South Carolina Personal Lines Practice Exam

Coverage A, B, and C cover which type of losses?

1. Indirect losses

2. Consequential losses

3. Direct losses

4. Service losses

The correct answer is: Direct losses

Coverage A, B, and C in a personal lines insurance policy specifically relate to the protection of certain types of physical property and personal belongings against direct losses. Coverage A typically pertains to the dwelling and structures attached to it, Coverage B covers other structures on the property such as sheds or fences, and Coverage C protects personal property within the insured premises. Direct losses refer to immediate physical damage to property due to covered perils such as fire, theft, or vandalism. In this context, these coverages provide financial reimbursement or restoration for losses that occur directly to these specified assets. Understanding that these coverages are designed to address physical damages helps clarify their role in risk management and financial protection for policyholders. Consequential or indirect losses arise from the aftereffects of direct losses, such as loss of rental income following property damage; service losses refer to losses incurred when a service is not rendered, which are not covered by these property-based insurance policies.