Chapter Exam - Homeowners (HO) Policies

HO-6

A condominium unit owner would purchase what type of homeowner policy form to protect her contents?

$120,000 To trigger the replacement cost settlement, the home must be insured to 80% of its full value. Therefore, the agent will suggest $120,000 ($150,000 x 80%).

A dwelling has an actual cash value of $100,000 and a replacement cost of $150,000. To make sure that the replacement cost provision of the homeowners policy applies, an agent should suggest that the minimum coverage amount for the dwelling be

$2,000

According to HO contract definitions, there is an exception to the definition of business for insureds who receive less than ________ in total income for the 12 months prior to the policy period.

No, because an insured's personal vehicle or business vehicle is excluded from a basic named perils form.

Adam has an HO-8 insurance policy on his home. He drives his company car into his garage door, causing the door to have to be replaced. Would this be covered under his policy?

debris removal Debris Removal is an additional coverage under the homeowners policy. The materials and supplies on the premises used to construct, alter, or repair the dwelling are considered covered under the dwelling portion. Other structures are insured under Coverage B.

Additional coverage in a homeowners policy would cover

HO-4 Because HO-4 is the Tenant Broad form is a renter's policy which does not provide coverages for either the dwelling or other structures (no Coverage A or Coverage B is included in the renters policy).

All of the following Homeowners forms offer replacement cost coverage for a detached garage, EXCEPT:

The insured notices wood shaving in the basement for several years before part of the structure collapses due to termite damage.. HO-5, the COMPREHENSIVE form is open perils coverage which is defined by the perils it EXCLUDES. Insect damage is not covered if the insured had reason to know of the situation. Only a collapse due to hidden decay by termites would be covered.

All of the following losses to the dwelling of an insured or are covered under an HO-5 Homeowners policy, EXCEPT:

The year before coverage, J made $1,700 selling her home made buttons online. According to HO contract definitions, there is an exception to the definition of business for insureds who receive less than $2,000 in total income for the 12 months prior to the policy period.

All of the following would be defined as a business under HO policies EXCEPT

Personal injury Personal injury is offered as an endorsement to Section II at an additional premium cost.

All the following are additional coverages under Section II of the homeowners policy EXCEPT

Appraisal Appraisal is found only in Section I of the homeowners policy. Appraisal only applies to disagreements between insurers and the named insured over the true value of a property loss. It never applies to liability claims. Instead parties may enter into an arbitration process if there is a disagreement about the applicability of coverage.

All the following are conditions of a homeowners policy found in BOTH Sections I and II, EXCEPT

Risk personal injury, if necessary, to protect damaged property from further damage The insured is under no obligation to risk personal injury to protect insured property. The requirement is for the insured to protect under reasonable conditions.

All the following are duties of an insured after a loss, under a homeowners policy EXCEPT

10% of the Coverage C limit Although the homeowners form extends coverage to contents anywhere in the world, there is a 10% limit of Coverage C on anything regularly or permanently off the premises or $1000 whichever is greater.

Contents are covered anywhere in the world unless they are regularly or permanently located in another residence. If so, what is the limit of coverage on those items regularly off the premises?

actions

Coverage F pays for medical expenses incurred by third-parties while on an insured residence location or because of the insured's

A resident's employee who is injured away from the insureds location Coverage F under any homeowners policy form does not apply to a residence employee who is injured while was from the insured premises and not engaged in any work-related task

Coverage F under any homeowners policy form does not apply to which of the following?

A resident's employee who is injured while visiting his family

Coverage F under any homeowners policy form does not apply to which of the following?

E

Coverage __ provides the insured with personal liability insurance if a third party sues the insured for compensation due to bodily injury or property damage.

Unoccupancy

D just purchased a warehouse at an auction. When D receives the keys and documents, he arrives at the building and finds no people, but there is some miscellaneous office furniture. The warehouse is in a state of

Vacancy

D just purchased a warehouse. When D receives the keys and documents, he arrives at the building to find it completely empty with no people or contents. The warehouse has a

$125,000 The basic limit for Coverage E (personal liability) in the homeowner's policy is $100,000. In addition, defense costs are covered over and above the stated limit. Therefore, $125,000 is paid.

Dave owns a homeowners policy covering his residence for $250,000 with basic personal liability coverage. A visitor is injured on the premises and sues Dave, winning a $100,000 judgment. During the suit, legal expenses of $25,000 are incurred. How much will Dave's policy pay?

the injured person is the daughter of the insured who lives on the insured premises

Each of the following is a scenario in which the insured's Coverage F on his homeowner's policy would pay the injured party's medical expenses, EXCEPT

are no people or contents

If a building has a vacancy, there

are no people, but there is content

If a building is unoccupied, there

unoccupied

If a structure has no people but has contents, it is

vacant

If the dwelling or structure has no people or property in it, the building is

modified

The HO-08 covers a ___________ form of the basic perils.

own or be operating

The HO-08 covers a modified form of the basic perils. It excludes damage caused by any vehicle the insured may

HO2-(Attached) broad form coverage for both the dwelling and personal property HO3- (Detached) special coverage on buildings but broad on the contents HO4- (Renters) No structural coverage but broad on contents HO5- (Maximum Protection) All Risk for Structures and Contents HO6-(Condos) Broad coverage up to $5,000 on buildings, broad coverage on contents HO8- (Old Homes) basic coverage on both buildings and personal property

What does HO2, HO3, HO4, HO5, HO6, HO8 cover?

If the dwelling or structure has no people or property in it, the building is vacant. If the structure has no people but has content, it is unoccupied.

What is the difference between vacant and unoccupied?

None of the answers listed. All of the answers listed are EXCLUDED under HO-5 policies who carry more EXCLUSIONS than other homeowners contracts (other than HO-3) since their coverage is open peril.

Which of the following perils will an HO-5 Cover?

All of them: Loss of use Loss of income Additional living expenses

Which of the following types of loss is considered to be an indirect loss?

The swimming pool would be covered under property coverage B

Which of the following would be true of a swimming pool on the premises of a residence that is insured under a homeowners policy?

Coverage E

Which portion of the HO form provides liability coverage for bodily injury or property damage?

Because a swimming pool is a structure, not personal property. It is distinct from the dwelling, so it is insured under Coverage B.

Why is a swimming pool covered under property coverage B?