Dwelling Policy Practice Questions

Under the Dwelling Policy, household and personal property, including property damaged in transit between the insured's old and new residences, are covered under: a. Coverage C b. Coverage D c. Coverage A d. Coverage B

A. Coverage C Explanation Coverage C is the coverage for Personal Property. 10% of the Coverage C limits apply to the Insured's Personal Property away from the premises anywhere in the world.

Under the Dwelling policies, which is correct regarding coverage of trees, shrubs or plants? a. Damage by wind, hail, weight of ice, snow or sleet is not covered b. All vehicle damage to trees, shrubs, or plants is covered c. Theft of shrubs and plants is covered d. The Limit of Liability is $1,000 for any tree, shrub, or plant

A. Damage by wind, hail, weight of ice, snow or sleet is not covered Explanation Damage to outdoor plants by forces of nature other than lightning are so common that such damage is considered uninsurable. Coverage for certain other perils is provided, with a limit of $500 for any one tree, shrub, or plant.

In the Dwelling Policy, the fact that earth movement, landslide, mine substance, or mudflow are not covered is stated where? a. General Exclusions b. Insuring Agreement c. Endorsements d. Other Coverages

A. General Exclusions Explanation The perils of earth movement, landslide, mine substance, and mudflow are perils that, because of their geographic nature, are insured under Earthquake or Flood insurance policies designed specifically for these perils.

Which of the following is true regarding the Personal Liability Supplement? a. It provides coverage for claim expenses, first aid expenses and damage to property of others b. It covers the insured's personal auto c. It covers Professional Services rendered by the insured d. The Limit of Liability is the same as the Coverage A amount

A. It provides coverage for claim expenses, first aid expenses and damage to property of others Explanation The Claim Expenses, First Aid Expenses, and Damage to Property of Others are Additional Coverages that supplement Coverage L, Personal Liability, and Coverage M, Medical Payments.

All of the following are correct regarding the Broad Theft Endorsement on a Dwelling policy, except: a. Only on-premises coverage is available b. It applies only to owner-occupied structures c. It also includes vandalism resulting from theft d. It may be added to any of the Dwelling forms

A. Only on-premises coverage is available Explanation The Broad Form Theft endorsement is attached to owner-occupied Dwelling policies to provide theft coverage for the owner-occupant's Personal Property. On-premises and off-premises coverage is available.

All of the following are true of Dwelling Forms, except: a. Radio and television antennas are covered for wind-related losses b. Mobile homes are only eligible on the DP-1 form c. Coverage A includes building materials on premises intended for repair d. The broad form will cover water damage caused by a burst pipe

A. Radio and television antennas are covered for wind-related losses Explanation Wind losses to antennas are specifically excluded from coverage in a Dwelling Policy form.

Under the Dwelling Broad Form, losses to a building are paid on a(n) ____ basis. a. Replacement Cost b. At Functional Replacement Cost c. Agreed Value d. Actual Cash Value

A. Replacement Cost Explanation The Dwelling Broad Form provides for building losses to be paid on a replacement cost basis, if the amount of insurance carried is equal to at least 80% of the replacement cost of the property insured.

All of the following perils are included under the Dwelling Broad Form, except: a. Smoke damage from industrial operations b. Falling Objects c. Volcanic Eruption d. Burglary Damage

A. Smoke damage from industrial operations Explanation Smoke damage is a covered peril of the Dwelling Broad Form; however, the description of the peril specifically excludes smoke from agricultural smudging or industrial operations.

Under the Dwelling Policy coverage extension of Debris Removal, which of the following is correct? a. The extension does not increase the amount of insurance under the policy b. The limit for Debris Removal is 5% of the Coverage A Limit of Insurance c. The limit for Debris Removal is 10% of the Coverage A Limit of Insurance d. The limit for Debris Removal is an additional amount of insurance

A. The extension does not increase the amount of insurance under the policy Explanation The Debris Removal expense is included in the Limit of Liability that applies to the damaged property; therefore, is not Additional Insurance.

The Dwelling Broad Form (DP-2) includes coverage for all of the following, except: a. Water damage by flood b. Damage caused by burglars (but not property take by burglars) c. Accidental discharge or overflow of water or steam from a heating or air conditioning system or household appliance d. Breakage of glass that is a part of a building, storm door or window

A. Water damage by flood Explanation There is no flood coverage in a dwelling policy.

Which of the following is not a covered peril under the Extended Coverage Endorsement to the DP-1? a. Weight of ice, snow or sleet b. Volcanic eruption c. Windstorm d. Vehicles

A. Weight of ice, snow or sleet Explanation Weight of ice, snow or sleet is not part of the Extended Coverage perils.

The Basic (DP-1) Dwelling Form does not include: a. Property Removed to a Newly Acquired Residence b. Additional Living Expenses c. World Wide Coverage on Personal Property d. Fair Rental Value

B. Additional Living Expenses Explanation The Basic Dwelling Form (DP-1) provides coverage for Fair Rental Value. Coverage for Additional Living Expenses is available by endorsement.

Which is true of Coverage C of the Dwelling Policy? a. Coverage C provides coverage for passports, tickets, and deeds b. Coverage C excludes coverage for animals, birds, fish, motor vehicles not used to service the premises or assist the handicapped, and property of boarders, roomers or tenants c. Coverage C provides coverage for coins and currency d. Coverage C provides coverage for grave markers

B. Coverage C excludes coverage for animals, birds, fish, motor vehicles not used to service the premises or assist the handicapped, and property of boarders, roomers or tenants Explanation Coverage C contains a lengthy list of Property Not Covered. Many items in addition to those above are listed as Property Not Covered.

Which endorsement provides liability coverage under the Dwelling Policy Program? a. Public Liability Endorsement b. Personal Liability Supplement c. Family Liability Endorsment d. Comprehensive Liability Supplement

B. Personal Liability Supplement Explanation The Personal Liability Supplement provides Liability coverage on the dwelling premises and the insured's non-business activities. It is similar to the Liability coverage of the Homeowners Policy.

Which statement is true of a Special Form (DP-3) Dwelling Policy? a. Losses caused by power failure off the premises or enforcement of any ordinance or law are covered b. Subject to coinsurance, coverage for the structure is provided on a replacement cost basis c. Coverage is not provided for collapse of a building d. Coverage is provided for structures used for commercial, manufacturing, or farming purposes

B. Subject to coinsurance, coverage for the structure is provided on a replacement cost basis Explanation DP-3 policies cover physical damage losses to the structure on a replacement cost basis, subject to the usual 80% coinsurance requirement. Personal property is covered on an ACV basis, subject to policy limits.

All of the following are false concerning the Dwelling Policy Form, except: a. The Special Form covers the contents on an open peril basis b. The Basic Form covers the perils of fire, lighting and internal explosion c. The Basic Form covers the contents for theft d. The Broad Form covers the cost to repair defective plumbing

B. The Basic Form covers the perils of fire, lighting and internal explosion Explanation The Basic Form without endorsement covers only these three perils. All other answers are false.

Under Dwelling Policies, which of the following require the policy to be written to at least 80% of the full replacement cost of the dwelling at the time of loss to provide replacement cost coverage? a. The DP-1 and the DP-2 b. The DP-2 and the DP-3 c. The DP-1 d. The DP-4

B. The DP-2 and the DP-3 Explanation The DP-2 (Broad) and DP-3 (Special) Dwelling policies provide replacement cost coverage, provided, that the insured insures the property to at least 80% of its replacement cost. The DP-1 (Basic) provides only Actual Cash Value coverage.

Under Coverage C of the Special Form Dwelling policy, all of the following are included, except: a. Household and personal property usual and incidental to occupancy of the premises b. The insured's golden retriever c. Property of guests and servants, but not tenants or boarders d. Property being moved to a newly acquired principal residence for up to 30 days

B. The Insured's golden retriever Explanation The policy does not cover animals or pets.

Under the Broad Form Dwelling Policy (DP-2), which peril is not included for coverage without an endorsement? a. Volcanic Eruption b. Theft c. Damage to appliances by artificially generated electricity d. Falling Objects

B. Theft Explanation Theft Coverage for the Broad Form Dwelling Policy (DP-2) is available only through attachment of the Limited Theft or the Broad Theft endorsements.

Which of the following losses is not covered under a DP-2 (Broad Form) policy? a. Sudden and accidental discharge from artificially generated electrical current b. Theft of personal property c. Falling objects d. Freezing of plumbing, heating, or air conditioning

B. Theft of personal property Explanation Although Broad Form Dwelling policies cover damage to property done by burglars, they do not cover theft of personal property.

Of the Dwelling Policy Forms, which one does not cover Damage by Burglars? a. Special Form (DP-3) b. Broad Form (DP-2) c. Basic Form (DP-1) d. None of the Dwelling Policies cover Damage done by Burglars

C. Basic Form (DP-1) Explanation Damage by Burglars is covered only in the broader Forms DP-2 and DP-3.

Which is true of the Special Dwelling Forms? a. It will automatically cover the theft of contents b. Losses to the dwelling are paid on an actual cash value basis c. Contents are covered on an actual cash value basis d. It will cover the cracking of walls due to settling

C. Contents are covered on an actual cash value basis Explanation In a DP-3 policy, contents are covered at ACV for losses on a Named Peril (Broad Form) basis. Losses due to earth movement are excluded, and damage to the dwelling is covered on a replacement cost basis, not ACV.

Under a Dwelling Policy, detached structures on the insured premises are included in: a. Coverage A b. Coverage D c. Coverage B d. Coverage C

C. Coverage B Explanation Coverage B is the coverage for other structures on the Insured Location. The other structures must be set apart from the dwelling by clear space.

Coverage D of the Dwelling Policy includes: a. Trees, Shrubs, and Other Plants b. Other Structures c. Fair Rental Value d. Additional Living Expenses

C. Fair Rental Value Explanation Loss of Rental Income is an indirect loss sustained by the insured when the dwelling is rendered uninhabitable by a direct loss. Coverage D provides protection for this indirect loss.

Which is not eligible to be insured under a Dwelling Policy? a. Dwelling with any type of business in them b. Mobile home c. Farms d. Dwellings containing three apartment units

C. Farms Explanation The farm property exposure includes hazards not found in other residential property. Insurance companies have developed special Farm Forms for farm property insurance.

All of the following are true of the Dwelling Broad Form Policy, except: a. The dwelling and contents are covered for the broad form perils b. Losses to the dwelling are paid on a replacement cost basis c. It includes dwellings located on farms d. It automatically includes incidental business occupanies

C. It includes dwellings located on farms Explanation Dwellings located on farms are not eligible for the Dwelling program.

Under the Basic Dwelling Form, is damage caused by vandalism automatically included? a. It is included in the Extended Coverage Perils b. It is not available in the Basic Dwelling Policy c. No, it must be added by endorsement d. It is included as Basic Peril

C. No, it must be added by endorsement Explanation The Basic Dwelling Form is designed to provide coverage at a minimum cost. If the insured desires vandalism coverage, attaching a Vandalism Coverage endorsement and charging a premium for the endorsement provides it.

Which is true regarding dwelling policies? a. Coverage B includes the insured's use of a garage as an office b. Coverage D is considered a direct loss coverage c. Property of guest and servants is covered under Coverage C d. Coverage C includes property of tenants and boarders

C. Property of guest and servants is covered under Coverage C Explanation Coverage C extends to property of guests and servants. Property of tenants and boarders is not covered.

Under the Dwelling Broad Form, losses to a building are paid on a(n) ____ basis. a. Actual Cash Value b. Agreed Value c. Replacement Cost d. At Functional Replacement Cost

C. Replacement Cost Explanation The Dwelling Broad Form provides for building losses to be paid on a replacement cost basis, if the amount of insurance carried is equal to at least 80% of the replacement cost of the property insured.

Which statement is true concerning dwelling policies? a. 100% of Coverage C applies to worldwide coverage b. The Special Form automatically covers the contents against the peril of theft c. The Special Form insures the dwelling on an open perils basis, and insures the contents against the broad form perils d. The Basic Form pays for losses to the dwelling on a replacement cost basis

C. The Special Form insures the dwelling on an open perils basis, and insures the contents against the broad form perils Explanation The Special Form insures the dwelling on an open perils basis, and insures the contents against the broad form perils. Theft is excluded. The Basic Form settles losses to the dwelling on an ACV basis. Up to 10% of the Coverage C limit may be applied to covered property anywhere in the world.

Under the Property Removed coverage extension of a Dwelling Policy, which of the following is incorrect? a. Coverage applies up to 5 days in the DP-1, and up to 30 days in the DP-2 b. The property is covered against direct loss from any cause c. The policy will not provide any coverage while insured property is being removed from endangered property d. The extension does not change the Limit of Liability that applies to the property

C. The policy will not provide any coverage while insured property is being removed from endangered property Explanation The function of the Property Removed extension is to reimburse the insured for any damage to the property occasioned by its removal from premises endangered by an insured peril.

Which of the following is true of the Dwelling Under Construction Endorsement of a Dwelling Policy? a. Insurance applies to the Dwelling under Coverage A and to other structures under Coverage B b. The amount of insurance at any time is the provisional amount stated in the Declarations c. The premium is based upon a percentage of the Coverage A limit d. The insured had up to 90 days to notify the company that the dwelling is occupied

C. The premium is based upon a percentage of the Coverage A limit Explanation The amount of insurance available under the Dwelling Under Construction Endorsement depends upon the percentage of completion of the structure. Since this amount varies, the premium is based upon the average amount of insurance during the term of the policy.

All of the following may be eligible for coverage under the Dwelling Program, except: a. A duplex b. A house in the suburbs c. A mobile home d. A farmhouse

D. A farmhouse Explanation A farmhouse does not fit the eligibility requirements of the Dwelling Program.

Under the Dwelling Policy Forms, which losses would be covered? a. Collapse due to settling b. Damage caused by subsidence of land the dwelling is sitting on c. Damage caused by a sewer or drain backup d. Fire damage to building materials and supplies that are located on the insured premises

D. Fire damage to building materials and supplies that are located on the insured premises Explanation Coverage A includes materials and supplies located on or next to the Described Location used to construct, alter, or repair the dwelling on the Location.

Which statement concerning the Dwelling Special Form is true? a. Contents are provided Open Perils coverage on an Actual Cash Value basis b. Contents are provided Open Perils coverage on a Replacement Cost basis c. Coverages A through D are provided Open Perils coverage on an Actual Cash Value basis d. The Dwelling and other structures are provided Open Perils coverage on a Replacement Cost basis

D. The Dwelling and other structures are provided Open Perils coverage on a Replacement Cost basis Explanation Under the Special Form, the dwelling and other structures are covered against open perils on a replacement cost basis, while personal property is covered against the broad perils on an actual cash value basis.

All of the following are true of the Dwelling Special Form, except: a. Mobile homes are not eligible b. Losses to the dwelling are paid on a replacement cost basis c. The dwelling must be used principally for dwelling purposes d. The dwelling and contents are both covered on an open peril basis

D. The dwelling and contents are both covered on an open peril basis Explanation Only the dwelling is covered on an open peril basis

Which is correct regarding the Automatic Increase in Insurance Endorsement? a. The endorsement does not apply if the Coverage Limits are otherwise adjusted during the policy term b. The adjustment is made to the deductible, as well as to the limit of insurance c. The endorsement applies to Coverages A, B, and C d. The endorsement will automatically raise the limits of insurance at periodic intervals

D. The endorsement will automatically raise the limits of insurance at periodic intervals Explanation The function of the Automatic Increase in Insurance endorsement is to protect adequately the insured when the property increases in value because of inflation.

Which statement is false? a. A Special Dwelling Form will cover damage to the building from a vehicle b. Personal property of a guest or servant is covered while located on the described location c. The Dwelling Broad Form will cover trees, shrubs and plants up to $500 each d. Under a Dwelling Basic Form without Extended Coverage, if an insured were to accidentally hit a fence in the backyard with his car, the damage to the fence would be covered

D. Under a Dwelling Basic Form without Extended Coverage, if an insured were to accidentally hit a fence in the backyard with his car, the damage to the fence would be covered Explanation The Basic Dwelling Form does not cover damage to the property done by the insured's owned or operated auto.