Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Property InsuranceMedium
A client's Homeowners policy (HO-3) has a Coverage C (Personal Property) limit of $100,000. They have a valuable collection of rare books, not scheduled on the policy, worth $20,000. During a covered fire, the entire book collection is destroyed. Assuming no deductible applies to personal property, how much will the insurer pay for the loss of the book collection?
- A$10,000
- B$20,000
- C$0
- D$1,500
Show answer & explanationAnswer & explanation
Correct answer: B. $20,000
An unendorsed HO-3 policy does not have a special limit of liability for rare books destroyed by a fire. The general Coverage C (Personal Property) limit applies, and since the $20,000 loss is well within the $100,000 limit, the full value of the lost collection will be paid.
Why the other options are wrong
- A. This is an incorrect amount and does not correspond to a standard HO-3 limit for rare books.
- C. This is incorrect; the loss is covered by the personal property coverage.
- D. This is a special limit for items like jewelry theft, not for rare books destroyed by fire.
HO-3 Coverage C (Personal Property)
Coverage in a Homeowners policy that protects the insured's personal belongings, both on and off the premises, against covered perils.
- Typically 50-70% of Coverage A (Dwelling)
- Named perils coverage (HO-3 for contents)
- Subject to special limits for certain types of property or perils
Memory trick: Coverage C: Your stuff, named perils, and some tricky limits.