Mississippi Property & Casualty Practice Exam

Which of the following is a limitation of a dwelling policy?

1. Coverage for personal liability

2. Full replacement cost

3. Liability for injury to guests

4. Exclusion of theft coverage

The correct answer is: Exclusion of theft coverage

Dwelling policies are specialized property insurance policies that offer coverage primarily for the structure of a home as well as some associated risks. One notable limitation of a standard dwelling policy is the exclusion of certain forms of coverage, including theft. In many instances, traditional dwelling policies do not automatically include protection against theft unless specifically added through an endorsement. This limitation reflects the policy's design, which focuses on the dwelling itself rather than personal property or liability coverage. Such exclusions are significant for homeowners, as theft can pose a considerable financial risk. Understanding this limitation helps policyholders assess their needs and determine if additional coverage for theft is necessary. The other options provided typically represent features that might be included within broader property or liability coverage but are not part of the limitations that characterize a dwelling policy. For example, coverage for personal liability is usually associated with a homeowner's policy rather than a dwelling policy, full replacement cost is often available in specific endorsements, and liability for injury to guests might also not be included in all types of dwelling policies. However, the exclusion of theft is a common limitation inherent in dwelling policy structures.