Property & Casualty Insurance Exam (National Portion)Types of PoliciesEasy
A homeowner has a standard Homeowners Policy (HO-3) and is reviewing their coverage. Which of the following perils is typically NOT covered under Coverage A - Dwelling, unless specifically endorsed?
- AWindstorm
- BEarthquake
- CFire
- DLightning
Show answer & explanationAnswer & explanation
Correct answer: B. Earthquake
Standard HO-3 policies provide 'open perils' coverage for the dwelling, meaning all perils are covered unless specifically excluded. Earthquake is a common exclusion that requires a separate endorsement for coverage.
Why the other options are wrong
- A. Windstorm is a standard covered peril under an HO-3 policy, though may have a separate deductible in some areas.
- C. Fire is a standard covered peril under an HO-3 policy.
- D. Lightning is a standard covered peril under an HO-3 policy.
HO-3 Exclusions
Standard HO-3 policies provide broad coverage for the dwelling and other structures, but many perils are specifically excluded and require special endorsements for coverage.
- HO-3 is an 'open perils' policy for Coverage A and B.
- Common exclusions include earthquake, flood, war, nuclear hazard, and governmental action.
- Exclusions can often be added back through endorsements for an additional premium.
Memory trick: HO-3 covers all, but Earth's quakes are out of bounds.