Homeowners InsuranceQuestion 151 of 215
Six months after the insured's HO-3 takes effect, the insurer files a broadened policy form with the state that adds coverage for an additional peril at no extra premium. How does the liberalization clause apply to the insured's existing policy?
a.The broader coverage applies automatically to the existing policy
b.The insured must request an endorsement to obtain the new coverage
c.The new coverage applies only at the next renewal
d.The new coverage applies only if the insured pays an additional premium
Explanation
The liberalization clause provides that if the insurer broadens a form during the policy period (or within a stated window before the policy started) without an additional premium, the broader coverage applies automatically to the existing policy. This protects the insured from having to wait for renewal to enjoy the improvement and avoids cumbersome endorsement procedures.
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