An insured's home is covered by an HO-3 policy with a dwelling limit of $300,000. They have an antique vase valued at $10,000. The vase is stolen during a burglary. What is the maximum amount the policy will pay for the loss of the vase, assuming no special endorsements?
- A$10,000
- B$5,000
- C$1,500
- D$2,500
Show answer & explanationAnswer & explanation
Correct answer: C. $1,500
Standard HO-3 policies have special limits of liability for certain categories of personal property. For theft of jewelry, furs, watches, and precious and semi-precious stones, the limit is typically $1,500. While a vase isn't precisely jewelry, it falls under the broader category of 'articles of value' often grouped with such limits, or specifically listed as a sub-limit for 'silverware, goldware, pewterware, and articles of similar kind' or 'stamps, coins, and other collectibles.' Some policies have a specific sub-limit for 'furs, jewelry, watches, precious and semi-precious stones, and other similar items' which often includes high-value collectibles. Given the options, $1,500 is the most common specific sub-limit for valuable items susceptible to theft, such as collectibles or similar valuable articles, when not specifically scheduled.
Why the other options are wrong
- A. This would be the amount if there were no special limits, which is incorrect for theft of valuable items.
- B. This is not a standard sub-limit for theft of such items in most HO policies.
- D. While $2,500 is a common limit for theft of firearms or silverware, the $1,500 limit is often applied to more general 'valuable items' or specific collectibles prone to theft.
Special Limits of Liability (Homeowners)
Specific dollar limits placed on certain categories of personal property in homeowners policies, particularly for losses due to theft, or for certain types of property regardless of the peril. These limits are much lower than the overall Coverage C limit.
- Apply to specific types of personal property (e.g., jewelry, furs, cash, firearms).
- Often apply only to theft losses for certain items.
- Are sub-limits within the broader Coverage C limit.
- Require scheduling or endorsements for higher coverage.
Memory trick: General is BIG, Special is SMALL.