South Carolina Personal Lines Practice Exam

What is the designation of a DP2 policy?

1. Basic Form

2. Comprehensive Form

3. Broad Form

4. Special Form

The correct answer is: Broad Form

A DP2 policy is known as the "Broad Form" for dwelling insurance. This designation is significant because it provides coverage for certain risks that are beyond what is covered in a basic policy. The Broad Form typically includes protection against more specific perils, such as theft and vandalism, that are not covered in a basic form (which is generally referred to as the DP1 or Basic Form). Additionally, the DP2 policy typically affords replacement cost coverage for the dwelling under certain conditions, making it a more comprehensive option for homeowners. By being classified as the Broad Form, the DP2 policy strikes a balance between covering multiple risks while still being less comprehensive than what a Special Form (DP3) policy would offer, which covers all risks except those specifically excluded. This ranking and classification help homeowners and agents understand the scope of coverage available through different policy options.