Wisconsin Personal Lines Insurance License Exam — All Questions
4 questions
A landlord who rents out a single-family house and needs to insure the building and lost rental income would most appropriately use a:
- a.Homeowners HO-4 policy
- b.Dwelling policy (DP form)✓
- c.Personal auto policy
- d.Condominium HO-6 policy
A Dwelling policy (DP form) is designed for residential property, including non-owner-occupied rentals, and can cover the building and fair rental value. It does not automatically include personal liability, which can be added by endorsement. HO-4 covers a tenant's contents, HO-6 covers a condo unit owner, and neither fits a landlord who needs building and rental-income coverage.
Which Dwelling form insures the dwelling on an open-perils basis, providing the broadest property coverage?
- a.DP-1 (Basic)
- b.DP-2 (Broad)
- c.DP-3 (Special)✓
- d.DP-0 (Minimum)
The DP-3 (Special) form is the broadest Dwelling form, insuring the dwelling and other structures on an open-perils basis while covering personal property on a named-perils basis. The DP-1 (Basic) covers a short list of named perils and is narrowest, and the DP-2 (Broad) covers more named perils but is still not open-perils. There is no standard DP-0 form.
Under a Dwelling policy covering a rented home, the coverage that reimburses the owner for lost rent while the home is being repaired after a covered loss is:
- a.Coverage A – Dwelling
- b.Coverage B – Other Structures
- c.Coverage C – Personal Property
- d.Coverage D – Fair Rental Value✓
Fair Rental Value (Coverage D) reimburses the owner for the rental income lost while a covered peril makes the rented dwelling unfit to live in, limited to the time reasonably required to repair. Coverage A insures the structure, Coverage B other structures, and Coverage C personal property. Fair rental value protects the landlord's income rather than the physical property itself.
A major difference between a Dwelling policy and a Homeowners policy is that the Dwelling policy:
- a.Does not automatically include personal liability coverage✓
- b.Always includes worldwide contents coverage
- c.Can only be issued to condominium owners
- d.Never covers the dwelling structure
A Dwelling policy is primarily a property policy and does not automatically include personal liability or medical payments coverage; liability must be added by endorsement. A Homeowners policy packages property and personal liability together. This flexibility makes the Dwelling policy suitable for rentals and homes that do not qualify for Homeowners coverage, where liability may be handled differently.