Alabama Property and Casualty Practice Exam

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What is Coverage D in a Dwelling policy?

Additional living expense
Fair rental value
Broad form theft
Limited theft

The correct answer is: Fair rental value

Coverage D in a Dwelling policy pertains specifically to Fair Rental Value. This coverage is essential for property owners who rent out their property because it compensates them for the loss of rental income if their rental property becomes uninhabitable due to a covered loss, such as a fire or severe storm. The Fair Rental Value provides a financial safety net for landlords, ensuring that they do not suffer a loss of income while the property is being repaired or rebuilt. Coverage D is distinct from other types like Additional Living Expense, which is designed for homeowners who need to temporarily relocate while their home is being repaired. While important, Additional Living Expense does not apply to rental scenarios in the same way Fair Rental Value does. Understanding this coverage is crucial for property owners to effectively manage their financial risks and protect their investment.