How are the dwelling and other structures covered in an HO-3 policy form?

• A. On a named-peril basis
• B. On an open-peril basis
• C. On a replacement-cost basis only
• D. Not covered

Answer: (B)

Open-peril coverage means the dwelling and other structures are protected against all risks of direct physical loss unless a specific exclusion in the policy applies. In an HO-3, Coverage A (the dwelling) and Coverage B (other structures) are written on an open (all-risk) basis, which gives broad protection for the physical structure. Perils that are not covered come from the policy exclusions, not from listing every covered peril. This contrasts with the personal-property portion, which is insured on a named-peril basis, meaning only the specifically listed perils apply to belongings.