Homeowners Insurance
For a homeowners policy, which one of the following statements about insuring personal property normally kept at a residence other than the residence premises is CORRECT? A) It is covered only if the insured has paid an additional premium. B) It is not covered when located off the residence premises. C) It is covered for the full limit worldwide, whether on or off premises. D) It is covered for up to 10% of the coverage C limit.
D
Which one of the following dwellings would a Homeowner Form HO-3 cover? A) Condominium. B) Apartment building. C) Office building. D) Single family home.
d
Which one of the following homeowners forms provides open perils coverage? A) HO-8. B) HO-2. C) HO-3. D) HO-4.
c
Which one of the following is NOT an exclusion found in Section I of the homeowners policies? A) Water damage from flood or surface water. B) Power failure occurring away from the insured premises. C) Earth movement such as earthquake, mudflow, and landslide. D) Failure of the insured to care for the property before the loss.
d
Adding the personal injury endorsement to the homeowners policy protects the insured against all of the following EXCEPT: A) contractual liability. B) invasion of privacy. C) slander. D) libel.
a
Which one of the following is NOT a factor in determining eligibility for coverage under a particular homeowners form? A) Square footage. B) Intended use. C) Occupancy. D) Dwelling type.
a
After a fire damages a home, how much is the insured entitled to recover for buying materials to board up the windows under the homeowners policy? A) Whatever it will reasonably cost. B) 5% of the Coverage A limit. C) No coverage is available. D) $500.00
a
An insured has a homeowners policy for $60,000 on the dwelling. Lightning completely destroys the home, which has a replacement cost of $40,000. How much will the insured receive? A) $40,000.00 B) $60,000.00 C) $20,000.00 D) $6,000.00
a
George just returned from Europe with a beautiful Swiss watch valued at $10,000. He is concerned that his homeowners policy will not provide enough coverage. His insurance agent suggests that he add which endorsement to adequately cover his watch? A) Scheduled personal property endorsement. B) Special property limits. C) Coverage C--Personal property. D) Personal property replacement cost endorsement.
a
If the shrubs in front of a house burn when the house catches fire, how much is the insured entitled to recover for the shrubs under his HO-3? A) 5 % of the limit on Coverage A with a maximum of $500 for any one shrub. B) Policy limit. C) Replacement cost. D) $500.00
a
Sandy and Stewart had a fire loss, and the insurance company reimbursed them for their damaged personal property. They believed that they did not get enough for this property because the settlement was based on actual cash value. Which endorsement would have provided a better loss settlement? A) Scheduled personal property endorsement. B) Coverage C--Personal property increased limits. C) Special limits of liability. D) Personal property replacement cost endorsement.
a
The Broad Form/HO-2 policy provides which type of coverage? A) Named-peril coverage for dwelling and personal property coverage. B) Named-peril coverage for personal property coverage and open-perils coverage for dwelling coverage. C) Open-perils coverage for dwelling and personal property coverage. D) Open-perils coverage for dwelling coverage only.
a
The insured may list or schedule certain types of property under the scheduled personal property endorsement to increase the coverage. Which of the following items is NOT included in this endorsement? A) Firearms. B) Musical instruments. C) Postage stamps. D) Coins.
a
Under an HO-2 policy with a coverage limit of $50,000 on the dwelling, what is the amount of personal property coverage that would be available? A) $25,000.00 B) $30,000.00 C) $50,000.00 D) $20,000.00
a
Which homeowners endorsement is used to insure high value items of personal property? A) Scheduled personal property. B) Personal effects. C) Personal property replacement cost. D) Business pursuits.
a
Which of the following coverages in the homeowners policy is used to protect Sam when a friend files suit after falling down basement stairs that Sam is repairing? A) Coverage E-Personal Liability. B) Coverage A-Dwelling. C) Coverage F-Medical Payments. D) Coverage D-Loss of Use.
a
Which of the following endorsements will change Coverage C--Personal Property in the HO-3 from named peril to open peril? A) Special personal property. B) Increased limit on personal property. C) Scheduled personal property. D) Personal property replacement cost.
a
Which of the following items could be insured under Coverage C of a homeowners policy? A) Personal property usually located in a secondary residence. B) Snowmobile. C) Motorized go cart. D) Exotic birds.
a
Which of the following items may be covered under Coverage C-Personal Property of a homeowners policy? A) Personal property of the insured located anywhere in the world. B) Animals. C) Property belonging to the insured's boarder. D) Aircraft parts.
a
Which of the following unendorsed policies provides open peril coverage on Coverage C--Personal Property? A) HO-5. B) HO-3. C) HO-8. D) HO-2.
a
Which one of the following is NOT an additional coverage found in homeowners policies? A) Market valuation. B) Loss assessment. C) Fire department service charge. D) Debris removal.
a
A house has a replacement cost of $150,000. To make sure that the replacement cost provision of a homeowners policy applies, the minimum policy amount for the dwelling should be: A) $100,000.00 B) $120,000.00 C) $300,000.00 D) $150,000.00
b
All of the following properties can be insured under an unendorsed homeowners policy EXCEPT a: A) home under construction that the owner intends to occupy. B) mobile home that is owner occupied. C) townhouse that is owner occupied. D) duplex that is owner occupied.
b
An insured owns a personal auto policy and a homeowners policy. He purchases a new TV and puts it in the trunk of his car. On the way home he hits another car, and the crash totally destroys the TV. The damage to the TV is covered by which insurance policy? A) umbrella. B) homeowners. C) auto. D) medical expense.
b
Bart keeps a dog that is known in the neighborhood to be vicious. One day the dog attacks a neighbor while she is working in her own yard. The court orders that the animal be put to sleep. Bart's homeowners policy will cover all of the following expenses related to this incident EXCEPT: A) damage to the neighbor's yard. B) cost to have the dog put to sleep. C) the neighbor's medical expenses. D) damage to the neighbor's clothing.
b
Bill and Marge have a HO-2 policy insuring their main residence for $150,000. How much coverage do they have for personal property kept at their summer cottage? A) $30,000.00 B) $7,500.00 C) $15,000.00 D) $75,000.00
b
John's dog bites a friend who is visiting John's house. Which part of John's homeowners policy, if any, would cover the visitor's ensuing medical expenses? A) Coverage F only. B) Either Coverage E or Coverage F. C) Coverage E only. D) This loss is excluded because it was caused by an animal owned by the insured.
b
Section II of the homeowners policy provides liability coverage for all of the following EXCEPT: A) actions of a domestic animal in the care of the insured. B) using a speedboat in an organized race. C) actions of a residence employee. D) use of a 17-foot sailboat.
b
Under Coverage C-Personal Property, the homeowners policy (HO-3) covers property owned or used by an insured. When jewelry valued at $5,000 is stolen from the residence, the policy will pay: A) $1,000.00 B) $1,500.00 C) $5,000.00 D) $0.00
b
Which homeowners policy would be written to cover personal property only? A) HO-2. B) HO-4. C) HO-5. D) HO-3.
b
Which of the following individuals is NOT an insured under Section I of the homeowners policies? A) Resident relative of the insured. B) Person hired by the insured to perform work on the insured premises. C) Person younger than 21 who is in the care of the named insured. D) The spouse of the named insured.
b
Which one of the following homeowners forms is used to cover tenants or renters? A) HO-5. B) HO-4. C) HO-2. D) HO-6.
b
Which one of the following is NOT an appurtenant structure for purposes of a homeowners policy? A) Storage shed. B) Tree. C) Swimming pool. D) Fence.
b
Which one of the following is part of the formula for calculating the actual cash value of a dwelling? A) Assessed value. B) Replacement cost. C) Purchase price. D) Original market value.
b
Why is the homeowners special provisions endorsement important? A) It is added to the homeowners policy to increase the special theft limits. B) It modifies several homeowners policy provisions to comply with state requirements. C) It changes the standard deductible in the homeowners policy from $250 to $500. D) It is added to the homeowners policy to change personal property coverage from named peril to open peril.
b
All of the following are homeowners Section II additional coverages EXCEPT: A) first aid provided by the insured. B) damage to property of others. C) first aid provided to the insured. D) claim expenses.
c
All of the following statements about debris removal coverage under the homeowners policy are correct EXCEPT: A) the insurer will pay the reasonable expenses associated with the removal of remaining debris following a covered loss. B) debris (e.g., ash, dust, or particles) from a volcanic eruption that caused direct loss to a building or property contained in a building is covered. C) the homeowners policy allows 5% of the limit of liability applying to the damaged property for reimbursement for debris removal. D) reimbursement for debris removal is included in the limit of liability applying to the damaged property.
c
Bill and Marge suffer the following losses as the result of a severe storm: $3,900 wind damage to their roof; $1,000 loss of income because a boarder in their house had to move; $1,250 in repair costs to prevent further loss to covered property; and $500 in medical expenses when Marge was hit by part of the falling roof. How much will their HO-3 policy pay for these losses? Assume all losses are within the applicable policy limits and ignore any deductible that may apply. A) $5,150.00 B) $6,650.00 C) $6,150.00 D) $3,900.00
c
For personal property coverage, who is NOT insured by a homeowners policy? A) A 20 year-old resident. B) A live-in housekeeper requested by the named insured. C) A nonresident uncle. D) The named insured.
c
Frank's house has a replacement cost of $250,000. His HO-3 policy has a Coverage A limit of $180,000 and a $500 deductible. A fire causes a loss of $10,000 replacement cost and $8,000 actual cash value. What is the most Frank can collect for his loss? A) $9,000.00 B) $10,000.00 C) $8,500.00 D) $7,200.00
c
How would a loss be adjusted under a homeowners policy with an insurance-to-value clause if a homeowner failed to carry coverage of at least 80% of the replacement cost of the home? A) Cost to replace the property. B) Cost to repair the property. C) Payment of the actual cash value or a proportional share of the loss, whichever is greater. D) 100% of the loss.
c
If a homeowners policy insures the dwelling to less than 80% of replacement cost, how would a dwelling loss be adjusted? A) The loss would be settled by subtracting reasonable depreciation from the replacement cost. B) The loss payment would be reduced by 20%. C) The insured would be responsible for part of the loss. D) The full replacement cost basis would apply.
c
Joan is a music teacher who teaches piano to 20 students who come to her home for weekly lessons. Which endorsement does Joan need to add to her homeowners policy to make sure she is covered if a student is injured on her property? A) Personal liability. B) Business pursuits. C) Permitted incidental occupancies. D) Personal injury.
c
Max and Sam are neighbors who get into an argument over the placement of their common property line. The argument becomes a fight in which Sam's nose is broken. Sam sues Max for his medical expenses. How will Max's homeowners policy respond to this loss? A) It will pay Sam's medical bills under Part E--Personal Liability. B) It will pay Sam's medical bills under the first aid expenses additional coverage. C) The insurer will deny the claim because of the intentional injury exclusion. D) It will pay Sam's medical bills under Part F--Medical Payments to Others.
c
Robert wants open perils coverage on his dwelling and named perils coverage for his personal property. Which homeowners form should he choose? A) HO-2. B) HO-4. C) HO-3. D) HO-6.
c
Stephanie is an agent in a local insurance agency. While visiting a client in his home, Stephanie accidentally leaves a coffee cup on an antique coffee table, damaging the wood surface. She asks her sales manager whether she has coverage under her homeowners policy. Which of the following is the best advice given to Stephanie? A) You need to buy a commercial liability policy. B) The personal injury endorsement should be added to your policy to provide coverage for injury or damage you may cause to a client. C) The business pursuits endorsement should be added to your homeowners policy to protect you if you personally damage property while conducting business. D) Your homeowners policy provides coverage for this exposure.
c
Trees, shrubs, and other plants are covered as additional coverages for Coverages A through D. The coverage is limited to certain perils, however. All of the following perils are covered when causing damage to a tree or shrub EXCEPT: A) theft. B) explosion. C) wind. D) riot.
c
Under the homeowners policy, what is the maximum number of roomers, boarders permitted in residential structures eligible for homeowners coverage? A) 1 B) 5 C) 2 D) 3
c
Which of the following is NOT a peril covered under the personal property coverage in the HO-3 Special Form? A) Freezing. B) Hail. C) Water damage. D) Malicious mischief.
c
Which of the following is NOT an eligibility requirement for a homeowners policy? A) No more than 4 families occupy the dwelling. B) Named insured is owner-occupant of dwelling or a renter who maintains a residential occupancy. C) Dwelling is used as a primary residence. D) Dwelling may contain an incidental occupancy.
c
Which one of the following statements regarding personal liability coverage is CORRECT? A) It is automatically included in both the dwelling and homeowners policies. B) It is added by endorsement to both the dwelling and homeowners policies. C) It is added by endorsement to the dwelling policy but automatically included in the homeowners policy. D) It is added by endorsement to the homeowners policy.
c
Who would use a HO-6 homeowners form? A) Owner of a rental house. B) Tenant of a rental house. C) Owner of a condominium. D) Owner of a duplex.
c
Coverage D in homeowners insurance is for what type of loss? A) Personal liability. B) Personal property. C) Dwelling. D) Loss of use.
d
Credit card fraud is covered under a homeowners policy to a maximum of what amount? A) $1,000.00 B) $2,000.00 C) $100.00 D) $500.00
d
Frank owns a house valued at $500,000. He purchases a policy insuring it for $300,000 with an 80% coinsurance clause and a $1,000 deductible. Faulty wiring causes a fire that results in a loss of $100,000. How much will the policy pay? A) $239,000.00 B) $399,000.00 C) $59,000.00 D) $74,000.00
d
In homeowners policies, what does Coverage A insure? A) Other structures. B) Extra expenses. C) Personal property. D) Dwelling.
d
Jim and his family are considering a move to the West Coast but are very concerned about earthquakes. Jim called an insurance agent for advice. What is the best advice the agent could give Jim about adequately covering his new home for possible earthquake damage? A) A separate earthquake policy should be purchased to provide full coverage for earth movement. B) A state insurance fund will cover any damage that occurs. C) The homeowners policy automatically provides earthquake coverage. D) Adding the earthquake endorsement will provide the coverage needed.
d
Mary's purse was stolen from her as she walked down the sidewalk. She has an HO-2 policy. Will Mary's policy cover this loss subject to the deductible? A) Yes, if Mary has added the Scheduled Personal Property endorsement to her policy. B) No, because the loss occurred away from the insured premises. C) No, theft is not a covered peril in the HO-2. D) Yes, theft is a covered peril under all of the homeowners forms.
d
Roberta inherited a home from her grandmother. This home is 150 years old, in fair condition, and has ornate doors and trim. Unfortunately, the market value is much less than the cost to rebuild with the same doors and trims. Which is the best homeowners policy for Roberta? A) HO-5. B) HO-2. C) HO-3. D) HO-8.
d
Section II of a Homeowners policy covers all the following EXCEPT: A) property damage of another caused by the insured. B) bodily injury to others. C) liability for loss of use of another's property. D) bodily injury to one of the insured's resident family members.
d
The medical payments coverage provided by the homeowners policy covers reasonable medical expenses incurred within how many years of an accident? A) Two. B) Five. C) One. D) Three.
d
Which of the following statements regarding theft coverage in the HO-8 policy is NOT true? A) Higher on-premises theft coverage limits are available. B) The standard theft limit applies on the residence premises only. C) A maximum of $1,000 coverage per occurrence for loss by theft is available. D) Special limits of liability for jewelry and furs are provided.
d
Which one of the following could be insured under Coverage B of a homeowners policy? A) A detached garage rented to a friend to change the oil for neighbors at a discounted price. B) A garage next to the house with only the roof connecting them. C) A detached garage with a second-floor room rented by a travel agent for several representatives to book cruises over the telephone. D) A detached garage rented to a neighbor to store his sports car during the winter.
d
