PI 3.2.1 The Dwelling Policy

Which of the following coverages is not included in a dwelling policy?

Business interruption

Carly's home is insured under a DP 3 form. While she was on vacation, her home was vandalized, which resulted in considerable damage to her living room. All of the following property will be covered by her policy on an actual cash value basis EXCEPT:

Living room interior walls

Which of the following coverages is not automatically provided by a dwelling policy?

Theft

A windstorm damages the fence around John's property. He has a dwelling policy and files a claim for the loss. Is the loss covered and, if so, on what basis is the loss adjusted?

Yes. A fence is a nonbuilding structure and is adjusted on an actual cash value basis.

How many basic coverages are provided in a dwelling policy?

5

Tyrone wants to know if his new dwelling policy includes coverage for theft or burglary. What does his agent tell him?

A broad theft coverage endorsement is necessary.

Which of the following is not a reason for an individual to apply for coverage on a dwelling policy?

A dwelling is eligible for a homeowners policy

Neeraj is shopping for insurance on his new home. He is not sure whether he should have a homeowners policy or a dwelling policy. Which of the following is a principal difference between the two policies?

A dwelling policy only covers the dwelling, other structures, personal property, fair rental value, and additional living expenses. It does not cover liability.

Which of the following would be eligible for a dwelling policy?

A vacation home in the mountains used primarily for family ski weekend outings

Darnell bought a dwelling policy on his new home while it was under construction. In addition, he purchased a dwelling under construction endorsement. When approximately one-third of the home was completed, lightning struck it and burned it to the ground. At the time of its destruction, what was the amount of insurance available to Darnell?

Approximately ⅓ of the coverage A limit

Bonnie is concerned that during the course of the policy year, her dwelling policy's Coverage A limit of liability might not keep pace with inflation. What endorsement do you recommend to address her concerns?

Automatic Increase in Insurance

Jerry and Juliet live in a city where the housing market is robust and the cost of construction is rising. They want to make sure that if the coverage on their dwelling will keep pace with its increasing value. What will give them this assurance?

Automatic increase in insurance endorsement

Lightning destroys several metal awnings on a high-rise apartment building. The building is insured with a dwelling policy. Is the loss covered and, if so, on what basis is it adjusted or settled?

Awnings and outdoor equipment are covered and adjusted on an actual cash value basis

Madeline's three-family dwelling was damaged in a fire. Several claims were submitted to the insurer that issued her dwelling policy by people who live in the dwelling. A claim for which of the following items of personal property was not paid by Madeline's insurer?

Clothing of Madeline's second floor tenant

The DP 2 and DP 3 forms are alike in that both

Cover personal property on a named perils basis

Which of the following coverages receives loss settlement on a replacement value basis on the DP-2 and DP-3 forms?

Coverage A ' Dwelling

When Nolan's two-family home is damaged in a fire, he and his tenant are unable to live in the dwelling for three months. What coverage on Nolan's dwelling policy will pay for the difference between the rent he charges his tenant and the non-continuing charges for the apartment?

Coverage D ' Fair Rental Value

Which of the following coverages is not found on a dwelling policy?

Coverage E ' Personal Liability

Which dwelling form does not include Coverage E ' Additional Living Expense?

DP-1 Basic Form

Mr. Petrie's DP-1 Basic Form only provides coverage for three perils'nothing extra. Which of the following perils is not covered by Mr. Petrie's DP-

Flood

When would wall-to-wall carpeting be considered part of the dwelling and included under Coverage A of a dwelling policy?

If permanently affixed over an unfinished floor

An automatic increase in insurance endorsement is sometimes referred to as a(n

Inflation guard endorsement

How is personal liability coverage provided on a dwelling fire policy?

It can only be provided by endorsement

What Other Coverages are provided in all three unendorsed DP forms?

Reasonable repairs

Todd's home is insured by a dwelling policy on a DP-3 Special Form. When a tree falls on the roof of his house, what valuation method does the insurance company use to settle the loss to the dwelling?

Replacement value

Joan insures her home on a personal lines property policy that does not automatically include personal liability coverage. What type of policy does she have?

dwelling policy

Which of the following perils is not excluded on a dwelling policy?

lightning

Dustin asks his insurance agent if liability coverage is automatically included in dwelling policy. Dustin's agent tells him that it is not and advises him to add which endorsement to his policy?

personal liability supplement

Which of the following would not be covered under Coverage B ' Other Structures in a dwelling policy?

the attached garage on Brad's property

Which of the following is not a named peril covered by the DP 2 Broad Form?

theft

Which of the following is not a standard peril under the basic dwelling form (DP 1)?

Falling objects

Under the DP 1 form, coverage applies for loss by certain extended coverage perils, but only if a premium charge is shown in the declarations for these perils. Which of the following is not one of these extended perils?

Accidental discharge from a plumbing system

Vandals paint graffiti on the garage door of a house. Which dwelling form(s) cover this loss?

DP 2 and 3; coverage is optional in the DP 1

Of the three dwelling policies, which would cover loss by falling objects, weight of ice, snow or sleet, and accidental discharge from a plumbing system?

DP 2 and DP 3

Greg wants to be sure his dwelling policy covers losses to trees, shrubs and plants by a covered peril. Which dwelling policy(s) should he get?

DP 2 or DP 3

Maria intends to buy a dwelling policy on some rental property she owns. She tells her agent she wants the broadest coverage possible. Which policy form should the agent recommend?

DP 3

Mrs. Lombardi's dwelling policy denied her claim for the collapse of her deck. On what form is her dwelling policy written?

DP-1 Basic Form

Kirk's dwelling policy provides coverage for his home on an open perils basis. On what form is his dwelling policy written?

DP-3 Special Form

An earthquake ruptures a natural gas line, which starts a fire that damages Robert and Gretchen's home. Is the damage covered under their dwelling policy?

Damage caused by the earthquake is excluded. Damage from the ensuing fire is covered.

Jackson files a claim for accidental discharge when a pipe bursts and damages the wall-to-wall carpeting he installed last year over his unfinished floor. With reference to the dwelling policy, under which coverage will the insurer pay for the loss?

Dwelling

Liang and Chan are constructing a home on a vacant lot they own. What type of insurance policy would be most appropriate for them at this time?

Dwelling policy

Norman is the owner of a single-family home that is rented to a tenant. What type of policy is most appropriate for Norman?

Dwelling policy

Mr. Abramson is having a new house built. You tell him he can purchase a dwelling policy while the house is being built, but he needs to add an endorsement to the policy. What endorsement does he need to purchase?

Dwelling under Construction

Nemo's new house is destroyed by a tornado when it is only half completed. What endorsement would cover this situation?

Dwelling under construction endorsement

The DP 2 form includes coverage for all three groups of named perils in the DP 1 form, plus coverage for additional perils for dwelling, other structures, and personal property losses. However, the DP 2 form does not cover

Earth movement

Zara wants the peril of theft included on her dwelling policy. Which form or document will provide the desired coverage for theft?

Endorsement

Loren's home was badly damaged during a windstorm. Her dwelling policy will cover certain expenses because she is temporarily unable to live in her home during its repair. Which of the following expenses would not be covered by Coverage E 'Additional Living Expense of her dwelling policy?

Entertainment expenses

Ronald wants to purchase coverage for vandalism and malicious mischief on his dwelling policy, which is written on a DP-1 Basic Form. You tell him he cannot do so unless he purchases coverage for which of the following perils?

Extended coverage perils

Michael rents a house to Kelly. The house sustains a covered loss, and Kelly is forced to move out. She doesn't pay rent while the house is being repaired. What coverage is available under Michael's dwelling policy to pay him for the loss of the monthly rent while the repairs are being made?

Fair rental value

Mr. and Mrs. Yamakawa report that the new garage they added to their house just collapsed. The claims adjuster determines the collapse is the direct result of the faulty design and workmanship of the contractor who built the garage. What exclusion on the Yamakawas' dwelling policy will apply to the loss?

Faulty, inadequate, or defective processes, procedures, materials, or workmanship

Valerie's home is insured on a dwelling policy. It is destroyed when it falls into a sinkhole. How does Valerie's insurer respond when she submits a claim for damage to the building?

It denies her claim per the Earthquake exclusion

Javier wants to know how the dwelling form DP 3 form compares to the DP 1 and 2. Which of the following most accurately describes the DP 3 form?

It provides open perils coverage for the dwelling and other structures, and named perils coverage for personal property.

Your client, Warren, reports that his basement is filled with water because water beneath the surface of the ground seeped through foundation. He asks you to submit his claim to the insurer that writes his dwelling policy. How will the insurer respond to Warren's claim?

It will deny the claim under the water damage exclusion

Holly's personal property is covered on an actual cash value basis in her DP 3 form. If she had either a DP 1 or DP 2 form, how would her personal property be covered?

It would be covered on an actual cash value basis.

Tom buys a dwelling policy. His agent tells him that the policy does not cover a significant risk to which Tom may be exposed, and that Tom should add specific coverage address that exposure. What is this exposure to which the agent refers?

Liability

Torrential rains over several days cause water to enter Martha's basement. She files a claim on her dwelling policy, but the insurer denies it on the grounds that the damage was caused by flooding. Martha contends that the loss was caused by rain, which is covered under the policy. Who will likely prevail, and for what reason?

Martha. Damage caused by rains is not excluded.

Daniel has a DP 2 form to insure his house. A windstorm blows off part of the roof, but he does nothing to cover the hole. Two days later, heavy rain causes more damage. Which exclusion in the DP 2 might eliminate coverage for the water damage?

Neglect exclusion

Whenever it rained, the roof of Jada's home leaked. Although she intended to repair the roof, she never got around to it. A heavy rainstorm exacerbated the leakage problem and damaged furniture in her home. She filed a claim with her insurer and it was denied. The insurer based its denial on which exclusion in the DP 3 policy?

Neglect exclusion

Molly has a DP 1 Basic Form policy on her home. Two steam pipes explode in her basement and damage her newly-renovated recreation room. She knows there are three mandatory coverages under a DP 1 form, one of which is internal explosion. So she files a claim for her loss. Will her insurer pay the claim?

No, because an explosion of steam pipes is not included in the definition of 'internal explosion.'

The broad theft coverage (DP 04 72) endorsement provides coverage for all of the following EXCEPT:

Off-premises theft only

The land immediately behind Amy's home was being excavated to install underground wiring to her garage. The earth movement resulted in a gas line break and explosion that damaged her home. Which statement is true about coverage for losses due to earth movement under Amy's DP 3 form?

Only damage resulting from the explosion is covered.

Regis' 100-year-old house is extensively damaged by a fire. Regis learns that he may rebuild the house only if it conforms to current building codes. What provision in his DP 3 form provides limited coverage for this?

Ordinance or law

Mr. and Mrs. Oswald insure their home on a DP-3. Which of the following statements BEST describes the additional coverage provided by their policy when a local ordinance requires them to upgrade the electrical system in their home after an explosion?

Ordinance or law is an additional coverage on a DP-3

Adam rents a house. The landlady permits him to build a swing set in the yard for his children. If this equipment were damaged by a covered peril, under what dwelling coverage would the loss be covered?

Other structures

What dwelling policy form provides the broadest coverage?

P-3 Special Form

Willie lives in a coastal area where storms often cause a great deal of property damage. When he is selecting a dwelling policy form under which to insure his home, it is most important for him to know the

Perils insured against

Dustin asks his insurance agent if liability coverage is automatically included in dwelling policy. Dustin's agent tells him that it is not and advises him to add which endorsement to his policy?

Personal liability supplement

Vanessa has a DP 1 policy, which she knows covers her computer equipment. Members of her computer club will be staying with her this weekend and she is not sure if their computers are also covered under her policy. As her agent, you explain that Coverage C'Personal Property in a dwelling policy covers

Personal property of the named insured (Vanessa) and resident family members

Stephanie's DP-2 Broad Form provides coverage for more perils than a DP-1 Basic Form does. It also provides loss settlement for the dwelling and structures on a different basis. What is the loss valuation method for the dwelling and other structures on Stephanie's DP-2?

Replacement value

Terrell recently purchased a DP 1 dwelling policy. His home will be covered for property damage due to windstorm or hail under all of the following conditions EXCEPT:

The declarations doesn't show a premium for this peril.

Heat and electricity were out for four days at Tanner's home due to a city power outage. The lack of heat, combined with freezing weather conditions, caused the pipes in Tanner's home to burst. Will his DP 3 policy cover this loss?

The freezing loss is covered by the DP 3.

Manuel has a DP 1 policy form on his residence. During a storm, the residence is struck by lightning. Which statement is correct about the policy's coverage in this situation?

The loss is adjusted on an actual cash value basis.

Mr. Uhlman's dwelling policy is written on a DP-1. He wants to add the peril of windstorm to the basic perils of fire, lightning, and internal explosion. What instructions do you give him with respect to processing his request?

The peril of windstorm can be purchased with extended coverages (EC)

When selecting a limit of insurance in a dwelling policy, it is important to know how the value of property is determined after a loss. The provision that addresses the value of property is found in

The valuation provision of the policy

Which of the following perils insured against is not included on a DP-2 Broad Form?

Theft

All of the following are advantages of a dwelling policy EXCEPT:

They provide comprehensive coverage.

Mrs. Quinella pays an extra premium for the extended coverage perils on her dwelling policy, which is written on a DP-1 Basic Form. Which of the following perils is not included as an Extended Coverage (EC) peril on Mrs. Quinella's policy?

Vandalism and malicious mischief

Does a dwelling policy cover property removed from the premises when it is endangered by loss from a covered peril, and if so, how long does the coverage last?

While DP 2 and 3 cover the property for 30 days, DP 1 covers it only for five days

Heather's distraught next-door neighbor was holding his wife hostage at gunpoint. After several hours, the neighbor's husband still refused to free his wife. The sheriff's department ordered that tear gas canisters be fired into the house. The gas sparked a fire in the house and the sheriff ordered the fire department to contain the fire from spreading to other homes. Will Heather's dwelling policy cover the damage to her home from this fire containment action?

Yes, because a fire containment action ordered by a governmental authority is an exception to the governmental action exclusion.

Blake is adding a three-season room to the side of his home and is storing the building materials in his attached garage. Both the garage and the building materials are destroyed in a fire. Will the building materials be considered part of the dwelling and covered under Coverage A ' Dwelling of his dwelling policy?

Yes, construction materials located on the premises to be used to alter the home are considered part of the dwelling.

A windstorm tears away part of the roof to Donna's dwelling. To prevent more damage, Donna hires a roofing contractor to temporarily place a heavy canvas over the opening. Donna submits the roofer's bill of $400 to her insurer. Will she be reimbursed for this expense?

Yes. Donna is covered for protecting the property from further loss, provided the repairs are reasonable.