553 - chp 6

Under the Section II—Conditions of the HO-3—Special Form (HO-3), the bankruptcy of the insured

If the insured becomes bankrupt or insolvent, the insurer is still obligated to handle the occurrence as it normally would.

liberalization clause

If the insurer during the policy period adopts a revision that broadens the coverage without additional premium charge, the increased coverage will automatically apply to all existing policies on the date it is implemented.

The Claim Expenses additional coverage under Section II of a homeowners policy covers

It covers reasonable expenses at the insurer's request. (These expenses may include loss of earnings up to $250 a day.) It does not cover the premium on bonds exceeding the personal liability limit. Personal liability and medical payments coverages are not additional coverages, but rather, Coverage E and Coverage F, respectively.

Under Section II—Liability Coverage of a homeowners policy all of the following are the insured's duties after an occurrence, EXCEPT:

Making voluntary payments to the claimant is not an insured duty after a loss. submit a sworn statement, provide claims assistance and forward legal documents

The medical payments coverage in a homeowners policy covers certain medical expenses incurred by

Nonresidents of the insured's household.-Coverage F—Medical Payments to Others covers medical payments incurred by others (not insureds or regular household residents) within three years of an injury.

Which one of the following statements is true regarding watercraft liability coverage under the HO-3—Special Form (HO-3)?

Sailboats shorter than 26 feet owned by the insured are covered.

exception to the Coverages E and F Business exclusion to the liability coverage provided by the HO-3—Special Form (HO-3)?

Teen painting neighbor's fence. The Coverages E and F Business exclusion is designed to exclude coverage for bodily injury or property damage arising out of the business activities of any insured while providing coverage for occasional or part-time activities.

Which one of the following statements concerning the Scheduled Personal Property Endorsement is true?

The Coverage C special limits do not apply to scheduled items.

After a loss covered by a homeowners policy, an insured may find that repairs must be made under a newer, stricter building code. An endorsement that provides increased coverage for such a situation is the

The Ordinance or Law—Increased Amount of Coverage endorsement increases coverage to cover repairs that must be made in order to comply with current ordinance or laws.

Ben lost in his lawsuit against his neighbor, Jim, alleging that Jim had created a nuisance on his property. Jim has now filed a malicious prosecution claim against Ben. Under which endorsement to Ben's homeowners policy can coverage for this claim be found?

The Personal Injury Coverage endorsement expands the liability coverage by adding the definition of personal injury and then adding coverage for personal injury. The definition of personal injury includes malicious prosecution.

The Inflation Guard endorsement gradually and automatically increases limits throughout the policy period in homeowners policies for Coverage(s)

The endorsement provides an automatic increase in the amount of each of the Section I—Property coverages

Which one of the following statements is true regarding "aircraft liability" coverage under the HO-3—Special Form (HO-3)?

The homeowners policy excludes all aircraft liability. Model airplanes or hobby aircraft that do not carry people or cargo are excluded in the policy's aircraft definition, however, and therefore are covered.

Eileen, who is insured under an unendorsed HO-3—Special Form (HO-3), borrows her neighbor's power washer valued at $600. Eileen leaves it running and ruins its motor. How much will Eileen's HO-3 insurer reimburse the neighbor for damage to the power washer, assuming it is damaged beyond repair?

The insurer will pay $600 to replace the power washer regardless of whether Eileen is proven to be at fault. The Damage to Property of Others additional coverage provides a limit of $1,000.

If a claim is paid under Coverage F—Medical Payments to Others of a homeowners policy, a policy condition makes it clear that

The payment is not an admission of liability by the insured or the insur

Steve and Julie purchased a HO-3 policy with a Coverage A limit of $200,000 and a Coverage C limit of $100,000. Steve and Julie added the Earthquake endorsement to their policy, which has the standard deductible. A landslide occurs and causes significant damage to their dwelling and property. If Steve and Julie suffered a $75,000 loss as a result of the landslide, how much coverage will their policy provide?

The policy will cover $65,000 worth of losses: $75,000 - $10,000 deductible (5% of Coverage A limit) = $65,000

Jeremy owns a home covered with an HO-5—Comprehensive Form (HO-5). He left a window open one night before he went to sleep. It rained during the night and rain water damaged a sofa under the window. There was no other damage. Is the damage to the sofa a covered loss?

Yes, because the HO-5 typically covers damage by rain through an open window even if the building itself is not damaged.

Marisa lives in a two-story rental apartment and she has an HO-4—Contents Broad Form (HO-4) policy. Because she needs a wheelchair to get around, she had special ramps installed over the steps between floors. If a fire destroys the ramps, are the ramps covered under her policy?

Yes, because they are a building addition and alteration. The HO-4 provides coverage for building additions and alterations by the tenant with a limit up to 10 percent of Coverage C.

Jackie insures her home with an HO-3—Special Form (HO-3). She operates a seamstress service from her home. A customer was picking up some altered pants, tripped on a loose floorboard on her porch, and was injured. Is there coverage for this claim?

Yes, there is coverage if Jackie's policy was endorsed with the Home Business Insurance Coverage endorsement.

Volunteer activities & A 12-year-old girl pet sitting the neighbor's dog for a fee

an exception to the Coverage E and F Business exclusion to the HO-3—Special Form?