Policyholder M insures her owner-occupied single family residence under a dwelling property policy (DP-3) with a limit of $100,000. If the dwelling is damaged in a fire, what policy coverage will pay for M's extra costs to stay in a motel and board her pets while the fire damage is being repaired?

The correct answer revolves around the purpose and function of Coverage E in a dwelling property policy (DP-3). Coverage E, often referred to as "Additional Living Expenses," is specifically designed to cover the policyholder's necessary increased living expenses when the dwelling is uninhabitable due to a covered loss, such as fire damage.

In this scenario, since the home is being repaired after fire damage, the policyholder incurs extra costs for accommodation in a motel and for the care of her pets. Coverage E would provide compensation for those additional expenses, facilitating a temporary living arrangement while repairs are underway. This understanding highlights the goal of providing financial relief to policyholders during a temporary displacement caused by insured damages.

Other coverages within the policy, such as Coverage B and Coverage C, have different functions – specifically relating to other structures on the property and personal property, respectively. Coverage D, while related to loss of use, focuses specifically on rental value loss, rather than the increased living expenses recognized under Coverage E. Thus, Coverage E is the appropriate choice for addressing the extra costs incurred by Policyholder M during her time away from her home.