32. A typical homeowners policy with a $250,000 limit for Coverage A - Dwelling will automatically have how much coverage for Other Structures (assuming there are no endorsements)?
Answer: C
A typical homeowners policy with a $250,000 limit for Coverage A - Dwelling will automatically have $25,000 coverage for Other Structures.
A typical homeowners policy provides coverage for Other Structures at a specified percentage of the dwelling coverage, which is typically set at 10%. Therefore, with a $250,000 limit for Coverage A, the automatic coverage for Other Structures amounts to $25,000.
A) $15,000
Option A is incorrect because it represents a figure that is lower than the typical 10% allocation for Other Structures based on the Coverage A limit. This amount does not align with the standard provisions of a homeowners policy.
B) $37,500
Option B is also incorrect as it exceeds the 10% threshold typically applied to Coverage A. This would imply a higher dwelling coverage limit, which is not applicable in this scenario.
C) $25,000
Option C is correct, as it accurately reflects the standard provision of 10% of the $250,000 Coverage A limit for Other Structures. Thus, $25,000 is the correct automatic coverage amount.
D) $50,000
Option D is incorrect because it represents a figure that exceeds the typical 10% allocation for Other Structures. This would suggest a significantly higher limit for Coverage A than what is provided in this question.
Conclusion
The correct answer of $25,000 for Other Structures is derived from the standard 10% coverage allocation of the $250,000 limit for Coverage A. Other options fail to accurately reflect this provision, either being too low or too high, thereby confirming that Option C is the only correct choice.