South Carolina Personal Lines Practice Exam

For which coverage is an insured allowed to receive compensation for improvements made at their expense?

1. Property conditions

2. Building additions and alterations

3. Liability conditions

4. Contents coverage

The correct answer is: Building additions and alterations

The correct answer is the coverage related to building additions and alterations. This type of coverage is specifically designed to compensate an insured for improvements or renovations they have made to the property that enhance its value or utility beyond the original structure. In many insurance policies, particularly those related to homeowners or commercial property, there is often a provision that acknowledges and covers enhancements made by the policyholder. These improvements could include upgrades such as new fixtures, significant structural changes, or expansions that increase the property's value. While property conditions and contents coverage pertain to different aspects of insuring a structure or its contents, they do not typically address compensation for improvements. Liability conditions focus on the insured's responsibility for harm caused to others, which also does not relate to improvements made to the property itself. Thus, building additions and alterations is the specific coverage that enables an insured to recover costs associated with the enhancements they have made.