South Carolina Personal Lines Practice Exam

What type of coverage is included in HO policies that is not available in Dwelling policies?

1. Property damage coverage

2. Liability coverage

3. Comprehensive coverage

4. Personal property coverage

The correct answer is: Liability coverage

The inclusion of liability coverage is a defining characteristic of Homeowners (HO) policies that sets them apart from Dwelling policies. While Dwelling policies provide basic property coverage, they typically do not encompass liability protection for the policyholder. Homeowners policies, on the other hand, incorporate liability coverage, which protects the policyholder from legal claims resulting from injuries or property damage caused to others while on the insured premises or as a result of the insured’s actions. Liability coverage can help cover the costs associated with legal fees, medical expenses, and damages awarded in lawsuits, making it a crucial aspect of HO policies for homeowners who want comprehensive protection. Dwelling policies may cover the structure and certain types of property, but they lack the personal liability aspect that addresses potential legal risks faced by the homeowner. This makes the presence of liability coverage in HO policies important for personal lines of insurance, providing a more holistic protection package for homeowners.