Texas General Lines — Property and CasualtyPersonal LinesMedium
A client is concerned about their valuable antique coin collection. They have a standard HO-3 policy. What is the most effective way to ensure adequate coverage for the collection?
- ARequest an appraisal and list the collection on Schedule A of the HO-3 policy.
- BPurchase a Personal Articles Floater (PAF).
- CIncrease the personal property limit on the HO-3 policy.
- DAdd a Personal Property Replacement Cost endorsement.
Show answer & explanationAnswer & explanation
Correct answer: B. Purchase a Personal Articles Floater (PAF).
Valuable collections like antique coins often have sub-limits under standard homeowners policies and are best covered by a Personal Articles Floater (PAF) which provides open perils coverage and agreed value for scheduled items.
Why the other options are wrong
- A. While an appraisal is good, listing it on Schedule A of an HO-3 policy typically only increases the sub-limit for that category (e.g., coins) to a slightly higher amount, but doesn't provide the same broad coverage as a PAF.
- C. Increasing the personal property limit would still subject the collection to special sub-limits for theft of jewelry, furs, stamps, and coins.
- D. A Personal Property Replacement Cost endorsement changes the valuation method but does not address sub-limits for specific valuable items.
Personal Articles Floater (PAF)
An inland marine policy designed to provide broad, 'open perils' coverage for specific, high-value personal property items, often on an 'agreed value' basis.
- Covers items like jewelry, furs, cameras, musical instruments, fine art, and coin/stamp collections.
- Provides 'open perils' coverage, meaning it covers all risks of direct physical loss unless specifically excluded.
- Often uses 'agreed value' or 'stated value' settlement, avoiding standard policy sub-limits.
Memory trick: For your precious treasures, float them on a PAF.