Georgia Property & Casualty Practice Exam

Which type of policy is most appropriate for a home that is under construction?

1. Homeowners policy

2. Dwelling policy

3. Umbrella policy

4. Personal liability policy

The correct answer is: Dwelling policy

A dwelling policy is the most suitable option for a home that is under construction because it specifically caters to properties that may not be able to qualify for a standard homeowners insurance policy due to their incomplete status. When a home is being built or is undergoing significant renovations, it may not be fully livable, which means that the extensive coverage provided by a homeowners policy wouldn't be applicable. Dwelling policies are designed to offer coverage for the structure itself against risks like fire, wind, and vandalism during the construction phase. They can also provide liability coverage, which protects the homeowner from claims involving bodily injury or property damage that may occur on the construction site. In contrast, a homeowners policy integrates coverage for both the home and personal property, but it is intended for completed and occupied dwellings. An umbrella policy extends additional liability coverage over existing policies, so it would not directly cover the construction aspect. A personal liability policy primarily protects individuals against legal claims due to bodily injury or property damage, but it doesn't cover property risks or damage to a building under construction. Therefore, for a home in the process of being built, the dwelling policy emerges as the most appropriate choice.