Ch. 5 Homeowners Policy - Random Questions 1 - MI P&C Licensing

Policyholder C's debit card is stolen, and $1,000 is subsequently stolen from his account. How much will his HO-3 pay for the loss? A. $500 B. $1,000 C. $250 D. 0%

A. $500 Coverage up to $500 is paid for theft or unauthorized use of a credit card or electronic fund transfer card (debit card). 5.4

What is the limit of insurance available under an HO-3 policy for a tree totally damaged in a hail storm? A. 0% B. $500 C. $250 D. $1,000

A. 0% The most paid for a covered tree is $500 but coverage is not provided for windstorm or hail losses.

Which of the following is eligible to receive medical payments under Section II of a Homeowners Policy? A. A residence employee B. A tenant who lives in a portion of the insured's residence C. The named insured's spouse D. The named insured

A. A residence employee Which of the following is eligible to receive medical payments under Section II of a Homeowners Policy? 5.7

The Home Day Care endorsement does not provide which of the following? A. Coverage for a day care employee B. Coverage on the residence premises C. A policy year aggregate limit for personal liability and medical payments D. Medical payments

A. Coverage for a day care employee Injury to any employee arising out of the day care business is not covered.

The HO-3 dwelling and other structures coverages are insured against which perils? A. Open perils B. Broad Perils C. Modified Perils D. Basic Perils

A. Open perils Coverages A and B of the HO-3 are insured on an open perils basis in which all perils are insured unless specifically excluded. 5.1

A guest falls in K's house and is injured in an amount of $1,000. How much will K's Homeowners Policy pay regardless of fault, if the Coverage F limit is $1,500? A. Nothing B. $1,000 C. $500 D. $1,500

B. $1,000 K's policy will pay the actual amount of medical expenses up to the policy limit of Coverage F.

Under a Homeowners policy, Coverage B is what percentage of Coverage A? A. 50% B. 10% C. 25% D. 5%

B. 10% As with the Dwelling Policy, Coverage B is provided at 10% of the Coverage A limit.

Which of the following would be covered under the Damage to Property of Others additional coverage of the Homeowners Policy? A. Damage arising out of the insured's business pursuits B. Damage caused intentionally by the insured's 10-year-old son C. Damage to property owned by the insured's tenant D. Damage to property owned by the insured

B. Damage caused intentionally by the insured's 10-year-old son Intentional damage by a child under age 13 is covered. 5.3

The HO-8 form settles losses to the building on what valuation method? A. Replacement value B. Functional replacement value C. Agreed value D. Aggregate value

B. Functional replacement value The HO-8 form settles losses to buildings on a functional replacement value basis, replacing property with other property that performs the same function, although the replacement property is not identical to the property being replaced. 5.1

Which statement is false regarding Section II of a Homeowners Policy? A. At its own expense, the insurer will provide a legal defense against claims B. If the named insured or the spouse dies, coverage does not continue for their legal representatives C. Liability arising out of the sale, use, manufacture, delivery, or possession of a controlled substance is excluded D. An insurer's obligations end when it pays damages equal to the policy limit for any one occurrence

B. If the named insured or the spouse dies, coverage does not continue for their legal representatives In the event of the death of the insureds, coverage continues for the insured's legal representative.

Which statement regarding medical payments under a homeowners policy is true? A. Medical payments are provided by Coverage E B. Medical payments under a Homeowners Policy will cover funeral expenses C. Medical payments under a Homeowners Policy will cover the insured's injuries D. Medical payments include personal injury

B. Medical payments under a Homeowners Policy will cover funeral expenses Funeral expenses are covered expenses under Coverage F, Medical Payments.

Which of the following is NOT a 'residence premises' in the homeowners policy? A. A three-family dwelling where the named insured resides B. Premises rented occasionally to the named insured for non-business purposes C. Other structures on the Declarations if shown as the 'residence premises' D. A one-family residence where the named insured resides

B. Premises rented occasionally to the named insured for non-business purposes A location rented occasionally to the named insured for non-business purposes is an 'insured location. 5.2

All of the following are true of a Homeowners Policy, Coverage F, except: A. Under Coverage F, coverage does not apply to injuries of the named insured or any regular resident of the insured's household B. Under Coverage F, payments apply to necessary medical expenses incurred within a maximum of 1 year C. Under Coverage F, a covered accident may occur during the policy period D. Under Coverage F, coverage applies to persons that are on the insured location with permission

B. Under Coverage F, payments apply to necessary medical expenses incurred within a maximum of 1 year Coverage F will pay for expenses incurred up to three years after the accident. 5.7

Including debris removal, what is the maximum an HO-3 policy with a Coverage A amount of $250,000 will pay If a detached garage burns down? A. $1,250 B. $250,000 C. $26,250 D. $25,000

C. $26,250 The Coverage B total is $25,000, and the policy allows for an additional 5% for debris removal: $25,000 + 5% or $1,250 = $26,250.

In the event an apartment attached to the insured's home is damaged and unlivable, what percentage of Coverage A does the HO-3 provide for the rental value? A. 10% B. 20% C. 30% D. 5%

C. 30% Coverage D will pay up to 30% of Coverage A on the HO-3 for the fair rental value, less continuing expenses, of the apartment.

The Homeowners Policy provides coverage for all of the following, except: A. An ATV on the insured's premises B. A motorized wheelchair C. A motorized golf cart being driven to or from a golf facility D. A riding lawn mower pulling a two-wheel garden trailer

C. A motorized golf cart being driven to or from a golf facility A golf cart must be on a golf course for coverage to apply.

Which of the following is eligible to receive medical payments under Section II of a Homeowners Policy? A. A tenant who lives in a portion of the insured's residence B. The named insured's spouse C. A residence employee D. The named insured

C. A residence employee The residence employee is eligible, if injured in the course of employment. 5.7

Which of the following homeowners coverage does not have a deductible? A. Personal Property B. Other Structures C. Damage to Property of Others D. Dwelling

C. Damage to Property of Others Damage to property of Others is an Additional Coverage under Section II, which is not subject to a deductible. 5.8

All of the following are defined as insured locations under the Homeowners Policy, except: A. Any premises named in the Declarations B. Cemetery plots C. Farmland owned by the insured D. A non-owned premises where the insured is temporarily residing

C. Farmland owned by the insured Farmland owned by the insured is not covered. 5.2

All of the following are true of Section II of a Homeowners Policy, except: A. First aid expenses are automatically included B. Medical expense coverage is payable to guests C. Loss assessment charges against the insured by a property owner's association are excluded D. Medical payments coverage would apply if the family dog were to bite someone 3 blocks from home

C. Loss assessment charges against the insured by a property owner's association are excluded Loss assessment charges against the insured by a property owner's association are covered up to $1,000. 5.4

Which coverage is not provided under Section II of a Homeowners Policy? A. Damage to property of others B. Personal injury liability C. Medical expense of a boarder D. Medical expense of a guest

C. Medical expense of a boarder Medical expense coverage for a boarder or regular resident is excluded.

Up to what amount of coverage is provided for a $1,000 shed if the insured doesn't use an available fire extinguisher to put out a shed fire? A. $1,000 B. $500 C. Nothing D. $900

C. Nothing The neglect exclusion prevents coverage since the insured failed to use all reasonable means to save covered property. 5.5

Which of the following is not true about the Home Business endorsement? A. Advertising injury is covered B. The business must be owned by the insured C. Only property damage is covered D. Professional services are excluded

C. Only property damage is covered The endorsement provides both business property and liability coverages for an eligible home business.

All of the following are true of a Homeowners Policy, except: A. Cemetery plots, burial vaults and vacant land are insured locations B. Section II is the same in all Homeowners Policies C. Section II provides coverage for damage to the insured's property D. Coverage E is written on a single limit basis

C. Section II provides coverage for damage to the insured's property Coverage for the insured's property is provided in Section I.

Under the Homeowners Policy, an unrelated resident in the care of the insured is covered up to what age? A. 18 B. 24 C. 16 D. 21

D. 21 Unrelated residents, such as exchange students, are covered up to age 21.

Under an HO-3 policy, what is the coinsurance requirement? A. 90% B. 50% C. 75% D. 80%

D. 80% If Coverage A is less than 80% at the time of a loss to the dwelling, a penalty will be applied to the partial dwelling loss claim payment. 5.3

All of the following are considered to be insured under a Homeowners Policy, except: A. A son or daughter while away at college, who is 23 B. A friend's 14-year-old daughter who is living with an insured C. A 79-year-old father-in-law who is living with an insured D. A 25-year-old friend who is living with an insured

D. A 25-year-old friend who is living with an insured The definition of insured does not include anyone over the age of 21 that is not a relative. 5.2

Which statement is false? A. Obligations of an insurer end when it pays damages equal to the policy limit for any one occurrence B. Insurer investigation expenses are in addition to the limits stated in Coverage E C. Total liability coverage resulting from any one occurrence may not exceed the Coverage E limit that is stated in the policy D. Coverage F limits are subject to a deductible

D. Coverage F limits are subject to a deductible Section II coverages are not subject to a deductible. 5.7

Which statement is true concerning Section II of a Homeowners Policy? A. Medical payments will pay for a maximum of 1 year from the date of the accident B. Medical payments coverage is available for the insured and resident relatives C. Medical payments coverage is not available for a residence employee D. Damage to Property of Others coverage is provided up to a specified limit regardless of negligence

D. Damage to Property of Others coverage is provided up to a specified limit regardless of negligence Damage to Property of Others pays up to $1,000 regardless of whether the insured is liable or not. 5.8

The HO-5 personal property coverages are insured on which basis? A. Broad Perils B. Modified Perils C. Basic Perils D. Open perils

D. Open perils The HO-5 is the broadest policy providing open perils coverage on Coverages A, B, and C. 5.1

All of the following definitions are true of a Homeowners Policy, except: A. Bodily injury -- Bodily harm, sickness or disease, including required care, loss of services and death that results B. Residence employee -- An employee of an insured whose duties are related to the maintenance or use of the residence premises C. Occurrence -- An accident, including exposure to conditions that result during the policy period in bodily injury or property damage D. Property damage -- Physical injury to tangible property, but does not include loss of use of that property

D. Property damage -- Physical injury to tangible property, but does not include loss of use of that property Property Damage does include loss of use of the property.