South Carolina Personal Lines Practice Exam

Which coverages are included under HO-3 in terms of perils?

1. Named perils only

2. Open perils for Coverage A and B

3. Basic perils only

4. Liability perils only

The correct answer is: Open perils for Coverage A and B

The HO-3 homeowners insurance policy is known for providing broad protection that includes coverage for a wide range of risks. This policy primarily features open perils coverage for the dwelling (Coverage A) and other structures (Coverage B), meaning it covers any risk of physical loss or damage unless specifically excluded in the policy. This approach offers homeowners a high level of protection since it does not limit coverage to those perils explicitly named in the policy. This contrasts with named perils coverage, where only those perils specifically listed in the policy are covered. Therefore, responses that suggest named perils or basic perils only do not accurately reflect the comprehensive nature of the HO-3. Additionally, liability coverage under the HO-3 does not fit the description of perils, as liability is about legal responsibilities rather than direct physical damage or loss to property. Thus, the inclusion of open perils for Coverage A and B distinguishes the HO-3 policy, making it a preferred choice for many homeowners seeking robust protection against various risks.