South Carolina Personal Lines Practice Exam

Which coverage in DP policies is designed for income loss from renting out a property?

1. Coverage A

2. Coverage B

3. Coverage D

4. Coverage E

The correct answer is: Coverage D

Coverage D, also known as Fair Rental Value, is indeed the section of the DP (Dwelling Policy) that is designed to provide coverage for income loss from renting out a property. This coverage helps replace the anticipated rental income that the property owner would have received during the period in which the property is uninhabitable due to a covered loss, such as a fire or other insured peril. What makes this coverage important for property owners who rent out their homes is that it acknowledges the financial impact that damage to the property can have on their income. When a rental property suffers a loss that causes it to be temporarily uninhabitable, Coverage D ensures that the owner can still maintain some level of financial stability by compensating for the lost rental income. This contrasts with other types of coverage in the DP policies. For instance, Coverage A is focused on the dwelling itself, and Coverage B is primarily for other structures on the property, like a shed or garage. Coverage E, often associated with personal liability coverage under other policy types, does not address rental income and is more related to legal liabilities. Hence, C is the most appropriate answer when discussing income loss from renting out a property.