Texas General Lines — Property and CasualtyPersonal LinesEasy
A client has an HO-3 Special Form policy with a Coverage C (Personal Property) limit of $75,000. During a covered loss, their collection of rare stamps, valued at $3,000, is stolen. The policy has a special limit of liability for theft of stamps. How much will the policy pay for the loss of the stamps?
- A$3,000
- BNothing, as stamps are not covered.
- C$1,500
- D$75,000
Show answer & explanationAnswer & explanation
Correct answer: C. $1,500
Standard HO-3 policies include special limits of liability for certain classes of personal property, such as stamps, usually $1,500 for theft. Since the loss is $3,000, the policy will pay up to its special limit.
Why the other options are wrong
- A. This is the value of the stamps, but the policy's special limit is lower.
- B. Stamps are covered, but subject to a special limit for theft.
- D. This is the overall Coverage C limit, not the special limit for stamps.
HO-3 Special Limits
Homeowners policies (like HO-3) have specific, lower limits for certain types of personal property, particularly for losses due to theft.
- Apply to specific categories of property (e.g., jewelry, furs, stamps, firearms).
- Limits are often lower for theft than for other perils.
- These limits are sub-limits within the overall Coverage C limit.
Memory trick: Special limits are like 'financial fences' around specific valuables.