Georgia Property & Casualty Practice Exam

What is the benefit of having a dwelling policy for a house that is tenant occupied?

1. It provides higher liability limits.

2. It offers broader coverage than homeowners policy.

3. It is suitable for properties not eligible under homeowners policy.

4. It increases property value.

The correct answer is: It is suitable for properties not eligible under homeowners policy.

Having a dwelling policy for a tenant-occupied house is particularly beneficial because it is specifically designed for properties that do not meet the eligibility requirements of a homeowners policy. Homeowners policies typically require that the insured property be occupied by the owner, which means that properties that are rented out to tenants may not qualify. In contrast, a dwelling policy can provide coverage for properties that are owner-occupied and for those that are tenant-occupied, allowing landlords to protect their investment effectively. The dwelling policy covers various risks associated with owning a rental property, including property damage and liability. This coverage is essential for landlords to manage financial risks associated with damage to the buildings, as well as potential legal liabilities from tenant-related incidents. Therefore, this type of policy is a suitable option for those renting out their properties and ensures that they have the necessary coverage to safeguard their interests. While other options may discuss aspects of coverage or value, they do not directly address the primary reason a dwelling policy is specifically chosen for tenant-occupied homes.