Homeowners Policies P13-17

Section II (liability) of an unendorsed homeowners policy will pay up to what amount of the named insured's share of a loss assessment charged by the insured's condominium association deemed legally responsible for a claimant's bodily injury or property damage? $500 $1,000 unlimited $0

$1,000

A house guest sues Jayne for $500,000 in damages for injuries suffered when a deck collapsed. Jayne's homeowners policy had a Coverage E-Liability limit of $100,000. The insurer's attorneys were able to settle the claim for $100,000. However, the defense attorneys' legal fees were $15,000. How much will Jayne's insurer pay in damages or defense costs? $15,000 $115,000 Nothing $100,000

$115,000

Which one of the following incidents that resulted in liability claims against Aida did not involve "bodily injury" as defined in her homeowners insurance policy? A postal carrier broke his leg after slipping on Aida's icy sidewalk. A visiting child drowned in Aida's swimming pool. A neighbor's reputation was harmed because Aida spread false rumors about the neighbor. A guest became sick after eating poorly cooked food at Aida's house.

A neighbor's reputation was harmed because Aida spread false rumors about the neighbor.

Each of the following incidents resulted in liability claims against Angeline. Which one did NOT involve bodily injury as defined in her homeowners insurance policy? A visiting child drowned in the swimming pool. A guest became sick after eating improperly-cooked food while dining at Angeline's house. A neighbor's reputation was harmed because Angeline spread false rumors about the neighbor. A parcel service employee broke his leg due to a faulty step on the porch.

A neighbor's reputation was harmed because Angeline spread false rumors about the neighbor.

Alta bought a single-family home in a community that provides many amenities that are supported by homeowners' association dues. Unfortunately, the association has inadequate liability insurance on the clubhouse and charges Alta $750 as her share of paying for the medical expenses of a guest who tripped over the gardener's hose. Does Alta's HO 3 policy cover this expense? Alta's additional living expense coverage applies. Alta's ordinance or law additional coverage applies. Alta's loss assessment additional coverage applies. No coverage applies because Alta's house was not damaged.

Alta's loss assessment additional coverage applies.

Which of the following situations is not a covered liability loss for watercraft under the homeowners policy? Mick is operating his boat with an inboard motor. He accidentally injures a swimmer while passing her. John takes his best friend sailing in his 24-foot long sailboat. John negligently causes an accident and his friend is injured. David is using his boat to entertain his business clients when he collides with another vessel. Bill stores his boat in a detached garage. A young neighbor climbs on the boat and is injured.

David is using his boat to entertain his business clients when he collides with another vessel.

At the condominium association owners meeting, Edwina moved that the association increase the limits of its general liability insurance coverage from $300,000 to at least $1 million. Her motion did not pass. Edwina has an HO 6 condominium unit owners policy with a $500,000 Coverage E limit. What more, if anything, can Edwina do to protect herself against the possibility of a large liability claim against the association that leads the association to assess her and other association members? Edwina should set some money aside in an emergency fund. There is nothing more Edwina can do. Edwina's HO 6 will cover any loss assessment up to $500,000. Edwina can have her HO 6 endorsed to increase its current $1,000 loss assessment limit.

Edwina can have her HO 6 endorsed to increase its current $1,000 loss assessment limit.

Ernie, Tom's teenaged son, is trying to make money to buy a car. Tom wants Ernie's money-making venture to be an enterprise covered under his homeowners policy, should Ernie be liable for hurting someone or damaging someone's property. Which of the following potential businesses would not have coverage under Tom's homeowners policy? Ernie will babysit the neighbor's child three days a week. Ernie will do weekly gardening for the next-door neighbors. Ernie is hired to paint a house, so he hires two of friends to help him. Ernie will fold and deliver newspapers each morning.

Ernie is hired to paint a house, so he hires two of friends to help him.

Which of the following is an example of a situation that would be probably covered by the homeowners policy in spite of the expected or intended injury exclusion? Gayle encounters a robber in her living room and shoots him in the leg when he attacks her. Ted waits for his neighbor to walk down the street before striking him with his car. Richard punches his friend Monty to scare him, but ends up breaking Monty's jaw. Peter's son takes a knife to school and attacks a teacher.

Gayle encounters a robber in her living room and shoots him in the leg when he attacks her.

Stephan was injured in Hilda's backyard. What additional condition must exist if Hilda's homeowners insurer is to pay damages for his bodily injury under Coverage E of the policy? Hilda must be legally responsible for damages because of Stephan's injury. Hilda must not have warned Stephan of any hazards in her backyard. Hilda must have invited Stephan onto her property. Hilda must personally attempt to negotiate a reasonable settlement with Stephan.

Hilda must be legally responsible for damages because of Stephan's injury.

Kevin lives in his insured home with his wife, two children, and mother-in-law. Which of the following would be covered under his homeowners policy? His neighbor Charles trips over a hose in Kevin's yard. His mother-in-law slips and falls in the bathroom because Kevin has not repaired a loose tile. Kevin is installing shelving in his garage when the shelf falls, hitting him on the head. His children are wrestling on the landing when one of them falls down the stairs.

His neighbor Charles trips over a hose in Kevin's yard.

Zane is shocked to learn that his niece accuses him of sexually molesting her last summer when she was visiting him. When he informs the insurance company that provides his liability coverage under his standard Homeowners Policy Special Form 3 (HO 3) policy, what is he surprised to learn? His policy has a sublimit on molestation claims. His policy provides full coverage on bodily injury arising out of sexual molestation. His policy provides no coverage for bodily injury arising out of sexual molestation. His policy does not apply to claims brought by a relative.

His policy provides no coverage for bodily injury arising out of sexual molestation

The expected or intended injury exclusion would apply in all of the following situations EXCEPT: Ozzie got angry with his neighbor Mr. Rogers and ran over him with a lawnmower. Shirley's son Bubba picked a fight with the neighbor's son. Karl in anger throws a heavy book at his boss but strikes the boss' secretary instead. Hugh strikes a burglar with a baseball bat.

Hugh strikes a burglar with a baseball bat.

The homeowners policy provides no coverage for liability under any contract or agreement engaged in by any insured. However, there are two exceptions. Which of the following illustrates one of those two exceptions? Bob signs a contract to serve on a nonprofit board and is later sued for wrongdoing in his capacity as a director. Irving contracts with a builder to have a deck built for his house. The deck collapses and an injured neighbor sues him. Bill, a homeowner and handyman, signs a contract to do electrical work in a friend's home. When he buys a townhouse, Jerry agrees to become a member of the homeowners association. However, he fails to join.

Irving contracts with a builder to have a deck built for his house. The deck collapses and an injured neighbor sues him.

Cesar's homeowners insurance policy provides no liability coverage on the 30-foot sailboat that he has moored at a local marina. Why? It is longer than 26 feet. It is not in use. It is the marina's responsibility. It isn't motor powered.

It is longer than 26 feet.

Don, a repairman employed by Brady HVAC, accidently cut off his own finger while repairing Jeannine's furnace ductwork. Brady carries liability and workers compensation insurance. Therefore, what does Jeannine's homeowners insurance policy cover, if anything? It provides no coverage for Don's injuries because they were self-inflicted. It covers Don's injuries because he was injured on Jeannine's residence premises. It covers Don's injuries because they were caused by Jeannine's furnace. It provides no coverage for Don's injuries because he is eligible for workers compensation benefits from Brady.

It provides no coverage for Don's injuries because he is eligible for workers compensation benefits from Brady

Iggy fell on the flat sidewalk in front of Herb's house, so Herb called for an ambulance. Iggy, who was not seriously injured, needed no medical treatment. Herb now submits a claim to his homeowners insurance carrier for the ambulance fees. How will Herb's insurance company respond to his claim? It will refuse to pay, citing the policy's personal injury exclusion. It will refuse to pay because ambulance services are not medical expenses. It will pay Herb's claim under the first aid expense coverage. It will pay Herb's claim under the medical payments to others coverage.

It will pay Herb's claim under the first aid expense coverage.

Given the watercraft liability exclusion, which of the following would be covered for liability under the homeowners policy? Steve participates in a race with his boat when he accidentally damages another racing boat. Walter lives on a small island and takes other residents to the mainland on his boat in exchange for a small fee. Keith is cruising on the lake in his 24 foot sailboat when he accidentally damages another sailboat. Luke lives in Hawaii and occasionally rents his boat to tourists.

Keith is cruising on the lake in his 24 foot sailboat when he accidentally damages another sailboat.

What is Coverage F?

Medical Payments to Others

Which of the following losses would be covered by the "damage to property of others" additional liability coverage section of the homeowners policy? Janice borrows her resident daughter's bicycle and damages it. Melvin borrows his neighbor's riding lawnmower and accidentally ruins the engine when he fills the gas tank with kerosene. Edward's garage apartment is rented to a friend whose belongings are damaged in a fire. William's 15-year-old son intentionally throws the neighbor's bicycle into a nearby lake.

Melvin borrows his neighbor's riding lawnmower and accidentally ruins the engine when he fills the gas tank with kerosene.

Lance is driving in heavy traffic when he causes a minor accident. Lance owns a home that is insured with an HO 3. What kind of coverage is available for the vehicle accident under his HO 3? None, motor vehicle liability is excluded under the HO 3. Coverage is available under an HO 3 endorsed with the motor vehicle liability endorsement. Coverage is available under an unendorsed HO 3 for limits determined by rating factors. Coverage for liability only is available under the HO 3.

None, motor vehicle liability is excluded under the HO 3.

Zachary invited his old friend Quinn to spend a weekend in Zachary's lake house. Quinn hurt his back when he fell out of bed one night. Quinn admits it was his own fault, and nothing was wrong with the bed. Does Zachary's homeowners insurance policy provide any coverage for Quinn's doctor bills related to this back injury? Only Coverage F (medical payments to others) applies to these expenses. No coverage applies because Zachary had no liability. Only Coverage E (personal liability) applies to these expenses. Both Coverage E (personal liability) and Coverage F (medical payments to others) cover these expenses.

Only Coverage F (medical payments to others) applies to these expenses.

Tom is working on the electrical system of the condominium unit he owns when he negligently damages the system. He tries to collect under the liability part of his homeowners policy for this property damage. What exclusion will apply in this situation? Property damage to property owned by an insured Loss assessment and contractual Property damage to property rented to, occupied, or used by an insured Property damage to electrical or plumbing system

Property damage to property owned by an insured

Considering the exceptions to the "property damage to property rented to, occupied or used by an insured" exclusion, which of the following losses would be covered by the homeowners policy's liability coverage? Rochelle borrows her neighbor's fur coat and wears it in the rain, damaging it. Ricky borrows his neighbor's grass trimmer and leaves it in the garage. The trimmer is stolen. Roxy rents a tent for her daughter's birthday party and fails to return it, then misplaces it. Rhonda borrows her neighbor's wing chairs for a party. The chairs are destroyed in a fire that night.

Rhonda borrows her neighbor's wing chairs for a party. The chairs are destroyed in a fire that night.

Larry was injured in Rosemary's backyard. Besides being caused by a covered occurrence, what condition must exist if the adjuster for Rosemary's homeowners insurer is to pay damages for Larry's bodily injury under Coverage E of the policy? Rosemary must personally attempt to negotiate a reasonable settlement with Larry. Rosemary must have directly caused Larry's injury. Rosemary must not have warned Larry of any hazards in her backyard. Rosemary must be deemed legally responsible for damages because of Larry's injury.

Rosemary must be deemed legally responsible for damages because of Larry's injury.

While backing out of her garage, Louise accidentally presses the button to activate her garage door opener, and the door is damaged when it strikes the moving car. Louise checks her homeowners insurance policy and sees, to her dismay, that it excludes liability coverage for damage to the insured's own property. Where else might she find coverage for this damage? Exception to the "damaged to owned property" exclusion Section I Condition in Section II Extension of coverage in Section II

Section I

Which of the following is an example of a loss assessment charge covered by the loss assessment coverage in Section II of the homeowners policy? The Pompeii Villas Homeowners Association charges each of its members $600 in loss assessment charges for damage to the community game room after a volcanic eruption causes a major land tremor. The Kon Tiki Homeowners Association charges each of its members $200 in loss assessment charges for the clubhouse patio furniture that was swept away in a flood. The Shakers Village Homeowners Association charges each of its members $300 in loss assessment charges for damage to its clubhouse in a major earthquake. The Silver Tresses Homeowners Association charges each of its members $100 in loss assessment charges for the liability claim of a guest injured on the association's tennis court.

The Silver Tresses Homeowners Association charges each of its members $100 in loss assessment charges for the liability claim of a guest injured on the association's tennis court.

The footprints permanently embedded in their neighbor's new concrete driveway belong to the Grambles' seven-year-old daughter Margie. Will any coverage in the Grambles' homeowners insurance policy pay for repairing the neighbor's driveway? The medical payments to others coverage applies to this claim regardless of fault. The damage to property of others coverage will pay up to $1,000. Property damage liability coverage applies up to the policy limit. No, as intentional damage is excluded.

The damage to property of others coverage will pay up to $1,000.

Amy employs a maid, who lives in Amy's spare bedroom. The maid is injured while vacuuming the stairs. How will Amy's unendorsed homeowners policy respond to this loss? The homeowners policy will cover the loss if the state in which Amy lives does not require her to provide workers compensation coverage for her maid. If Amy has workers compensation coverage for her maid, the homeowners policy will provide primary coverage and the workers compensation coverage will provide secondary coverage. The homeowners policy will cover the loss if the state in which Amy lives requires her to provide workers compensation coverage for her maid. The homeowners policy will not cover this loss, regardless of the state requirements for workers compensation coverage.

The homeowners policy will cover the loss if the state in which Amy lives does not require her to provide workers compensation coverage for her maid.

Ollie works at a nuclear power plant as a technician. The plant has a workers compensation policy that covers its workers. Ollie's is also the named insured in a homeowners policy. If Ollie is injured on the job, how will his homeowners policy respond? The homeowners policy will not provide coverage. The nuclear energy liability policy will provide primary coverage and the homeowners policy will provide secondary coverage. The homeowners policy will provide coverage for Ollie's medical bills. The homeowners policy will provide primary coverage and the nuclear energy liability policy will provide secondary coverage.

The homeowners policy will not provide coverage.

Medical payments coverage, although provided in Section II of the homeowners policy, differs from personal liability coverage in what way? Medical payments coverage only applies at the residence premises. Medical payments coverage is provided for the insured's injuries. Medical payments coverage doesn't have its own limit of insurance; it's included in the personal liability limit of insurance. The insured's negligence is not required for medical payments coverage to apply.

The insured's negligence is not required for medical payments coverage to apply.

The personal liability section of the homeowners policy addresses the tort negligence of the insured that results in injury or damage to another party. Which of the following claims would not be covered under the personal liability section of a homeowners policy? The postal carrier trips and falls over a broken walkway on the insured's front lawn. The neighbor's dog bites the insured. The insured is walking his dog, which bites a passerby. A neighbor's child is injured while swimming in the insured's pool.

The neighbor's dog bites the insured.

Jacqueline, a maid employed by Melinda, lives in Melinda's house. Jacqueline falls from a ladder while washing the windows and breaks an ankle. Melinda and Jacqueline live in a state that provides workers compensation in this type of situation. How, if at all, does Melinda's unendorsed homeowners policy cover the resulting medical bills? The policy will provide coverage for this loss. The policy will not provide coverage for this loss. The policy will provide limited coverage equal to the difference between the workers compensation benefit amount and the policy's limit of liability. The policy will pay the policy's full liability limit.

The policy will not provide coverage for this loss.

A deck collapsed during a graduation party at Earlene and Harry's house. Several guests who were standing on the deck were injured. The medical payments to others coverage of Earlene and Harry's homeowners insurance policy will pay the medical bills of which guest? Avery, a guest's service dog Theron, the honored guest who had just graduated Alana, an uninvited guest Lola, the two-year-old daughter of Earlene and Harry

Theron, the honored guest who had just graduated

The following incidents led to liability claims against Tracie. Which one of them did NOT involve property damage as defined in her homeowners insurance policy? Neighbors claim damages because they were unable to watch TV after Tracie dug a hole to plant a tree and cut the cable running through her yard. When Tracie sprayed her lawn for dandelions, the spray killed not only her dandelions but also the flowers in her neighbor's flower garden. Tracie copied a magazine article and submitted it as her own homework. Tracie's son Omar accidentally ran her lawn mower over the neighbor's prize petunias.

Tracie copied a magazine article and submitted it as her own homework.

During the Fawn family picnic, Mr. Fawn allows his 16-year-old son Sam to drink beer. The boy becomes inebriated and rides his bicycle recklessly through the group, running over a child. Will the Fawns' homeowners policy pay for the child's medical treatment? No, because Sandy was intoxicated Yes, because coverage is provided when an insured negligently injures someone on or off the premises Yes, because the incident happened on the insured premises No, because Sandy is a minor

Yes, because coverage is provided when an insured negligently injures someone on or off the premises

The Browns attend their annual family reunion in Oklahoma. Their teenage son finds a snake and begins teasing the smaller children with it. The snake, which turns out to be poisonous, bites a child. Will the Browns' homeowners policy pay for the child's medical treatment? No, because snake bites are excluded from coverage Yes, under Coverage E No, because the incident took place away from the insured premises Only if the child's family brings suit and prevails in court

Yes, under Coverage E

Coverage E (personal liability) of the homeowners policy states that the insurer will provide a defense against liability claims at the insurer's expense when the claim is made because the insured feels a moral obligation to a person who has been injured. is without merit or is fraudulent. alleges that the insured's libel or slander has damaged the claimant's reputation. alleges bodily injury or property damage caused by a covered occurrence.

alleges bodily injury or property damage caused by a covered occurrence.

In the Section II of the homeowners policy loss assessment additional coverage, "loss assessment" refers to the insurer's evaluation of the loss claimed by the insured. an amount charged by an association of property owners or tenants against an insured for his share of a liability claim not covered by the association's insurance. an amount charged by the insured to an association of property owners for damage caused to the insured's property. the degree of severity of a loss.

an amount charged by an association of property owners or tenants against an insured for his share of a liability claim not covered by the association's insurance.

After Patrice told James, the insurance adjuster, to leave her porch, he tried to force his way into her house. Fearful for her safety, she struck him with an umbrella. His subsequent bodily injury claim against Patrice is is not covered because of the intentional injury exclusion. is not covered because the business exclusion applies to an insurance adjuster. covered because James was not an invitee. covered because she intentionally used reasonable force to protect herself.

covered because she intentionally used reasonable force to protect herself.

Which one of the following terms refers to money paid as compensation to a person or business that has suffered a loss caused by an insured? occurrence consideration damages payout

damages

In one of the additional coverages in the liability section of Rupert's homeowners policy the insurer agrees to cover various claim expenses. Which one of the following is not an example of a covered expense? legal expenses Rupert incurs in defending a covered claim interest on the entire judgment against Rupert due to a liability claim premiums on bonds required in connection with the defense of a suit against Rupert loss of a sales bonus because Rupert missed work time while working on his defense

loss of a sales bonus because Rupert missed work time while working on his defense

The two exceptions to the loss assessment and contractual exclusion are losses from any written contracts that relate directly to the ownership, maintenance, or use of an insured location and losses arising from corporal punishment. losses arising from written contracts in which the liability of others is assumed by the named insured prior to an occurrence. losses arising from written contracts in which the named insured transfers his liability to others. losses arising from written contracts in which the named insured agrees to provide professional services.

losses arising from written contracts in which the liability of others is assumed by the named insured prior to an occurrence.

Lorna, a nanny, lives in Ronald's house and cares for Ronald's children. On her day off, Lorna is shopping for shoes and sprains her ankle while trying on a pair on high heels. With respect to her resulting medical expenses, the medical payments to others coverage of Ronald's policy provides coverage because she is a residence employee. coverage because she is a resident of the household. no coverage because she was away from the insured location and injured outside the scope of her employment. no coverage because she is eligible for workers compensation benefits for any job-related injury.

no coverage because she was away from the insured location and injured outside the scope of her employment.

What is Coverage E?

personal liability

Sarita, a domestic assistant, lives in Arthur's house and cares for his children. She suffers food poisoning after eating in a restaurant on her day off. With respect to Sarita's resulting medical expenses, the medical payments to others coverage of Arthur's policy provides coverage because she is a residence employee. provides no coverage because she is eligible for workers compensation benefits for any job-related injury. provides coverage because she is a resident of the household. provides no coverage because she was away from the insured location and injured outside the scope of her employment.

provides no coverage because she was away from the insured location and injured outside the scope of her employment.

Pierre notices that his homeowners policy often uses the word "we." After carefully considering how the word "we" is used, Pierre determines correctly that "we" means: Jacqui, the friendly insurance agent that sold him the policy, and her agency staff Pierre and his family the insurance company whose name is on the front of the policy the adjuster settling a claim.

the insurance company whose name is on the front of the policy

The controlled substance exclusion does not exclude coverage for bodily injury that the insured's friend suffers after using cocaine the insured supplied to him. the insured's niece suffers after she ingests a bottle of the insured's aspirin. a customer suffers after buying LSD from the insured. the insured suffers when he uses marijuana.

the insured's niece suffers after she ingests a bottle of the insured's aspirin.