AD BANKER Ch 6 Exam
Liability associated with the ownership or operation of all of the following vehicles would be excluded by Homeowners policies, except: A A lawn tractor used to service the residence B A recreational vehicle the insured uses to give rides to neighborhood kids for a fee C A recreational vehicle the insured rents to others D A golf cart practicing or an organized race on a golfing facility
A A lawn tractor used to service the residence Homeowners policies will exclude liability coverage associated with the use of any vehicle rented to others, used to carry people or cargo for a fee, used for any business purpose, or used in or practicing for an organized racing competition.
The Broad Form perils named on the HO-2 include all of the following causes of loss, except: A Windstorm or hail B Vandalism and malicious mischief C Theft D Collapse
D Collapse Collapse is an Additional Coverage provided by Homeowners forms, and it is not considered one of the named perils.
An HO-3 policy provides coverage on which basis? A Open perils coverage on the dwelling and named perils coverage on personal property B Open perils coverage on both the dwelling and personal property C Broad Form perils coverage on both the dwelling and personal property D Named perils coverage on both the dwelling and personal property
A Open perils coverage on the dwelling and named perils coverage on personal property The HO-3 provides open perils coverage on the dwelling, and coverage for personal property is provided on a named perils basis (also called the Broad Form named perils) like the HO-2.
Which type of liability limit applies to medical payments coverage provided by a Homeowners policy? A Per person limit B Aggregate limit C Per occurrence limit D Combined single limit
A Per person limit Medical payments coverage for all types of policies has a per person limit, meaning each person injured in any one accident may receive up to the specified limit. On Homeowners policies, the limit for Coverage E is a per occurrence limit.
Which of the following would NOT be considered part of the residence premises on a Homeowners policy? A Premises rented occasionally to the named insured for personal use B A 1-family residence where the named insured resides C Other structures on the grounds on which the insured dwelling sits D A 3-family dwelling where the named insured resides
A Premises rented occasionally to the named insured for personal use The residence premises is the dwelling in which the insured lives, as well as the other structures and grounds at that location. A location rented occasionally to the named insured for nonbusiness purposes is considered an insured location.
Coverage C on the HO-3 would cover which of the following losses? A Damage to furniture caused by wild animals B Vandalism loss to property the insured borrows from a neighbor C Lightning damage to a structure held for rental to tenants as a private garage D Fire loss to the personal property of a boarder who is not related to the insured
B Vandalism loss to property the insured borrows from a neighbor Coverage C covers personal property (contents) owned or used by the insured. Coverage C can apply to the personal property of others while it is on the residence premises, as long as coverage is requested by the insured after a loss by a covered peril. Property of a boarder, roomer, or tenant who is not related to an insured is not covered, as they would need their own insurance. Coverage C on the HO-3 protects against the Broad Form named perils, which does not include wild animals. Damage to a structure rented or held for rental to tenants as a private garage is covered under Coverage B.
Under a Homeowners policy, personal liability coverage includes all of the following, except: A Coverage for damages awarded against an insured due to bodily injury to a third party B Payment of prejudgment interest awarded against the insured, subject to the applicable limit C Coverage for damages awarded against an insured due to personal injury to a third party D The insurer's duty to defend the insured at the insurer's expense
C Coverage for damages awarded against an insured due to personal injury to a third party Coverage E - Personal Liability provides coverage for damages awarded against the insured for bodily injury or property damage to others, and it includes coverage for an insurer-provided defense and related expenses. Personal injury coverage is not provided by Coverage E and would have to be added by endorsement.
Which statement is true concerning Coverage D of a Homeowners policy? A If the insured must relocate permanently, payment will be made for 365 days, regardless of the time it takes the insured to settle at the new location B The coverage will pay for all of the insured's living expenses until the property is restored C If the insured loses rental income after an early lease cancellation, the policy pays the fair rental value for up to 2 weeks D The coverage will pay for any increase in living expenses required to maintain the insured's normal standard of living
C If the insured loses rental income after an early lease cancellation, the policy pays the fair rental value for up to 2 weeks Coverage D is intended to pay only the increase in the insured's normal living expenses occasioned by a covered loss. Costs the insured was already paying before incurring the loss are not covered. Coverage D will not pay for expenses that result from lease cancellation.
Section I of a Homeowners policy does NOT include which of the following coverages? A Loss of use B Additional living expense C Liability D Other structures
C Liability Section I contains the policy's property coverages. Additional living expense coverage is a loss of use coverage provided by Coverage D. Liability coverages are provided by Section II of the policy.
Which of the following coverages is not included in a standard Homeowners policy? A Bodily injury liability B Personal injury liability C Medical payments D Property damage liability
C Medical payments Coverage for personal injury (such as libel or slander) is not automatically provided in a Homeowners policy. It is available by endorsement only. Coverage E insures against the insured's bodily injury and property damage liability. Coverage F provides medical payments to others, without needing to first establish negligence.
As provided by the Claim Expenses Additional Coverage on a Homeowners policy, if the insured losses income because they must assist the insurer with the investigation of a claim, the insurer will: A Not pay for the insured's loss of earnings B Pay for the entirety of the insured's loss of earnings C Pay up to $250 per day for loss of earnings D Pay up to $500 per day for loss of earnings
C Pay up to $250 per day for loss of earnings The Claim Expenses Additional Coverage provides coverage for the insured's actual loss of earnings, up to $250 per day.
Which of the following would NOT be considered part of the residence premises on a Homeowners policy? A Other structures on the grounds on which the insured dwelling sits B A 1-family residence where the named insured resides C Premises rented occasionally to the named insured for personal use D A 3-family dwelling where the named insured resides
C Premises rented occasionally to the named insured for personal use The residence premises is the dwelling in which the insured lives, as well as the other structures and grounds at that location. A location rented occasionally to the named insured for nonbusiness purposes is considered an insured location.
Under Section II of the Homeowners policy, a two-family dwelling where the insured resides in one of the units, including other structures and grounds at that location, is referred to as: A Other structures B Dwelling structures C Residence premises D Nonbusiness premises
C Residence premises The residence premises is the 1- to 4-family dwelling in which the named insured resides. The residence premises also includes other structures and the grounds at that location, such as the 5 acres upon which the insured sits, including the barn, detached garage, and swimming pool.
Under Section II of a Homeowners policy, all of the following are correct about the insurer's duty to defend, except: A The insurer's duty to defend ends when the payment of damages exhausts the personal liability limit B Defense costs are paid in addition to the limit of liability C The insurer will not defend the insured against false or fraudulent claims D The insurer may choose to settle any claim it sees fit, without the insured's permission
C The insurer will not defend the insured against false or fraudulent claims Coverage E - Personal Liability includes the insurer's duty to defend the insured in the event a claim or suit is brought against them for bodily injury or property damage, including any claim or suit that is groundless, false, or fraudulent. The defense costs are paid in addition to the limit of liability, but the insurer's duty ends when the damages awarded against the insured exhaust the Coverage E limit. The insurer has the option to settle the claim or suit.
Liability coverage provided by a Homeowners policy would provide coverage for bodily injury liability arising out of all of the following, except: A A neighbor's child is bitten by the insured's pet B A residence employee is injured on the residence premises while working C A guest is injured by a recreational vehicle operated on the residence premises D A guest gets the flu from an insured
D A guest gets the flu from an insured Coverage is not provided for bodily injury arising out of the transmission of a communicable disease.
Coverage C has special limits of liability for all of the following items of personal property, except: A Money and securities B Watercraft and its trailers C An insured's phone in their car D An insured's desktop office computer
D An insured's desktop office computer Money, securities, and watercraft each have a special limit of insurance under Coverage C in Homeowners policies. Portable electronic equipment also has a special limit while it is in or on a motor vehicle, but the desktop computer in the insured's office would be covered under the regular Coverage C limit.
R owns a home insured on an HO-3 policy and rents out a suite over a detached garage to tenants. R's furniture used to furnish the suite is: A Considered property not covered under Coverage C B Protected against theft for up to $2,500 C Subject to a Coverage C special limit of liability of $3,000 D Covered up to $2,500 as an Additional Coverage
D Covered up to $2,500 as an Additional Coverage R's property that is used to furnish a unit rented or held for rental on the residence premises is covered by the Landlord's Furnishings Additional Coverage for up to $2,500. Theft is not a covered peril.
The Scheduled Personal Property Endorsement on a Homeowners policy provides which of the following coverages to described property? A Blanket coverage B Replacement cost coverage C Named perils coverage D Open perils coverage
D Open perils coverage The Scheduled Personal Property Endorsement is written on an open perils basis, with very few exclusions
Which of the following is not correct regarding the Damage to Property of Others Additional Coverage provided by Section II of a Homeowners policy? A Payments are made without reducing the medical payments limit of liability B The coverage is automatically provided by the policy C Payments are made without reducing the personal liability limit of liability D Payments are subject to the policy deductible
D Payments are subject to the policy deductible Like any payment made under Section II of a Homeowners policy, Additional Coverages are not subject to a deductible. The deductible will only apply to property losses covered by Section I. Section II Additional Coverages are all paid in addition to other policy limits.
An insured with a Broad Form Homeowners policy suffers a fire loss that damages the dwelling and personal property. The loss to the dwelling is valued at its: A Salvage value B Actual cash value C Market value D Replacement cost
D Replacement cost The HO-2 values losses to the dwelling and other structures at their replacement cost, and losses to personal property at its actual cash value. The HO-3, HO-5, and HO-6 also use this loss valuation basis.
Under an unendorsed Homeowners policy, jewelry is covered up to what amount? A $2,500 for loss by fire B $1,500 for loss by theft C The Coverage C limit for loss by any peril D $1,500 for loss by any peril
B $1,500 for loss by theft Jewelry, watches, furs, and precious and semiprecious stones are covered up to $1,500 for loss by theft.
The HO-2 protects against all of the following losses, except: A Smoke damage to a fence after a house fire B Rain damage to the interior after a window was left open during a storm C Theft of jewelry D Fire loss to a tool shed that stored gasoline in gas cans for the insured's personal use of a lawn mower
B Rain damage to the interior after a window was left open during a storm Coverage is provided against windstorm and hail, but damage to the interior is only covered if rain, snow, sleet, sand, or dust enter through an opening formed due to external damage caused by wind or hail.
f a Homeowners policy provision is change, the change must be made in writing by: A Any insured B The first named insured C The insurer D The adjuster
B The first named insured Any waiver or change of a policy provision must be made in writing by the insurer.
L owns a home covered under an HO-3 for $200,000. Under Coverage D, how much coverage does L have for lost rental income if the basement apartment becomes uninhabitable due to a fire loss? A $60,000 B $100,000 C $30,000 D $200,000
D $200,000 For a covered loss, the standard Coverage D limit for additional living expense, fair rental value, and civil authority prohibits use is 30% of the Coverage A limit. 30% of $200,000 is $60,000.
Following a bodily injury on the residence premises, an unendorsed Homeowners policy may provide medical payments to: A A residence employee in the course of their employment by the insured B A tenant C A guest whose injury arises from the insured's business pursuits D An employee of the insured who is eligible to receive Workers' Compensation benefits
A A residence employee in the course of their employment by the insured Residence employees, who are often not eligible for Worker's Compensation coverage, are eligible to receive medical payments provided by Coverage F of the insured's policy. Tenants and employees eligible for Workers' Compensation benefits are excluded, as are any injuries arising out of the insured's business pursuits.
A Special Form Homeowners policy will provide all of the following, except: A Coverage for personal property on a named perils basis B Coverage for other structures on an open perils basis C Settlement for losses to personal property on an actual cash value basis D Coverage for the dwelling on a named perils basis
A Coverage for personal property on a named perils basis On the HO-3, the dwelling and other structures are insured on an open perils basis, and personal property is protected against the Broad Form named perils. Losses under Coverage A and Coverage B are settled on a replacement cost basis, and losses to personal property are settled on an actual cash value basis.
A dwelling insured on an HO-3 policy suffers a partial fire loss. Before actual repair or replacement is complete, the insurer will pay up to: A The actual cash value of the damaged portion of the dwelling B The actual cash value of the entire dwelling C The functional replacement cost of the damaged portion of the dwelling D The replacement cost of the damaged portion of the dwelling
A The actual cash value of the damaged portion of the dwelling For dwellings and structures valued at their replacement cost, the insurer will pay no more than the actual cash value of the damaged part of the building or structure until actual repair or replacement is complete. This is stated in the Loss Settlement condition of Section I.
All of the following perils are excluded by Homeowners policies, except: A Unintentional loss B Neglecting to save property at the time of loss C Expenses incurred to respond to pollutants, by order of a local ordinance D Damage caused by radiation
A Unintentional loss Losses should be unintentional, and intentional losses are excluded by property policies. Neglect, nuclear hazards, and expenses to respond to pollutants are other common property exclusions.
All of the following would be included in the definition of insured location, except: A A summer vacation home rented by the insured B A 5-family dwelling in which the insured lives in one of the units, including the structures and grounds C Land upon which a 4-family dwelling is being built as a residence for the named insured D A boat slip used by the named insured
B A 5-family dwelling in which the insured lives in one of the units, including the structures and grounds Eligible residential dwellings are those containing 1 to 4 residential units, so a 5-family dwelling would not be insured on a Homeowners policy or included in the definition of insured location.
Coverage C of a Homeowners policy includes property coverage for: A Aircraft stored on the residence premises B An owned camera used by the insured while on vacation in another country C The insured's personal automobiles, while on the residence premises D The insured's pets
B An owned camera used by the insured while on vacation in another country Property not covered under Coverage C includes animals, aircraft, and vehicles registered for road use. Personal property is covered worldwide.
Any liability coverage provided by a Homeowners policy is: A Primary insurance that coordinates coverage on a pro rata liability basis B Excess insurance, unless other insurance is written as excess insurance C Primary insurance that coordinates coverage on a contribution by equal shares basis D Excess insurance over any applicable Excess Liability policy
B Excess insurance, unless other insurance is written as excess insurance According to the Other Insurance condition, Section II coverages are excess coverage over other collectible insurance, unless the other insurance is specifically written to provide excess insurance coverage.
Medical payments coverage under Section II of a Homeowners policy would cover all of the following expenses, except: A Medical and surgical expenses B Loss of income of an injured person C Prosthetic devices D Dental expenses
B Loss of income of an injured person Coverage F - Medical Payments to Others pays necessary medical expenses incurred within three years from the date of an accident. This may include surgical, dental, hospital, ambulance, professional nursing, and funeral expenses, as well as expenses for X-rays or prosthetic devices. Loss of income is not a covered medical expense.
An insured's young children were playing in the backyard and accidentally threw a ball through the neighbor's window, damage an expensive vase owned by the neighbor. The neighbor sues the insured for the losses. Damages the insured owes to the neighbor are covered by which part of the insured's Homeowners policy? A Personal property coverage B Personal liability coverage C Dwelling coverage D Damage to Property of Others Additional Coverage
B Personal liability coverage Damages for which the insured is legally liable due to bodily injury to others or damage to the property of others are covered by Coverage E - Personal Liability. In this scenario, the Damage to Property of Others Additional Coverage would provide a small amount of coverage for the damage, up to $1,000, prior to the claim made against the insured, but the Additional Coverage would not cover damages awarded against the insured.
The HO-2 protects against all of the following losses, except: A Theft of jewelry B Rain damage to the interior after a window was left open during a storm C Fire loss to a tool shed that stored gasoline in gas cans for the insured's personal use of a lawn mower D Smoke damage to a fence after a house fire
B Rain damage to the interior after a window was left open during a storm Coverage is provided against windstorm and hail, but damage to the interior is only covered if rain, snow, sleet, sand, or dust enter through an opening formed due to external damage caused by wind or hail.
in addition to the named insured of a Homeowners policy, coverage is automatically provided for: A Persons who purchase the insured's property B The insured's resident spouse C Persons who appraise the property D The insured's employer
B The insured's resident spouse The insured's spouse who is a member of the household is automatically considered an insured under the policy.
H insures a single-family home on a Homeowners policy. All of the following are covered under Coverage A of the policy, except: A H's attached porch B The land on which the dwelling is located C Lumber in H's yard being used to build a deck off the kitchen D H's dwelling, located on the residence premises
B The land on which the dwelling is located While vacant land is included in the definition of insured location for the purposes of liability coverage, no property coverage is provided for land under any Homeowners policy.
Which person is not a covered resident under Homeowners policies? A A 22-year-old son enrolled in school full time away from home B The named insured's tenant C A 20-year-old exchange student who is a resident of the household D The named insured's resident spouse
B The named insured's tenant Tenants must acquire their own insurance to cover their personal property and liability.
Under a Homeowners policy, the limit of insurance applicable to Coverage B is what percentage of the Coverage A limit? A 5% B 50% C 10% D 25%
C 10% As with a Dwelling policy, the Coverage B limit is provided at 10% of the Coverage A limit. This limit does not reduce the Coverage A limit.
In the event an apartment attached to the insured's home is damaged and unlivable, what percentage of the Coverage A limit does the HO-3 provide for the rental value? A 5% B 10% C 20% D 30%
C 20% Coverage D will pay up to 30% of the Coverage A limit on the HO-2, HO-3, or HO-5 for the fair rental value, less continuing expenses, of the apartment.
The HO-3 covers losses to other structures causes by which of the following perils? A Wear and tear B Smoke from agricultural smudging C Abrupt collapse from defective construction materials D Smog or rust
C Abrupt collapse from defective construction materials Collapse is covered as an Additional Coverage on Homeowners policies, subject to specific terms, like the collapse being abrupt and resulting from specified perils. Wear and tear, smog, rust, and smoke from agricultural smudging are named exclusions on the HO-3.
Under Section II of a Homeowners policy, all of the following are covered, except: A The insured's liability for damages to the property of others B A guest's medical expenses for an accident arising out of the residence premises C Damage to property of the insured D The insured's liability for bodily injury to others
C Damage to property of the insured Loss or damage to the insured's property would be covered by the property coverages provided by Section I.
Which of the following is true regarding an unendorsed HO-4? A It provides open perils coverage on a replacement cost basis B It provides named perils coverage on a replacement cost basis C It provides named perils coverage on an actual cash value basis D It provides open perils coverage on an actual cash value basis
C It provides named perils coverage on an actual cash value basis The HO-4 insures personal property against the Broad Form named perils, and settles losses on an actual cash value basis. Replacement cost coverage is available by endorsement, for an additional premium.
Homeowners policies define the insured location to include all of the following, except: A Hotel rooms B Cemetery plots or burial vaults C Other premises rented to an insured for business use D Vacant land rented to the insured
C Other premises rented to an insured for business use The insured location would not include other premises rented to an insured for business use, like a commercial location the insured rents. However, if that kind of premises is used for non-business purposes, that can be considered part of the insured location. Vacant land is included in the definition, though vacant farmland is specifically excluded.
Homeowners policies would cover all of the following theft losses, except: A The insured's trailer stolen from their detached garage B A 19-year-old insured's personal property stolen from their dorm room C The insured's camper stolen from an off-premises campsite D Electronics stolen from the dwelling by a burglar
C The insured's camper stolen from an off-premises campsite Theft coverage offered by Homeowners policies has certain limitations. Coverage is not provided for off-premises theft of trailers, campers, watercraft and their equipment, or property at another residence occupied on a non-temporary basis. However, if the insured is a student who lives off the insured premises, the policy will provide theft coverage for their off-premises property.
The amount of insurance provided to cover personal property on a Special Form Homeowners policy is what percentage of the Coverage A limit? A 40% B 30% C 20% D 50%
D 50% Most forms automatically set the Coverage C limit at 50% of the Coverage A limit.
