Which statement is true regarding dwelling policy coverage?

The statement indicating that exclusions apply to all three policy forms is accurate because dwelling policies—specifically the DP-1 (basic), DP-2 (broad), and DP-3 (special) forms—each contain specific exclusions that dictate what is not covered under the policy. While these forms provide varying levels of coverage, they all share the characteristic of having certain perils or situations that are excluded from coverage. Understanding these exclusions is crucial for policyholders, as it helps them comprehend the limitations of their coverage and avoid potential gaps in protection.

In contrast, the other options either misrepresent the nature of dwelling policies or make assumptions about the coverage that are not universally applicable. For instance, dwelling policies do not cover all perils without exceptions; rather, they specifically outline covered perils and those that are excluded. Additionally, while some forms may include additional coverages, it is not guaranteed that additional coverage is always part of the policy. Lastly, liability coverage is not automatically included in dwelling policies; it must typically be added through an endorsement if desired. Therefore, the nuance of exclusions being a fundamental aspect of all three policy forms makes the statement regarding exclusions correct.