Los Angeles Claims Adjuster Property and Causality Practice Exam

What type of coverage does the HO-3 provide for the dwelling?

1. Broad peril

2. Open peril

3. Named peril

4. Limited peril

The correct answer is: Open peril

The HO-3 policy, which is a standard homeowners insurance policy, provides open peril coverage for the dwelling. This means that it covers all risks of direct physical loss to the dwelling unless the policy specifies particular exclusions. Open peril coverage is extensive and typically protects against a wider range of potential damages compared to named peril coverage, which only protects against losses that are specifically listed in the policy. In essence, with open peril coverage, the burden of proof is on the insurance company to demonstrate that a cause of loss is excluded, rather than the insured having to prove that their loss is covered by the policy. This feature offers homeowners a significant advantage, as they generally enjoy broader protections and peace of mind knowing that only explicitly stated exclusions apply. In contrast, the other types of coverage mentioned—broad peril and named peril—provide more limited protection, with named peril covering only specific risks that are listed in the policy. Limited peril would imply an even tighter scope, which is not characteristic of the HO-3 coverage. Thus, the open peril format makes the HO-3 policy particularly popular among homeowners seeking comprehensive dwelling protection.