Chapter 21 - Homeowners Insurance, Section II

Which of the following statements about an earthquake endorsement for a homeowners policy is (are) true? I. The endorsement also covers landslides and volcanic eruptions. II. The coverage for earthquakes is written without a deductible.

I only

Which of the following statements about endorsements to the homeowners policy is (are) true? I. The purpose of the inflation guard endorsement is to help prevent home owners from being under-insured. II. The purpose of the watercraft endorsement is to provide coverage for watercraft when they are used outside the United States.

I only

Which of the following statements concerning the scheduled personal property endorsement with agreed value loss settlement is (are) true? I. The endorsement provides open-perils ("all-risks") coverage on the scheduled property. II. Losses under the endorsement are settled on an actual cash value basis.

I only

Which of the following statements is (are) true concerning the home business insurance coverage endorsement? I. It increases the coverage on business personal property at the insured residence from $2,500 to the Coverage C limit. II. It excludes coverage for liability arising out of the home business.

I only

Which of the following statements about the insurer's obligation to provide a legal defense under the personal liability coverage (Coverage E) of the homeowners policy is (are) true? I. The insurer agrees to defend the insured only if the suit is not groundless, false, or fraudulent. II. The insurer's obligation to defend the insured ceases after the amount paid for damages from an occurrence equals the policy limit.

II only

Which of the following statements about the scheduled personal property endorsement to the homeowners policy is (are) true? I. It provides named-perils coverage on scheduled items. II. It can be used to insure valuable items such as jewelry, silverware, and coin collections.

II only

Which of the following statements regarding watercraft liability under Section II of an unendorsed HO-3 policy is (are) true? I. No coverage is available for watercraft liability. II. Liability arising out of the use of watercraft that are under certain length and horsepower limits is covered.

II only

All of the following losses are excluded from coverage under Section II of an unendorsed Homeowners 3 policy EXCEPT

While using his canoe, Bert hit another canoe. The other canoe sank. Bert is being sued.

Section II of the homeowners policy has exclusions applying to all of the following EXCEPT

activities of the name insured's minor children

Tom and Tammy Evans were ready to purchase a home. The home was to serve as collateral for their mortgage loan. Two insurers declined to insure the home, citing "an adverse CLUE report." Why would an insurer reject a homeowners insurance application because of an adverse CLUE report?

because there had been previous property insurance claims filed on the home

All of the following are exclusions in the homeowners policy that apply to medical payments to others (Coverage F) EXCEPT

bodily injury to persons who are social guests at the insured location

Factors that affect the cost of homeowners insurance include which of the following? I. Construction material II. Deductible amount

both I and II

Which of the following persons is (are) eligible for benefits under medical payments to others (Coverage F) of the homeowners policy? I. A friend who slips and falls on a wet patio while visiting the named insured II. A neighborhood child who is severely scratched by a cat in the care of the named insured

both I and II

Which of the following statements is (are) true concerning the use of an individual's credit history as an insurance rating factor? I. Individuals with poor credit histories, as a group, generally file more homeowners claims than do individuals with good credit histories. II. The use of credit history as an insurance rating factor is controversial.

both I and II

Which of the following statements about the personal liability coverage (Coverage E) of an unendorsed homeowners policy is true?

coverage is provided for bodily injury liability

One of the "Tips for Buying a Homeowners Policy" is to consider purchasing a personal umbrella policy. What coverage is provided by a personal umbrella policy?

excess liability coverage and coverage for some liability claims excluded by underlying policies

Liability arising out of which of the following is covered under the personal injury endorsement to the homeowners policy?

false arrest

All of the following are considered insured locations for medical payments to others (Coverage F) under a homeowners policy EXCEPT

farmland owned by the insured

Reggie just purchased a home. A friend told him to consider insurance coverage for natural disasters when insuring the home. A loss from which of the following perils is covered under an unendorsed Homeowners 3 policy?

forest fire

Which of the following statements is true regarding the Homeowners 3 policy and identity theft?

identity theft is covered by adding an endorsement

Which of the following situations is covered under Section II of an unendorsed homeowners policy?

injuries resulting from an auto not subject to registration because it is in dead storage

Which of the following losses would be covered under the medical payments coverage of the Homeowners 3 policy?

injury to a resident employee at the insured's home

A credit-based score that is highly predictive of future claims cost is an individual's

insurance score

Lu would like to save money on her homeowners premium. All of the following steps will help her to reduce her homeowners premium EXCEPT

insuring the value of the land beneath the house

Which of the following statements about the additional coverages included in Section II of the homeowners policy is true?

interest that accrues on a judgment after the judgment is awarded but before the judgment is paid is covered under claims expenses

Which of the following losses would be covered under the personal liability coverage (Coverage E) of an unendorsed Homeowners 3 policy?

liability arising out of damage to a neighbor's property that occurred over time

Which of the following statements about the coverage for medical payments to others (Coverage F) under the homeowners policy is true?

medical expenses incurred within 3 years of an accident are covered

Which of the following statements regarding Section II coverage under the Homeowners 3 policy is true?

medical payments to others are covered regardless of whether the insured is legally liable

For which of the following situations would there be personal liability coverage under the homeowners policy? I. The named insured accidentally injures her husband with a chain saw. II. The named insured breaks his wife's valuable vase while practicing his golf swing.

neither I nor II

Persons insured for personal liability under the homeowners policy include which of the following? I. Relatives while visiting the named insured. II. Overnight guests who are not relatives of the named insured.

neither I nor II

Which of the following situations would be covered under Section II of a homeowners policy? I. The insured is sued by his girlfriend because he infected her with the AIDS virus. II. The insured's son is sued after a friend suffered serious injury as a result of using illegal drugs sold to him by the son.

neither I nor II

Which of the following statements about the personal property replacement cost endorsement used with the homeowners policy is (are) true? I. The damaged or destroyed property must be repaired or replaced, no matter the size of the loss. II. It is designed primarily for antiques and fine art.

neither I nor II

All of the following persons are insured for personal liability under the homeowners policy EXCEPT

nonresident employees of the named insured

Tom is planning to build a home. He is weighing many factors, including construction materials, location, and other considerations. Which of the following statements is true with regard to homeowners insurance and Tom's new home?

older homes cost more to insure than newer homes

Which of the following statements about the additional coverage for damage to property of others in Section II of the homeowners policy is true?

payments are made on the basis of the replacement cost of the damaged property

Robert purchased an unendorsed Homeowners 3 policy. He is concerned that if his personal property is destroyed, the insurer will take depreciation into consideration when determining the loss settlement and will pay him less than the amount needed to purchase new property. Which endorsement can Robert add to his Homeowners 3 policy to address this concern?

personal property replacement cost endorsement

Which of the following statements about buying homeowners insurance is true?

premiums often can be reduced substantially by selecting a higher deductible

Liability arising out of which of the following is covered under the personal injury endorsement to the homeowners policy?

slander

John purchased an unendorsed Homeowners 3 policy. The coverage will expire next month. Which of the following changes will lower the premium that John will pay?

switching to an HO-2 policy

Gail lives in southern Illinois, near the New Madrid Fault Line. She added an earthquake endorsement to her Homeowners 3 policy. All of the following statements about the endorsement are true EXCEPT

the endorsement also covers flood losses

Which of the following losses would be covered under Section II of an unendorsed Homeowners 3 policy?

the homeowner accidentally dropped a bowling ball, injuring another bowler's foot

Which of the following statements regarding Section II conditions under the homeowners policy is true?

the liability limit is the same regardless of the number of persons injured in a covered occurrence

Which of the following statements regarding the Coverage E limit in the homeowners policy is true?

the limit applies on a per-occurrence basis so more than the limit could be paid during the policy period

All of the following situations are excluded from coverage under Section II of the homeowners policy EXCEPT

the rental of a spare bedroom which is used by the tenant as an office

Liability arising out of which of the following is covered under Coverage E of an unendorsed Homeowners 3 policy?

use of the insured's golf cart at a golf course