South Carolina Personal Lines Practice Exam

What does the Dwelling Under Construction Endorsement limit its liability based on?

1. The length of construction time

2. Completed value of the structure

3. The estimated cost of materials

4. The contractor's insurance limits

The correct answer is: Completed value of the structure

The Dwelling Under Construction Endorsement limits its liability based on the completed value of the structure. This endorsement typically addresses the coverage for a dwelling that is in the process of being built. The completed value represents the total amount of coverage available for the dwelling once it is finished. This valuation includes all components of the construction project, including materials and labor costs, and it helps to ensure that the insurance policy provides adequate protection against potential losses that could occur during the construction phase. In a scenario where a dwelling is under construction, having coverage tied to its completed value allows the insurer to more accurately assess potential risks and exposures associated with the property, thus ensuring that both the insurer and the insured are protected appropriately during the construction period.