State Farm Fire Independent Policy Practice Exam

What amount do Mike and Dorothy Jackson receive for their destroyed fence under their HO-3 policy?

1. $0

2. $1,300

3. $900

4. $650

The correct answer is: $650

Under an HO-3 policy, also known as a Homeowner's Policy Special Form, coverage is generally provided for the dwelling and other structures, like fences, against various perils. The specific amount that Mike and Dorothy Jackson would receive for their destroyed fence depends on the policy limits, deductibles, and any relevant coverage provisions. If the answer reflects that they receive $650, this amount likely aligns with the specific coverage limit for other structures as outlined in their policy. The HO-3 typically covers other structures at a specified percentage of the dwelling coverage limit, which could explain why the amount awarded for the fence is $650. This figure might also account for any applicable deductibles, depreciation, or limitations on coverage for specific types of damage. In this context, it is essential to understand that the total payout for damaged property under an HO-3 policy is often influenced by the property’s replacement cost, actual cash value calculations, and the policy's terms regarding coverage for other structures. Thus, the answer represents a calculated compensation amount based on these insurance principles and the specifics of Mike and Dorothy's coverage.