State Farm Fire Independent Policy Practice Exam

When can Coverage A and Coverage B limits be applied according to an HO-3 policy?

1. In the event of theft only.

2. During the moving process if the policy is in force.

3. Only at the original location.

4. For partial losses only.

The correct answer is: During the moving process if the policy is in force.

Coverage A typically refers to the dwelling coverage, which protects the physical structure of the home, while Coverage B covers other structures on the property, such as sheds or detached garages. In the context of an HO-3 policy, the ability to apply these limits during the moving process is significant because it reflects how the policy adapts to changing circumstances. When a policyholder is in the process of moving, the coverage may extend to the property being transported, ensuring that the insured items are protected under the policy while they are in transit. This means that if damage occurs while in the moving process, both Coverage A and Coverage B limits can come into play to provide protection for the dwelling and any other structures affected during this transition. This option highlights the flexibility of homeowners insurance in providing coverage at different stages of property ownership, thereby offering peace of mind during potentially vulnerable times like moving.