Why is Progressive dropping dwelling fire policies?

In a news release, Progressive says its decision to drop dwelling fire policies is part of “ongoing, strategic efforts to ensure the long-term stability of its property business for the benefit of both customers and independent agents.”

The company notes that it is committed to selling other types of coverage to homeowners and renters, including: 

  • Homeowners insurance
  • Renters insurance
  • Condo insurance
  • Umbrella liability insurance

What is a dwelling fire policy?

DP-3 policies cover properties that are not the policyholder's primary residence. Examples of such properties include vacation homes and homes used as long- or short-term rentals.

Dwelling fire policies cover a lot more than just damage associated with fires. In fact, the coverage is similar to what you would find in a typical homeowners policy. 

However, a dwelling fire policy generally does not include liability coverage, which is a major difference between it and a homeowners policy. Dwelling fire coverage also includes less personal property coverage.

Who will be impacted by the decision?

Progressive says DP-3 policies cover just 3.6% of the properties it insures.

According to the National Association of Insurance Commissioners, Progressive ranked 65th out of 125 companies offering dwelling fire policies in 2023. 

Although Progressive’s decision will not impact most customers, some policyholders will lose coverage. Property owners most likely to be affected are those with: 

  • Vacation homes and seasonal homes
  • Secondary homes
  • Rental properties
  • Vacant homes
  • Older homes

Areas with a high number of vacation or rental homes are more likely to be impacted than neighborhoods with mostly owner-occupied homes.

But overall, the impact of Progressive’s decision on the insurance market should be relatively small, says Christine O'Brien, president of the Insurance Council of New Jersey. 

"Progressive’s strategic decision will not have a significant impact on the home insurance market, especially since it affects approximately 3.6% of all Progressive property policies," she says. 

Potential benefits of Progressive dropping dwelling fire

Progressive's news isn’t all bad. The company notes that dropping dwelling fire policies will “create additional capacity for owner-occupied home policies in many states.”

That could mean that a larger number of customers will have the option of purchasing homeowners coverage from Progressive. That's not the case in Texas, at least not at the moment, as Progressive has paused sales of Texas home insurance policies.

If so, it would be welcome news to those shopping for insurance, particularly in places where homeowners insurance options have dwindled in recent years. 

What to do if you’re losing dwelling fire coverage

If you are losing dwelling fire coverage from Progressive, you still have options for replacing the insurance. 

“Policyholders affected by this change will have the challenge of shopping around for new DP-3 coverage and should consult an agent as soon as possible,” O’Brien says. “Numerous insurers continue to sell DP-3 policies.”

According to the National Association of Insurance Commissioners, these are the top 10 insurers that offer dwelling fire coverage: 

  • Starr
  • Berkshire Hathaway
  • FM Global
  • American International
  • Travelers
  • Liberty Mutual
  • Allianz
  • Zurich
  • Chubb
  • Farmers

As always, shopping around and gathering quotes is a great way to get the right policy at the best price. 

“Consulting with an independent agent or one affiliated with a particular insurer is the best way to find alternative coverage,” O’Brien says. 

Are there alternatives to dwelling fire policies?

Dwelling fire policies are not your only option for insuring a home that is not your primary home, or that you sometimes rent on a short-term basis. 

If you own a vacation home, a standard homeowners policy might be the best way to get the most comprehensive coverage. However, note that in many cases, insuring a vacation home is more costly than insuring a primary residence, and not all insurers will sell a standard homeowners policy if the home is not owner-occupied full-time.

The fact that you are likely to be away from a vacation home for extended periods means the home poses a bigger risk to your insurer, which results in higher costs to insure the property. 

Those who occasionally rent out their homes to travelers—such as through Airbnb—may benefit from a home-sharing endorsement. However, it’s important to note that coverage from these policies can be restrictive, and some people may be more comfortable with the comprehensive coverage that a commercial short-term rental insurance policy offers. 

Finally, if you leave your home vacant for an extended period — usually 30 days or more — your insurance company may discontinue your coverage. Some insurers offer vacant home insurance to protect you in these situations. 

However, the cost of such coverage can be more than 50% higher than you would pay for standard homeowners insurance, according to the Insurance Information Institute. It’s important to note that a vacant home is both vacant of occupants and personal property. If the home is furnished and other personal property is kept there, it is not considered vacant but rather unoccupied.

For landlords who rent out a home full-time, dwelling fire coverage is the main choice; if you are losing Progressive coverage, shop around to find a company offering a policy. Most major insurance companies write dwelling fire coverage.

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