South Carolina Personal Lines Practice Exam

HO-2 provides protection for dwelling on an _____ peril basis.

1. Basic

2. Open

3. Specific

4. Named

The correct answer is: Open

The correct understanding of the HO-2 policy, which is also known as the Broad Form, is that it provides coverage on a named peril basis. This means that the policy specifically lists the perils for which it offers protection. The HO-2 form covers a range of risks that are outlined in the policy, such as fire, lightning, windstorm, hail, explosion, and certain other specified perils. It does not provide open peril coverage, as that would cover any risk not expressly excluded by the policy, which is typically associated with HO-3 policies. In this context, the term "named" refers to the specific types of perils that the policy will cover, emphasizing that you need to reference the list within the policy to determine what is protected. This distinguishes the HO-2 from other coverage types that might have broader or different coverage terms.