Texas General Lines — Property and CasualtyPersonal LinesMedium
A client has an HO-5 Comprehensive Form policy with a Coverage C limit of $75,000. They report the theft of a valuable painting from their home, appraised at $15,000. The policy has a special limit of liability for theft of furs, jewels, and precious stones at $1,500. What is the maximum amount the policy will pay for this loss, assuming no deductible applies?
- A$1,500
- B$7,500
- C$15,000
- D$75,000
Show answer & explanationAnswer & explanation
Correct answer: C. $15,000
The HO-5 Comprehensive Form policy provides broad coverage for personal property, including theft. The special limit of liability for 'theft of furs, jewels, and precious stones' does not apply to a painting. Therefore, the painting is covered for its full appraised value of $15,000, as long as it does not exceed the overall Coverage C limit.
Why the other options are wrong
- A. This incorrectly applies a special limit that is not relevant to a painting.
- B. This is an arbitrary amount and does not reflect policy limits or coverage.
- D. This is the overall Coverage C limit, but the loss is only $15,000, so the policy pays the actual loss amount.
HO-5 Personal Property Coverage
The HO-5 Comprehensive Form provides 'open perils' coverage for both the dwelling and personal property, meaning it covers all perils except those specifically excluded.
- Personal property is covered on an open perils basis.
- Special limits of liability still apply to certain categories of property (e.g., money, jewelry, firearms).
- The burden of proof for an exclusion rests with the insurer.
Memory trick: HO-5 is 'O'pen to most perils, but still has 'L'imits for some 'V'aluables.