State Farm Fire Independent Policy Practice Exam

Which of the following expense types is excluded from coverage under an HO-3 policy?

1. Personal property in the residence

2. Losses related to natural disasters

3. Coverage A limits

4. Flood damage to the property

The correct answer is: Flood damage to the property

Flood damage to the property is excluded from coverage under an HO-3 policy because standard homeowners insurance policies, including HO-3, do not cover flood damage. Flood insurance is typically provided through a separate policy, often under the National Flood Insurance Program (NFIP). Homeowners in flood-prone areas are encouraged to purchase this additional coverage to protect against losses that result from flooding. The other expense types referenced in the question are covered under various circumstances in an HO-3 policy. Personal property in the residence is protected against many perils, and Coverage A encompasses the dwelling itself and any attached structures, providing coverage up to certain policy limits. Losses related to natural disasters can be covered, but specific exclusions can apply depending on the nature of the disaster. Thus, while certain natural disasters like earthquakes might have specific exclusions, they are not blanket exclusions like flooding, which requires separate coverage.