South Carolina Personal Lines Practice Exam

What is the maximum number of units in residential dwellings that can be insured by a DP policy?

1. 1 - 2

2. 1 - 3

3. 1 - 4

4. 1 - 5

The correct answer is: 1 - 4

The correct answer identifies that a dwelling policy (DP) is designed to provide coverage for residential properties that have a maximum of four units. This makes the DP policy ideal for insuring single-family homes, duplexes, triplexes, and four-plexes, which encompass a range of residential living situations. Policies are structured this way to help manage the risk for insurance providers and ensure that coverage is applicable to types of properties that can be easily assessed and underwritten. Properties exceeding four units typically require a different form of coverage, such as a commercial property policy, as they often involve more complex risks, such as those associated with higher tenant occupancy and liability concerns. Options that suggest the maximum number of residential units as being less than or greater than four do not align with the provisions established for dwelling policies. Thus, recognizing that the DP policy accommodates up to four units is key to understanding the correct application of these insurance products.