Property & Casualty Insurance Exam (National Portion)Types of PoliciesEasy
A homeowner has a standard Homeowners Policy (HO-3) and is reviewing their coverage for personal property. Which of the following items would typically be subject to a special limit of liability for theft?
- AA television set valued at $1,500.
- BA laptop computer valued at $1,800.
- CA collection of rare stamps valued at $2,000.
- DA diamond engagement ring valued at $5,000.
Show answer & explanationAnswer & explanation
Correct answer: C. A collection of rare stamps valued at $2,000.
Homeowners policies typically impose special limits of liability on certain categories of personal property, particularly for theft, to manage the insurer's exposure to high-value, easily transportable items. Stamp collections are commonly listed among these items.
Why the other options are wrong
- A. General household items like televisions are usually covered under the broader personal property limits without special theft sub-limits, unless specifically scheduled for higher value.
- B. Electronic equipment like laptop computers is generally covered under the standard personal property limits, not specific theft sub-limits, unless used for business purposes which might have separate limitations.
- D. Jewelry, while having special limits for theft, typically has a higher sub-limit than stamp collections, often around $1,500 - $2,500 for jewelry, watches, furs, and precious and semi-precious stones, but stamp collections have a lower limit, often $1,000 or $1,500.
HO Special Limits of Liability (Theft)
Homeowners policies impose specific dollar limits on certain types of personal property, especially for theft, to control the insurer's risk for high-value or easily stolen items.
- Applies to specific categories like jewelry, furs, firearms, silverware, and stamp/coin collections.
- Limits are often lower for theft than for other perils.
- Insureds can schedule items for higher coverage or purchase endorsements.
Memory trick: Jolly Fellas Find Silver Coins Valuable, but Stamps are Limited.