Texas General Lines — Property and CasualtyPersonal LinesEasy
A homeowner has an HO-3 Special Form policy with a Coverage C limit of $50,000. A thief breaks into their home and steals a collection of rare stamps valued at $3,500. Assuming no other special limits apply, how much would the policy pay for the stamp collection, subject to the deductible?
- A$1,000
- B$3,500
- C$2,500
- D$500
Show answer & explanationAnswer & explanation
Correct answer: C. $2,500
HO-3 policies typically have special limits of liability for certain categories of personal property. For theft of stamps, the common limit is $2,500, which is less than the collection's value.
Why the other options are wrong
- A. This is a common special limit for theft of firearms and related equipment.
- B. While the collection is valued at $3,500, the policy's special limit of liability for stamps restricts the payout.
- D. This is a common special limit for theft of jewelry, watches, furs, and precious and semi-precious stones.
HO-3 Special Limits of Liability
Specific dollar limits applied to certain categories of personal property, restricting the amount an insurer will pay for a loss to those items, regardless of the overall Coverage C limit.
- Applies to specific perils like theft for certain items.
- Limits are often lower than the item's actual value.
- Common categories include jewelry, firearms, stamps, and money.
Memory trick: Special treasures need special limits, like a lock on a jewel box.