Which of the following statements about covered perils and loss settlement under an unendorsed Homeowners 3 policy is true?
A)The dwelling is covered on a named-perils basis.
B)Personal property losses are settled on an actual cash value basis.
C)Losses to the dwelling are always settled on an actual cash value basis.
D)Personal property is covered on an open-perils basis.

Question

Quizplus · Accepted Answer

Under an unendorsed Homeowners 3 policy, personal property losses are typically settled on an actual cash value basis, which takes into account depreciation. This contrasts with the dwelling coverage, which is usually on a replacement cost basis and not limited to named perils but rather covered on an open-perils basis, unlike what options A and D suggest. Option C is incorrect because losses to the dwelling are not always settled on an actual cash value basis; they are generally settled on a replacement cost basis.

Which of the Following Statements About Covered Perils and Loss