South Carolina Personal Lines Practice Exam

Which peril is included in the extended covered perils on a Basic DP policy?

1. Fire

2. Flood

3. Explosion

4. Earthquake

The correct answer is: Explosion

The correct choice identifies explosion as a peril included in the extended covered perils of a Basic Dwelling Policy (DP). When considering the extended coverage options available on a Basic DP policy, specific perils can be added to the basic coverage that initially begins with fire, lightning, and internal explosion. An explosion refers to the violent expansion of gases that can cause damage to property and is specifically covered under the basic policy itself; however, it is important to understand that while many other hazards may seem significant, like flood and earthquake, they are typically not automatically covered under a Basic DP policy or its standard extensions. Instead, these additional perils generally require separate coverage options or endorsements. Flood and earthquake are examples of perils that require specific coverage due to their substantial risk and potential for significant loss; thus, they are not included in the extended perils of the Basic DP policy, reinforcing the importance of understanding the types of coverage available in various policies.