Dwelling Policy Practice Test

Which type of damage does the dwelling policy most commonly not cover?

1. Theft

2. Fire damage

3. Earth movement

4. Water damage from bursting pipes

The correct answer is: Earth movement

The dwelling policy typically excludes coverage for earth movement, which includes situations like earthquakes, landslides, or sinkholes. This exclusion reflects the insurance industry's assessment of risk and the cost of providing coverage for such events, which are often catastrophic and can lead to significant losses for insurers. In contrast, other types of damage such as theft, fire damage, and water damage from bursting pipes generally receive coverage under standard dwelling policies. Theft is covered to protect the insured's personal belongings, fire damage is one of the primary risks the policy is designed to protect against, and water damage from pipes is often included as part of the dwelling policy’s coverage for sudden and accidental losses. Thus, earth movement stands out as the risk commonly not covered.