State Farm Fire Independent Policy Practice Exam

Who qualifies as insureds under a HO-3 policy in the given household scenario?

1. Only Sue

2. Sue and Louis

3. Sue, Louis, Tammy, and Matt

4. Sue, Louis, Tammy, Matt, and Mildred

The correct answer is: Sue, Louis, Tammy, Matt, and Mildred

In a homeowner's policy, specifically an HO-3 policy, qualifications for insureds extend beyond the primary named insured and typically include household members, defined as those who permanently reside in the home. This environment generally covers not just the individual who holds the policy but also their family members, including children and dependents. In this scenario, if Mildred is an adult who lives in the household alongside Sue, Louis, Tammy, and Matt, she is included as an insured. The rationale here is that the insurance policy recognizes the risk associated with all individuals living in the household. Each household member does not need to be directly related to the policyholder for coverage to apply. Thus, when the answer includes all five individuals—Sue, Louis, Tammy, Matt, and Mildred—it reflects a comprehensive approach to household coverage, ensuring that all individuals residing in the policyholder's home are safeguarded under the policy in case of an incident, which is a foundational principle in the design of the HO-3 policy structure.