South Carolina Personal Lines Practice Exam

A basic dwelling policy primarily covers losses from which of the following perils?

1. Theft

2. Fire

3. Flood

4. Earthquake

The correct answer is: Fire

A basic dwelling policy primarily covers losses from fire because it specifically provides coverage for certain named perils, and fire is one of the foundational risks that these policies address. The intention of a basic dwelling policy is to protect property owners against significant and common risks associated with residential properties, and fire is a prevalent hazard that can lead to substantial losses. In a basic dwelling policy, the coverage typically includes losses caused by fire, lightning, windstorm, hail, explosion, and vandalism among other specified perils. This makes fire one of the most important and included risks in these types of insurance policies. The other options, such as theft, flood, and earthquake, do not fall under the primary coverage of a basic dwelling policy. For example, while theft might have limited coverage in some policies, it is not considered a core peril. Flood is usually excluded and requires a separate flood insurance policy, while earthquake coverage is generally available through additional endorsements or separate policies due to the distinct nature of earthquake risk. Thus, the primary focus of a basic dwelling policy remains on encompassing fire-related losses, making it the central peril covered.