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Question: Harley Davidson decides to set up an arc welding shop inside his garage to earn a little extra money so he can go up to the Sturgis Falls Celebration. Harley has an HO-2 policy on his home. Unfortunately, his garage burns to the ground one night when the motorcycle strut he is welding overheats and causes an explosion. What will happen with this claim according to the HO-2 contract?

Options:

  1.  The fire is a covered peril and the damage will be paid because Harley had an insurable interest in the property at the time of loss
  2.  The peril of fire is not covered because Harley did not show an insurable interest in the garage at the inception of the policy
  3.  There will be no payment because the HO-2 policy excludes business pursuits
  4.  A partial payment will be made based on the indirect damage losses from Harley being unable to continue his business in the garage
  5.  A full payment will be made because Harley showed insurable interest at the time of loss and the principle of subrogation applies

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3. There will be no payment because the HO-2 policy excludes business pursuits

Harley Davidson decides to set up an arc welding shop inside his garage to earn a little extra money so he can go up to the Sturgis Falls Celebration. Harley has an HO-2 policy on his home. Unfortunately, his garage burns to the ground one night when the motorcycle strut he is welding overheats and causes an explosion.

According to the HO-2 contract, there will be no payment because the HO-2 policy excludes business pursuits.

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