South Carolina Personal Lines Practice Exam

What type of peril covers the dwelling under a HO-3 Special Form?

1. Named peril

2. Basic peril

3. Open peril

4. Broad peril

The correct answer is: Open peril

The HO-3 Special Form provides coverage on an open peril basis for the dwelling. This means that all risks of physical loss or damage to the structure are covered, except for those specifically excluded in the policy. Open peril coverage is advantageous because it offers broad protection, allowing homeowners to have peace of mind knowing that most risks will be addressed without having to list each individual peril. This form is designed to protect the dwelling itself against a wide variety of potential hazards, making it a preferred choice for many homeowners. The coverage extends to nearly all types of damages, enhancing the security of property owners. Understanding this distinction is crucial, as it sets the HO-3 apart from other forms that may offer only named peril or restricted coverage.