South Carolina Personal Lines Practice Exam

Under the building additions and alterations coverage, what is the category and maximum amount covered?

1. Covers improvements made by the tenant for up to 5000

2. Covers improvements for up to 10% of Coverage C

3. Covers all alterations for a maximum of 2500

4. Covers renovations for up to 500

The correct answer is: Covers improvements for up to 10% of Coverage C

The correct option highlights an important aspect of the building additions and alterations coverage, which is specifically designed to provide protection for improvements made by tenants to a leased space. This coverage typically extends to enhancements and modifications that a tenant performs on the property they occupy. Under this particular provision, the coverage is often limited to a percentage of the total Coverage C limit, ensuring that tenants have adequate, yet controlled, space for recovery in the event of loss or damage. Specifically, the maximum amount covered is commonly set at 10% of the total Coverage C limit, reflecting a balance between the interests of the landlord and tenant. This arrangement acknowledges that while tenants invest in personalizing and improving their rental space, the property owner maintains overall responsibility for the building itself. This limit helps ensure that any improvements made by the tenant do not exceed the coverage provided by the policy, which can help to manage risk effectively for both parties involved.