Property & Casualty Insurance Exam (National Portion)Types of PoliciesEasy
A homeowner's policy includes coverage for personal property. Which of the following items would typically be subject to a special limit of liability for theft?
- AA collection of rare stamps valued at $2,000.
- BA television set valued at $1,500.
- CA bicycle valued at $800.
- DA laptop computer valued at $1,200.
Show answer & explanationAnswer & explanation
Correct answer: A. A collection of rare stamps valued at $2,000.
Homeowners policies often have special limits of liability for certain categories of personal property, particularly those that are easily stolen and have high value, like stamp collections, jewelry, and firearms. These limits are typically lower than the general personal property limit.
Why the other options are wrong
- B. Televisions are generally covered under the standard personal property limit unless specifically excluded or scheduled.
- C. Bicycles are typically covered under the standard personal property limit unless they are of extremely high value and scheduled.
- D. Laptop computers are generally covered under the standard personal property limit, although some policies may have specific limits for electronics.
Special Limits of Liability (HO)
Specific monetary caps applied to certain types of personal property in a Homeowners policy, particularly for losses due to theft, to manage insurer exposure.
- Applies to items like jewelry, furs, firearms, silverware, and stamp/coin collections.
- Limits are often lower than the overall personal property coverage.
- Higher coverage for these items usually requires scheduling them.
Memory trick: HO's personal stuff has general rules, but some 'special' items get a 'limit' when stolen.