Mississippi Property & Casualty Practice Exam

How can additional coverage be obtained in DP1?

1. By paying an additional premium

2. By reducing the deductible

3. By increasing the coverage limit

4. By changing the policy type

The correct answer is: By paying an additional premium

In the context of a DP1 (Dwelling Property 1) policy, additional coverage can typically be obtained by paying an additional premium. This is a common practice in insurance where policyholders can enhance their coverage options by opting for endorsements or higher limits on certain covered perils. This method allows policyholders the flexibility to tailor their insurance needs without fundamentally changing the nature of their policy. The DP1 form is a basic coverage policy that provides very limited protection, mainly for named perils, so paying additional premiums to add coverage or endorsements can ensure more comprehensive protection for the insured property. Other options, such as reducing the deductible, increasing the coverage limit, or changing the policy type, do not directly provide additional coverage. Reducing the deductible only lowers out-of-pocket expenses in the event of a claim. Increasing the coverage limit may not necessarily mean adding coverage for new perils; rather, it adjusts the maximum payout. Changing the policy type could result in a different set of coverages that may not be suitable for the existing needs. Therefore, the correct approach to obtain additional coverage in a DP1 policy specifically involves paying an additional premium.