Which of the following describes the DP-1 dwelling policy?

The DP-1 dwelling policy is a basic form of coverage that specifically insures against named perils. This means it only covers the specific risks that are explicitly listed in the policy, such as fire, lightning, and explosion. By design, the DP-1 does not provide coverage for all types of perils, which distinguishes it from broader policies that might cover an "open basis," or unspecified risks.

This approach allows homeowners to have a more affordable insurance option while still protecting their property from specific dangers. Unlike comprehensive policies that may encompass a wide range of risks, the named perils format of the DP-1 is more limited, focusing only on those that are stated in the policy.

The other options do not accurately reflect the nature of the DP-1 policy. For instance, while personal property is an important aspect of dwelling insurance, the DP-1 does not only cover personal property but also includes the dwelling itself, and its coverage does not extend to theft or water damage unless these specific perils are included in the named perils list.