South Carolina Personal Lines Practice Exam

What type of form is the HO-3?

1. Basic Form

2. Broad Form

3. Special Form

4. Contents Broad Form

The correct answer is: Special Form

The HO-3 form is recognized as a Special Form homeowners insurance policy. This type of policy offers a comprehensive range of coverage for the structure of the home (the dwelling) against all perils except those specifically excluded in the policy. This means that unless a specific risk is mentioned as excluded, it is covered under the policy. For example, common exclusions might include risks like flooding or earthquakes, which means that if such events cause damage, the homeowner would not be compensated for those losses under the HO-3 policy. However, this form provides broad protection for the policyholder’s home, making it one of the most popular homeowners insurance choices. In contrast, other types of forms have different scopes of coverage. The Basic Form, for instance, typically covers only a limited set of perils, while the Broad Form extends coverage compared to the Basic but does not provide the same level of comprehensive protection as the Special Form. The Contents Broad Form is focused solely on personal property within the home rather than offering coverage for the structure itself, making it fundamentally different from the HO-3. Understanding these distinctions helps clarify why the HO-3 is classified specifically as a Special Form.