State Farm Insurance License Practice Exam

Which kind of coverage does not include liability on all policies?

1. Homeowners Policy

2. Dwelling Policy

3. Business Owners Policy

4. All of the Above

The correct answer is: Dwelling Policy

The dwelling policy is designed primarily to provide coverage for the physical structure of a home and is usually used for properties that are not owner-occupied, such as rental properties or seasonally used homes. Unlike homeowners insurance, which typically includes liability coverage for injuries or damages to third parties occurring on the property, the dwelling policy does not automatically include liability coverage. Liability coverage can be added through endorsements or additional policies, but it is not included by default. This distinguishes it from the homeowners policy, which inherently includes personal liability protection, and the business owners policy, which also includes liability limits for business operations. By understanding these distinctions, one can better appreciate the specific coverages and gaps associated with different types of insurance policies.