South Carolina Personal Lines Practice Exam

What is a key feature of the DP-2 policy compared to the DP-1?

1. It provides no additional coverage.

2. It covers additional perils and damages.

3. It is more expensive.

4. It covers only personal property.

The correct answer is: It covers additional perils and damages.

The DP-2 policy, also known as the Broad Form Dwelling Policy, is an upgrade from the DP-1 policy (Basic Form) in several important ways. The key feature that distinguishes the DP-2 is its coverage for additional perils and damages, which means it includes protection against more types of risks than the DP-1. While the DP-1 policy typically only covers 11 specific perils on a named peril basis, the DP-2 expands this coverage significantly to include additional perils such as falling objects, weight of ice and snow, and accidental discharge or overflow of water. Furthermore, the DP-2 often provides coverage for replacement cost on the dwelling and certain types of personal property, which is not guaranteed in the DP-1. This broader coverage on both the number of perils and the basis of loss settlement underlines why the DP-2 policy is favored for those seeking more comprehensive protection for their dwelling and its contents. In summary, the DP-2 policy's inclusion of additional covered perils and broader protection is what makes it stand out in comparison to the DP-1 policy.