Idaho Property Insurance Practice Test 2025 - Free Property Insurance Practice Questions and Study Guide

The correct answer is that contents are covered open peril on the HO-5 policy and named peril on the HO-3 policy.

In an HO-5 policy, coverage for personal property is broader, as it is typically on an open peril basis. This means that personal property is covered against all perils except for specifically excluded risks. This approach provides comprehensive protection, giving policyholders peace of mind that if something unforeseen occurs—such as theft, fire, or accidental damage—their belongings will likely be covered.

On the other hand, the HO-3 policy utilizes a named peril approach for personal property coverage. This means that only losses caused by specific perils that are explicitly listed in the policy are covered. If a peril is not named in the policy, then the losses occurring from that peril would not be covered.

The distinction in these coverage types can significantly impact the level of protection that homeowners experience. Understanding these differences is crucial for policyholders when choosing the right insurance policy that meets their needs.