What is the coverage type for the contents in a Broad Form Dwelling Policy (DP-2)?

In a Broad Form Dwelling Policy (DP-2), the coverage for contents is based on the actual cash value. This means that in the event of a loss, the insurance payout will reflect the cost to replace the lost or damaged items, minus depreciation. This approach provides coverage that accounts for the decrease in value over time due to wear and tear or obsolescence.

The focus on actual cash value ensures that policyholders receive a financial settlement that reflects the true value of their possessions at the time of the loss, rather than their replacement cost, which might be significantly higher. This is an important distinction in the realm of property insurance, as it impacts how losses are assessed and compensated.