DWELLING INSURANCE

Which of the following is NOT excluded under Coverage C of a Dwelling policy?

A canoe used on the premises by the insured

The standard Dwelling coverage forms may be used to cover all of the following, EXCEPT:

A farm house.

Which of the following losses would be covered by the EC peril of "Windstorm or Hail" under a Dwelling policy?

A roof that suffered damage in a tornado.

The "Sudden and Accidental Tearing Apart, Cracking, Burning or Bulging" broad form peril applies to all of the following, EXCEPT:

Any structural wall of the covered dwelling or other structure.

Which of the following statements is TRUE regarding the DP-2 cause of loss form?

It automatically includes the EC perils, V&MM coverage, and the broad form perils.

Which of the following statements is TRUE regarding the DP-3 special form?

It provides open peril coverage on the structure and named peril coverage on the personal property.

Which of the following Dwelling forms provides "open peril" coverage for dwellings and other structures?

The DP-3 special form.

Under the DP-3 special form, which of the following would be covered?

Theft of outside lighting attached to the dwelling.

Which of the following Dwelling insuring agreements would be included on a DP-3 form but not on a DP-1 form?

"Additional Living Expenses". The coverage for "Additional Living Expenses" is NOT included on the DP-1.

Charlie has her house covered by a DP-1 form with a $50,000 Coverage A limit. There are no endorsements attached for a deductible or any other coverage. When it is damaged by a fire, Charlie is provided how much coverage for "Additional Living Expenses"?

$0 Charlie's policy is a DP-1 and does not provide Coverage E -- Additional Living Expenses unless it is added by endorsement.

If the insured carries a DP-2 Dwelling form and insures the dwelling for 80% of its replacement cost value (the co-insurance requirement), what will he be paid if his 30-year-old roof sustains $10,000 in damages (disregarding any deductible)?

$10,000 If the insured carries 80% to value (co-insurance) he would be entitled to full replacement cost coverage for his damaged roof. Nothing to calculate here, full replacement cost is $10,000.

Under a standardized Dwelling form, a loss by a covered peril for Improvements, Alterations and Additions is covered for up to:

10% of the Coverage C limit of liability.

Which of the following losses would be covered under the standard Dwelling policy optional coverage Vandalism & Malicious Mischief (V&MM)?

The graffiti painted on the siding caused by a gang in the neighborhood while the insured was out for the evening.

Under a standardized DP-2 or DP-3 policy, what is the maximum that would be paid for additional living expenses if Coverage A was $60,000?

$12,000 The form provides 20% for additional living expenses and fair rental value. You can figure this out in your head by asking yourself, "What is 10% of $60,000" and then double it. 10% of $60,000 is $6,000 x 2 = $12,000. This is a coverage that is frequently amended to comply with state laws, so please notice that this question is asking about the STANDARDIZED policies.

The insured has suffered a severe storm and some of his trees, shrubs, and plants are heavily damaged by the wind. How much coverage could the insured expect to receive for his claim under his DP-3 Dwelling policy?

$0 The Dwelling policy provides an additional coverage for trees, shrubs, and plants. However, the coverage applies for specified perils and "wind" is a peril that is NOT covered for the loss to trees, shrubs, and plants. The insured will not collect anything for this loss.

The insured carries an unendorsed DP-3 dwelling policy on his home and personal contents. While traveling abroad someone broke into the home and stole $200 in cash, a shotgun valued at $1,000, and other household items valued at $2,000. Damage caused by the burglars is $1,500. Assuming no deductible applies to their coverage how much would be paid?

$1,500. The DP-3 only provides damage to covered property caused by the burglars. Theft is excluded under the DP-3 unless endorsed with the theft endorsement.

Sam's home is located in a rural area and is covered by a standardized DP-2 Dwelling form with a $500 deductible form attached. He experiences a fire at his home and has to call the local volunteer fire department to extinguish the fire. He receives a bill from the fire department in the amount of $800. How much of the bill will Sam's DP-2 form cover?

$500. The policy will provide $500 to pay for fire department charges incurred when the fire department is called to save or protect covered property from a peril insured against. This coverage is additional insurance and no deductible applies. PLEASE NOTE: This question is asking about the STANDARDIZED DP-2 form. If the state statutes in the state for which you are studying amends this amount, we will cover this amount in the course and in another question.

An insured is covered under a DP-2 broad form Dwelling policy. A water pipe has frozen and burst and the insured has suffered floor and ceiling damage in his two-story home. The cost to remove and replace the walls to get to the pipe is $300. The cost to repair the floor is $400. The pipe that burst must now be replaced with a more expensive option to meet newer building codes. The cost to replace the pipe is $200. How much will the insurer pay?

$700. The form will not cover the pipe that burst and caused the damage, but will cover the other damages.

Kari has her home covered under a DP-3 form and has suffered a loss that will require major repairs. How much coverage does she have to comply with laws causing an increase in costs due to new regulations requiring newer plumbing materials be used when the repairs are made?

10% of the Coverage A limit as additional insurance. In Kari's situation, she will have 10% of the Coverage A limit as additional insurance under the "Ordinance or Law" other coverage of the DP-2 and DP-3.

The standardized Dwelling forms consider all eruptions of a volcano within a __________ period to be a single "occurrence".

72-hour

Coverage D of a Dwelling policy provides coverage for:

Fair Rental Value.

Which of the following Dwelling Insurance forms is also referred to as the "Dwelling Fire" form?

The DP-1 form.

The DP-1 basic form peril of "internal explosion" will cover which of the following losses?

The explosion of a furnace that the insured owns, inside the covered dwelling.

An insured has his home covered under Dwelling policies with three different insurance companies. Company A provides 50% of the coverage, Company B provides 45% of the coverage, and Company C provides 5% of the coverage. When settling a claim for $10,000 worth of damage to the dwelling, what will Company C pay?

$500 In this situation, Company C will pay $500. 5% of $10,000 is $500. You should be able to figure this in your head by asking yourself "What is 10% of $10,000?" 10% of $10,000 is $1,000. Then, you can simply figure that 5% is half of 10%, which would be $500.

Roxanne has her home covered under a DP-2 policy. She regularly works on her laptop computer at the bar in her kitchen. One day she decided to go out for lunch, leaving her laptop plugged in and turned on. While she was out, the electrical cord attached to her laptop began to short out and create sparks. One of the sparks fell on a dish towel Roxanne had left on the bar and it caught fire. This led to a larger fire that caused extensive damage to Roxanne's kitchen. The damage caused to the kitchen came to $15,000. The laptop was destroyed and it's ACV was $1,800. The policy did not have a deductible form attached. How much will be paid on this claim?

$15,000. The policy will pay for the damage to the kitchen caused by the fire, but it excludes coverage for the laptop computer under the "Artificially Generated Electrical Current" peril.

Which of the following statements is NOT TRUE with regard to Coverage E: Additional Living Expenses under a DP-2 or DP-3 form?

It pays a percentage of the Coverage C limit. Coverage E pays a percentage of the Coverage A limit, not a percentage of the Coverage C limit.

The insured has suffered roof damage as a result of a tornado. He makes temporary repairs until permanent repairs can be made. He spends $1,500 for this work. How much, if any amount, will the DP-2 Dwelling policy pay on the repairs?

$1,500

Under the DP-3 special form, which of the following losses would NOT be covered?

Damage to the dwelling that is caused by an infestation of mice The broad form is a named peril form and does not list damage caused by wild animals as a covered peril.

Which of the following statements regarding the eligibility requirements for coverage under a Dwelling policy is TRUE?

Dwellings owned by corporations or other business entities are eligible.

Tori owns a cabin in the Ozark Mountains that she rents to Vincent. Tori has the cabin covered under a DP-2 policy. One cold evening, Vincent started a large fire in the cabin's fireplace and left the room to start dinner in the kitchen. Vincent didn't realize that he forgot to open the chimney flue before starting the fire and by the time he came back into the living room, it was completely filled with smoke. Vincent immediately opened the doors and windows to "air-out" the cabin but when the smoke cleared, there was extensive soot damage to the walls, ceilings and furnishings in the room. Which of the following statements is true regarding how this claim will be handled?

The claim will be paid because the DP-2 extends the peril of "smoke" to cover smoke damage from a fireplace. The DP-2 includes the broad form perils that extend the peril of "smoke" to cover smoke from a fireplace, therefore the claim will be paid.