Which statement is true about coverage extensions and additional coverages?

• A. Cost no additional premium
• B. Cost additional premium
• C. Replace existing coverages
• D. Reduce limits

Answer: (A)

Coverage extensions and additional coverages are protections added to a policy that broaden what’s covered without needing the policyholder to pay more. They’re built into the policy package and come at no extra premium, though they do have limits and conditions that apply. In practice, these add-ons supplement the standard coverages, providing extra protections (up to their stated limits) for specified situations, but they don’t replace existing coverages or automatically raise your overall limits unless the policy specifies.

For example, a typical homeowners policy might include certain debris-removal or fire-department-service-charge extensions automatically. If a loss fits one of these extensions, the claim would be paid up to the extension’s limit at no additional cost.