South Carolina Personal Lines Practice Exam

What is the special sub-limit for watercraft and associated equipment under DP policies?

1. 200

2. 1500

3. 2500

4. 5000

The correct answer is: 1500

In Dwelling Property (DP) policies, there is a specific sub-limit for watercraft and associated equipment that applies to personal property coverage. The correct sub-limit is $1,500. This means that if personal property coverage is activated under a Dwelling Property policy, there is a cap of $1,500 on the amount that will be paid out for watercraft, including items like motors, trailers, and equipment related to watercraft ownership. This limit reflects standard underwriting practices in the insurance industry, where certain categories of personal property have specific sub-limits due to higher risks associated with them. Watercraft can be subject to losses from various risks such as theft, damage, or liability, so the sub-limit helps insurers manage their exposure while still providing some level of coverage. Understanding these limits is crucial for policyholders to ensure they have adequate coverage for their specific needs and to avoid potential gaps in insurance protection.