Insurance ch 22 and 23

David has a Homeowners 3 policy that provides $280,000 of insurance on his dwelling, which has a current replacement value of $400,000. Ignoring any deductible, how much will David collect if a roof with a replacement value of $16,000 but an actual cash value of $10,000 is destroyed in a fire? $14,000 $16,000 $12,000 $10,000

$14,000

Darla purchased an unendorsed Homeowners 3 policy. While the policy was in force, a fire occurred that destroyed a living room set. The living room set cost $4,000 new, but was 25 percent depreciated when the loss occurred. Replacement furniture will cost $4,400. Assuming no deductible, how much will Darla receive from her insurer? $3,300 $4,400 $3,400 $3,000

$3,300

Which of the following is (are) included among the duties of an insured following a loss covered under the Homeowners 3 policy? I. To file a proof of loss within a specified time period after the insurer's request II. To prepare an inventory of damaged personal property Both Neither

Both

Which of the following statements concerning the coverage of collapse of the dwelling under an unendorsed Homeowners 3 policy is true? There is no coverage for collapse unless the proper endorsement is added to the policy. Collapse is covered if it is caused by one of the Coverage C perils. There is no coverage for collapse, regardless of the cause of the collapse. If collapse is caused by an earthquake, the loss is covered.

Collapse is covered if it is caused by one of the Coverage C perils.

Cal is renting an apartment. Which homeowners policy is specially designed to insure renters? HO-4 HO-3 HO-6 HO-2

HO-4

Shauna purchased a condominium unit. Which homeowners policy is specially designed for condominium unit owners? HO-4 HO-3 HO-2 HO-6

HO-6

Which homeowners policy is designed for the tenants of a rented premises? Homeowners 2 Homeowners 6 Homeowners 4 Homeowners 8

Homeowners 4

Which of the following statements is (are) true regarding how the Homeowners 3 policy handles the peril of collapse? I. Collapse is specifically excluded, and there are no exceptions to the exclusion. II. Collapse that is caused by a Coverage C peril is covered. both I and II neither I nor II

II. Collapse that is caused by a Coverage C peril is covered.

Which of the following statements about the appraisal clause in the Homeowners 3 policy is (are) true? I. It is used to determine a value for personal property when the policy is issued. II. It is used to help settle disputes over the amount of a loss after a loss has occurred. both I and II neither I nor II

II. It is used to help settle disputes over the amount of a loss after a loss has occurred.

Which of the following statements about eligibility requirements for homeowners insurance is (are) true? I. A contract can be written on a twenty-unit apartment complex as long as the tenants are families. II. Separate forms are available for renters and condominium owners. both I and II neither I nor II

II. Separate forms are available for renters and condominium owners.

Which of the following statements concerning coverage under the Homeowners 3 policy is true? If a discharge from a home appliance causes the home to flood, the loss is excluded. If an insured peril damages a portion of a pair or set (e.g., matching lamps or end tables), the insurer must pay the full value of the entire pair or set. If a power failure away from the insured dwelling causes a loss, the loss is covered. If a Coverage C peril causes a collapse, the resulting damage is covered.

If a Coverage C peril causes a collapse, the resulting damage is covered.

Which of the following statements about coverage for loss of use (Coverage D) under the Homeowners 3 policy is true? There is no coverage for loss of rent if an insured peril makes the part of the premises rented to others uninhabitable. If a covered loss makes the home unfit for living, the insurer pays additional living expenses the insured may incur as a result of the loss. There is coverage for loss of business income if an insured peril forces a home business to be terminated. The duration of payments for additional living expenses is limited to a maximum of 30 days.

If a covered loss makes the home unfit for living, the insurer pays additional living expenses the insured may incur as a result of the loss.

Which of the following is a general exclusion under Section I of the Homeowners 3 policy? Losses resulting from a power failure caused by an insured peril at the residence premises. Water damage caused by accidental discharge from a household appliance. Losses due to the failure of the insured to use all reasonable means to save and preserve property after the time of a loss. Losses due to a windstorm.

Losses due to the failure of the insured to use all reasonable means to save and preserve property after the time of a loss.

Which of the following statements about the coverage for other structures (Coverage B) under the Homeowners 3 policy is true? Structures attached to the dwelling by a fence or utility line are considered to be part of the dwelling rather than other structures. Coverage applies even if the other structure is used for business purposes. There is no coverage for a private garage if it is rented to a tenant of the dwelling. The coverage applies to a detached garage or tool shed on the residence premises.

The coverage applies to a detached garage or tool shed on the residence premises.

Michelle had four matching end tables in her home. A fire damaged the home, destroying two of the end tables. Michelle's home was covered by an unendorsed Homeowners 3 policy. Which of the following is true with regard to the settlement for the end tables in this case? The insurer will pay the replacement cost of the loss. If a partial loss to a pair or set occurs, the insurer is liable for replacement of the entire pair or set. Loss to a pair or set is excluded under the policy. The insurer will pay the difference in actual cash value of the property before and after the loss.

The insurer will pay the difference in actual cash value of the property before and after the loss.

Which of the following statements about the additional coverages under Section I of the Homeowners 3 policy is true? Property removed from the premises because it is endangered by an insured peril is covered on a named-perils basis while it is outside the insured premises. There is coverage for the reasonable cost incurred to protect property from further damage after a covered loss occurs. There is unlimited coverage for furnishings of the landlord in an apartment on the premises that is rented to others. There is no coverage for the increased cost of construction or repair to comply with an ordinance or law.

There is coverage for the reasonable cost incurred to protect property from further damage after a covered loss occurs.

Ellen believes the value of the loss to her home is $30,000. The insurer has offered $18,000 to settle the loss. If Ellen and the insurer cannot agree on the value of the loss, which homeowners policy provision specifies how this dispute will be settled? mortgage clause insurer's option loss payment clause appraisal clause

appraisal clause

All of the following statements about the cancellation of a Homeowners 3 policy are true EXCEPT a policy written for longer than 1 year can be cancelled for any reason on the anniversary date by giving the insured at least 30 days' notice of cancellation. the insurer may cancel a new policy for any reason if it has been in force for less than 60 days and is not a renewal policy. at least 100 days' notice of cancellation must be given if an insurer cancels a policy for nonpayment of premium. after a policy has been in force for at least 60 days, it can be cancelled by the insurer if the risk has increased substantially since the policy was issued.

at least 100 days' notice of cancellation must be given if an insurer cancels a policy for nonpayment of premium.

Persons insured under Section I of the Homeowners 3 policy include which of the following? I. A spouse of the named insured if living in the same household II. The named insured's children who are under age 24 and who are full-time college students both I and II neither I nor II

both I and II

Which of the following is (are) included among the duties of an insured following a loss covered under the Homeowners 3 policy? I. To file a proof of loss within a specified time period after the insurer's request II. To prepare an inventory of damaged personal property both I and II neither I nor II

both I and II

Which of the following statements about the personal property coverage (Coverage C) of the Homeowners 3 policy is (are) true? I. There are special limits of liability that apply to certain types of personal property. II. The full amount of coverage applies only if the property is permanently located at any residence of the insured. both I and II neither I nor II

both I and II

The homeowners policy excludes a loss brought about by two or more perils where one peril is covered under the policy and the other perils are excluded. This situation is called nullification. concurrent causation. proximate cause. ordinance or law.

concurrent causation.

Which of the following losses to a dwelling would be covered under an unendorsed Homeowners 3 policy? smoke damage resulting from agricultural operations of a neighboring farmer damage to the structure caused by a flash flood damage to a floor caused by water backing up through a sewer pipe damage to the structure caused by the weight of heavy snow on the roof

damage to the structure caused by the weight of heavy snow on the roof

All of the following are additional coverages under Section I of the Homeowners 3 policy EXCEPT the reasonable expenses of removing debris after an insured loss. fire department service charges for which the insured is liable by contract or agreement. losses incurred from the unauthorized use of a stolen credit card. damage to trees and shrubs caused by a windstorm.

damage to trees and shrubs caused by a windstorm.

Which of the following is an additional coverage provided under Section I of the Homeowners 3 policy? intentional property damage caused by an insured medical payments to others debris removal personal liability

debris removal

Mike and Susan built their "dream home." They insured their home for its full replacement cost. They also added an endorsement that will pay up to an additional 20 percent of the policy limit in case the cost of rebuilding the home after a loss is greater than the policy limit. The basis under which Mike and Susan insured their home is called valued policy coverage. actual cash value. extended replacement cost. guaranteed replacement cost.

extended replacement cost.

All of the following losses are subject to special limits of liability under the Homeowners 3 policy EXCEPT destruction by fire of property used for business purposes. storm damage to a boat at a marina. furniture destroyed by a fire. theft of firearms.

furniture destroyed by a fire.

All of the following statements about conditions under a Homeowners 3 policy are true EXCEPT a waiver or change in any policy provision must be approved in writing by the insurer to be valid. if the named insured dies, coverage automatically ceases with respect to any property of the deceased. the insurer must give written consent for an assignment of the policy to be valid. if an insurer broadens coverage without an additional premium during the policy period, the broadened coverage applies immediately to the present policy.

if the named insured dies, coverage automatically ceases with respect to any property of the deceased.

Section I of the Homeowners 3 policy provides coverage for which of the following? loss of use personal liability medical payments disability of the homeowner

loss of use

Which of the following statements about the Homeowners 3 policy is (are) true? I. Losses to the dwelling are always settled on an actual cash value basis II. Coverage on personal property is limited to $5,000. both I and II neither I nor II

neither I nor II

One additional coverage under the homeowners policy makes available up to 10 percent of the Coverage A limit to cover increased repair costs after a loss in order to comply with a stricter building code. This additional coverage is called reasonable repairs. concurrent causation. ordinance or law. debris removal.

ordinance or law.

Under the Homeowners 3 policy, all of the following are options of the insurer for settling claims EXCEPT paying the claim with insurance company stock. repairing the property. replacing the property. paying the claim in cash.

paying the claim with insurance company stock.

Following catastrophic hurricane losses, South Coast Insurance Company changed its deductible provision. Rather than using a specified dollar value, $250 for example; the dollar value of the deductible increases with the size of the loss. The type of deductible that South Coast changed to is called a(n) calendar-year deductible. aggregate deductible. straight deductible. percentage deductible.

percentage deductible.

Linda wants to purchase a homeowners policy. She has some valuable personal property to which internal policy limits apply. Her agent said that she could obtain coverage under her homeowners policy by attaching a list of this valuable property with specific amounts of insurance. Such a listing is called a(n) schedule. application. warranty. binder.

schedule.

The purpose of the appraisal clause in the Homeowners 3 policy is to set a value on the home for estate purposes if the homeowner dies. determine a mortgage lender's insurable interest after a loss has occurred. settle valuation disputes between the insurer and insured after a loss has occurred. determine the appropriate amount of homeowners insurance to purchase.

settle valuation disputes between the insurer and insured after a loss has occurred.

Several different values can be considered when determining how much insurance should be carried on a dwelling (the Coverage A limit of the Homeowners 3 policy). The appropriate value that should be used is: the home's actual cash value. the home's appraised value for property tax purposes. the home's replacement cost. the home's market value.

the home's replacement cost.

If there is a conflict between state law and a provision in a homeowners policy, the policyholder is entitled to whichever provides broader coverage. the state law takes precedence. the policy is null and void. the policy wording takes precedence.

the state law takes precedence.