Which statement correctly describes coverage under HO-3 as compared to HO-2?

Which statement correctly describes coverage under HO-3 as compared to HO-2?

• A. HO-3 covers dwelling and other structures on an open-peril basis; personal property is covered on a named-peril basis; HO-2 covers dwelling and contents on named peril.
• B. HO-3 covers dwelling on named peril; personal property is open-peril; HO-2 covers dwelling and contents on open peril.
• C. HO-3 covers everything on open peril; HO-2 covers all property on named peril.
• D. HO-3 covers only personal property; HO-2 covers dwelling only.

Answer: (A)

The key idea is how perils are applied differently to the dwelling versus personal property in HO-3 compared to HO-2. In HO-3, the dwelling and other structures are insured on an open-peril (special form) basis, meaning coverage applies to all risks unless a specific exclusion applies. Personal property, however, is insured on a named-peril basis, so only the perils listed in the policy for contents are covered. HO-2, on the other hand, provides dwelling and contents on named-peril basis, meaning both the structure and personal property are covered only for the perils named in the policy. This combination is why the statement describes HO-3 as dwelling and other structures on open peril and personal property on named peril, with HO-2 covering dwelling and contents on named peril.

The key idea is how perils are applied differently to the dwelling versus personal property in HO-3 compared to HO-2. In HO-3, the dwelling and other structures are insured on an open-peril (special form) basis, meaning coverage applies to all risks unless a specific exclusion applies. Personal property, however, is insured on a named-peril basis, so only the perils listed in the policy for contents are covered. HO-2, on the other hand, provides dwelling and contents on named-peril basis, meaning both the structure and personal property are covered only for the perils named in the policy. This combination is why the statement describes HO-3 as dwelling and other structures on open peril and personal property on named peril, with HO-2 covering dwelling and contents on named peril.