Dwelling Policy Practice Test

Which of the following properties would NOT be eligible for coverage under a dwelling policy?

1. A single-family home

2. A house with 4 residential units

3. A house that has 5 residential units

4. A small rental property with 2 units

The correct answer is: A house that has 5 residential units

A dwelling policy is primarily designed to provide coverage for residential properties that are not occupied by the owner or that consist of one to four units. The correct answer indicates a property that exceeds the limit set for units eligible for this type of coverage. A house with five residential units does not meet the eligibility criteria for a dwelling policy, as it is classified as a multi-family property, which typically requires a different type of insurance, such as a commercial policy or a business owners policy. In contrast, properties like a single-family home, a house with four residential units, or a small rental property with two units are all within the guidelines for coverage under a dwelling policy, as they either consist of one unit or are limited to four units. This distinction is vital for ensuring that properties are insured under the correct policy type that aligns with their specific characteristics and usage.