State Farm Fire Independent Policy Practice Exam

Which of the following situations would qualify as a covered loss under the HO-3 policy?

1. Damage from a tornado and no other natural events

2. Loss due to theft after water damage

3. Lightning strike causing property loss

4. Earthquake damage to foundation

The correct answer is: Lightning strike causing property loss

The situation involving a lightning strike causing property loss qualifies as a covered loss under the HO-3 policy because the HO-3 homeowners insurance policy is designed to cover certain perils, and lightning strikes are specifically included among the covered events. This type of policy generally covers direct damage to the insured dwelling and personal property due to certain specified perils, including fire, windstorm, explosion, and lightning. In contrast, the other situations presented typically wouldn't qualify. Damage from a tornado is covered, but if there are no other natural events involved, the specifics of the scenario could impact coverage depending on additional conditions or endorsements. Loss due to theft following water damage can complicate claims—while theft is covered, the relationship between the water damage and the theft must be examined to determine if coverage applies. Earthquake damage, on the other hand, is not typically included in standard HO-3 policies; this coverage usually requires separate earthquake insurance. Therefore, the clarity of the coverage provided by the HO-3 policy in relation to lightning strikes makes that situation the correct choice.