Homeowners Policy

With regards to a homeowners policy, which coverage provides for indirect or consequential losses?

Coverage D Coverage D provide for loss of use, which is an indirect loss.

Damage to insured property caused by earth movement or earthquake is covered under which of the following homeowners forms?

None Damage by earthquake is specifically excluded from coverage in all homeowners forms. However, coverage may be purchased by endorsement. If purchased, the coverage will be subject to a different deductible than other property losses.

What type of coverage does a homeowners policy include that a dwelling policy does not?

Liability

An insured suffers a windstorm loss in which the insured's driveway is blocked by two of the insured's trees and two of the neighbor's trees. The total amount of the removal adds up to the following: three trees at $300 per tree, and one tree at $600. How much will the insurer pay for the loss?

$1,000 It is important to pay particular attention to coverages that have a maximum amount of coverage and an additional sublimit for one particular item. The most the policy will pay for this loss is $1,000

An insured has a homeowners policy and is required to be a member of the homeowners association in her neighborhood. The association's community house has burned down, and the insured has been assessed $1,200 for her share of the rebuilding cost. how much of the assessment will her homeowners policy pay?

$1,000 as an additional coverage, homeowners policies will pay up to $1,000 of a loss assessment

An insured decides to store some heavy boxes in the attic. While moving them around, he accidentally drops a heavy box that crashes through the ceiling, causing $1,000 of damage. The insured's HO-3 policy form will pay

$1,000 minus the deductible

An insured has a standard HO-4 policy with a $30,000 limit of coverage for personal property. while he was traveling, a fire in his hotel destroys clothes and luggage with a replacement value of $10,000 and jewelry with a replacement value of $10,000. Disregarding any deductible, and assuming a depreciation of 20% has occurred in both properties, what amount is the insurer obligated to pay?

$16,000 This loss would be settled on an actual cash value (ACV) basis: $20,000 total for the loss minus $4,000 for depreciation. Remember, the limitation on loss of jewelry applies to the peril of theft only.

Which loss listed below would be fully covered by a homeowners policy?

$2,000 silver tea set stolen Tea sets are covered with a special limit $2,500 for the peril of theft; the firearm collection is covered for no more than $2,500 id stolen; boats are covered for no more than $1,500 for any peril the policy covers; the dog is not covered at all.

The insured's home is covered by an HO-3. Two years ago, the insured bought the home for $58,000. Today, its replacement value is $60,000. How much Coverage A does the insured need to qualify for replacement cost coverage?

$48,000

How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card?

$500 $500 is provided automatically, and may be increased by endorsement

Under additional coverages for homeowners policies, what is the maximum amount that can be charged to the insured for fire department services?

$500 if insured calls the fire department to the insured premises to protect the insured property from a covered peril, the HO will pay up to $500 of the fire department service charge.

What is the maximum number of boarders per unit that would be allowed in the homeowners policy?

2

An insured with a homeowners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. The removal coverage applies for

30 days Removal coverage applies for 30 days when the property has been removed to be protected

Under Coverage C of a homeowners policy, the amount of insurance provided to cover personal property of the insured is

50% of the amount provided as Coverage A

According to the loss payment condition in HO policies, losses must be paid within how many days of the insurer receiving proof of loss?

60 days all losses will be paid within 60 days of receiving the proof of loss

Which of the following would NOT be considered an insured under a homeowners policy?

A divorced spouse living in another state Insureds are defined as the named insured and spouse, if a resident of the same household, and persons, related to the named insured by blood or marriage who are residents of the household, as well as persons under age 21 not related to but in the care of the insured.

All of the following are optional coverages that may be attached to an HO-3 policy EXCEPT A. Dwelling replacement cost B. Home day care coverage C. Earthquake coverage D. Personal property replacement cost

A. Dwelling replacement cost The HO-3 provides replacement cost coverages for losses to the dwelling without endorsement or optional coverage being added

Which of the following endorsements is used to insure coverage C (personal property) for values beyond the limitations of the homeowners policy? A. Scheduled personal property endorsement B. Personal property replacement cost endorsement C. Blue skies endorsement Personal property injury endorsement

A. Scheduled personal property endorsement Items that are scheduled and insured under a scheduled personal property endorsement are covered on a valued basis

Which of the following risks would not be eligible for coverage under a homeowners policy?

An applicant who owns and lives on a commercial farm

All of the following are true of Coverage B - Other Structures EXCEPT A. Land where the other structures are located is not covered. B. It must be added by endorsement to a homeowners policy. C. This coverage is not applicable on the HO-4 policy form D. The amount of coverage provided by Coverage B is an amount equal to 10% of coverages a.

B. It must be added by endorsement to a homeowners policy homeowners policies automatically provide an amount of insurance in Coverage B that is equal to 10% of the amount written as Coverage A. this amount may be increased by endorsement.

Which of the following statements regarding coverage for the flood and earthquake perils is true?

Both flood and earthquake are excluded perils in all property policies

Homeowners policies provide coverage for

Business property while on the residence premises Your contents coverage will cover up to a $2,500 for loss of business property on premises.

The difference in the contents coverage on an HO-3 and HO-5 is which of the following?

Contents are covered open peril on HO-5, and named peril on HO-3

Which of the following losses would NOT be covered by a homeowners policy? A. A stolen silver tea set worth $2,000 B. A $800 outboard motor destroyed by hail C. A coin collection valued at $500 lost in a fire D. A $550 utility trailer blown away by a tornado

C. A coin collection valued $500 lost in a fire An HO policy will pay up to $2,500 for silverware by theft, $1500 for boats, motors, trailers, $1,500 for loss of trailers not used with boats, but no more than $200 for coins

Which of the following losses would be covered by an unendorsed homeowners policy? A. Theft in a structure under construction B. Collapse caused by earthquake C. Fire or lightning D. Faulty or defective zoning

C. Fire or lightning

Which of the following best describes liberalization clause in a policy?

Changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium Liberalization clause states that if the insurer adopts any changes that broaden coverage in the policy, those changes will automatically apply to the policy at no additional premium as of the date the insurer implements the change in the insured's state, provided that this implantation date falls within 60 days prior to or during the policy period stated in the declarations.

Which of the following is NOT a primary property coverage in homeowners coverage?

Collapse The primary coverages are coverage A - Dwelling, Coverage B - Structures, Coverage C - Contents, and Coverage D - Loss of Use. Collapse is an additional coverage, not a primary property coverage.

All of the following are special personal property limits under a homeowners policy EXCEPT A. $1,500 for securities, accounts, deeds, and evidences of debt B. $1,500 for trailers not used with watercraft C. $2,500 for the theft of firearms D. $500 for business personal property on the insured premises.

D. $500 for business personal property on the insured premises.

Which of the following could be covered by an HO policy? A. birds, fish, and animals B. A sports car kept in an attached garage C. Property of a tenant not related to the insured D. An oriental rug in an on-premises apartment

D. An oriental rug in an on-premises apartment Homeowners contents coverages does not apply to animals, cars, or property of those who pay to be at your house; it does provide up to $2,500 for a loss of landlord's furnishing in an on-premises apartment

If a loss occurs, the insured with a homeowners policy is required to do the following EXCEPT A. Provide the insurer with prompt notice of the loss B. Notify the police if a loss is caused by theft. C. Protect the property from further damage, and keep records of any repair expenses D. Arrange for an appraisal by an unbiased third party.

D. Arrange for an appraisal by an unbiased third party The appraisal system would be used only if there is a disagreement as to the sice of loss. Then, each side picks an appraiser, and the appraiser selects the unbiased third party.

Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy?

Damage to the dwelling caused by ash or dust from a volcanic eruption An HO-3 covers losses on an open peril basis. An HO-2 covers losses on a named peril basis. Both forms cover damage to the dwelling caused by ash or dust from a volcanic eruption

An insured condominium unit owner wants to purchase fire and extended coverage for personal property and liability coverage for himself and his family members. He should purchase

HO-6

Elaborate homes and those with detailed designs or decorative architecture with replacement costs greater than ACV or market value are insured on

HO-8

Coverage for all the following is found in Section 1 of a homeowners policy EXCEPT A. Dwelling B. Other Structure C. Personal Property D. Personal Liability

Personal liability Personal liability is a section II coverage that provides protection on the event an insured is charged with libel, slander, etc.

Under Section I, homeowners insurance must include

Property Coverage

The limited fungi, wet or dry rot, or bacteria coverage endorsement applies to

Property and liability losses Limited fungi, wet or dry rot, or bacteria coverages is an endorsement that may be used to add special limits for losses caused by fungi, dry and wet rot, and bacteria. This endorsement applies to both property and liability losses.

Who is covered by an HO-4 policy?

Tenants

Theft coverage under an HO-8 is restricted to

The actual cash value of what was stolen, with limits for certain classes of property.

The contents coverage on a homeowners policy would pay how much after the loss of one of a pair of golden candlesticks?

The difference in the actual cash value as a pair and as a single According to the pair or set clause, the insurer may elect to restore the set to its value before the loss, or pay the difference between the actual cash value of the property before and after the loss.

Which of the following would NOT be considered part of the insured location under the liability section of a homeowners policy?

Vacant farmland owned by the insured Farm property is specifically excluded from coverage

Which of the following perils is covered by the HO-2 and HO-3? A. sudden and accidental rupture of a heating system B. Loss due to power interruption that occurs off the premises C. Flood D. War

a. sudden and accidental rupture of a heating system Off-premises power failure, flood, and war are excluded from all DP and HO policies.

The insured with a homeowners policy has had damage to his property caused by a volcano. Which of the following is true?

all volcanic eruptions within a 72-hour period will be considered one occurrence.

The additional living expense coverage on homeowners policies

is intended to allow the family to maintain its normal standard of living

The amount an insurer will pay under Coverage D (Loss of Use) depends on

the amount of coverage on the dwelling Loss of use is usually limited to a percentage of the overall dwelling or personal property coverage (when dealing with HO-4 and HO-6)