South Carolina Personal Lines Practice Exam

What is one of the eligibility requirements for a HO policy?

1. More than 6 units

2. Single-family homes only

3. Up to 4 units

4. Must be owner-occupied

The correct answer is: Up to 4 units

A homeowners (HO) policy is designed to provide coverage for residential properties and is typically applicable to certain types of homes. One of the eligibility requirements is that the property must have up to four units. This means that a single-family home or a property with up to three additional rental units can qualify for an HO policy. In the context of insurance, limiting eligibility to properties with up to four units helps ensure that the coverage is suited for residential use, which is the primary focus of homeowners insurance. Properties with more than four units usually require a different type of insurance policy, such as a commercial property policy, due to the increased complexity and risk associated with multi-family dwellings. While it’s important to acknowledge that owner-occupation is often preferred for certain types of HO policies, the key eligibility stipulation regarding the number of units directly relates to the nature of the coverage that homeowners insurance provides.