Why Florida Homeowners Dropping Insurance Should Consider a DP-1 Policy

Home insurance premiums in Florida have skyrocketed in recent years, leaving many homeowners questioning if it’s worth paying for coverage. Florida now has the most expensive home insurance in the nation – averaging around $11,000 per year, after a 72% increase in the last five years. In response, roughly 1 in 5 Florida homeowners (primarily those without mortgages) have decided to “go naked” (self-insure) and carry no property insurance at all. If you own your home outright, it might be tempting to cancel your homeowners policy to save money. Before you do, let’s explore why that can be dangerously risky and how a DP-1 dwelling policy could be a smarter, cost-effective alternative to going uninsured or buying liability-only coverage.

Florida’s Home Insurance Dilemma: Rising Costs and Dropped Coverage

It’s no secret that Florida is in an insurance crisis. Frequent hurricanes, tropical storms, and even rampant insurance fraud have driven many insurers out of the state and pushed premiums through the roof cfpublic.org. With 15–20% of Floridians now dropping their home insurance and choosing to self-insure, this trend is especially common among retirees and longtime residents who own their homes free and clear. Lenders require coverage if you have a mortgage, but if your home is paid off, there’s no law forcing you to insure it. As a result, some homeowners are simply canceling their policies out of frustration with rising costs and limited options.

However, opting out comes at a price: zero financial protection if disaster strikes. Florida’s unique risks – from hurricanes and flooding to lightning and tornadoes – mean going uninsured (or “self-insuring”) is essentially gambling with your largest asset. “Going without insurance is really the worst possible choice in our opinion. It’s very risky and most people live to regret it, especially in a state like Florida, with so many hazards we face all year round,” warns the Insurance Information Institute. Let’s break down what self-insuring entails and why experts strongly caution against it.

The Risk of Going Uninsured (Self-Insuring)

Self-insuring your home means you alone bear the cost of any damage or loss. While you do save on premiums, you need to have huge reserves of money set aside “in case” something happens – and in Florida, something will happen eventually. Unless you are very wealthy, this approach is “unrealistic and dangerous” for most homeowners.

Consider these facts:

• According to the Insurance Information Institute, the average homeowner’s property damage claim is about $15,700. Wind and hail claims (common in Florida storms) average $13,500 each, and fire or lightning claims average a whopping $84,000. If your house burns down or a major hurricane levels it, you could be on the hook for hundreds of thousands of dollars to rebuild – all out of pocket.
  
• Even “small” incidents can cause big bills. A kitchen fire, a burst pipe flooding a room, or a tree falling on your roof might rack up tens of thousands in repairs. Without insurance, every penny of that comes from your savings or retirement funds. You have to ask yourself: Can I comfortably absorb a $50,000 or $100,000 hit if a disaster happens? For most people, the answer is no.
  
• Don’t forget liability risks. If someone gets hurt on your property or your dog bites a neighbor, you could be sued for medical bills and damages. Homeowners insurance typically includes personal liability coverage for these situations. Without it, you’d face those legal and medical costs alone. (Fun fact: dog bite claims cost U.S. insurers over $1.1 billion in 2023 – imagine being on the hook for a chunk of that without insurance!)

Most self-insurers regret it

Insurance experts in Florida report “so many homeowners in the past few years that decided to self-insure and regret it to the point where they cannot rebuild their homes and have to move” after a disaster. In other words, going uninsured can be financially devastating – a single hurricane or fire can wipe out a lifetime of savings. Mark Friedlander of III cautions that in most cases, if you make that choice, “you’re going to regret it for the rest of your life”.

In short, self-insuring is a high-stakes gamble. Yes, you might save money if no disaster ever strikes. But Florida’s history shows that sooner or later, nature wins. For the vast majority of homeowners, completely dropping coverage is “a bad road to go down”. Thankfully, dropping your standard policy doesn’t have to be all-or-nothing. There are middle-ground options to get some protection without paying for a full high-premium homeowners policy. This is where liability-only policies and DP-1 Dwelling policies come into play.

Liability-Only Policies: Protection From Lawsuits, But Not Mother Nature

Some Florida homeowners who are fed up with huge premiums still recognize they need at least some insurance – particularly liability coverage. Liability insurance covers you if someone is injured on your property or if you accidentally cause damage to others. For example, if a visitor slips on your porch or your tree falls and damages the neighbor’s car, liability insurance can pay for the resulting claims or lawsuits. Personal liability coverage is a standard part of any homeowners policy, but can you buy it by itself?

Standalone “liability-only” home policies do exist, but they are relatively rare. Most insurers bundle property and liability coverage together. In fact, many companies won’t offer a home liability policy by itself. However, some specialized insurers or independent agencies in Florida do offer “liability only” policies for homeowners who insist on it. This kind of policy would cover injuries or damages you’re legally liable for, but nothing for your house or belongings. It’s essentially like having only the personal liability portion of homeowners insurance, without any hazard coverage for the structure.

Before you go this route, consider a few points:

Liability-only is better than nothing

It at least shields you from catastrophic lawsuits (which could potentially cost even more than your house is worth). Given the high cost of legal claims (especially in Florida’s litigious environment), maintaining liability coverage is crucial. For instance, if someone is seriously hurt and you’re at fault, medical and legal bills could easily exceed six figures. A liability policy would handle those costs (typically up to a chosen limit), saving you from financial ruin.

Your home itself remains 100% at risk.

With only liability insurance, you have zero coverage for damage to your own property. Any storm, fire, theft, or other peril that affects your house or contents would be an out-of-pocket loss. Essentially, you’re still self-insuring the structure and contents.

Cost savings might be modest.

Surprisingly, dropping the property coverage doesn’t always slash the premium as much as you’d hope. Insurance companies may charge a minimum premium for liability policies, and since liability claims can also be costly, the price for stand-alone liability could be close to (or even more than) a bare-bones property policy. In other words, you might only save a little by going liability-only – but you lose a lot of protection.

Example:

Imagine you pay, say, $1,000/year for a liability-only policy. If a hurricane causes $50,000 of roof damage to your house, that $1,000 bought you no help at all for that scenario. You’d have to pay the $50k yourself. If instead you had a minimal property policy for a similar premium, you could receive at least some payout for that damage, greatly reducing your personal loss.

This brings us to the smarter compromise: a DP-1 dwelling policy. It can provide the liability coverage you need plus a basic level of property insurance for often around the same cost as liability alone. Let’s explore what a DP-1 is and why it might be the ideal solution for cost-conscious Floridians.

What is a DP-1 Dwelling Policy?

A DP-1 policy (Dwelling Property 1), sometimes called a Dwelling Fire Form 1, is a basic home insurance policy designed originally for non-owner-occupied homes. Landlords often use DP-1 or “dwelling fire” policies to insure rental houses, and people with vacant properties also use them. However, if you’re an owner looking for cheaper insurance, you can potentially use a DP-1 on your own home as a stripped-down alternative to a full homeowners policy (especially if traditional insurance is unavailable or unaffordable).

Key features of a DP-1 policy:

Named-Peril Coverage:

DP-1 covers damage to your dwelling only if it’s caused by specific perils named in the policy. Typically, a DP-1 insures against nine basic perils: fire, lightning, windstorm (hurricane), hail, explosions, riot or civil commotion, smoke, aircraft, vehicle impact, and volcanic eruption. In plain language, that means common dangers like fire and hurricanes are covered under DP-1. (Yes, importantly for Florida, windstorms are included in the standard DP-1 named perils.) Anything not on the list is generally not covered. For example, water damage from a burst pipe or leaky appliance is usually not covered, nor is theft or vandalism under a basic DP-1. This is a major difference from a typical homeowners policy, which covers many more perils (often on an “all-risk except exclusions” basis).

Dwelling and Other Structures:

A DP-1 policy covers the structure of your home itself (the dwelling). It also usually covers “other structures” on your property, like a detached garage, shed, or fence, for the same named perils. So if a windstorm knocks over your fence or a fire damages your shed, those could be covered under DP-1.

Personal Property (Contents):

Unlike a homeowners policy, personal belongings coverage is optional on a DP-1. You can choose to add coverage for your personal property (furniture, electronics, etc.), but it’s not automatically includedtotalcsr.com. Many people buying DP-1 for rentals skip personal property (since the tenants’ belongings aren’t the landlord’s to insure). If you’re living in the home and want your own stuff covered, you’d need to add a contents coverage endorsement – keeping in mind it will also likely be named peril and often on an Actual Cash Value basis (meaning depreciation will apply, more on that shortly).

Personal Liability:

Here’s a crucial point – liability coverage is not standard on a DP-1, but it can be added. You can usually attach a personal liability endorsement to the DP-1 policy so that you’re protected if someone is injured or you’re suedtotalcsr.com. This is exactly how a DP-1 can substitute for that “liability-only” policy: by adding liability to the DP-1, you effectively get the liability protection and property coverage in one package.

No Additional Living Expense:

A DP-1 for an owner-occupied home generally will not include loss-of-use coverage (also called Additional Living Expense) that homeowners insurance provides. In a standard HO-3 policy, if your home is uninhabitable due to a covered loss, the policy pays for you to live elsewhere (hotel, rental) while repairs are made. DP-1 policies for rentals may include fair rental value coverage (to reimburse lost rent), but for an owner-occupant there typically isn’t coverage for your temporary lodging. So that’s one benefit you give up with a DP-1.

Actual Cash Value Payouts:

Most DP-1 policies pay claims on an Actual Cash Value (ACV) basistotalcsr.com. This means depreciation is deducted from any payout. For example, if a windstorm damages your 15-year-old roof, the insurance won’t pay for a brand-new roof; it will pay only the depreciated value of the old roof (which could be much less). Here’s a quick illustration: suppose a new roof would cost $15,000 and your current roof has used 12 of its 15-year expected life. ACV formula would pay perhaps ~$3,000 for that damage, and you would pay the rest (roughly $12,000) out-of-pocket kin.com. ACV lowers the payout, which helps keep DP-1 premiums low. In contrast, standard homeowners policies often pay Replacement Cost Value (RCV) for buildings (no depreciation) as long as you insured the home to a high percentage of its value. With DP-1, expect lower claim checks – but something is still better than nothing.

Basic Home Protection

In essence, a DP-1 policy is “home insurance light.” It provides a minimalist safety net: covering your house for a short list of major perils (like fire and wind) and paying out limited amounts (ACV, not full replacement). It won’t cover every calamity and it won’t make you fully whole after a big loss, but it will at least cushion the blow. And critically, you can include personal liability coverage in this policy, combining the two important protections you need (property + liability) in one affordable package.

Now, how does DP-1 stack up against the standard Homeowners (HO-3) policy you might be dropping? And where does it stand versus other options like DP-3 or HO-8? Let’s compare.

DP-1 vs. HO-3 (Standard Homeowners Insurance): How They Compare

It’s helpful to understand exactly what you’re sacrificing (and gaining) when you switch from a full homeowners policy (often an HO-3 form) to a DP-1 policy.

Here’s a quick comparison of coverage and cost differences:

Covered Perils:

An HO-3 policy covers your dwelling for “open perils”, meaning everything is covered except things specifically excluded (common exclusions are flood, earthquake, war, etc.). It also covers personal property for a broad set of perils (fire, theft, lightning, plumbing leaks, etc.). A DP-1, by contrast, is named perils only – usually just 9 basic hazards. Anything not named is not covered. For example, a standard HO-3 would cover damage from a burst pipe or accidental plumbing leak, or a theft of your valuables – a DP-1 will not. If your water heater ruptures and floods the house, a DP-1 offers no coverage (water damage from internal sources is off the list). If your home is vandalized or burglarized, DP-1 won’t pay, but HO-3 would. This is a significant reduction in protection you should be aware of.

Structure Coverage Amount:

With an HO-3, you generally insure for the full replacement cost of the home (what it would cost to rebuild new). Many HO policies even require you to insure to at least 80% of replacement value to get full coverage. With DP-1, you have more flexibility to insure maybe for a lower amount or just the market value or even only the remaining mortgage (if you had one). Since DP-1 pays ACV, the carrier is less concerned with full replacement cost. However, to get meaningful protection, you’ll still want a sufficient limit on your DP-1 (at least enough to cover a partial rebuild if not full).

Claim Settlement (ACV vs RCV):

As noted, DP-1 pays Actual Cash Value – which means depreciation is subtracted from claim payoutstotalcsr.com. HO-3 typically pays Replacement Cost on the dwelling (and often you can add replacement cost on contents via an endorsement). This means HO-3 claims generally pay more, allowing you to actually rebuild with new materials. With DP-1’s ACV, expect potentially much lower payouts, especially on older structures or roofs. This is a trade-off for the lower premium. You might end up paying a chunk of repairs yourself due to depreciation.

Other Coverages:

A standard HO-3 policy bundles a lot of extras: other structures, personal property, loss of use (ALE), personal liability, medical payments, etc., usually included automatically. A DP-1 is bare-bones: other structures are typically covered (often a percentage of dwelling amount), but loss of use is not included for owner-occupants, and contents and liability must be added if desiredtotalcsr.com. Even things like tree debris removal, ordinance & law coverage, etc., that might be in an HO policy won’t be in a basic DP-1 unless added.

Cost:

Here’s the upside – price. Because a DP-1 policy is so limited, it is significantly cheaper than a comprehensive HO-3. It’s designed for “budget-conscious owners or lower-value homes”totalcsr.com. You’re not paying for the insurer to cover all those extra perils and replacement cost coverage. On average, DP-1 premiums can be substantially lower – often hundreds or even thousands less per year than a full homeowners policy on the same home. Every case varies, but you can generally expect DP-1 to be one of the lowest-cost property insurance options available (aside from going completely uninsured).

Eligibility and Usage:

Some insurers won’t issue a DP-1 for owner-occupied homes, as it’s for rentals. However, others will, especially for homes that don’t qualify for standard insurance. Florida’s Citizens Insurance offers DP-3 and DP-1 policies for such properties. If you’re priced out or non-renewed, consider a DP-1 through these channels. Always check with your agent for available options.

Other Alternatives: You might also hear about DP-3 or HO-8 as alternatives:

DP-3

It is another dwelling policy form (Dwelling Fire Form 3) that provides broader coverage than DP-1. It’s often an “open perils” dwelling policy with replacement cost – more like a landlord’s version of an HO-3. DP-3 covers many more perils (including plumbing leaks, etc.) and usually costs more than DP-1 but less than an HO-3. However, DP-3 is typically used for rental properties or homes that don’t qualify for HO-3 due to certain conditions. It often includes liability or offers it easily, similar to HO policies totalcsr.com. If cost is the only issue, DP-3 might still be pricey. The focus of this article is DP-1 because it’s the cheapest tier of dwelling coverage.

HO-8

HO-8 is a modified policy for older homes, similar to a scaled-down HO-3. It covers 11 named perils, excluding most water damage. HO-8 settles losses on a functional replacement or ACV basis, leading to lower payouts. It’s designed for historic or aging homes, costing less than full replacement coverage. HO-8 offers broader coverage than DP-1, including theft and some water damage, but less than HO-3. If your home is old or unique, HO-8 might be an option. Premiums are lower than HO-3 but higher than DP-1. Some lenders may not accept HO-8 if it doesn’t meet minimum coverage requirements.

The bottom line: DP-1 offers lower cost by stripping away coverage. For those considering no insurance, DP-1 provides critical coverage affordably. Let’s highlight why DP-1 plus liability is a better choice than going bare or only carrying liability.

DP-1 vs. Going “Liability-Only” or Uninsured: The Benefits of Minimal Coverage

If you’re considering dropping your insurance, here’s the crux: a DP-1 with liability gives you immensely better protection than no insurance or liability-only, often for a comparable cost. It essentially serves as a safety net against the biggest threats to your home, while keeping your budget in check.

Here are the key benefits of choosing a DP-1 policy over going uninsured or liability-only:

Financial Security for Property Damage:

With a DP-1, you won’t be completely on your own if a covered disaster strikes. For instance, if a fire burns part of your house or a hurricane blows off your roof, your DP-1 policy would kick in to pay for repairs (after deductible), up to your policy limit. Even though it might not cover the full cost (due to ACV and coverage limits), it could cover tens of thousands of dollars that you would otherwise have to pay. In a scenario where your home suffers, say, $100,000 in windstorm damage, having a DP-1 might mean the insurer pays perhaps $50,000 (hypothetically) and you pay $50,000 – whereas with no insurance, you pay the full $100,000. That difference can be the line between recovery and financial ruin.

Liability Protection Included:

By adding liability coverage to your DP-1, you’re also protected if accidents happen. So you’re not only insuring the house, but also covering yourself against lawsuits and injury claims – just like a normal homeowners policy would. This dual protection (property + liability) comes in one package. If you only bought liability-only coverage, you’d miss out on that property protection; and if you went uninsured, you’d have neither.

Minimal Premium Difference:

Many people are surprised to learn that a DP-1 policy with basic coverage can sometimes cost about the same or even less than a stand-alone liability policy. Insurance agents in Florida note that liability-only policies are niche products with limited availability, so they don’t always save much money. Meanwhile, a DP-1’s bare-bones nature keeps premiums lowtotalcsr.com. In practical terms, you might find that for roughly the same budget you were willing to spend on liability insurance, you can get a DP-1 that includes liability and also insures your dwelling. Why pay nearly the same amount and not insure your house? Getting the extra property coverage is usually a no-brainer if the cost is comparable.

Peace of Mind:

Beyond the dollars, consider the peace of mind aspect. Living in Florida without any property insurance can be nerve-wracking – every tropical storm warning or lightning strike might make you sweat, knowing you’re one bad day away from an uninsured disaster. With a DP-1 policy, you can sleep a little easier. You’ll know that if the worst happens, you won’t lose everything. You have a safety net for the big stuff – your roof, walls, and foundation – and you have liability coverage in case someone gets hurt. That confidence and security can be well worth the modest premium. It’s a way of protecting your home equity and years of investment from being completely wiped out.

A Step Toward Fuller Coverage:

Having a DP-1 keeps you in the insurance system, so to speak. If rates stabilize or you decide to upgrade coverage later, it may be easier to transition back to a standard homeowners policy from a DP-1 than from having no insurance history at all. You also avoid gaps in coverage that could complicate things (for example, if you ever decide to sell the house, buyers might have issues if the home was uninsured for a long period; maintaining continuous insurance even at a lower level can be beneficial).

Real-World Scenario:

To illustrate, let’s imagine Jane, a retiree in Florida. Tired of paying $5,000+ a year for insurance, she cancels her HO-3 policy. She thinks, “My house has stood for 30 years with no big problems; I’ll take my chances.” She keeps only a $300,000 liability-only policy for ~$800/year to protect against lawsuits. Two years later, an electrical fire breaks out and severely damages her kitchen and living room, causing $60,000 in repair costs. Jane is safe, but her home is not.

With no property coverage, Jane must withdraw from her 401(k) and savings to cover all $60,000 of rebuilding costs. Those years of premiums she “saved” by canceling? They’re gone in an instant – and then some.

Now imagine Jane had instead purchased a DP-1 policy. For perhaps $800–$1,000 a year (comparable to the liability policy), she got basic fire coverage plus $300k liability. After the fire, her DP-1 insurer pays, say, $40,000 (after depreciation and deductible) toward the repairs. Jane still has to pay $20k out of pocket, but that’s a heck of a lot better than $60k.

In hindsight, the DP-1 would have clearly been the wiser choice, saving her $40,000 and a lot of stress. This scenario isn’t hypothetical – uninsured homeowners face outcomes like this all the time, and those with minimal coverage are far better off when disaster strikes.

Crafting Your Strategy: Don’t Go It Alone

If you’re leaning towards dropping your insurance because of high costs, it’s critical to talk to an insurance agent and explore alternatives like the DP-1 before pulling the plug. An experienced Florida agent can review your specific situation (home value, location, risk factors) and help you compare quotes for different coverage levels. You might be surprised at the affordable options that still give you essential protection. As industry experts advise, “talk with your agent, see if there’s any steps you can take,” because completely going without coverage should be the last resort.

Other cost-saving tips to consider in your strategy:

Raise your deductible:

Increasing the deductible on your homeowners or dwelling policy (what you pay out of pocket on each claim) can significantly lower your premium. Just ensure you keep the deductible at an amount you could reasonably pay in an emergency. Many Florida homeowners opt for higher hurricane deductibles or all-peril deductibles to save money. (Note: If you have a mortgage, your lender may limit how high you can go – often max 5% or 10% of the home’s value).

Opt for wind-only or exclude wind (in some cases):

In certain coastal areas, you might consider a specific wind-only policy or, conversely, a property policy that excludes windstorm (if you’re confident in self-insuring wind). Florida’s Citizens Insurance, for example, offers wind-only policies in high-risk zones. Be VERY cautious with this approach – excluding hurricane coverage is risky, but it is an option to cut cost if you can financially handle wind damage while still insuring for fire, etc.

Bundle insurance policies:

If you also have auto insurance (or other policies), getting them from the same insurer often yields a multi-policy discount on both. Bundling home and auto can chop a decent percentage off your premium. It’s worth checking if switching or bundling could offset some of the increase in your home insurance cost.

Fortify your home:

Florida law requires insurers to give discounts for certain wind-mitigation features (like storm shutters, wind-resistant roofs, etc.). Making upgrades to harden your home against hurricanes can not only give you peace of mind, but also earn sizable insurance credits. Also, keeping up with maintenance (roof, plumbing, electrical) helps you qualify for better rates.

Shop around and use state resources:

The insurance market in Florida is constantly changing. New insurers are entering the state, and legislative reforms are aiming to stabilize rates. Don’t assume your current carrier (or Citizens) is your only choice. Shop the market through an independent agent who can quote multiple companies. You can also consult the Florida Office of Insurance Regulation or consumer guides for up-to-date information on affordable insurance programs.

Conclusion: Smart Protection Without Breaking the Bank

Dropping homeowners insurance feels like controlling your budget, but it’s a huge financial gamble. For most, the potential loss outweighs short-term savings. You don’t have to choose between high premiums and no protection. A DP-1 dwelling policy offers an affordable, lean option that covers critical perils and liability.

Choosing a DP-1 policy means self-insuring some risks but covering big ones that could ruin you. This sensible approach keeps costs low while maintaining security against fires, hurricanes, and major liabilities. In a catastrophe, you’ll appreciate having some coverage in place.

Next Steps:

Call our team before dropping your insurance due to cost. We help Florida homeowners find creative solutions, offering DP-1 policies and higher deductible plans to fit budgets. We provide coverage comparisons and free quotes tailored to your needs. Download our free case study on the risks of going uninsured in Florida.

Insurance keeps a bad day from becoming a worse lifetime. With planning and strategy, you can weather Florida’s storms confidently. Protect your home and future with the right coverage. It’s about empowerment and peace of mind, not fear, despite rising costs. Stay safe, stay savvy, and reach out for guidance on insurance.