Homeowners Policy
The forms
HO-2 broad, HO-3 special, HO-5 comprehensive, HO-4 renters, HO-6 condominium/cooperative, and HO-8 modified replacement cost for older homes. HO-2, HO-3, HO-5 and HO-8 are for owner-occupied dwellings; HO-4 and HO-6 insure personal property and liability only.
Section I
A dwelling; B other structures (usually 10 percent of A); C personal property (usually 50 percent of A); D loss of use (usually 30 percent of A). The HO-3 insures the dwelling and other structures on an open-peril basis and personal property on a named-peril basis; the HO-5 insures both on an open-peril basis. Replacement cost on the dwelling typically requires insurance to at least 80 percent of replacement cost, and personal property is valued at ACV unless replacement cost is endorsed.
Section II
E personal liability and F medical payments to others, which pays a small per-person limit regardless of fault but never pays the insured. Additional coverages include debris removal, trees and shrubs, credit card and forgery, loss assessment, collapse and glass.
Special limits and exclusions
Internal sub-limits apply to money, theft of jewelry, theft of firearms, theft of silverware, business property and property of others. Standard exclusions include earth movement, flood, ordinance or law, neglect, intentional loss, business pursuits, and liability arising from aircraft, watercraft and autos.
Traps
The Section I deductible does not apply to Section II. The HO-3's open-peril coverage stops at the dwelling and other structures - contents remain named peril. An HO-3 cannot insure a dwelling rented to tenants.
Rule of thumb
If an answer choice says the HO-3 covers personal property on a special form, it is wrong; only the HO-5 does that automatically.