HS 311 - Insurance - Chapter 17

What is the standard amount of insurance for loss of use (Coverage D) under an unendorsed HO-3 policy is what percentage of the amount of insurance for the dwelling (Coverage A)?

30%

Floater

A property insurance policy to provide broad insurance protection on property that is subject to being moved

Homeowners Policy

A series of policy forms, for different types of situations, with differing degrees of coverage for real and personal property and personal liability

ISO (Insurance Services Office)

An advisory organization that develops standard policies for homeowners insurance and other lines

What would you use "increased special limits" insurance for?

Coverage for some of the items where limited amounts of protection are available under Coverage C - e.g., jewelry, watches, and firearms

Additional Living Expense

Covers extra costs of maintaining a family's standard of living while the family's residence is being repaired or rebuilt following a covered loss

What alternatives are available for obtaining property coverage for clients who fail to meet the underwriting guidelines of most insurers?

FAIR programs Some states offer beachfront and windstorm plans to provide protection that insurers are unwilling to write because of the loss exposure to hurricanes

T/F: Title Insurance guarantees that the owner will keep possession of the property if a defect in the title is discovered.

False - Title insurance indemnifies the insured up to policy limits but provides no guarantee that the policyowner will retain possession of the property.

T/F: A person who owns and lives in a condominium unit should carry an HO-4 Contents Broad Form, because the association covers the building and detached structures.

False - should carry HO-6

T/F: Coverage E-Liability covers a licensed Harley Davidson motorcycle while it is being ridden on the driveway at the insured location

False! Homeowners policies do not provide liability coverage for vehicles licensed for use on public roads.

T/F: In a homeowners policy, losses under all property coverages are settled on a replacement cost basis.

False. Coverage A losses = settled on a *replacement* cost basis Coverage C losses = settled on an *actual* cash value basis

T/F: The identity fraud expense coverage endorsement would reimburse a victim of identity theft for money stolen from his bank account

False. Identity fraud expense coverage endorsement provides up to $15,000 in coverage for expenses that may be incurred as a result of identity thief, but it does not reimburse an insured for the theft itself.

T/F: Personal property is covered on a replacement cost basis in an HO-3, but it is covered for actual cash value in an HO-2.

False. Personal property is covered for actual cash value in all homeowners policies.

T/F: Title insurance provides protection against all title defects, regardless of when they occur or are discovered.

False. Title insurance provides protection only against unknown title defects that have occurred PRIOR to the effective date of the policy but were discovered after the effective date.

National Flood Insurance Program (NFIP)

Federal program that provides insurance for the peril of flood, as defined in the policy

HO-8 Coverage

Homeowners for *older homes* where the *replacement cost exceeds its market value*

HO-6 Coverage

Homeowners insurance for *condominiums* or cooperative units

What is excluded under home day-care coverage?

Injuries arising out of motor vehicles, watercraft, and saddle animals, and for liability arising out of sexual molestation and physical or mental abuse inflicted by an insured or an employee.

Dwelling Policies

Less comprehensive property coverage than homeowners policies No liability coverage (endorsement available) Used for rental property and other dwellings not eligible for homeowners policies

Personal Property Floater

Open perils coverage for *unscheduled* personal property on a worldwide basis e.g., used for expensive jewelry, silverware

Personal Effects Floater

Open perils worldwide coverage for baggage, clothes, cameras, and other *items commonly worn or carried by tourists*

Personal Articles Floater

Open-perils coverage for certain *scheduled* and valuable items of personal property. Similar to unscheduled personal property endorsement to HO policy

What coverage does the National Flood Insurance Program (NFIP) provide, and how can a client obtain such coverage?

Property owner must live in a community that participates in the NFIP. These communities must agree to establish and enforce certain land use restrictions to minimize the community's exposure to flood losses. A homeowner can purchase insurance on the dwelling, its contents, or both.

HO-5 Coverage

Provides broader coverage than ho-3 homeowners insurance (but more expensive)

What would you use "business pursuits endorsement" insurance for?

Provides coverage for liability that arises out of or in connection with a business engaged in by an insured, and it is most commonly used by persons in sales, clerical, and teaching occupations

Title Insurance

Provides protection only against unknown title defects that have occurred *prior to the effective date* of the policy but are discovered after the effective date. written on the assumption that losses will not occur because most title defects are known and listed in the policy The policy term is indefinite and continues until title to the property is again transferred The premium is paid only once, when issued

HO-4 Coverage

Renters insurance

What are the sections of a homeowners policy?

Section I - property coverage. Different in each homeowners form Section II - liability coverage. Same in all homeowners forms

Mobile home Insurance

Similar to homeowners insurance provides coverage to owner-occupants of mobile homes

High-Value Residential Property

Special challenges, such as high values, old homes, unique construction, gardens, pools, stables, high-risk locations, and multiple locations with property

FAIR (Fair Access to Insurance Requirements) plan

State-run programs to provide property insurance if a property owner is unable to obtain coverage in the standard marketplace

Functional Replacement Cost

The cost to repair or replace damaged real property with less costly construction materials and methods that are functionally equivalent to the old construction

What locations are included as insured locations in a homeowners policy?

The residence premises. Any structures or grounds used by the insured or spouse as a residence if shown in the declarations, or if acquired during the policy year as a residence by the named insured Other premises not owned by an insured but where an insured is temporarily residing Vacant land, other than farm land, owned by or rented to an insured Any part of a premises occasionally rented to an insured for other than business use

T/F: A homeowners policy provides coverage for additional living expenses incurred while a family lives elsewhere during repairs for a covered property loss.

True

T/F: Benefits under the medical payments coverage in the homeowners policy are paid only to persons other than an insured.

True

T/F: Damage to an attached garage is covered under Coverage A in an HO-3 policy, but damage to a detached garage is covered under Coverage B

True

T/F: In a HO-3 policy, the personal property of any insured is covered while located anywhere in the world

True

T/F: Liability coverage in an unendorsed homeowners policy excludes coverage for liability arising out of business and professional activities as well as the use of an auto.

True

T/F: The dwelling building is covered against loss by more perils in an HO-3 than in an HO-2.

True

T/F: The liability section is identical for all ISO homeowners forms

True

What is EXCLUDED in HO-3 coverage

Wear and tear Mold, fungus wet rot (unless hidden and accidental) Frozen pipes Weather conditions Inadequate of defective planning, zoning, development, workmanship, etc. War, nuclear reaction, flood and earthquakes Intentional losses committed by an insured Neglect after loss

What is INCLUDED in HO-3 coverage?

fire or lightning windstorm or hail explosion riot or civil commotion aircraft vehicles smoke vandalism theft falling objects weight of ice, snow, sleet volcanic eruption