South Carolina Personal Lines Practice Exam

Which peril is specifically excluded under the DP-1 Basic Form?

1. Fire Damage

2. Theft

3. Burglary

4. Smoke

The correct answer is: Theft

The correct answer is that theft is specifically excluded under the DP-1 Basic Form, also known as the Dwelling Policy - Basic Form. This policy is designed to cover a limited range of perils, namely those that are specified, such as fire, lightning, and internal explosion. However, it does not provide coverage for certain other risks, one of which is theft. In the context of this policy, theft is excluded because the DP-1 Basic Form is primarily focused on more common types of damage that can occur to a dwelling, namely those related to natural disasters and structural integrity, rather than personal property losses due to theft or burglary. Other forms of dwelling policies, such as DP-2 and DP-3, offer more comprehensive coverage options that can include theft, but the Basic Form purposely limits its scope to keep premiums lower and to provide fundamental coverage. Fire damage, smoke, and other defined perils are included in the DP-1 Basic Form, making them eligible for coverage. Understanding the specific exclusions and inclusions of the DP-1 form is crucial for policyholders, as it informs them what kinds of risks are covered under their insurance and helps them make more informed decisions about additional coverage they may need based on their individual risk factors