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Dwelling Policies

Practice questions on dwelling policies for the property exam, each with an answer and explanation.

Study questions and answers

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1. Dwelling policies (DP forms) are generally used to insure:

  1. Only owner-occupied single-family homes
  2. Mobile homes only
  3. Large apartment complexes
  4. One- to four-family dwellings, including rental properties
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D. One- to four-family dwellings, including rental properties
Dwelling forms cover one- to four-family dwellings and do not require the owner to live there, which makes them common for rentals.

2. Which coverage is NOT provided by an unendorsed dwelling policy?

  1. Dwelling
  2. Other structures
  3. Personal property
  4. Personal liability
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D. Personal liability
Dwelling policies are property-only forms. Liability can be added with a separate personal liability supplement or endorsement.

3. Which dwelling form provides the most limited (basic) named perils coverage?

  1. DP-1
  2. DP-2
  3. DP-3
  4. DP-4
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A. DP-1
The DP-1 basic form covers fire, lightning, and internal explosion, with extended coverage and vandalism available as options.

4. Under the dwelling basic form (DP-1), covered losses to the dwelling are settled at:

  1. Replacement cost
  2. Actual cash value
  3. Agreed value
  4. Market value
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B. Actual cash value
The DP-1 pays actual cash value. The DP-2 and DP-3 offer replacement cost on buildings when they are insured to at least 80% of replacement cost.

5. Under the special form (DP-3), the dwelling and other structures are covered on an open perils basis. Personal property is covered on:

  1. An open perils basis
  2. A basic named perils basis
  3. A broad named perils basis
  4. An agreed value basis
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C. A broad named perils basis
The DP-3 covers Coverages A and B against open perils, while Coverage C personal property is covered for broad named perils.

6. Coverage E (Additional Living Expense) is included in which dwelling forms?

  1. DP-1 only
  2. All three dwelling forms
  3. DP-3 only
  4. DP-2 and DP-3
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D. DP-2 and DP-3
DP-1 includes Fair Rental Value (Coverage D) but not Additional Living Expense. DP-2 and DP-3 include both D and E.

7. A landlord's rental dwelling is damaged by a covered fire and the tenants move out during repairs. Which coverage pays the landlord for the rent lost?

  1. Coverage B - Other Structures
  2. Coverage C - Personal Property
  3. Coverage D - Fair Rental Value
  4. Coverage E - Additional Living Expense
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C. Coverage D - Fair Rental Value
Fair Rental Value pays the rental income lost, minus expenses that stop, while the property is unfit to live in after a covered loss.

8. Under the dwelling broad and special forms, other structures (Coverage B) may be covered for up to what amount of the Coverage A limit?

  1. 5%
  2. 10%
  3. 20%
  4. 50%
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B. 10%
Other structures, such as a detached garage or shed, are covered up to 10% of the Coverage A limit.

9. Under the DP-2 and DP-3, coverage for trees, shrubs, and plants is limited to 5% of Coverage A and:

  1. $250 per item
  2. $500 per item
  3. $1,000 per item
  4. $5,000 per item
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B. $500 per item
Trees, shrubs, and plants are covered for certain named perils up to 5% of Coverage A, with a $500 limit for any one tree, shrub, or plant. Windstorm is not a covered peril for them.

10. Personal property covered under a dwelling policy is also covered anywhere in the world, but only up to:

  1. 5% of Coverage C
  2. 10% of Coverage C
  3. 20% of Coverage C
  4. 50% of Coverage C
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B. 10% of Coverage C
Off-premises coverage for personal property is limited to 10% of the Coverage C limit.

11. Under a dwelling policy, coverage for vandalism and malicious mischief does not apply if the dwelling has been vacant for more than how many consecutive days before the loss?

  1. 30
  2. 45
  3. 60
  4. 90
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C. 60
Vandalism and malicious mischief, along with some other perils, are excluded once the dwelling has been vacant more than 60 consecutive days.

12. Covered property removed from a dwelling to protect it from a covered peril is insured against direct loss from any cause for up to:

  1. 5 days
  2. 10 days
  3. 30 days
  4. 60 days
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A. 5 days
The dwelling forms cover property while being removed from an endangered premises and for up to 5 days while removed. Homeowners forms allow 30 days.
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