Ace the Idaho Property & Casualty Exam 2025 – Unlock Your Insurance Success!

The HO-3 (Special Form) is distinctive for its approach to coverage regarding the dwelling and other structures. The correct answer highlights that both the dwelling and other structures, classified as Coverages A and B, are insured on an open perils basis. This means that these coverages protect against any risk of direct physical loss or damage unless specifically excluded in the policy.

This approach provides homeowners with broader protection compared to a named perils basis, which would only cover losses from specifically listed risks. The open perils coverage ensures that unless a peril is expressly excluded—like wear and tear, inherent vice, or certain natural disasters—the insured dwelling and structures are protected, offering substantial peace of mind to homeowners.

The other options present different statements about coverage that do not accurately represent the features of the HO-3 form. For example, stating that Coverages A and B are on a named perils basis is inaccurate, as that would apply to more limited forms of coverage. Additionally, while replacement cost tends to be a feature in many homeowners’ policies, it's not accurate to say all coverages are written on a replacement cost basis without specific conditions applying. Finally, Coverage C (contents) is typically covered on a named perils basis in the HO