Section 7 quiz questions

Marta insured her home with an HO-3 policy that includes a Personal Property Replacement Cost Loss Settlement endorsement. Her large screen television fell off the wall and was damaged beyond repair. She had paid $2,000 for it. At the time of loss it had an actual cash value of $800 and a replacement cost of $1,500. Because she found that she had little time to watch television, she decided not to replace the TV. How much did her insurer pay on the claim? Select one: A. $0 B. $800 C. $1,500 D. $2,000

A. $0

Which one of the following would be an exception to the Coverages E and F Business exclusion to the liability coverage provided by the HO-3 policy? Select one: A. A 12-year-old girl pet sitting the neighbor's dog for a fee B. Mother running a full-time beauty salon in the home as a second income to support the family C. Full-time landscaping business D. Home daycare services for a fee

A. A 12-year-old girl pet sitting the neighbor's dog for a fee

One of the effects of the Personal Injury Coverage endorsement on an HO-3 policy is to Select one: A. Add the definition of personal injury. B. Add liability coverage for bodily injury. C. Add definitions for bodily injury and property damage. D. Add liability coverage for medical payments.

A. Add the definition of personal injury.

Carol has an unendorsed HO-5 policy with adequate limits and a $500 deductible. Carol rented a place at the shore for a week in August. While she was on the beach a sudden rainstorm developed and Carol suffered water damage to her personal property from the rain through a window she had left open. To replace the damaged items it cost her $650. After depreciation the personal property was valued at $450. How much would Carol be able to collect from her insurer? Select one: A. Carol would not collect anything as her policy covers actual cash value less the deductible. B. Carol would not collect anything as the HO-5 does not cover rain damage through open windows. C. Carol would collect $450 as her deductible does not apply to off premises claims. D. Carol would collect $150 as the HO-5 policy is a replacement cost policy.

A. Carol would not collect anything as her policy covers actual cash value less the deductible.

The Richleys have an HO-3 policy. A deliveryman cut across the grass, rather than using the walk to the Richleys' front door, and twisted his ankle on the unlevel surface. He had to go to the emergency room and incurred medical expenses of $750. Which one of the following coverages, if any, would pay for the $750 in expenses? Select one: A. Coverage F—Medical Payments to Others B. No coverage C. Section II—Additional Coverages D. Coverage E—Personal Liability

A. Coverage F—Medical Payments to Others

The Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money Coverage—Increased Limit endorsement may be appropriate for Select one: A. Insureds who hold credit cards. B. Insureds who pay their bills online. C. Insureds who use automated teller machines. D. Insureds who tend to overspend because of credit availability.

A. Insureds who hold credit cards.

The HO-5 policy special limits for jewelry and furs, firearms, and silverware apply to all of the following items, EXCEPT: Select one: A. Intentionally lost items B. Stolen items C. Accidentally lost items D. Misplaced items

A. Intentionally lost items

Which one of the following describes the difference between the HO-3 policy and the HO-2 policy? Select one: A. The HO-3 provides coverage for all causes of loss, unless specifically excluded, for Coverages A and B. The HO-2 provides coverage for named perils for Coverages A and B. B. The HO-3 is designed for an owner-occupant of a house. The HO-2 is designed for a tenant-homeowner of an apartment. C. The HO-3 is the preferred homeowners policy for homeowners who have had no prior losses. The HO-2 is designed for homeowners who have experienced some losses. D. The HO-3 provides Coverage C limits that are 50% of Coverage A. The HO-2 provides Coverage C limits that are 40% of Coverage A.

A. The HO-3 provides coverage for all causes of loss, unless specifically excluded, for Coverages A and B. The HO-2 provides coverage for named perils for Coverages A and B.

All of the following are included as insureds for the Section II—Liability Coverages of a homeowners policy, EXCEPT: Select one: A. The homeowners association that sends a loss assessment bill to the named insured B. The 19-year-old exchange student who temporarily lives with and under the care of the named insured and his spouse C. The named insured's neighbor while caring for the insured's dog if the dog causes injury while in the neighbor's care D. The named insured's 17-year-old foster child

A. The homeowners association that sends a loss assessment bill to the named insured

Under the HO-3 policy, if the named insured or his or her spouse should die, Select one: A. The insurer agrees to cover the decedent's legal representative as an insured to the extent that the decedent had an interest in the property covered in the policy. B. Any insureds found guilty of manslaughter or murder of the named insured or spouse cannot receive policy benefits. C. The insurer agrees to cover the decedent's entire estate, including property not covered by the policy. D. The policy is automatically canceled.

A. The insurer agrees to cover the decedent's legal representative as an insured to the extent that the decedent had an interest in the property covered in the policy.

Jackie insures her home with an HO-3 policy. She operates a seamstress service from her home. A customer was picking up some altered pants, tripped on a loose floorboard on her porch, and was injured. Is there coverage for this claim? Select one: A. Yes, if Jackie's policy was endorsed with the Home Business Insurance Coverage endorsement B. Yes, if Jackie's policy was endorsed with the Personal Injury Coverage endorsement C. No, because of the Business Liability Exclusion in the HO-3 D. No, because of the Home Business Exclusion in the HO-3

A. Yes, if Jackie's policy was endorsed with the Home Business Insurance Coverage endorsement

Steve and Julie purchased a HO-3 policy with a Coverage A limit of $200,000 and a Coverage C limit of $100,000. Steve and Julie added the Earthquake endorsement to their policy, which has the standard deductible. An earthquake occurs and causes significant damage to their dwelling and property. If Steve and Julie suffered a $75,000 loss as a result of the earthquake, how much coverage will their policy provide? Select one: A. $0 B. $65,000 C. $70,000 D. $74,500

B. $65,000

Grayson runs a business from his home. His loss exposures include personal property used in the business and liability for his business activities. Grayson has an HO-3 policy for his home. Which one of the following endorsements will provide coverage for Grayson's business loss exposures? Select one: A. Supplemental Loss Assessment Coverage endorsement B. Home Business Insurance Coverage endorsement C. Personal Property Replacement Cost Loss Settlement endorsement D. Scheduled Personal Property endorsement

B. Home Business Insurance Coverage endorsement

Regarding property damage coverage under the Section II—Additional Coverages for Damage to Property of Others in the HO-3 policy, the insurer will Select one: A. Not pay for intentional property damage to a neighbor's home caused by a 12-year-old insured. B. Not pay for any damage to property owned by the insured. C. Pay for damage to property owned by a tenant of the insured. D. Pay for damage to property owned by a resident of the named insured's household.

B. Not pay for any damage to property owned by the insured.

After a loss covered by a homeowners policy, an insured may find that repairs must be made under a newer, stricter building code. An endorsement that provides increased coverage for such a situation is the Select one: A. Supplemental Loss Assessment Coverage endorsement. B. Ordinance or Law—Increased Amount of Coverage endorsement. C. Change in Code endorsement. D. Loss Contingency endorsement.

B. Ordinance or Law—Increased Amount of Coverage endorsement.

Which one of the following statements is true regarding watercraft liability coverage under the HO-3 policy? Select one: A. Watercraft owned by the insured that is stored at a marina is not covered. B. Sailboats shorter than 26 feet owned by the insured are covered. C. Sailboats longer than 26 feet not owned by or rented to an insured are not covered. D. Inboard watercraft with 50 horsepower engines owned by the insured are covered.

B. Sailboats shorter than 26 feet owned by the insured are covered.

Which one of the following statements concerning the Scheduled Personal Property Endorsement is true? Select one: A. The Section I deductible applies to scheduled items. B. The Coverage C special limits do not apply to scheduled items. C. Cameras cannot be scheduled under the endorsement. D. The endorsement covers fewer causes of loss than does the HO-3 policy.

B. The Coverage C special limits do not apply to scheduled items.

All of the following are true statements concerning the HO-6 policy, EXCEPT: Select one: A. Coverage A includes other structures owned solely by the insured. B. The HO-6 defines residence premises as a one- to four-family dwelling where the insured resides. C. Section I—Perils Insured Against provides named perils coverage for Coverages A and C. D. The insured selects the limit for Coverage C—Personal Property.

B. The HO-6 defines residence premises as a one- to four-family dwelling where the insured resides.

Garth insures his home with an HO-3 policy. Garth was invited to a party at the apartment of his friend, Julie. Garth was having trouble closing the front door behind him as he entered the apartment. He pulled the door hard, which shook the walls and caused a vase to fall off of a shelf and break into pieces. Julie made a claim against Garth for the replacement cost of the vase, which was $1,108. Garth's insurer did not believe that the accident was Garth's fault in any way. How much did the insurer pay to Julie? Select one: A. $0 B. $554 C. $1,000 D. $1,108

C. $1,000

Dominic and Amy are a married couple who insure their home, which sits on a large property, with an HO-3 policy. It has a Coverage E—Personal Liability limit of $300,000. They were riding their snowmobiles on their own property when they saw a man crouching behind the shrubs, so they assumed he was a burglar. They drove their snowmobiles directly at the man, seriously injuring him. Then they discovered the man was a technician installing cable for their television. The cable technician sued Dominic and Amy and was awarded $300,000 against Dominic and $100,000 against Amy. The defense costs were $30,000. The court ruled that the insurer could not deny coverage for an intentional or expected injury because the couple was using force reasonably believed necessary to protect their home. As a result of the lawsuit, Dominic and Amy's insurer will pay Select one: A. $0. B. $300,000. Dominic and Amy are a married couple who insure their home, which sits on a large property, with an HO-3 policy. It has a Coverage E—Personal Liability limit of $300,000. They were riding their snowmobiles on their own property when they saw a man crouching behind the shrubs, so they assumed he was a burglar. They drove their snowmobiles directly at the man, seriously injuring him. Then they discovered the man was a technician installing cable for their television. The cable technician sued Dominic and Amy and was awarded $300,000 against Dominic and $100,000 against Amy. The defense costs were $30,000. The court ruled that the insurer could not deny coverage for an intentional or expected injury because the couple was using force reasonably believed necessary to protect their home. As a result of the lawsuit, Dominic and Amy's insurer will pay Select one: A. $0. B. $300,000. C. $330,000. D. $400,000. D. $400,000.

C. $330,000.

Jack and Gabriela rent the second floor of a two-family dwelling. They have an unendorsed HO-4 policy with a Coverage C—Personal Property limit of $90,000. Due to a fire on the first floor of the dwelling, Jack and Gabriela were forced to stay in a motel for five nights. The motel costs were $100 a night and they spent $50 a day on meals. They estimate their normal food budget to be $15 a day. There was no damage to the second floor of the dwelling or any of Jack and Gabriela's personal property, so they submitted a claim for $750 to their insurer. How much, if any, will their insurer pay? Select one: A. $0 B. $500 C. $675 D. $750

C. $675

Ralph is a homeowner living in a subdivision that has a formal homeowners association. Collectively the members of the association own the subdivision's clubhouse and tennis courts. The Loss Assessment additional coverage under Section II—Liability Coverages of Ralph's homeowners policy will provide coverage to Ralph for an assessment up to $1,000 arising from which one of the following losses? Select one: A. A tennis player accidentally dropped a cigarette in the trash next to the clubhouse. The resulting fire totally destroyed the clubhouse. B. Ralph's dog bit a tennis player on one of the courts and that tennis player made a claim against Ralph. C. A tennis player tripped over a torn chain link fence surrounding the court. The tennis player sued the association for her injuries and recovered a judgment. D. Ralph's daughter injured another player on the court when she accidentally released her racquet following a serve, and that injured player made a claim against Ralph and his daughter.

C. A tennis player tripped over a torn chain link fence surrounding the court. The tennis player sued the association for her injuries and recovered a judgment.

An occurrence as defined in the HO-3 policy is Select one: A. A claim. B. A loss. C. An accident. D. An event.

C. An accident.

Under the Section II—Conditions of the HO-3 policy, the bankruptcy of the insured Select one: A. May relieve the insurer of its obligations under certain chapters of the bankruptcy code. B. Relieves the insurer of its obligations at the discretion of the federal bankruptcy court. C. Does not relieve the insurer of its obligations. D. Relieves the insurer of its obligations to the same extent that the insured is relieved of its obligations.

C. Does not relieve the insurer of its obligations.

Under the Severability of Insurance condition in the HO-3 policy, Select one: A. Separate limits of liability exist for bodily injury and property damage. B. The insurer's limit of liability is increased for any one occurrence if more than one insured is involved. C. Each insured seeking protection is treated as if that insured has separate coverage under the policy, but the limit of insurance is not increased for any one occurrence. D. The insurer and the insured are subject to separate sets of conditions.

C. Each insured seeking protection is treated as if that insured has separate coverage under the policy, but the limit of insurance is not increased for any one occurrence.

Which one of the following homeowners forms provides the broadest property coverage of any of the standard unendorsed homeowners forms? Select one: A. HO-2 policy. B. HO-3 policy. C. HO-5 policy. D. HO-8 policy.

C. HO-5 policy.

Sammy and Sally Oshua insure their home with an HO-3 policy. They own a cocker spaniel puppy. While a neighboring couple and their five-year-old daughter were visiting, the puppy bit the girl as she was playing with it. The child suffered a serious wound and the neighbors sued the Oshuas. Which one of the following statements is true? Select one: A. Because the dog was on the Oshuas' property, they are not covered for injury to the child. B. Because the child is a minor, the insurer will pay the damages regardless of legal liability. C. In addition to paying up to the limit of liability, the insurer will pay defense costs associated with the lawsuit. D. Defense costs are not covered for the Oshuas if the lawsuit is found to be groundless.

C. In addition to paying up to the limit of liability, the insurer will pay defense costs associated with the lawsuit.

While mowing the lawn at his family's home, Jake accidentally ran over the foot of his three-year-old son, causing severe injury. What coverages for this loss, if any, would be provided under Jake's HO-3 policy? Select one: A. Coverage F—Medical Payment to Others only B. Coverage E—Personal Liability only C. None D. Coverage E—Personal Liability and Coverage F—Medical Payment to Others

C. None

Which one of the following terms contained in the HO-3 policy is defined as an accident, including continuous or repeated exposure to the same general harmful conditions? Select one: A. Loss B. Exposure C. Occurrence D. Claim

C. Occurrence

An occurrence as defined in the HO-3 policy may include Select one: A. Property damage caused intentionally by an insured who is 13 years old or older. B. More than one accident with more than one injury. C. One accident involving injury to more than one person. D. A non-accidental event.

C. One accident involving injury to more than one person.

When comparing Coverage D—Loss of Use as provided by the HO-3 policy and HO-4 policy, Select one: A. Both policies automatically provide coverage at 30% of the Coverage A limit. B. The HO-4 policy automatically provides coverage at 30% of the Coverage A limit, rather than 30% of the Coverage C limit, as in the HO-3 policy. C. The HO-4 policy automatically provides coverage at 30% of the Coverage C limit, rather than 30% of the Coverage A limit, as in the HO-3 policy. D. Both policies automatically provide coverage at 30% of the Coverage C limit.

C. The HO-4 policy automatically provides coverage at 30% of the Coverage C limit, rather than 30% of the Coverage A limit, as in the HO-3 policy.

All of the following statements about the HO-5—Comprehensive Form (HO-5) policy are correct, EXCEPT: Select one: A. The HO-5 covers water damage for personal property away from a premises owned by an insured. B. The HO-5 generally covers personal property damaged by rain through an open window even if the building itself is not damaged. C. The HO-5 Coverage D provides broader coverage than the HO-3 Coverage D. D. The HO-5 special limits for jewelry and furs apply to items that are lost.

C. The HO-5 Coverage D provides broader coverage than the HO-3 Coverage D.

Tom recently met with his insurance agent to discuss his homeowners coverage. The agent has suggested that Tom change his present HO-2 policy to either an HO-3 policy or an HO-5 policy. Which one of the following is a reason the agent might give to support his suggestion? Select one: A. The HO-3 will provide open perils coverage for Tom's personal property. B. The HO-5 will provide coverage without a deductible. C. The HO-5 will provide much broader coverage for his home and personal property. D. The HO-3 will be less expensive saving Tom some premium dollars for similar coverage.

C. The HO-5 will provide much broader coverage for his home and personal property.

Marisa lives in a two-story rental apartment and she has an HO-4 policy. Because she needs a wheelchair to get around, she had special ramps installed over the steps between floors. If a fire destroys the ramps, are the ramps covered under her policy? Select one: A. No, because she has no insurable interest in the apartment. B. No, because tenant-added fixtures are excluded. C. Yes, because they are a building addition and alteration. D. Yes, because the ordinance and law provision applies to the Americans with Disabilities Act.

C. Yes, because they are a building addition and alteration.

The Section II Limit of Liability provision of the HO-3 policy stipulates that the limit of Coverage E—Personal Liability appearing on the declarations page is the total limit of coverage for Select one: A. Each claim made relative to an occurrence. B. Each person injured in a claim. C. Each insured separately. D. Any one occurrence.

D. Any one occurrence.

Nick's five-year-old nephew from another state was visiting for the day. Nick was mowing the grass at his home when he accidentally ran over his nephew's toe, causing injury. Nick has an HO-3 policy. Which of the following coverages would apply to this loss? Select one: A. Coverage F—Medical Payments to Others only B. Coverage E—Personal Liability only C. None D. Coverage E—Personal Liability and Coverage F—Medical Payments to Others

D. Coverage E—Personal Liability and Coverage F—Medical Payments to Others

The Inflation Guard endorsement gradually and automatically increases limits throughout the policy period in homeowners policies for Select one: A. Coverage A only. B. Coverages A and B only. C. Coverages A, B, and C only. D. Coverages A, B, C, and D.

D. Coverages A, B, C, and D.

Ed and Genie Allen submitted a claim under an HO-2 policy for a property loss, and the insurer conducted an investigation. Under their HO-2, which one of the following statements is true regarding the burden of proof? Select one: A. Under the HO-2 there is no burden of proof on either the Allens or the insurer. B. The insurer must prove that the loss was caused by an excluded cause of loss. C. Because the HO-2 policy is an all-risks policy, the burden of proof lies in the coverage investigation by the insurer. D. Ed and Genie must prove that the loss was caused by a covered cause of loss.

D. Ed and Genie must prove that the loss was caused by a covered cause of loss.

The Personal Injury endorsement to a homeowners policy adds an additional liability insuring agreement expanding the homeowners policy to cover personal injury, which includes all of the following, EXCEPT: Select one: A. Publishing oral or written material involving libel, slander, or invasion of privacy B. False arrest, detention, or imprisonment C. Malicious prosecution D. Intentionally publishing material known to be false

D. Intentionally publishing material known to be false

The HO-3 policy Select one: A. Is fully assignable without the insurer's consent. B. May be assigned when the insured makes a written request within 60 days of the assignment. C. Cannot be assigned to another party. D. Is assignable only with the insurer's written consent.

D. Is assignable only with the insurer's written consent.

Defense costs coverage is included under Section II—Liability Coverages in the HO-3 policy. This coverage Select one: A. Is included in the personal liability limit. B. Has a liability limit separate from the personal liability limit. C. Is excluded if the suit against the insured is groundless. D. Is supplemental to the liability limit.

D. Is supplemental to the liability limit.

Under Section II—Liability Coverage of a homeowners policy all of the following are the insured's duties after an occurrence, EXCEPT: Select one: A. Provide claims assistance to the insurer B. Submit a sworn statement of loss for damage to property of others if making a claim under that coverage C. Forward legal documents to the insurer D. Make voluntary payments to the claimant

D. Make voluntary payments to the claimant

All of the following motor vehicle exposures are covered by Section II—Liability Coverages of the HO-3 policy, EXCEPT: Select one: A. Trailers not towed by, hitched to, or carried on a motor vehicle B. Motor vehicles used solely to service an insured's residence C. Motor vehicles designed for assisting people who are handicapped D. Motor vehicles used to carry persons or cargo for a charge

D. Motor vehicles used to carry persons or cargo for a charge

The medical payments coverage in a homeowners policy covers certain medical expenses incurred by Select one: A. Resident relatives of the insured. B. Residents of the insured's household other than residence employees. C. Insureds. D. Nonresidents of the insured's household.

D. Nonresidents of the insured's household.

The Claim Expenses additional coverage under Section II of a homeowners policy covers Select one: A. Medical payments incurred by others. B. The insured's personal liability. C. Premiums on bonds exceeding the personal liability limit. D. The insured's reasonable expenses at the insurer's request.

D. The insured's reasonable expenses at the insurer's request.

If a claim is paid under Coverage F—Medical Payments to Others of a homeowners policy, a policy condition makes it clear that Select one: A. The payment settles the loss and the insurer has no additional legal obligation to the insured. B. The insurer no longer has a right to defend the insured against a Coverage E claim. C. The insurer is required to pay damages even if the insured was not connected to the injury. D. The payment is not an admission of liability by the insured or the insurer.

D. The payment is not an admission of liability by the insured or the insurer.

Tomas has an HO-3 policy covering his home. A neighbor jumped Tomas's fence to use his yard as a shortcut to a store, tripped over a small shovel left on the lawn, and was injured. The neighbor sued Tomas. Tomas's insurer defended and won the lawsuit on the theory that the neighbor was a trespasser to whom no duty was owed by Tomas. The insurer's defense included $20,000 in legal fees. Who is responsible for these fees? Select one: A. Tomas is, because liability coverage is not triggered absent a finding of liability. B. Tomas and the insurer share responsibility for the legal fees. C. The insurer is responsible for the legal fees only if Tomas is not able to pay them. D. Tomas's HO-3 insurer is responsible for the legal fees.

D. Tomas's HO-3 insurer is responsible for the legal fees.

The HO-3 policy excludes liability coverage for Select one: A. Any motor vehicle that is rented to others. B. A motorized golf cart owned by an insured and used on a golf course. C. A motorized vehicle not requiring registration that is designed for recreational use off public roads and owned by an insured, and used on an insured location. D. A motor vehicle in dead storage on an insured location.

A. Any motor vehicle that is rented to others.

Which one of the following statements regarding the liberalization clause is true in a homeowners policy? Select one: A. If the insurer, during the policy period, adopts a revision that broadens the coverage without additional premium charge, the increased coverage will automatically apply to all existing policies on the date it is implemented. B. The liberalization clause applies to changes introduced when the insurer makes a general homeowners program revision that both broadens and restricts coverage. C. Policyholders insured under a current homeowners series of the homeowners policy would automatically benefit from any changes that might be introduced in a new policy edition introduced in future years. D. The liberalization clause applies to any claim an insured files.

A. If the insurer, during the policy period, adopts a revision that broadens the coverage without additional premium charge, the increased coverage will automatically apply to all existing policies on the date it is implemented.

An insurer has decided to offer a special extended Golf Cart Liability homeowners policy endorsement, an endorsement unique to this insurer, without charge as part of a marketing promotion to attract homeowners in retirement communities. According to the liberalization clause in the Sections I and II Conditions section of the homeowners policy, the additional coverage will automatically apply to all of the insurer's Select one: A. In force homeowners policies on the date it is implemented within the state. B. Homeowners policies as the policies are renewed. C. Former homeowners policyholders who had taken their insurance business to another insurer. D. Homeowners policyholders who had their policies canceled before the endorsement was implemented within the state.

A. In force homeowners policies on the date it is implemented within the state.

Bob and Diane Rothwell's rural home is insured with an HO-3 policy. During spring clean up, the Rothwells hired a college student to help clean up and burn the brush that had accumulated over the prior season. As the brush pile was burning, an unexpected wind carried the fire across the Rothwells' pasture. Bob and Diane, their 15-year-old son Jeff, Diane's father who was visiting, the college student, and a neighbor all worked together to put out the fire before it spread to the neighbor's yard. They all suffered some burns. All of the parties listed below will be able to collect compensation for their medical bills to treat their burns from the Medical Payments to Others coverage from the Rothwells' HO-3, EXCEPT: Select one: A. Jeff B. The neighbor C. Diane's father D. The college student

A. Jeff

Which one of the following best explains why an HO-2 policy has a slightly lower premium than an HO-3 policy with similar limits? Select one: A. The HO-2 covers the dwelling building and other structures against fewer causes of loss. B. Recovery under the HO-2 is on an actual cash value basis rather than on replacement cost basis for buildings. C. The HO-2 covers only the named insured and resident relatives for specific causes of loss. D. There is no coverage for other structures under the HO-2.

A. The HO-2 covers the dwelling building and other structures against fewer causes of loss.

Which one of the following statements about the HO-2 policy and HO-3 policy is correct? Select one: A. The HO-2's Section I—Perils Insured Against is different from the HO-3. B. Both the HO-2 and HO-3 provide named perils coverage for Coverages A, B, and C. C. Both the HO-2 and HO-3 provide special form coverage for Coverages A, B, and C. D. The HO-2's Section I—Perils Insured Against is the same as that in the HO-3.

A. The HO-2's Section I—Perils Insured Against is different from the HO-3.

Tom recently met with his insurance agent to discuss his homeowners coverage. The agent has suggested that Tom change his present HO-2 policy to either an HO-3 policy or an HO-5 policy. Which one of the following is a reason the agent might give to support his suggestion? Select one: A. The HO-3 and the HO-5, in particular, will provide broader coverage for his home and personal property. B. The HO-3 will be less expensive saving Tom some premium dollars for similar coverage. C. The HO-5 will provide coverage without a deductible. D. The HO-3 will provide open perils coverage for Tom's personal property.

A. The HO-3 and the HO-5, in particular, will provide broader coverage for his home and personal property.

Which one of the following statements is true regarding "aircraft liability" coverage under the HO-3 policy? Select one: A. The homeowners policy excludes all aircraft liability. B. Model airplanes that do not carry people or cargo are considered to be "aircraft" in the HO-3 policy. C. If the insured flies her radio-controlled model airplane through a neighbor's picture window, the resulting liability claim would not be covered. D. Hobby aircraft that do not carry people or cargo are considered to be "aircraft" in the HO-3 policy.

A. The homeowners policy excludes all aircraft liability.

Under the cancellation condition in the HO-3 policy, Select one: A. The policyholder may cancel the policy for any reason but the insurer can cancel the policy only for certain reasons set forth in state regulations. B. Neither the policyholder nor the insurer can cancel the policy during the policy term. C. The policy can only be cancelled by mutual consent of the insured and the insurer. D. Either the policyholder or the insurer can cancel the policy for any reason.

A. The policyholder may cancel the policy for any reason but the insurer can cancel the policy only for certain reasons set forth in state regulations.

Coverage F—Medical Payments to Others in the homeowners policy applies to bodily injury to a residence employee in all of the following situations, EXCEPT: Select one: A. The residence employee is away from the insured location and is not working B. The residence employee is on the insured location but is not working C. The residence employee is away from the insured location but is working D. The residence employee is on the insured location and is working

A. The residence employee is away from the insured location and is not working

The HO-3 policy excludes coverage for liability assumed under contract or agreement. However, exceptions apply, provided the loss exposures do not involve coverage excluded elsewhere in the policy. Which one of the following describes an exception? Select one: A. Written contracts relating to the ownership of an insured location B. Liability assumed after an accident occurs C. Agreements intending to injure a third party D. First-party liability

A. Written contracts relating to the ownership of an insured location

An insured has a Personal Auto Policy (PAP) to cover his automobile and travel trailer and an HO-3 policy for his home. While on vacation, he unhitched the trailer at a campground for a one-week stay. During the middle of the week, a visitor was injured when an awning on the trailer fell on his head. The visitor made a claim against the insured. Is this a covered claim under the HO-3? Select one: A. Yes, because a trailer that is not being carried on, towed by, or hitched for towing by a motor vehicle is not subject to the motor vehicle exclusion. B. No, because the trailer is a defined motor vehicle under the HO-3 policy and therefore subject to a liability exclusion. C. No, because the awning is not a part of the trailer. D. Yes, because a trailer cannot be a motor vehicle under the motor vehicle exclusion.

A. Yes, because a trailer that is not being carried on, towed by, or hitched for towing by a motor vehicle is not subject to the motor vehicle exclusion.

Bill carves duck hunting decoys for sale in the basement of his home, which is insured with an HO-3 policy. This is his full-time job. One day, a customer picked up a sharp chisel after Bill told him not to touch it because it was dangerous. The customer mishandled it and severely cut his hand, requiring several stitches at the local emergency room. Would the Medical Payment to Others coverage in the HO-3 apply in this situation? Select one: A. Yes, if Bill's policy was endorsed with the Home Business Insurance Coverage endorsement B. Yes, if Bill's policy was endorsed with the Personal Injury Coverage endorsement C. No, because of the Home Crafter exclusion in the HO-3 D. No, because of the Personal Injury Liability exclusion in the HO-3

A. Yes, if Bill's policy was endorsed with the Home Business Insurance Coverage endorsement

Doris owns jewelry appraised at $10,000. She would like insurance coverage that will protect her jewelry for its appraised value. Doris also would like broad coverage for her jewelry in case she accidentally loses a piece or a stone falls out of a ring. Assuming that she purchased an HO-3 policy, which one of the following will provide the coverage she wants? Select one: A. The unendorsed HO-3 B. An HO-3 with a Scheduled Personal Property endorsement scheduling all of the jewelry C. An HO-3 with a Scheduled Personal Property endorsement scheduling $9,000 of the jewelry, on top of the $1,000 coverage limit provided by the HO-3 D. An HO-3 with a Supplemental Loss Assessment Coverage endorsement with a $10,000 limit

B. An HO-3 with a Scheduled Personal Property endorsement scheduling all of the jewelry

An HO-4 policy includes building additions and alterations coverage up to 10% of the limit of Coverage C—Personal Property. Which one of the following individuals would typically benefit from this coverage? Select one: A. A condominium unit owner who renovates the kitchen and installs more expensive cabinets than were originally in the unit B. An apartment dweller who has installed a power-lift chair at the stairway inside his two-story unit C. An owner of an older house with obsolete construction D. An owner of a single family home who has installed wheelchair ramps at the doors of her home to accommodate her wheelchair

B. An apartment dweller who has installed a power-lift chair at the stairway inside his two-story unit

Juan lives on a large property insured with an HO-3 policy. His home is heated by fuel oil that is stored in an underground tank in his backyard. Juan did not realize that there has been a small leak in the tank and that for several years fuel has slowly trickled out of it, making its way into a neighbor's well. The neighbor has made a claim against Juan, who turned the claim over to his insurer. Under Juan's HO-3 policy, this is Select one: A. Not considered an occurrence because it was not sudden. B. Considered an occurrence because it was a continuous condition and it was fortuitous. C. Not considered an occurrence because it did not cause bodily injury. D. Considered an occurrence because it destroyed tangible property.

B. Considered an occurrence because it was a continuous condition and it was fortuitous.

The loss settlement for Coverages A—Dwelling and B—Other Structures in the HO-8 policy is significantly different from the loss settlement in the HO-3 policy. Under the HO-8, if the insured makes repairs after a loss, the insurer will not pay more than the Select one: A. Replacement cost for the dwelling. B. Cost of repairs using common construction materials and methods. C. Actual cash value. D. Purchase price of the building, excluding land.

B. Cost of repairs using common construction materials and methods.

All of the following are true regarding the HO-6 policy, EXCEPT: Select one: A. Coverage C—Personal Property in the HO-6 is written for a limit selected by the insured. B. Coverage B—Other Structures is included in the HO-6 subject to a basic limit. C. Coverage A—Dwelling is included in the HO-6 policy subject to a basic limit. D. The definition of the residence premises refers to a "unit."

B. Coverage B—Other Structures is included in the HO-6 subject to a basic limit.

Josef left the garage door of his home open one night and a homeless person sneaked in and fell asleep. During the night, a shovel that was hanging on the wall fell down, hitting the person in the head, causing him to seek emergency medical treatment at a nearby hospital. Which one of the following statements is true about Josef's coverage under his HO-3 policy? Select one: A. The injured person is entitled to benefits under Coverage F—Medical Payments to Others. B. Coverage F—Medical Payments to Others is not available for persons on the insured location without permission. C. The injured person is entitled to benefits under Coverage F—Medical Payments to Others because there is no evidence that he caused the shovel to fall. D. Only Josef and his relatives are entitled to benefits under Coverage F—Medical Payments to Others.

B. Coverage F—Medical Payments to Others is not available for persons on the insured location without permission.

Under Coverage E—Personal Liability of the HO-3 policy, the insurer's obligation to defend ends Select one: A. When policy limits are exhausted by the claim expenses. B. When the liability limit for the occurrence is exhausted by payment of a settlement or judgment. C. When the cost of defense exceeds the personal liability limits. D. When the costs of defense limits are exhausted.

B. When the liability limit for the occurrence is exhausted by payment of a settlement or judgment.

Jeremy owns a home covered with an HO-5 policy. He left a window open one night before he went to sleep. It rained during the night and rain water damaged a sofa under the window. There was no other damage. Is the damage to the sofa a covered loss? Select one: A. No, because it would not qualify as flood damage. B. Yes, because the HO-5 typically covers damage by rain through an open window even if the building itself is not damaged. C. No, because the HO-5 does not cover damage by rain through an open window unless the building itself is damaged. D. Yes, because it would be considered flood damage.

B. Yes, because the HO-5 typically covers damage by rain through an open window even if the building itself is not damaged.

Eileen, who is insured under an unendorsed HO-3 policy, borrows her neighbor's power washer valued at $600. Eileen leaves it running and ruins its motor. How much will Eileen's HO-3 insurer reimburse the neighbor for damage to the power washer, assuming it is damaged beyond repair? Select one: A. Nothing, because property in the care, custody, and control of Eileen is excluded B. Nothing, because the power washer is not Eileen's property and, therefore, is excluded C. $600, regardless of whether Eileen is proven to be at fault D. $600, only if Eileen is proven to be at fault

C. $600, regardless of whether Eileen is proven to be at fault

Bertha is insured under an unendorsed HO-5 policy. The declarations page shows the following coverages: Coverage A—Dwelling$200,000 Coverage B—Other Structures$20,000 Coverage C—Personal Property$100,000 Coverage D—Loss of Use$60,000 As Bertha was returning home from a business trip, a rainstorm erupted as the airline crew was unloading her baggage. The rain soaked Bertha's two soft-sided suitcases until they could be reached and taken under cover. After Bertha got home she discovered that the rain had ruined a number of silk and other fine cloth clothing items. Bertha calculated her loss to be $1,200. She filed a claim with the airline, which paid its maximum liability of $400. Bertha has met all conditions required by the HO-5 policy. Assuming no deductible applies, which one of the following best explains the maximum amount the insurer would pay for the loss? Select one: A. $0, no coverage under HO-5 for damage from dampness or temperature extremes B. $400, coverage under HO-5 only matches other available insurance C. $800, coverage under HO-5 is available for direct loss by rain D. $1,200, full coverage available under HO-5 for loss to personal property by any peril

C. $800, coverage under HO-5 is available for direct loss by rain

Sammy is the named insured on an HO-3 policy covering his family's home. Sammy and his wife, Sally, have a young daughter, Suzie, and a grown-up son, Steve, who lives with them, and they own a cocker spaniel puppy. While a neighboring couple and their five-year-old son, Jay, were visiting, the puppy bit Jay. Jay suffered a serious wound and his parents sued Sammy and Sally. All of the following are insureds under the HO-3, EXCEPT: Select one: A. Steve B. Sally C. Jay D. Suzie

C. Jay

An insured has an HO-3 policy covering his home. While he was away during a special athletic tournament in his town, he rented his home for a week to one of the athletes. During that week, the mail carrier was injured on a loose floorboard on the porch of the home. A claim was made against the insured. Does the Coverage E business exclusion apply? Select one: A. Yes, because renting property to others qualifies as a business as defined by the policy. B. No, because home rental is not considered a business activity. C. No, because rental of an insured location on an occasional basis is a covered loss exposure if the location is used only as a residence. D. It depends on whether a dollar threshold for the amount of rent charged is met.

C. No, because rental of an insured location on an occasional basis is a covered loss exposure if the location is used only as a residence.

All of the following are policy conditions that apply to both Sections I and II of the HO-3 policy, EXCEPT: Select one: A. Liberalization B. Nonrenewal C. Severability of Insurance D. Death

C. Severability of Insurance

The HO-3 policy Sections I and II—Conditions contain a liberalization clause that Select one: A. Specifies how coverage may be cancelled by the insured. B. Increases the limit of liability when there are multiple insureds involved in a claim. C. Specifies how coverage is broadened for insureds when the insurer changes a current edition of a policy. D. Broadens the definition section in accordance with state regulations.

C. Specifies how coverage is broadened for insureds when the insurer changes a current edition of a policy.

Which one of the following would be an exception to the Coverages E and F Business exclusion to the liability coverage provided by the HO-3 policy? Select one: A. Charging neighborhood families for home daycare services B. Full-time landscaping business C. Teenage son of named insured painting neighbor's fence in exchange for a few dollars D. Full-time beauty salon in the home

C. Teenage son of named insured painting neighbor's fence in exchange for a few dollars

The Suit Against Us condition in Section II of the HO-3 policy provides for all of the following, EXCEPT: Select one: A. No one can join the insurer as a party to any action against an insured. B. No action with respect to Coverage E can be brought against the insurer until the obligation of the insured has been determined by a final judgment or agreement signed by the insurer. C. The insurer must first meet all of its obligations under Section II before the insurer can bring a legal action against the insured. D. The insured must first meet all of its obligations under Section II before the insured can bring a legal action against the insurer.

C. The insurer must first meet all of its obligations under Section II before the insurer can bring a legal action against the insured.

Which one of the following is an exception to the Coverage E and F Business exclusion to the HO-3 policy? Select one: A. Activities generating income of $10,000 or less during the year preceding the policy period B. Home daycare services performed for neighbors for a fee C. Volunteer activities D. A plumbing business operated from the home

C. Volunteer activities

The Subrogation condition in the HO-3 policy allows the insured to waive all rights to recover against any person provided the Select one: A. Insured acts in its best interests. B. Waiver is in writing and made after a loss. C. Waiver is in writing and made before a loss. D. Insured acts in good faith.

C. Waiver is in writing and made before a loss.

Regarding the Other Insurance condition in Section II of the homeowners policy, the Coverage E limits applicable to any Select one: A. Loss are paid on a pro rata basis with other collectible insurance. B. Loss are paid as excess over any other primary or umbrella coverages. C. Occurrence are paid as primary and any other collectible insurance provides excess coverage. D. Occurrence are paid as excess over any other collectible insurance except for other insurance written specifically to provide excess coverage.

D. Occurrence are paid as excess over any other collectible insurance except for other insurance written specifically to provide excess coverage.

The Section II Limit of Liability provision in the HO-3 policy states that for Coverage E, all bodily injury and property damage that result from continuous or repeated exposure to the same harmful conditions are considered Select one: A. Two occurrences, namely, the bodily injury and the property damage. B. Multiple occurrences, depending on how many events caused the bodily injury and property damage. C. Three occurrences, namely, the bodily injury, the property damage, and the combination of bodily injury and property damage. D. One occurrence, even if the occurrence that caused the bodily injury or property damage was not a single event.

D. One occurrence, even if the occurrence that caused the bodily injury or property damage was not a single event.

Ben lost in his lawsuit against his neighbor, Jim, alleging that Jim had created a nuisance on his property. Jim has now filed a malicious prosecution claim against Ben. Under which endorsement to Ben's homeowners policy can coverage for this claim be found? Select one: A. Ordinance or Law—Increased Amount of Coverage endorsement B. Personal Liability endorsement C. Additional Liability Coverages endorsement D. Personal Injury Coverage endorsement

D. Personal Injury Coverage endorsement

Under which one of the following conditions of a homeowners policy is each insured seeking protection treated as if he or she has separate liability coverage under the policy? Select one: A. Limits of Liability condition B. Voluntary Payment condition C. Singularity of Coverage condition D. Severability of Insurance condition

D. Severability of Insurance condition

All of the following are included as insureds for the Section II—Liability Coverages of a homeowners policy, EXCEPT: Select one: A. The 19-year-old exchange student who temporarily lives with and under the care of the named insured and his spouse B. The named insured's spouse who lives with the named insured but is away on business most Mondays through Fridays C. The named insured's neighbor while caring for the insured's dog if the dog causes injury while in the neighbor's care D. The named insured's 30-year-old best friend who is not related but becomes a temporary resident of the named insured's household

D. The named insured's 30-year-old best friend who is not related but becomes a temporary resident of the named insured's household

All of the following are included as insureds under the Section II—Liability Coverages of a homeowners policy, EXCEPT: Select one: A. The named insured's neighbor while caring for the insured's dog if the dog causes injury while in the neighbor's care B. The named insured's 17-year-old foster child C. The named insured's grandmother who lives with her D. The named insured's separated spouse who resides and works in another state

D. The named insured's separated spouse who resides and works in another state

Bill and Marge Beatty are named insureds on an HO-3 policy with a $300,000 limit for Coverage E—Personal Liability and a $2,500 limit for Coverage F—Medical Payments to Others. Bill and Marge rented a cabin in a mountain resort for their summer vacation. They invited neighbors to a campfire one evening. The campfire was too close to the Beattys' cabin and a gust of wind blew sparks that ignited the cabin roof. Before the fire was extinguished, it caused $5,000 damage to the roof. Bill and a guest suffered burns as they tried to extinguish the fire. Bill's medical expenses totaled $700. The guest was more severely injured and incurred medical expenses of $1,900. Which one of the following statements accurately describes the coverage available for this occurrence under the Beattys' HO-3? Select one: A. There is full coverage for damage by fire to property in the insured's care, but the medical expenses of Bill and the guest are not covered. B. There is no coverage for damage by fire to property in the insured's care, but the medical expenses of Bill and the guest will be paid in full. C. There is no coverage for either the property damage or the bodily injury because the occurrence was not at an insured location. D. There is full coverage for damage by fire to property in the insured's care and for the guest's medical expenses, but there is no medical payments coverage for Bill.

D. There is full coverage for damage by fire to property in the insured's care and for the guest's medical expenses, but there is no medical payments coverage for Bill.