South Carolina Personal Lines Practice Exam

Which of the following liability limits typically applies to homeowners insurance?

1. $100,000

2. $300,000

3. $500,000

4. $1,000,000

The correct answer is: $300,000

Homeowners insurance typically features liability limits that commonly start around $300,000. This amount is considered a standard limit in many policies, providing a balance between adequate coverage for typical incidents that could arise, such as accidents that cause injury or property damage to others, and affordability for the policyholder. Liability coverage is essential for protecting homeowners against potential lawsuits and claims that may exceed their personal assets. A limit of $300,000 is often viewed as sufficient for most homeowners, as it covers a range of issues—from a guest getting injured due to negligence on the property to unintentional damage to a neighbor's property. Higher limits are available, such as $500,000 or $1,000,000, typically targeted at high-net-worth individuals or those wishing to cater to specific risks associated with their property, but the choice of $300,000 reflects a practical standard within the industry. Limits can often be adjusted based on a homeowner's specific needs and risk assessments, but $300,000 remains a widely accepted baseline.