Texas General Lines — Property and CasualtyPersonal LinesMedium
A client lives in an area prone to both hurricanes and tornadoes. They have a standard HO-3 policy. Which of the following statements is true regarding coverage for wind damage from these perils?
- ADamage from hurricanes is covered, but may be subject to a separate hurricane deductible; tornado damage is subject to the standard deductible.
- BDamage from tornadoes is covered, but damage from hurricanes is excluded.
- CDamage from both hurricanes and tornadoes is covered under the basic HO-3 policy, subject to the standard deductible.
- DNeither hurricane nor tornado damage is covered under a standard HO-3 policy.
Show answer & explanationAnswer & explanation
Correct answer: A. Damage from hurricanes is covered, but may be subject to a separate hurricane deductible; tornado damage is subject to the standard deductible.
A standard HO-3 policy generally covers windstorm damage from both hurricanes and tornadoes. However, in hurricane-prone regions, policies often include a separate, higher hurricane deductible. Tornado damage typically falls under the standard deductible.
Why the other options are wrong
- B. Both perils are generally covered, but hurricane may have a special deductible.
- C. This is incorrect because hurricane damage often has a separate deductible.
- D. This is incorrect; wind damage from both perils is generally covered.
HO-3 Wind Deductibles
While HO-3 policies cover wind damage, specific deductibles (e.g., hurricane deductibles, windstorm deductibles) may apply, especially in coastal or high-risk areas, differing from the standard deductible.
- Standard HO-3 generally covers windstorm.
- Hurricane deductibles are usually a percentage of Coverage A, not a flat dollar amount.
- Tornado damage typically falls under the standard AOP (All Other Perils) deductible.
Memory trick: Wind deductibles are like 'two gates' – one for normal wind, a bigger one for hurricanes.