Dwelling Policy (DP)Question 80 of 474
Under a standard DP-3 without additional endorsements, how is a covered loss to the named insured's Coverage C personal property settled?
a.Actual cash value (replacement cost minus depreciation)
b.Replacement cost with no deduction for depreciation, which the DP-3 provides automatically for Coverage C
c.Functional replacement cost
d.Guaranteed replacement cost up to 125% of the Coverage C limit, applied without any endorsement
Explanation
Under every Dwelling Property form, personal property is settled at actual cash value (ACV) by default. To upgrade Coverage C to replacement cost the insured must add the Personal Property Replacement Cost Endorsement. Guaranteed replacement cost and functional replacement cost are not the standard settlement methods for DP Coverage C.
Law Reference: ISO Dwelling forms — Coverage C personal property settlementThis topic, taught in full in the Personal Lines Insurance Producer guide. Personal Lines Insurance Producer — Complete Study Guide (2026) — PDF + EPUB, $19.99 · 14-day refund →
Practice all 474 questions free — no signup required.
Own the complete Personal Lines Insurance Producer guide — PDF + EPUB, $19.99 →
Related questions on this topic
- A DP-3 dwelling has a replacement cost of $500,000. The landlord carries $300,000 of insurance and suffers a $60,000 partial loss with a $1,000 deductible. Using the coinsurance proportionate formula, what is the insurer's payment?
- Under a DP-3 written with $400,000 Coverage A, what is the automatic limit available for Coverage B (Other Structures) such as a detached garage?
- Which of the following is one of the BROAD perils added by the DP-2 Broad Form on top of the basic DP-1 perils?
- A landlord who rents out a single-family house on a DP-3 asks whether theft losses to the dwelling are covered. Which statement is MOST accurate?
- A homeowner uses a DP-3 to cover a vacation cabin she personally occupies four months each year. When a covered fire makes the cabin uninhabitable during her stay, which DP coverage reimburses her extra hotel and meal costs?
- A California landlord on a DP-3 asks whether a future earthquake that damages the rental house will be covered. Which response is correct?
Last reviewed: · editorial process
PrepPass team · Verified against California Personal Lines Insurance License Exam · How we review