Texas Adjuster Practice Test

What type of homeowner's policy is referred to as HO-B?

1. A policy for catastrophic loss

2. A policy providing coverage on a named peril basis

3. A policy covering all risks unless specifically excluded

4. A policy with limited personal property protection

The correct answer is: A policy covering all risks unless specifically excluded

The term HO-B refers to a specific type of homeowner’s policy, commonly known as a broad form policy. This kind of policy is designed to cover a wide array of risks associated with homeownership, providing comprehensive coverage for the dwelling itself and personal liabilities. What distinguishes the HO-B policy is that it covers all risks to the dwelling and other structures on the property unless those risks are specifically excluded in the policy. This means that the policyholder is generally protected against a broad range of potential damages, which offers a higher level of security and peace of mind compared to more limited coverage options. This all-risk coverage is particularly beneficial for homeowners who want to minimize their financial exposure from unforeseen events that could damage their property. In contrast, the other options describe different frameworks for homeowners insurance policies. A policy for catastrophic loss typically covers extreme or unforeseen events but does not guarantee broad protection like the HO-B. A named peril basis policy would only cover specific risks that are explicitly named in the policy, rather than the comprehensive approach of the HO-B. Lastly, limited personal property protection suggests there are substantial gaps in coverage for personal belongings, which again does not align with the comprehensive nature of the HO-B policy.