What distinguishes an HO 2 from an HO 3 policy?

The distinguishing feature between an HO 2 and an HO 3 policy lies in the coverage of personal property and the type of form used for dwelling protection. An HO 2 policy provides coverage for personal property based on a broad peril form, meaning it covers specific risks outlined in the policy, which may include a range of causative events such as fire, theft, or vandalism.

On the other hand, an HO 3 policy offers more comprehensive coverage for the dwelling itself, using an all-risk or special form for the dwelling, which covers any risks unless specifically excluded. This means that while the dwelling coverage under an HO 3 is broader and includes a wider range of potential hazards, the personal property is still covered under a named peril basis.

This distinction is crucial for understanding the level of protection offered by each policy type. Thus, the correct answer reflects that the HO 2 policy uses a broad peril form for personal property coverage, while the HO 3 policy makes use of a special form for dwelling coverage, leading to different scopes of protection within each policy.