Lesson 8 Quiz

Which of the following clauses states that full payment of damages to structures under the homeowners policy will be made only if the insurance equals 80 or more percent of the replacement cost of the structure and is carried on the property at the time of the loss? a. A coinsurance clause b. An inflation rider clause c. A reinsurance clause d. A replacement clause

The correct answer is (A).The coinsurance clause requires 80 percent coverage to avoid the insured becoming a coinsurer

The standard form of the homeowners policy excludes which of the following? a. Fire and other perils b. Animals, birds, and fish c. Personal liability d. Theft

The correct answer is (B). Animals, birds, and fish generally are excluded, although liability coverage may be available for pets.

Colin has a replacement-cost homeowners policy. The value of the home is $450,000, and he carries $350,000 worth of insurance. How much would the insurance company owe him in the event of a $100,000 loss due to fire (without regard to a deductible)? a. $80,000 b. $85,000 c. $97,222 d. $100,000

The correct answer is (C). $450,000 × 0.80 = $360,000 $350,000 ÷ $360,000 = 0.97222 0.97222 × $100,000 = $97,222

Homeowners policies generally insure personal property at actual value rather than replacement value. Which of the following should an insured homeowner consider obtaining if he or she has a significant amount of older personal property such as televisions and other electronics? a. A personal liability insurance rider b. A professional liability insurance rider c. An endorsement on that property d. A separate agreed value policy

The correct answer is (C). An endorsement on personal property allows that property to be insured for replacement rather than actual value, usually without a deductible for a premium increase.

Because it is a common exclusion from most homeowners insurance policies, homeowners must generally find supplemental coverage for which of the following perils: a. Fire b. Theft c. Flood d. Medical payments to others

The correct answer is (C). Damage from flooding is generally excluded from HO policies.

Which of the following individuals is most likely to be covered by malpractice insurance? a. A lawyer b. A financial planner c. A physician d. An architect

The correct answer is (C).Medical doctors, including physicians, are typically covered by malpractice insurance. The other professionals are generally covered by errors and omissions insurance

All of the following are generally covered by comprehensive coverage on a personal automobile policy EXCEPT: a. Fire b. Theft c. Vandalism d. Collisions

The correct answer is (D).Collisions with other vehicles are covered under liability coverage. Coverage with other objects is covered by collision coverage.

Homeowners policies provide coverage for losses from which of the following? a. Fire or other listed perils b. Loss of use c. Personal property d. All of the above

The correct answer is (D).Homeowners policies cover all of the above in Section 1 of the policy.

Which of the following losses is not covered by a standard homeowners policy? a. Personal liability b. Theft c. Medical payments d. Personal vehicle

The correct answer is (D).Homeowners policies do not generally cover any vehicle

All of the following statements are correct regarding a Personal Auto Policy Part C (Uninsured Motorists) coverage except: a. Payment for property damage. b. Payment for lost wages. c. Payment for punitive damages. d. Uninsured motorists coverage will cover all of the above.

The correct answer is C. The PAP uninsured motorist does not pay for punitive damages.