How do HO-2 and HO-3 homeowners forms differ in terms of peril coverage for dwelling and contents?

How do HO-2 and HO-3 homeowners forms differ in terms of peril coverage for dwelling and contents?

• A. HO-2 covers dwelling and contents on named perils; HO-3 covers dwelling on open perils and contents on named perils.
• B. HO-3 covers dwelling on named perils; HO-2 covers dwelling on open perils.
• C. HO-2 and HO-3 both cover dwelling and contents on open perils.
• D. HO-2 covers dwelling on open peril; contents on open peril.

Answer: (A)

Peril coverage is about which causes of loss are insured. In HO-2 (Broad Form), both the dwelling and the contents are covered only for perils that are named in the policy. In HO-3 (Special Form), the dwelling is covered on open perils (everything except exclusions), while the contents are covered only for perils named in the policy. Therefore, the best description is that HO-2 covers dwelling and contents on named perils; HO-3 covers dwelling on open perils and contents on named perils. The other options misstate HO-3’s open-peril treatment for the dwelling or HO-2’s named-peril scope.

Peril coverage is about which causes of loss are insured. In HO-2 (Broad Form), both the dwelling and the contents are covered only for perils that are named in the policy. In HO-3 (Special Form), the dwelling is covered on open perils (everything except exclusions), while the contents are covered only for perils named in the policy. Therefore, the best description is that HO-2 covers dwelling and contents on named perils; HO-3 covers dwelling on open perils and contents on named perils. The other options misstate HO-3’s open-peril treatment for the dwelling or HO-2’s named-peril scope.