Chapter 4 Dwelling Policy (P & C licensing)

Policyholder N insures his owner-occupied home under a dwelling property policy (DP-3) with a limit of $100,000. If the dwelling is damaged in a fire, what is the limit of insurance that will apply to Coverage E, Additional Living Expense?

A)$20,000 B)$40,000 C)$50,000 D)$10,000 A-The Coverage E is 20% of Coverage A.

The limit of insurance for the Other Coverage Trees, Shrubs, and Other Plants is provided at which percentage of the Coverage A limit?

A)100% B)50% C)5% D)10% C-This coverage is also in addition to the Coverage A limit.

Which of the following describes the loss settlement basis for a fire damage claim to a dwelling insured under a DP-3 policy?

A)Actual cash value of the dwelling up to the Coverage A limit B)Replacement cost up to the Coverage B limit C)Actual cash value of the dwelling up to the Coverage B limit D)Replacement cost up to the Coverage A limit D-The dwelling is covered under Coverage A. Losses to the dwelling and other structures are paid on a replacement cost basis, and losses to personal property are paid on an actual cash value basis.

Which of the following does not apply to the Other Coverage Glass or Safety Glazing Material?

A)Applies to all Dwelling forms B)No coverage applies if a dwelling is vacant for 60 consecutive days before the loss C)May be settled on a replacement cost basis D)Covers glass that is part of a covered structure A-Coverage is provided under only the DP-2 and DP-3 forms.

Which of the following losses would be covered under the Dwelling Policy?

A)Collapse caused by insect damage B)Land subsidence of the insured's land C)Damage caused by a backup of the sewer pipes D)Fire damage to building materials on the insured premises D-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 is true of the Dwelling policy Special Form?

A)Contents are covered on an actual cash value basis B)The form will cover the cracking of walls C)Losses to the dwelling are paid on an actual cash value basis D)The form will cover the theft of contents A-Losses to the dwelling are paid on a replacement cost basis, while the contents are paid on an actual cash value basis. Cracking of walls and theft are excluded under the policy.

An attached carport is covered under which of the following coverages?

A)Coverage A B)Coverage B C)Coverage D D)Coverage C A- Coverage A - Dwelling includes structures attached to the dwelling, such as a carport, attached garage, breezeway, or deck.

Under all the Dwelling Forms, the dwelling described in the declarations is covered under:

A)Coverage B B)Coverage C C)Coverage E D)Coverage A D-Coverage A applies to the Dwelling at the described location; Coverage B, to Other Structures; Coverage C, to Personal Property; Coverage D, to Fair Rental Value, and Coverage E to Additional Living Expenses.

Detached structures on the insured premises are included in which coverage under a Dwelling Policy?

A)Coverage C B)Coverage D C)Coverage B D)Coverage A C-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

Which coverage pays for the loss of rents due to direct loss to the dwelling from a covered peril?

A)Coverage C - Personal Property B)Coverage B - Other Structures C)Coverage E - Additional Living Expense D)Coverage D - Fair Rental Value D-The Coverage D - Fair Rental Value limit of insurance is up to 20% of the Coverage A limit.

Which of the following is NOT true about coverage for Property Removed?

A)Coverage applies under the DP-3 form for 30 days while the property is removed B)Property coverage applies under the DP-1 policy for 30 days while the property is removed C)Property is covered while being removed from the premises to avoid a covered loss D)Coverage does not increase the limit of insurance that applies to the property removed B- The DP-1 policy only provides 5 days of coverage while the property is removed from the dwelling to avoid a covered loss.

Which statement concerning the Dwelling Special Form (DP-3) is true?

A)Coverages A through D provide open perils coverage on an ACV basis B)Contents are provided open perils coverage on an ACV basis C)Contents 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 D-Under the DP-3, the dwelling and other structures are provided open perils coverage on a replacement cost basis. Personal Property (contents) is covered against the Broad Perils coverage on an actual cash value basis.

Which of the following dwelling forms pays for losses to the dwelling on an actual cash value basis?

A)DP-1 B)DP-3 C)DP-4 D)DP-2 A

Which of the following dwelling program forms covers the building on an open peril basis?

A)DP-3 B)DP-2 C)DP-4 D)DP-1 A

Which form would not insure against external explosion?

A)DP-3 B)Unendorsed DP-1 C)Endorsed DP-1 D)DP-2 B- The basic perils covered by the DP-1 form (without the extended coverage perils endorsement) are: fire, lightning, and internal explosion.

Under the Dwelling policy, 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 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.

Under the Broad Form Dwelling Policy (DP-2), which peril is not included for coverage without an endorsement?

A)Damage to appliances by artificially generated electricity B)Volcanic Eruption C)Falling Objects D)Theft D-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 is not eligible for the Dwelling Program?

A)Dwelling includes a piano school B)Dwelling is located on farm property C)Dwelling has 5 roomers D)Dwelling has 4 apartment units B

The Earth Movement exclusion contains all of the following perils, except:

A)Earthquake B)Explosion C)Landslide D)Mudflow B-If a direct loss by fire, explosion, or glass breakage occurs as a result of earth movement, the policy will cover the ensuing damage.

The Personal Liability endorsement includes each of the following additional coverages, except:

A)First aid expenses B)Claims expenses C)Damage to the property of others D)Debris removal D-Debris removal is not covered under a personal liability supplement.

The Automatic Increase in Insurance endorsement typically increases Coverages A and B by which of the following?

A)Flat amount B)$10,000 C)A percentage designated on the endorsement D)$23,500 C-The increase is applied by the percentage shown on the endorsement annually.

All of the following statements are TRUE about the Broad Theft Coverage endorsement, EXCEPT:

A)It does not apply to the DP-1 B)Both on- and off-premises coverage is available C)Theft and attempted theft are covered D)Resulting damage caused by malicious mischief and vandalism A-The Theft Coverage endorsement can be added to any form, including the basic DP-1.

Under Coverage A of a Dwelling Policy, all of the following are covered, except:

A)Materials for repairing the dwelling, located on the described location B)Fire or lightning damage to outdoor television antennas C)Outdoor equipment on the location used to service the dwelling D)Land, including the land on which the dwelling is located D-Coverage A stipulates, 'We do not cover land, including land on which the dwelling is located.'

Which of the following are eligible to be insured under a Dwelling Policy?

A)Mobile homes on wheels B)Dwellings used for incidental business C)Farms D)Dwellings with any type of business in them B-Farm property is not eligible, mobile homes must be permanently attached to the foundation, and only incidental business are covered if dwelling is primarily residential.

All of the following are types of property NOT covered under Coverage C - Personal Property, except:

A)Motor vehicles B)Credit cards or fund transfer cards C)A dog D)Canoes D-Also excluded are accounts, bank notes, coins and currency, birds, animals, or fish, and electronic data processing tapes, wires, and records.

Where in the Dwelling policy is it stated that earth movement, landslide, mine subsidence, and mudflow are not covered unless resulting from direct loss by fire or explosion?

A)Other Coverages B)Endorsements C)Insuring Agreement D)General Exclusions D-The perils of earth movement, landslide, mine substance, and mudflow are perils that, because of their catastrophic nature, are not insured under the Dwelling policy.

What type of power failure is excluded under all of the dwelling forms?

A)Power failure that causes a fire on the described location B)Power failure that occurs on the insured premises C)Power failure that causes a fire to a neighboring property D)Power failure that occurs off the insured premises D- Losses caused by power failure off the insured premises is not covered, but if a covered peril ensues as a result of the power failure, the damage from that ensuing loss is covered.

All of the following is covered under Coverage B - Other Structures, except:

A)Storage building B)Swimming pool C)Construction materials D)Shed C-Construction materials used for repairs or renovation of the dwelling or other structures are covered under Coverage A - Dwelling.

Which of the following is true of a Dwelling Form?

A)The Special Form covers the building and other structures on an open perils basis B)The Basic Form covers the contents against theft C)The Broad Form covers the cost to repair defective plumbing D)The Basic Form covers the contents on an open perils basis A-Coverage for the dwelling and other structures is provided on an open perils basis, meaning coverage is provided for all causes of loss except for those perils specifically excluded.

All of the following statements regarding the Fire Department Service Charge are correct, except:

A)The policy deductible does not apply to this coverage B)The coverage is additional insurance C)Coverage is not provided if the premises is within the same jurisdiction as the fire department D)The policy will pay up to $1,000 D-The Dwelling policy will pay up to $500 for liability assumed for fire department charges when the fire department is called to save or protect covered property from an insured peril. Coverage does not apply if the property is located within the limits of the city, municipality, or protection district furnishing the fire department response. This is additional insurance and the policy deductible does not apply.

DP-2 and DP-3 policies

Pay for losses to the dwelling on a replacement cost basis.