Chapter four
Policyholder L has a DP-1 with a Coverage A amount of $300,000. Following a severe storm, she suffers a covered loss to the dwelling of $275,000 and a covered loss to a detached swimming pool of $30,000. How much will L's policy pay? A $250,000 B $300,000 C $275,000 D $305,000
$300,000 The pool is covered under Coverage B, which pays up to 10% of Coverage A, or $30,000. However, because L's policy is written on the DP-1 form, the Coverage B limit is included in, not additional to, the Coverage A limit. Therefore, the most the policy will pay is $300,000.
Policyholder L has a DP-1 with a Coverage A amount of $300,000. Following a severe storm, she suffers a covered loss to the dwelling of $275,000 and a covered loss to a detached swimming pool of $30,000. How much will L's policy pay? A $305,000 B $275,000 C $300,000 D $250,000
$300,000 The pool is covered under Coverage B, which pays up to 10% of Coverage A, or $30,000. However, because L's policy is written on the DP-1 form, the Coverage B limit is included in, not additional to, the Coverage A limit. Therefore, the most the policy will pay is $300,000.
Coverage D covers which of the following losses? A Additional Living Expense B Damage to a swimming pool C Loss of rental income due to the cancellation of a lease D Access prevented by a civil authority because of a neighboring location's direct loss by a peril covered under the insured's policy
Access prevented by a civil authority because of a neighboring location's direct loss by a peril covered under the insured's policy Coverage D, Fair Rental Value, includes coverage for the indirect loss of access prevented by a civil authority due to the direct loss of a neighboring property by a covered peril.
Which DP form does not cover burglar damage? A None of the Dwelling Policies cover damage done by burglars B Special Form (DP-3) C Broad Form (DP-2) D Basic Form (DP-1)
Basic Form (DP-1) Damage by burglars is covered only in the broader Forms DP-2 and DP-3.
All of the following are types of property NOT covered under Coverage C - Personal Property, except: A dog Canoes Motor vehicles Credit cards or fund transfer cards
Canoes Also excluded are accounts, bank notes, coins and currency, birds, animals, or fish, and electronic data processing tapes, wires, and records.
All of the following is covered under Coverage B - Other Structures, except: Swimming pool Construction materials Shed Storage building
Construction Materials Construction materials used for repairs or renovation of the dwelling or other structures are covered under Coverage A - Dwelling.
Which is true of the Dwelling policy Special Form? A The form will cover the cracking of walls B Contents are covered on an actual cash value basis C The form will cover the theft of contents D Losses to the dwelling are paid on an actual cash value basis
Contents are covered on an actual cash value basis 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? Coverage A Coverage B Coverage C Coverage D
Coverage A Coverage A - Dwelling includes structures attached to the dwelling, such as a carport, attached garage, breezeway, or deck.
The Personal Liability endorsement includes each of the following additional coverages, except: First aid expenses Damage to the property of others Claims expenses Debris removal
Debris removal is not covered under a personal liability supplement.
Water damage caused by which of the following is a covered loss under the Dwelling policy? A Discharge caused by a plumbing failure B Leaks through a driveway C Overflow of water from a sump pump D Water below the surface of the ground
Discharge caused by a plumbing failure Water damage is excluded if caused by surface water, tidal water, and leakage through a building, foundation, or other structure.
Which of the following properties is ineligible to be insured under a Dwelling Policy? A Dwellings with any type of business in them B Dwellings containing three apartment units C Farms D Mobile homes
Farm Dwellings located on farms are not eligible. Dwellings must be used principally for residential dwelling purposes and cannot have more than 4 dwelling units. Incidental business occupancies, such as schools, studios, and offices, are permitted if the primary use of the dwelling is as a personal residence.
What type of power failure is excluded under all of the dwelling forms? Power failure that occurs on the insured premises Power failure that causes a fire to a neighboring property Power failure that occurs off the insured premises Power failure that causes a fire on the described location
Power failure that occurs off the insured premises 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.
The DP-3 insures personal property against the same perils as: A The DP-1 Personal Property Coverage B The DP-2 Personal Property Coverage C The DP-3 Dwelling coverage D The DP-1 Dwelling Coverage
The DP-2 Personal Property Coverage The DP-3 covers the dwelling against open perils, and personal property against the broad (DP-2) perils.
The Limited Theft Coverage endorsement to the DP is used under which of the following circumstances? A Coverage is desired for off-premises property B The dwelling has been vacant for more than 60 days C The insured dwelling is tenant-occupied D The insured dwelling is owner-occupied
The Limited Theft Coverage endorsement may only be used if the dwelling is tenant occupied. Owner-occupied dwellings should use the Broad Theft endorsement.
Which of the following statements about the DP-3 Policy is false? A Losses to the dwelling are paid on a replacement cost basis B Mobile homes are not eligible C The dwelling and contents are both covered on an open perils basis D The insured dwelling must be used principally for dwelling purposes
The dwelling and contents are both covered on an open perils basis Only the dwelling is covered on an open perils basis.
The Automatic Increase in Insurance endorsement typically increases Coverages A and B by which of the following? Flat amount A percentage designated on the endorsement $10,000 $23,500
The increase is applied by the percentage shown on the endorsement annually.
The Dwelling Broad Form (DP-2) insures against all of the following perils, except: A Accidental discharge or overflow B Breakage of glass that is a part of a building, storm door or window C Damage caused by burglars D Theft
There is no theft coverage in a Dwelling broad Form policy.
Which form would not insure against external explosion? A Endorsed DP-1 B Unendorsed DP-1 C DP-3 D DP-2
Unendorsed DP-1 The basic perils covered by the DP-1 form (without the extended coverage perils endorsement) are: fire, lightning, and internal explosion.
Which of the following is correct regarding damage caused by vandalism under the Basic Dwelling Form? A It is covered as an extended coverage peril B Vandalism coverage must be added by the V&MM endorsement C It is covered as a basic peril D Vandalism of vacant buildings is automatically covered
Vandalism coverage must be added by the V&MM endorsement The Basic Dwelling Form is designed to provide coverage at a minimum cost. If the insured desires vandalism coverage an endorsement and additional premium is required. Vandalism of vacant buildings is excluded even under the endorsement.
Which of the following is correct regarding damage caused by vandalism under the Basic Dwelling Form? A Vandalism coverage must be added by the V&MM endorsement B It is covered as an extended coverage peril C It is covered as a basic peril D Vandalism of vacant buildings is automatically covered
Vandalism coverage must be added by the V&MM endorsement The Basic Dwelling Form is designed to provide coverage at a minimum cost. If the insured desires vandalism coverage an endorsement and additional premium is required. Vandalism of vacant buildings is excluded even under the endorsement.
An insured tenant may use up to what percentage of Coverage C to improve the premises? A 10% B 20% C 0% D 5%
10% An tenant may use up to 10% of the Coverage C limit for a covered loss to improvements, alterations, and additions made at the insured's expense to that part of the described location occupied by the named insured.
All of the following statements are correct regarding Coverage E, except: A Additional living expenses include the boarding of pets B Additional living expense coverage is available if the dwelling is uninhabitable C Coverage E is available under all Dwelling policy forms D Coverage applies to the extent of the insured's normal standard of living
Coverage E is available under all Dwelling policy forms Coverage E - Additional Living Expense is not included on the DP-1 form.
Which of the following properties is ineligible to be insured under a Dwelling Policy? A Dwellings with any type of business in them B Dwellings containing three apartment units C Mobile homes D Farms
Farms Dwellings located on farms are not eligible. Dwellings must be used principally for residential dwelling purposes and cannot have more than 4 dwelling units. Incidental business occupancies, such as schools, studios, and offices, are permitted if the primary use of the dwelling is as a personal residence.
Sudden and accidental damage from artificially generated electrical current best describes a(n): A Internal explosion B Mechanical breakdown C Power failure D Power surge
Power surge Sudden and accidental damage from artificially generated electrical current is caused by man-made electricity or power surge.
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 B limit B Actual cash value of the dwelling up to the Coverage A limit C Replacement cost up to the Coverage B limit D Replacement cost up to the Coverage A limit
Replacement cost up to the Coverage A limit 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.
All of the following are true regarding Dwelling policy eligibility, except: A Farm dwellings are not eligible B Mobile homes are eligible if written on a DP-1 C The dwelling must be used for seasonal or secondary purposes D Some incidental business occupancies are permitted
The dwelling must be used for seasonal or secondary purposes The dwelling must be used principally for residential dwelling purposes and MAY be occupied on a seasonal or secondary basis, but it is not required.
Coverage D covers which of the following losses? A Damage to a swimming pool B Access prevented by a civil authority because of a neighboring location's direct loss by a peril covered under the insured's policy C Loss of rental income due to the cancellation of a lease D Additional Living Expense
Access prevented by a civil authority because of a neighboring location's direct loss by a peril covered under the insured's policy Coverage D, Fair Rental Value, includes coverage for the indirect loss of access prevented by a civil authority due to the direct loss of a neighboring property by a covered peril.
Which of the following does not apply to the Other Coverage Glass or Safety Glazing Material? Covers glass that is part of a covered structure Applies to all Dwelling forms No coverage applies if a dwelling is vacant for 60 consecutive days before the loss May be settled on a replacement cost basis
Applies to all Dwelling forms Coverage is provided under only the DP-2 and DP-3 forms.
The abrupt falling down or caving in of a building disallowing it to be used for its intended purpose is the definition of: A Settling B Collapse C Defective planning D Earth movement
Collapse Collapse is defined as the abrupt falling down or caving in of a building, but only if it cannot be occupied for its current intended purpose. If a building, or any portion of a building, is in danger of falling down or caving in -- or if it's standing, it is not in a state of collapse.
The abrupt falling down or caving in of a building disallowing it to be used for its intended purpose is the definition of: A Settling B Defective planning C Collapse D Earth movement
Collapse is defined as the abrupt falling down or caving in of a building, but only if it cannot be occupied for its current intended purpose. If a building, or any portion of a building, is in danger of falling down or caving in -- or if it's standing, it is not in a state of collapse.`
Which is true regarding Dwelling policies? A Coverage B would cover an attached garage B Coverage C applies while insured property is located at the described location C Coverage C includes coverage for personal property of tenants and boarders D Coverage D is considered a direct loss coverage
Coverage C applies while insured property is located at the described location Coverage C may be extended to cover property of guests and servants. Coverage D, Fair Rental Value, is an indirect coverage.
Which is true regarding Dwelling policies? A Coverage D is considered a direct loss coverage B Coverage C applies while insured property is located at the described location C Coverage B would cover an attached garage D Coverage C includes coverage for personal property of tenants and boarders
Coverage C applies while insured property is located at the described location Coverage C may be extended to cover property of guests and servants. Coverage D, Fair Rental Value, is an indirect coverage.
Which coverage pays for the loss of rents due to direct loss to the dwelling from a covered peril? Coverage B Coverage C Coverage D Coverage E
Coverage D The Coverage D - Fair Rental Value limit of insurance is up to 20% of the Coverage A limit.
Which of the following perils is not covered under the Dwelling Broad Form? A Weight of ice and snow B Smoke damage from industrial operations C Vehicle damage to the dwelling D Burglary damage
Smoke damage from industrial operations 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.
Which statement is true concerning Dwelling policies? A 100% of Coverage C applies to worldwide coverage B The Special Form insures the dwelling on an open perils basis, and insures the contents against the broad form perils C The Special Form automatically covers the contents against the peril of theft D The Basic Form pays for losses to the dwelling on a replacement cost basis
The Special Form insures the dwelling on an open perils basis, and insures the contents against the broad form perils 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.
The limit of insurance for the Other Coverage Trees, Shrubs, and Other Plants is provided at which percentage of the Coverage A limit? 5% 10% 50% 100%
5% This coverage is also in addition to the Coverage A limit.
ll of the following are eligible for coverage under the Dwelling Program, except: A A vacation home used as a secondary residence B A single-family home in the suburbs C A duplex D A beauty shop with a small bedroom attached
A beauty shop with a small bedroom attached A dwelling used primarily for business is not eligible.
All of the following are true of Dwelling Special Form, except: A Losses to the dwelling are paid on a replacement cost basis B Both the dwelling and contents are covered on an open perils basis C The dwelling must be used principally for residential dwelling purposes D Mobile homes are not eligible
Both the dwelling and contents are covered on an open perils basis
Water damage caused by which of the following is a covered loss under the Dwelling policy? A Overflow of water from a sump pump B Leaks through a driveway C Discharge caused by a plumbing failure D Water below the surface of the ground
Discharge caused by a plumbing failure Water damage is excluded if caused by surface water, tidal water, and leakage through a building, foundation, or other structure.
Under Coverage C of the Special Dwelling Form, all of the following are included, except: A At the insured's option, property of guests and servants B The insured's golden retriever C Household and personal property D Property of others that is in the care, custody and control of the insured
Golden retriever this policy does not cover animals or pets
Which of the following coverages is not provided by the Personal Liability endorsement? A Defense costs B Medical payments to others C Injury caused to a regular resident of the dwelling D First aid expenses
Injury caused to a regular resident of the dwelling Liability coverage applies to expenses incurred by residence employees, but not the named insured or regular residents of the named insured's household.
Which of the following coverages is not provided by the Personal Liability endorsement? A First aid expenses B Medical payments to others C Defense costs D Injury caused to a regular resident of the dwelling
Injury caused to a regular resident of the dwelling Liability coverage applies to expenses incurred by residence employees, but not the named insured or regular residents of the named insured's household.
Which of the following is NOT true about coverage for Property Removed? Property is covered while being removed from the premises to avoid a covered loss Coverage applies under the DP-3 form for 30 days while the property is removed Coverage does not increase the limit of insurance that applies to the property removed Property coverage applies under the DP-1 policy for 30 days while the property is removed
Property coverage applies under the DP-1 policy for 30 days while the property is removed The DP-1 policy only provides 5 days of coverage while the property is removed from the dwelling to avoid a covered loss.
Which of the following describes the loss settlement basis for a fire damage claim to a dwelling insured under a DP-3 policy? A Replacement cost up to the Coverage B limit B Actual cash value of the dwelling up to the Coverage A limit C Replacement cost up to the Coverage A limit D Actual cash value of the dwelling up to the Coverage B limit
Replacement cost up to the Coverage A limit 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 is true under the Dwelling policy? A The Basic Form covers the perils of fire, lightning and internal explosion B The Broad Form automatically covers contents against theft C The Special Form covers contents on an open perils basis D The Basic Form covers loss to trees, shrubs and plants
The Basic Form covers the perils of fire, lightning and internal explosion The Basic Form is written on a named perils basis and does not cover theft, or loss to trees, shrubs, and plants.
The Limited Theft Coverage endorsement to the DP is used under which of the following circumstances? A Coverage is desired for off-premises property B The insured dwelling is owner-occupied C The dwelling has been vacant for more than 60 days D The insured dwelling is tenant-occupied
The Limited Theft Coverage endorsement may only be used if the dwelling is tenant occupied. Owner-occupied dwellings should use the Broad Theft endorsement.
Which of the following is true of a Dwelling Form? A The Basic Form covers the contents against theft B The Basic Form covers the contents on an open perils basis C The Broad Form covers the cost to repair defective plumbing D The Special Form covers the building and other structures on an open perils basis
The Special Form covers the building and other structures on an open perils basis 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 are TRUE about the Broad Theft Coverage endorsement, EXCEPT? It does not apply to the DP-1 Both on- and off-premises coverage is available Theft and attempted theft are covered Resulting damage caused by malicious mischief and vandalism
The Theft Coverage endorsement can be added to any form, including the basic DP-1.
All of the following are true of the Dwelling Policy Broad Form, except: A The broad form automatically covers incidental business occupancies B Losses to the dwelling are paid on a replacement cost basis C The broad form covers dwellings located on farms D The dwelling and contents are covered for the broad form perils
The broad form covers dwellings located on farms Dwellings located on farms are not eligible for the Dwelling program.
Which of the following statements about the DP-3 Policy is false? A Losses to the dwelling are paid on a replacement cost basis B The insured dwelling must be used principally for dwelling purposes C Mobile homes are not eligible D The dwelling and contents are both covered on an open perils basis
The dwelling and contents are both covered on an open perils basis Only the dwelling is covered on an open perils basis.
Under Coverage C of the Special Dwelling Form, all of the following are included, except: A The insured's golden retriever B Household and personal property C Property of others that is in the care, custody and control of the insured D At the insured's option, property of guests and servants
The insured's golden retriever The policy does not cover animals or pets.
Which of the following statements about Fire Department Service Charge coverage is not correct? A The policy deductible does not apply to this coverage B Fire Department Service Charge coverage is included under all Dwelling policy forms C Coverage does not apply if the property is located within the limits of the jurisdiction furnishing the fire department response D The policy will pay up to $1,000 for Fire Department Service Charge coverage
The policy will pay up to $1,000 for Fire Department Service Charge coverage Under each of the dwelling forms, the 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 jurisdiction furnishing the fire department response.
The Dwelling Broad Form (DP-2) insures against all of the following perils, except: A Breakage of glass that is a part of a building, storm door or window B Theft C Accidental discharge or overflow D Damage caused by burglars
Theft There is no theft coverage in a Dwelling broad Form policy.
All of the following are covered perils under the Extended Coverage Endorsement to the DP-1, except: A Vehicles B Volcanic eruption C Windstorm D Weight of ice, snow or sleet
Weight of ice, snow or sleet is not part of the EC perils.
All of the following are covered perils under the Extended Coverage Endorsement to the DP-1, except: A Windstorm B Vehicles C Volcanic eruption D Weight of ice, snow or sleet
Weight of ice, snow or sleet is not part of the EC perils.
The Earth Movement exclusion contains all of the following perils, except: Mudflow Explosion Landslide Earthquake
explosion If a direct loss by fire, explosion, or glass breakage occurs as a result of earth movement, the policy will cover the ensuing damage.
Which of the following statements about Fire Department Service Charge coverage is not correct? A Fire Department Service Charge coverage is included under all Dwelling policy forms B Coverage does not apply if the property is located within the limits of the jurisdiction furnishing the fire department response C The policy deductible does not apply to this coverage D The policy will pay up to $1,000 for Fire Department Service Charge coverage
vThe policy will pay up to $1,000 for Fire Department Service Charge coverage Under each of the dwelling forms, the 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 jurisdiction furnishing the fire department response.
