Property & Casualty Insurance Exam (National Portion)Property InsuranceEasy
A homeowner's HO-3 policy has a Coverage A (Dwelling) limit of $350,000. If a fire completely destroys the dwelling, what is the typical minimum amount of coverage provided for Coverage C (Personal Property) under a standard HO-3 policy?
- A$175,000
- B$70,000
- C$350,000
- DCoverage C limits are determined by the insured and are not directly tied to Coverage A.
Show answer & explanationAnswer & explanation
Correct answer: A. $175,000
Under a standard HO-3 policy, Coverage C (Personal Property) is typically set at 50% of the Coverage A (Dwelling) limit. Therefore, 50% of $350,000 is $175,000.
Why the other options are wrong
- B. This amount is incorrect; it represents 20% of Coverage A, which is typically for Coverage B (Other Structures).
- C. This amount is incorrect; it represents 100% of Coverage A, which is not the standard for Coverage C.
- D. While insureds can often increase Coverage C limits, the standard policy provides a base percentage of Coverage A.
Homeowners Coverage C Limit
Under a standard Homeowners (HO) policy, the coverage limit for personal property (Coverage C) is typically a percentage of the dwelling's coverage limit (Coverage A).
- Standard HO-3 policies set Coverage C at 50% of Coverage A.
- Insureds can often purchase higher limits for Coverage C.
- Specific limits apply to certain types of personal property (e.g., jewelry, firearms).
Memory trick: Homeowners have 'A' dwelling, 'B' for structures, 'C' for contents, 'D' for displacement.