State Farm Fire Independent Policy Exam

An HO-3 policy is in force. A severe windstorm blows down a large oak tree in the insured's front yard. A portion of the tree falls upon and damages the roof of the insured dwelling. Which of the following expenses would not be covered? Select the single best answer: A. $150.00 to remove the limb from the roof. B. $500.00 to replace the tree. C. $400.00 cut the tree up and haul it to the municipal landfill. D. $500.00 repair roof. E. All the above items would be covered.

B. $500.00 to replace the tree.

Under an HO-3 policy, which of the following statements about Option JF is false? Select the single best answer: A. Coverage applies for accidental direct physical loss or damage, unless otherwise stated. B. Coverage applies only for the Coverage B named perils. C. The limits for this option are shown in the declarations. D. The first amount is the limit for any one article; the second amount is the aggregate limit for each loss. E. Our limits for loss by theft are those shown in the declarations for this option.

B. Coverage applies only for the Coverage B named perils

The insured has a HO-3 policy in force. All of the losses are covered except: Select the single best answer: A. Shed rented to a tenant, to store furniture B. Detached garage used to operate a lawnmower repair shop C. Garage rented to the neighbor to store an antique automobile D. Basement used as an office for insured's bookkeeping business E. Garage (attached) rented to tenant to store fishing boat

B. Detached garage used to operate a lawnmower repair shop

The definition of an insured includes all of the following except: Select the single best answer: A. Person(s) listed on the Declaration Page B. Spouse, if a resident of the household C. Relatives, if residents of the household D. Any person under the age of 21 in the care of the named insured, resident spouse, or a resident relative E. Spouse

Spouse

The insured has a storage shed on a foundation in his backyard. It is damaged by a windstorm and has not been repaired or replaced. Which one of the following statements is correct under the HO-3? Select the single best answer: A. The shed is not a Coverage A item B. The shed is a Coverage A-Dwelling Extension, subject to the dwelling extension limit C. The shed is a Coverage B item, damaged by a named Peril D. Both B and C E. None of the above

The shed is a Coverage A-Dwelling Extension, subject to the dwelling extension limit

In the HO-3 policy, resulting ALE and Fair Rental Value can be paid for up to two weeks if use of the premises is prohibited by civil authorities because of direct covered damage to a neighboring premises caused by a loss insured. True or False

True

The cooling system for the insured's freezer is damaged due to a power failure and all food in the unit is spoiled before the insured becomes aware of the loss. You can pay for the food if there is a HO-3 policy in force. True or False

True

Jennifer Marco has a HO-3 policy, with a Coverage B limit of $75,000, a $500 deductible, and no Option AI, ID, FA or JF. Which of the following statements is true concerning her personal property? Select the single best answer: A. Coverage for personal property applies for perils listed under Section I - Losses Insured, Coverage B - Personal Property and Section I - Additional Coverages. B. Coverage B applies only for items Jennifer owns, while anywhere in the world. C. The limit of liability for theft loss to jewelry and furs is $1000 or 10% of the Coverage B limit, whichever is greater. D. The limit of liability for tornado losses to firearms is $2,500.

A. Coverage for personal property applies for perils listed under Section I - Losses Insured, Coverage B - Personal Property and Section I - Additional Coverages.

Our insured's residence premises suffered damage to floor coverings, baseboards, drywall and personal property following exceptionally heavy rains that caused a nearby creek to rise and water enter the home. While the insured's were out of their home due to the flooding, looters stole lawn equipment from inside the detached garage. Under the HO-3 policy, what items would be covered? Select the single best answer: A. Stolen lawn equipment B. Coverage A items damaged by rising water C. Coverage B items damaged by rising water D. Nothing is covered because of Section I - Losses Not Insured 2. c. (1)

A. Stolen lawn equipment

Jo Smith has an HO-3 policy and grows exotic orchids as a hobby. Orchids cannot survive more than 80 degrees F. While Jo was on vacation, the electricity was out for several days. The temperature in the home rose to 95 degrees, causing the flowers to wilt and die. Immediately prior to the power outage, a tornado was spotted in the vicinity. Jo submitted a claim for $2,000. In order to pay the claim for the damaged flowers you must verify: Select the single best answer: A. The power interruption took place on the residence premises. B. The power interruption was caused by a loss insured. C. Power lines off the residence premises remained energized. D. A., B. and C. are required to pay this loss. E. There was no damage to the Coverage A property therefore you cannot pay for the loss of the flowers.

D

Judy Howard owns a home at 2500 Mocking Bird Lane. She had a HO-3 policy in force. She sold the home on June 5, XX and began moving her personal property to a new residence. On June 27 a tornado damaged the personal property at the new location. Judy's policy is still in force. She did not have a policy in force for the new location. Select the single best answer: A. Coverage up to the Coverage B limits applies at the new location B. Coverage up to the Coverage B limits applies at the original location C. Judy would have to purchase an endorsement to provide coverage for the personal property during the moving process. D. A and B are both correct. E. None of the above are correct.

D. A and B are both correct.

Under an HO-3 policy with Option JF, which if the following statements is true concerning a jewelry loss? Select the single best answer: A. Coverage applies only for the sixteen Section I-Losses Insured, Coverage B-Personal Property named perils. B. The limit of liability for theft jewelry and furs is $1,000. C. Coverage only applies for the items listed on the schedule in the Declarations. D. Coverage is for accidental direct physical loss or damage unless otherwise stated.

D. Coverage is for accidental direct physical loss or damage unless otherwise stated.

Joe Smith has a HO-3 policy. He is a carpenter and has collected 100 2"X4" studs and 30 2"X6" rafters from various job sites. Joe has no specific plans to use the lumber. The lumber is covered under Coverage A. True or False

False

Under an HO-3 policy, which of the following would be a Coverage B item? Select the single best answer: A. Satellite dish bolted to the eave of the house B. Free standing gas range C. Built-in microwave oven D. Automatic garage door opener E. Water softener system

Free Standing gas range

If a picture falls from a wall and damages an expensive statue, under the HO-3 coverage for the statue would: Select the single best answer: A. Apply under the falling object peril B. Not apply, not an insured peril C. Apply under the collapse peril D. Not apply since it should have been insured under a personal articles policy E. None of the above

not apply, not an insured peril

Bill and Mary Johnson have a HO-3 policy on their home with Coverage A limits of $400,000 and Coverage B limits of $300,000 with a $1,000 deductible. Very high straight-line winds struck their home, blowing down six large trees on the residence premises. One tree fell on the split-rail fence of the rear yard, damaging 24 LF of the fence. Another fell on a portable picnic table, destroying it. The remaining four trees were simply blown down in the yard. Bill and Mary submitted the following receipts for payment: Remove tree from fence in order to repair fence (two cuts with chainsaw) $ 50 Repair 24 LF of split-rail fence ($15 per foot) $360 Remove tree debris (tree that fell on fence) from residence premises $300 Remove tree from picnic table (three cuts with chainsaw) $75 Replace picnic table (Lowe's - treated pine - assembled) $120 Remove tree debris (tree that fell on table) from residence premises $410 Remove remaining four trees from residence premises ($375 each) $1,500 Replace six trees destroyed by high winds ($250 each) $1,500 What is payable on this loss? Select the single best answer: A. $830 B. $710 C. $0 D. $ 2,815 E. $ 4,315

0

During a severe thunderstorm, water puddled on the lawn, in a low area in front of our insured's sliding glass door. The water accumulated to the point that it seeped under the door, damaging the hardwood floor, wall paper, vertical blinds, and area rug. HO-3 policy is in force with the following limits: Coverage A $75,000 Dwelling Extensions $7,500 Coverage B $56,250 Deductible $500 The insured presents the following claim: Sand and finish floor $650 Remove and replace wall paper $320 Remove and replace vertical blinds $175 Replace area rug (contents) $35 All repairs are complete. How much do you owe the insured? Select the single best answer: A. $680 B. $0 C. $470 D. $325 E. $645

0

The insured has an HO-3 policy with a Coverage A limit of $250,000 and Option ID of $50,000. The in-ground swimming pool, located 20 feet away from the home, is totally destroyed by a loss insured. What is the maximum amount you can pay for pool debris removal and replacement of the pool? Select the single best answer: A. $25,000 B. $31,500 C. $30,000 D. $26,250 E. $50,000

26250

Mike and Jennifer Reed have an HO -3 policy in force with $250 deductible. Lightning struck the insured's house, damaging the house and the contents. Mike is a policeman and operates a engine repair shop in a shed on the insured premises. Jennifer is a sales representative and often has samples and merchandise at the house. The following items where listed on the personal property inventory forms submitted after the loss. Cash in Mike's billfold $35.00 Cash in Jennifer's purse $160.00 Change in piggy bank $25.00 Hand tools used in Mike's business $780.00 Jennifer's sales samples $320.00 Mike's police uniform $375.00 4 hunting rifles $1,820.00 3 shotguns $870.00 Use the information listed above to answer the following question. How much would you pay for the hunting rifles and shotguns listed in this loss? Do not consider the deductible in calculating this answer. Select the single best answer: A. $2,000 B. $2,940 C. $2,500 D. $2,250 E. $2,690

2690

Mike and Dorothy Jackson have a HO-3 policy with a $250 deductible. Their entire redwood basket weave fence, which surrounds the rear yard, is destroyed in a windstorm. The cost to replace the fence is $1,300. The Actual Cash Value of the fence is $900. Repairs are complete. How much do you owe Mr. and Mrs. Jackson? Select the single best answer: A. $0 B. $1,300 C. $ 900 D. $1,050 E. $ 650

650

An HO-3 policy is in force with Coverage A limits of $75,000, Coverage B limits of $56,250 and a deductible of $500. During a severe thunderstorm, a window is broken by hail and wind blows rain water through the window. Rainwater damages the hardwood floor, wall paper, vertical blinds, and an area rug. The insured presents the following claim: Sand and finish floor $650 Remove and replace wall paper $320 Remove and replace vertical blinds $175 Replace area rug $35 All repairs are complete. How much do you owe the insured? Select the single best answer: A. $325 B. $645 C. $470 D. $680 E. $ 0

680

The Sheriff's department ordered evacuation of the residence premises due to an approaching hurricane. The insured's departed in compliance with the order. They were not allowed to return for two weeks. The hurricane damaged neighboring homes but the residence premises did not suffer any damage. The insured's family stayed in a hotel during the mandatory evacuation and were charged $600 per week. Under the HO-3 policy, with a $500 deductible, how much would we owe the insured? elect the single best answer: A. $ 700 B. $ 600 C. $0 D. $1,200

700

An HO-3 policy is in force with coverage A limits of $75,000. The policy has a $1,000 deductible. The house is totally destroyed by a tornado and the cost to replace the house is $75,550 plus debris removal of $4,225 for a total claim of $79,775. All repairs have been completed. What is the amount of your final settlement? Consider the deductible in your calculations. Select the single best answer: A. $79,775 B. $78,750 C. $78,775 D. $77,750 E. $74,000

78750

Paul Smith owns a home at 1526 Keystone Rd. with a HO-3 policy in force. He also owns a cabin in the mountains which is not listed on the declaration page of his policy. Paul stayed at the cabin for two weeks and performed repairs on the cabin during his stay. Paul brought with him the building materials, supplies and tools necessary to make repairs. He also brought sporting equipment and clothes. Lightning struck the cabin, damaging it and personal property while Paul was there. All of the furniture and appliances normally remain at the cabin. Use the information listed above to answer the following question. The furniture and appliances have been replaced. You have verified the actual cash value for them to be $6,135 and the replacement cost to be $8,325. The Coverage B limit is $80,000, the policy deductible is $250 and Loss Settlement Provision is B1. What is the amount payable for the furniture and appliances? Select the single best answer: A. $8,000 B. $8,075 C. $8,325 D. $7,750 E. $ 0

8000

Under an HO-3 policy, deductibles apply to which of the following type(s) of losses. Select the single best answer: A. Credit Card, Bank Fund Transfer Card, Forgery and Counterfeit Money B. Fire Department Service Charges C. Rekey locks after keys are stolen D. Debris Removal Charges

B. Fire Department Service Charges

Mike and Jennifer Reed have an HO -3 policy in force with $250 deductible. Lightning struck the insured's house, damaging the house and the contents. Mike is a policeman and operates a engine repair shop in a shed on the insured premises. Jennifer is a sales representative and often has samples and merchandise at the house. The following items where listed on the personal property inventory forms submitted after the loss. Cash in Mike's billfold $35.00 Cash in Jennifer's purse $160.00 Change in piggy bank $25.00 Hand tools used in Mike's business $780.00 Jennifer's sales samples $320.00 Mike's police uniform $375.00 4 hunting rifles $1,820.00 3 shotguns $870.00 Use the information listed above to answer the following question. How much would you pay for the money listed in this loss? Select the single best answer: A. $200 B. $220 C. $195 D. $185 E. None of the above

E

The insured has an HO-3 policy. Lightning during a thunderstorm struck the insured's maple tree, killing it and knocking a large portion onto the roof of the insured dwelling. Which of the following expenses would not be covered? Select the single best answer: A. $150.00 to remove the tree from the roof. B. $400.00 to cut the tree up and haul it to the municipal landfill. C. $500.00 to repair the roof. D. $500.00 to replace the tree. E. All the above items would be covered.

E

In the HO-3 policy, temporary repairs: Select the single best answer: A. Are available for reasonable and necessary costs incurred, caused by a loss insured. B. Provide an additional amount of insurance for temporary repairs to covered property. C. Are to protect the property from further immediate damage or loss. D. A, B and C are correct. E. A and C are correct

E. A and C are correct

Select the false statement listed below: In the HO-3 policy, the ALE payments will be made only for: Select the single best answer: A. The shortest time necessary to repair or replace the damaged property, but not to exceed 24 months. B. If the insured does not rebuild, the time necessary for the insured to relocate in permanent living quarters, but not to exceed 24 months. C. ALE payments can run beyond the expiration of the policy. D. ALE payments are limited to incurred costs for the shortest of three time frames as dictated by the policy. E. ALE payments will not exceed 20% of Coverage A limits.

E. ALE payments will not exceed 20% of Coverage A limits.

Under an HO-3 policy, which of the following would not be a Coverage A item? Select the single best answer: A. Automatic lawn sprinkler system B. Wall to wall carpet attached to the dwelling C. A new (in the box), built-in microwave oven the insured intends to install in his fishing cabin. D. A shed, on a foundation, rented to a neighbor to store the neighbor's boat E. Materials and supplies to build bookshelves in the basement of the residence premises and stored in the garage

E. Materials and supplies to build bookshelves in the basement of the residence premises and stored in the garage

Sue Kojack is the named insured. Other residents in the household are: Sue's 21 year old son, Louis Tammy, Louis's wife Matt, a 16 year foster child Mildred, a 38 year old friend who lost her job Who would qualify as insureds under a HO-3 policy? Select the single best answer: A. Sue B. Sue, Louis, Tammy, and Matt C. Sue and Louis D. Sue, Louis, and Tammy E. Sue, Louis, Tammy, Matt, and Mildred

E. Sue, Louis, Tammy, Matt, and Mildred

Bill Smith constructed an awning beside his detached garage, under which he stores his small fishing boat. He screwed the framing of the awning to the fascia of the garage and supported the other side with posts set in concrete. Since the awning has no foundation, it is not considered a Coverage A item. True or False

False

Lightning hits a power transformer two streets away from the risk and knocks out the power to the entire area. The temperature is in the 20's and our insured's home is heated by an electric furnace. The insured has a HO-3 policy in force. ALE will be payable on this loss. True or False

False

Our insured has a HO-3 policy in force. The insured premises is located on the Gulf Coast. The National Weather Bureau issued a hurricane warning affecting the insured premises on July 18th. The insured removed antique furniture and stored it in a warehouse 50 miles inland. The furniture was damaged by flood waters August 22nd. We will pay for the damage to the furniture. True or False

False

We insure Steve Smith with a HO-3 policy. Steve works at the Acme Vacuum Co. On weekends and in the evenings he repairs vacuum cleaners in a detached building structure on the insured premises. The building is damaged by a severe windstorm. Since Steve owns his business and only works part time the damage will be paid under the Dwelling Extension coverage of the policy. True or False

False

In the HO-3 policy, Coverage C consists of three coverages: Additional Living Expense Fair Rental Value Property Removed True or False

False its Additional Living expense, Fair rental value and prohibited use

Paul Smith owns a home at 1526 Keystone Rd. with a HO-3 policy in force. He also owns a cabin in the mountains which is not listed on the declaration page of his policy. Paul stayed at the cabin for two weeks and performed repairs on the cabin during his stay. Paul brought with him the building materials, supplies and tools necessary to make repairs. He also brought sporting equipment and clothes. Lightning struck the cabin, damaging it and personal property while Paul was there. All of the furniture and appliances normally remain at the cabin. Use the information listed above to answer the following question. Select the true statement listed in the answer choices: Select the single best answer: A. The building materials are covered under Coverage A. B. The building materials, sporting equipment and clothing are subject to the 10% of Coverage B or $1,000 limit. C. Tools, sporting equipment and clothes are covered for theft up to 10% of Coverage B or $1,000 limit, only while Paul is staying at the cabin. D. Tools, sporting equipment and clothes are considered Personal Property and covered up to the Coverage B limits of liability. E. None of the above statements are true.

Tools, sporting equipment, and clothes are considered Personal Property and covered up to the Coverage B limits of liability

The insured (HO-3 policy in force) is building a barn on property where he plans to build a new home and move in the future. The property is not listed on the Declaration Page. During the construction process he stores construction materials and supplies for the barn in his detached garage at the insured premises. These building materials and supplies are destroyed. They are not covered under Coverage A. True or False

True

The steps in applying the deductible on a HO-3 homeowners policy are: 1.)The deductible is first applied to the covered loss. 2.)Any coverage or special limits are then applied to the covered loss. 3.)The amount payable to the insured will be the greater of the amounts arrived at in steps 1 and 2. True or False

True

Which of the following statements can apply to Debris Removal Coverage in the HO-3 policy? Select the single best answer: A. Pay up to $500 in the aggregate for each loss to cover the reasonable expenses incurred in the removal of tree debris from the residence premises when the tree has caused a loss insured to Coverage A property. B. We will pay the reasonable expenses incurred in the removal of debris of covered property damaged by a loss insured. This expense is included in the limit applying to the damaged property. C. When the amount payable for the property damage plus the debris removal exceeds the limit for the damaged property, an additional 5% of that limit is available for debris removal expense. D. All of the above E. None of the above

all of the above

Assume an HO-3 is in force. The insured's home is damaged by a severe windstorm and the family is forced to move into a motel for 2 weeks. The insured provided the following receipts. The water, electricity and telephone remained in service following the loss. Amount Paid Amount Normally Spent Mortgage Payment $985 $985 Hotel Bills $1,075 $0 Water $25 $35 Electricity $125 $95 Telephone $10 $38 Cable TV $0 $29 Meals in Restaurants $505 $150 Food prepared at home $0 $210 Automobile $35 $20 Laundry $60 $10 Dry cleaning $15 $15 How much do you owe for ALE. Do not consider a deductible. Select the single best answer: A. $ 253 B. $ 320 C. $1,520 D. $1,305 E. $1,248

1248

The Sheriff's department ordered evacuation of the residence premises due to an approaching hurricane. To protect their personal property, the insured moved antique furniture and valuables to a secure storage facility. The insured's family was not allowed to return to their home for three weeks. The hurricane damaged neighboring homes but the residence premises did not suffer any damage. The insured's family submitted the following bills, in addition to their hotel bill. Trailer rental (one way) to haul furniture and valuables to secure storage: $ 158.50 Wages paid to neighbor's teenage sons to help load/unload furniture: $90.00 Rent for the secure storage building for three weeks: $75.00 Trailer rental to haul furniture back home after the hurricane: $158.50 Wages paid to neighbor's son to help return furniture to home: $45.00 Hotel bill for three weeks ($500 per week): $1,500.00 Under the HO-3 policy with a $500 deductible, how much would we owe the insured's? Select the single best answer: A. $1,452.00 B. $ 392.00 C. $1,392.00 D. $ 210.00 E. $1,527.00

1527

An HO-3 homeowners policy with a $250 deductible is in force and the policy limits (Coverage A and Coverage B) are adequate to cover this damage. During a severe windstorm, rain blows through open windows and causes the following damage: Hardwood floor in the dining room $1,700 Water stains on the drywall $ 220 Water stains on the area rug $125 Antique vase (broken by force of wind) $375 How much should you pay on this loss? All repairs have been made. Select the single best answer: A. $ 0 B. $1,920 C. $2,420 D. $2,170 E. $2,045

2170

Mike and Jennifer Reed have an HO -3 policy in force with $250 deductible. Lightning struck the insured's house, damaging the house and the contents. Mike is a policeman and operates a engine repair shop in a shed on the insured premises. Jennifer is a sales representative and often has samples and merchandise at the house. The following items where listed on the personal property inventory forms submitted after the loss. Cash in Mike's billfold $35.00 Cash in Jennifer's purse $160.00 Change in piggy bank $25.00 Hand tools used in Mike's business $780.00 Jennifer's sales samples $320.00 Mike's police uniform $375.00 4 hunting rifles $1,820.00 3 shotguns $870.00 Use the information listed above to answer the following question. How much of the deductible, if any, would be absorbed in this loss? Select the single best answer: A. $ 0 B. $100 C. $475 D. $250 E. $120

250

Select the choice below that most accurately describes treatment of a deductible under the HO-3 policy. Select the single best answer: A. The deductible may be partially absorbed. B. The deductible may be completely absorbed. C. The deductible is not applied to Fire Department Service Charges. D. The deductible may be absorbed due to covered loss in excess of a coverage limit or a special limit. E. All the above are true.

E. All the above are true.

In an HO-3 policy, Option AI (Additional Insured) provides coverage for: Select the single best answer: A. Coverage C B. Coverage B C. Coverage A D. Coverage A and Coverage B E. Coverage A and Coverage C

C. Coverage A

Assume you have a HO-3 policy in force and do not have any endorsements added to the policy. Which of the following types of loss will be covered? Select the single best answer: A. The home sustains structural damage due to an earthquake. B. A landslide carries a large tree into the side of the insured home causing structural damage. C. The home is located in a non flood area, but following heavy rains the home sustains structural damage from 13 inches of flood water standing in the house for three days. D. The home is located on the western shore of Lake Michigan. The house is condemned because the yard is subsiding and falling into the lake. E. None of the situations are covered by the HO-3.

None of the situations are covered by the HO-3.

Chuck Bailey has a HO-3 policy with Loss Settlement Provisions of A1 & B1. After Chuck has made repairs to Coverage A items and replaced Coverage B items, claim payment (subject to any limit of liability) will be based upon which of the following amounts? Select the single best answer: A. Salvage value B. Replacement cost C. Market value D. \Original purchase price E. Actual cash value

Replacement cost

Paul Smith owns a home at 1526 Keystone Rd. with a HO-3 policy in force. He also owns a cabin in the mountains which is not listed on the declaration page of his policy. Paul stayed at the cabin for two weeks and performed repairs on the cabin during his stay. Paul brought with him the building materials, supplies and tools necessary to make repairs. He also brought sporting equipment and clothes. Lightning struck the cabin, damaging it and personal property while Paul was there. All of the furniture and appliances normally remain at the cabin. Use the information listed above to answer the following question. Select the true statement listed in the answer choices: Select the single best answer: A. The furniture and appliances are subject to the 10% or $1,000 limit under Coverage B. B. The policy does not provide any coverage for the furniture and appliances because the cabin is not listed on the Declaration page. C. The furniture and appliances are personal property and are covered up to the Coverage B limits of liability. D. None of the above statements are true.

That furniture and appliances are subject to the 10% or $1000 limit under Coverage B

Option ID under the HO-3 applies to: Select the single best answer: A. The dwelling and other building structures B. All covered structures C. The dwelling D. The dwelling and all other structures E. Both A and D

The dwelling and other building structures