Dwelling Policy Practice Test

What is the deductible for the water backup and sump pump overflow coverage under the dwelling policy endorsement?

1. $100

2. $250

3. $500

4. $1,000

The correct answer is: $250

The deductible for water backup and sump pump overflow coverage under a dwelling policy endorsement is set at $250, which aligns with standard practices in the insurance industry. This specific coverage is designed to protect policyholders from losses resulting from water backing up into their home due to a sewer or drain issue, or overflow from a sump pump. The choice of a $250 deductible strikes a balance between manageable out-of-pocket expenses for the policyholder and protecting the insurer from minor claims. Typically, the deductible is lower compared to other coverage options since water issues can result in significant damage and expenses. This encourages homeowners to seek coverage without facing an overwhelming financial barrier at the time of a loss. Other amounts, like $100 or $500, may also seem reasonable but do not reflect the standard deductible amount associated with this specific coverage type. A deductible of $1,000 would likely discourage claims for smaller incidents, which is why it is not often used for this type of endorsement.