A technician is explaining the benefits of an HO-2 Broad Form policy to a client. Which of the following statements about the HO-2 policy's coverage for personal property is accurate?
- APersonal property is only covered for fire and lightning.
- BPersonal property is covered on an 'open perils' basis, meaning all perils are covered unless specifically excluded.
- CPersonal property is covered for the same named perils as the dwelling, which are typically listed.
- DPersonal property coverage is limited to 10% of the Coverage A (Dwelling) limit.
Show answer & explanationAnswer & explanation
Correct answer: C. Personal property is covered for the same named perils as the dwelling, which are typically listed.
The HO-2 Broad Form policy provides 'named perils' coverage for both the dwelling and personal property. This means coverage is provided only for the specific perils listed in the policy, such as fire, lightning, windstorm, hail, explosion, riot, aircraft, vehicles, smoke, vandalism, theft, falling objects, weight of ice/snow/sleet, accidental discharge of water/steam, freezing, and sudden/accidental tearing apart.
Why the other options are wrong
- A. This describes the very basic coverage found in some DP-1 policies, not the broader HO-2.
- B. This describes 'open perils' coverage, which is characteristic of HO-3 (for dwelling) and HO-5 (for dwelling and personal property), not HO-2.
- D. This statement refers to Coverage B (Other Structures) or sometimes personal property off-premises, not the general principle of personal property coverage under HO-2.
HO-2 Broad Form Personal Property
Under an HO-2 Broad Form policy, personal property is covered on a 'named perils' basis, meaning coverage applies only for losses caused by perils specifically listed in the policy.
- Both dwelling and personal property are covered by named perils.
- The list of named perils is broader than a basic form but narrower than an open perils form.
- Common HO-2 perils include fire, windstorm, theft, falling objects, and accidental discharge of water.
Memory trick: HO-2 is 'N'amed, 'N'ot 'O'pen.