State Farm Insurance License Practice Exam

Which peril is covered under the HO-3 policy?

1. Personal property covered for open perils

2. Dwelling covered for open perils

3. Liability coverage for medical payments

4. All perils without exception

The correct answer is: Dwelling covered for open perils

The HO-3 policy, known as a homeowners insurance policy, provides a comprehensive range of coverage for both the dwelling and personal property, but it differentiates between the two. The correct answer indicates that the dwelling is covered for open perils, which means that it protects against any risk of physical loss or damage except for those specifically excluded in the policy. This type of coverage offers broad protection for the structure of the home itself, ensuring that policyholders are safeguarded against a wide array of potential dangers, such as fire, theft, vandalism, and certain natural disasters. For personal property, the policy typically provides coverage on a named perils basis, meaning only specific types of damage or losses listed in the policy are covered. This distinction is critical for understanding the scope of protection provided by the HO-3 policy. Liability coverage and medical payments to others, while important components of homeowners insurance, do not pertain directly to the coverage of the dwelling itself. Thus, focusing on the specific nature of the dwelling's coverage as it pertains to open perils is key to understanding why this answer is correct.