State Farm Fire Independent Policy Practice Exam

Which statement is true concerning jewelry loss under an HO-3 policy with Option JF?

1. Coverage applies only to named perils.

2. The limit of liability for theft of jewelry is $1,000.

3. Coverage applies to items listed on the schedule.

4. Coverage is for accidental direct physical loss or damage unless otherwise stated.

The correct answer is: Coverage is for accidental direct physical loss or damage unless otherwise stated.

The statement that coverage is for accidental direct physical loss or damage unless otherwise stated is accurate because an HO-3 policy, which is commonly used for homeowners insurance, typically provides broad coverage for personal property. This includes various types of property, such as jewelry, under specific circumstances. In the context of an HO-3 policy with Option JF (Jewelry Floater), the policy generally extends coverage to jewelry against accidental direct physical loss. This means that the coverage is not restricted to just specific perils (which would be the case in named peril policies); instead, it covers a wide range of risks unless explicitly excluded in the policy language. This comprehensive approach to coverage allows for greater protection for valuable items like jewelry, making it distinct from choices that imply limited or more restrictive coverage, such as only covering named perils or having specific liability limits for theft. Thus, Option D encapsulates the essence of the coverage provided under an HO-3 policy with a Jewelry Floater, ensuring that losses are addressed comprehensively unless stated otherwise in the policy.