South Carolina Personal Lines Practice Exam

How is Coverage B - Other Structures limit determined in HO policies?

1. It is a flat rate

2. 10% of Coverage A

3. 20% of Coverage A

4. 5% of Coverage A

The correct answer is: 10% of Coverage A

In Homeowners (HO) policies, Coverage B - Other Structures provides insurance for structures on the property that are not attached to the main dwelling, such as a detached garage, shed, or fence. The limit for Coverage B is typically calculated as a percentage of Coverage A, which is the primary dwelling coverage, specifically at 10% of Coverage A. This means that if the coverage limit for the main dwelling is established, then Coverage B will automatically allow coverage for other structures up to 10% of that limit. This uniform percentage helps to standardize coverage while ensuring that policyholders have a basic level of protection for additional structures without needing to request it separately. Understanding this standard percentage is crucial for homeowners as it reflects how much financial support they can expect if damages occur to these separate structures, thus aiding in adequate risk management and insurance planning.