Texas General Lines — Property and CasualtyPersonal LinesMedium
A client lives in an area prone to earthquakes and wants to ensure their home and personal belongings are covered against this peril. They have a standard HO-3 policy. Which of the following statements is true regarding earthquake coverage for this client?
- AEarthquake damage is excluded from the standard HO-3 policy and requires a separate endorsement or policy.
- BEarthquake damage is covered if it results in a fire, otherwise it's excluded.
- CEarthquake damage is covered under the HO-3 policy, subject to a separate deductible.
- DEarthquake damage is fully covered under the standard HO-3 policy.
Show answer & explanationAnswer & explanation
Correct answer: A. Earthquake damage is excluded from the standard HO-3 policy and requires a separate endorsement or policy.
Standard Homeowners policies, including the HO-3, specifically exclude damage caused by earth movement, which includes earthquakes. To obtain coverage for earthquake damage, an insured must typically purchase a separate Earthquake Endorsement or a stand-alone earthquake policy.
Why the other options are wrong
- B. While fire resulting from an earthquake might be covered, the direct damage from the earthquake itself is excluded.
- C. While a separate deductible applies with an endorsement, it's not covered by the standard HO-3 itself.
- D. Earthquake is a common exclusion in standard homeowners policies.
Earthquake Exclusion (HO Policy)
Standard Homeowners policies typically exclude damage caused by earth movement, including earthquakes. Coverage for this peril requires a specific endorsement or a separate policy.
- Earth movement is a standard exclusion.
- Coverage usually purchased as an endorsement.
- Endorsement often has a percentage deductible.
Memory trick: Some perils are too big or too tricky for standard home policies.