South Carolina Personal Lines Practice Exam

Which of the following statements is true regarding HO-4 coverage?

1. It covers open perils for both dwelling and contents

2. It provides coverage for named perils similar to HO-2

3. It only covers liability claims

4. It is a policy for mobile homes

The correct answer is: It provides coverage for named perils similar to HO-2

The correct statement about HO-4 coverage is that it provides coverage for named perils similar to HO-2. An HO-4, also known as a renters insurance policy, is designed specifically for individuals who are renting a residence but do not own it. This type of policy provides coverage for personal property against specific dangers or perils that are explicitly listed in the policy. Options that suggest it covers open perils for dwelling and contents or only covers liability claims are incorrect because the HO-4 does not cover the physical structure of the dwelling (which is covered under a policy like HO-3 for homeowners) since renters do not own the building. Additionally, while liability coverage is included in HO-4 policies, it is not the only aspect of coverage provided. The assertion that the HO-4 is designed for mobile homes is also inaccurate, as it is specifically tailored for renters of standard residential properties, not for mobile homes, which would require different types of coverage. Overall, the HO-4 policy offers a focused coverage package that protects renters against losses from specific events and provides liability protection for incidents occurring within their rented space.