TX Adjusters Exam | Property Insurance

The pair or set clause applies to the loss of an item that is part of a pair or set. The insurer can either:

- repair or replace any part to restore the pair or set to its value before the loss - pay the difference between the actual cash value of the property before and after the loss. This clause typically pertains to personal property, such as to a matching set of drapes, chairs, cufflinks, or earrings.

A retired artist, Amber gives free lessons in her home to promising young artists. According to Amber's homeowners insurance policy, giving art lessons is not considered a business because

- she only does it part time. C - she receives no money or other compensation. - art is not a trade or profession. - Amber is retired.

Clint buys a new boat for $7,000 but does not obtain a separate boatowners policy for it. What coverage, if any, will most likely be available for it under his HO 3?

- $3,500 (half of the purchase price) - Actual cash value coverage - Full replacement cost coverage C: $1,500 limit on the boat and any trailers, furnishings, equipment, and outboard motors

Charlie normally spends $2,500 a month on food and housing expenses for himself and his family. While their house is being repaired following a fire, Charlie incurs an additional $2,000 in living expenses, spending $4,500 per month in hotel and restaurant bills. How much, if anything, will Coverage D of Charlie's homeowners policy cover?

$0 $2,500 per month $4,500 per month C: $2,000 per month

Last week Mount Hanna erupted on Sunday, Monday, Friday, and Saturday. According to a homeowners policy, how many volcanic eruptions were there?

- Three C - Two - Four - One

According to the definition of a motor vehicle in Donnell's homeowners insurance policy, all of the following items he owns would be considered motor vehicles EXCEPT:

C - Bicycle - Lawn tractor - Trailer pulled behind a lawn tractor - Self-propelled snowblower

Bryce was able to buy his home with a 10 percent down payment and a mortgage from Porcine Bank for the balance of the purchase price. Which of the following statements concerning Porcine Bank is correct?

C - Bryce's insurance policy can protect Porcine Bank's interest in Bryce's home. - Bryce's signature on the mortgage document serves as collateral that secures Porcine Bank's mortgage loan. - Porcine Bank has no insurable interest in Bryce's home. - Porcine Bank is a mortgagor.

Which Insurance Services Office, Inc. (ISO), homeowners insurance form insures a single-family home provides on a named perils basis for both the dwelling and personal property?

C - HO 2 (The Homeowners Policy Broad Form 2 (HO 2) insures the dwelling, other structures, and personal property on a named perils basis). - HO 5 - HO 4 - HO 6

Which of the following is not a benefit provided under Coverage D-Loss of Use of a homeowners policy?

C - Legal liability expenses - Prohibited use - Additional living expense - Fair rental value

It would cost $500,000 to replace Angel's home today with an identical home at the same location. According to Angel's Homeowners Policy Special Form 3 (HO 3) policy, no depreciation will be deducted when settling a loss under her the policy if she buys coverage on the dwelling in at least what amount?

C: $400,000 $250,000 $500,000 $450,000

Arthur owns a house that has an ACV of $500,000. To get full replacement cost coverage on the home in the event of a partial loss, he must buy a policy with a limit of at least $400,000. However, he buys a policy with a limit of $350,000, which means there will be a coinsurance penalty. His deductible is $1,000. In case of a partial loss, the insurer will pay the policy limit divided by 80 percent of the replacement cost, multiplied by the amount of the loss, less the deductible.

So if Arthur's home suffers a partial loss valued at $200,000, the policy will pay for its restoration as follows: Step 1: $350,000 ÷ $400,000 = 0.875 Step 2: $200,000 × 0.875 = $175,000 Step 3: $175,000- $1,000 = $174,000 Arthur will receive $174,000 from the insurance company, not the $199,000 he would have received had he met the coinsurance requirement. In this case the coinsurance penalty is $25,000.

Kathy normally spends $2,500 a month on food and housing expenses for herself and her family. While their house is being repaired after a covered loss, Kathy puts her family up in a nearby hotel and incurs $3,750 per month in expenses. How much, if anything, will Coverage D of Kathy's homeowners policy cover?

$2,500 per month $3,750 per month $1,250 per month C: $0

James has an ISO form HO 3 homeowners policy. Which one of the following property losses would his policy probably cover?

- A fence is blown down by high winds during a severe thunderstorm. - A swimming pool is damaged when freezing temperatures cause the pool pipes to burst. - A dock is destroyed during an extremely high tide. C - A fire burns down the house.

Jeremy's one-car garage is detached from his house, which is covered by an HO 3 homeowners policy. Under Coverage B-Other Structures of Jeremy's policy, in which situation would coverage not be provided?

- A tenant who rents part of the house parks her car in the garage. C - His neighbor rents the garage to store household goods in the garage. - His neighbor rents the garage to park her car there. - A tenant who rents part of the house keeps her record collection in the garage.

Dennis and Amelia normally rent two rooms in their home to students attending a nearby college. The college canceled classes and sent all students home after an explosion destroyed the school's heating plant. What coverage, if any, is available under Dennis and Amelia's homeowners policy to cover their loss of rental income?

- Additional living expense. - Fair rental value. . C - None. - Civil authority prohibits use.

Asher's new home is insured by an HO 3. Which of the following is covered under "other structures"?

- An attached garage C - A large screened gazebo in Asher's backyard - A workshop from which Asher conducts his business - The land on which Asher's home sits

Eliseo, the adjuster handling Kurt's homeowners claim, carefully reads the concealment or fraud condition, because he suspects that someone is hiding the truth. He finds that the homeowners policy's concealment or fraud condition does not pertain to situations in which

- An insured makes false statements. C - The insurer engages in fraudulent business practices. (The concealment or fraud provision precludes coverage if any insured intentionally conceals or misrepresents any material fact or circumstance, engages in fraudulent conduct, or makes false statements related to that homeowners policy). - An insured conceals or misrepresents any material fact or circumstance. - An insured engages in fraudulent conduct.

Hector is closing up his insured summer cabin in Colorado and decides not to drain the water from the water systems in his cabin since the weather forecast anticipates a mild winter. The following spring, Hector returns to the cabin and discovers that during the winter, the pipes burst and caused extensive damage. Why is Hector's adjuster refusing to pay for this loss?

- Because the weather forecast was wrong. - Because the cabin did not have the proper type of water system. - Because the cabin was vacant. C - Because Hector did not take appropriate and reasonable steps to safeguard his property for the winter.

Because Fanny had two water damage claims during the past three years, Rattler Insurance Company does not want to provide coverage after her current policy expires. What will Rattler send Fanny to notify her of its decision?

- Bill for the next year's premium - Cancellation notice C - Nonrenewal notice - Expiration notice

Which of the following is not considered a dwelling or part of the dwelling under Coverage A of Aurora's homeowners policy?

- Central air-conditioning unit C - White picket fence along the sidewalk in Aurora's front yard - Her two-story Colonial house - The three-car garage attached to her house

Which of the following losses is not excluded by the wear and tear group of exclusions in an HO 3 homeowners policy?

- Dry rot ruins the floors in John's 50-year-old home. - The value of Jack's 25-year-old home decreases because the exterior needs painting. C - Harry's gas furnace suddenly explodes. (The wear-and-tear provision does not exclude coverage for a gas explosion). - Termites destroy wood on the outside of Betty's home.

The gas explosion in the house next door did not damage Ethan's house, which is covered by an HO 3. However, the fire marshal ordered Ethan to vacate his house because the house next door was unstable. Which of the following statements is incorrect?

- Ethan's fair rental value coverage covers his cost of renting comparable temporary quarters. - Ethan's resulting expenses are covered in full by Coverage C of his homeowners policy. - Ethan's additional living expense coverage does not apply because his home was undamaged. C - Ethan's additional living expenses are covered for two weeks by the "civil authority prohibits use" coverage.

Bonnie is scheduling repairs to her fire-damaged home, valued at $200,000. The repairs are estimated to cost about $30,000. The dwelling limit is 85 percent of the replacement cost. A contractor is selected and the work will take a few weeks. At this point, what is the insurer obligated to pay?

- Fair market value of the home. - Dwelling limit - Actual cash value of the loss because the repairs have not yet been made. - Estimated cash value of the repairs as determined by the insurance adjuster.

The burglars who broke into Landon's house stole several items. Which of these is not covered in full by his homeowners insurance policy because a sublimit applies to that type of property?

- Flat screen TV valued at $500 C - $750 in cash, kept in a cookie jar - Digital camera valued at $200 - Violin valued at $1,000

The foundation of Peter and Karen's home suddenly settles. As a result, their gas line breaks and a fire damages the house. An inspection reveals that the home was unknowingly built over an underground stream. What part of this loss will be covered under their unendorsed homeowners policy?

- Gas line and foundation damage. - Foundation damage only. - Gas line damage only. C - Fire damage only.

Lucinda is selling her country home and buying a condominium unit in the city. She had a Homeowners Policy Special Form 3 (HO 3) policy on her home and wants comparable coverage on her condo. Which Insurance Services Office, Inc. (ISO), policy is best suited for her needs?

- HO 3 - HO 5 - HO 6 (The Homeowners Policy Unit Owners Form 6 (HO 6) is designed for the owners of residential condominium units. Like Lucinda's HO 3, the HO 6 covers personal property on a named perils basis and also provides loss of use, personal liability, and medical payments coverage). - HO 4

Which ISO homeowners insurance form that can be used to insure a single-family home provides open perils coverage on the dwelling and named perils coverage on personal property?

- HO 4 - HO 2 - HO 5 C - HO 3 (The HO 3 Broad Form insures the dwelling and other structures on an open perils basis, and it insures personal property on a named perils basis with 16 perils specified).

Alexander wants the broadest homeowners insurance policy that is available to insure his luxury home. Cost is no object. Which Insurance Services Office, Inc. (ISO), homeowners policy form will he most likely choose?

- Homeowners Policy Special Form 3 (HO 3) - Homeowners Policy Broad Form 2 (HO 2) - Homeowners Modified Form 8 (HO 8) C - Homeowners Policy Comprehensive Form 5 (HO 5) ((The HO 5 form's open perils coverage on the dwelling, other structures, and personal property provides the broadest coverage available in a standard ISO homeowners form)).

Ebony noticed a number of unsafe conditions when she was adjusting Lula's water damage claim, so Ebony decided to put a memo in the file recommending that the underwriter discontinue coverage when Lula's current policy expires. Which wording Ebony should use in her memo?

- I recommend we terminate Lula's policy. - I recommend we cancel Lula's policy. - I recommend we allow Lula's policy to expire. C - I recommend we nonrenew Lula's policy.

Why is a homeowners insurance policy considered a package policy?

- It is usually delivered by a parcel service. - It comes in a policy binder. - It is associated with home ownership. C - It combines two or more separate coverages in a single policy. (A package policy combines two or more separate coverages, such as property and liability insurance coverages, in a single policy).

Which of the following would be considered in a state of collapse according to the homeowners policy?

- Jesse's insured home is found to have foundation problems and may cave in. - The collection of heavy snow and ice on a roof is causing the doors of Melanie's home to not close properly. - Donna's insured home is leaning to one side and may fall down. C - Andrea's insured home becomes a pile of rubble after a gas line explodes under the street in front of her house.

Which of the following is a loss for which coverage is excluded by the governmental action exclusion of the homeowners policy?

- John, the city police chief, finds his home vandalized. C - Tom's house is confiscated and destroyed by the EPA because it sits on contaminated soil. (The exclusion prevents coverage when the insured's property is confiscated by a government agency except when the property has been destroyed or seized to prevent the spread of a fire). - Irma's insured house is damaged by a kitchen fire. - While pursuing a criminal, local police damage the front door to Jeremy's home.

A fire damaged Millard's house. Because Coverage A of his homeowners policy covers dwelling property at replacement cost, Millard wants as much of his damaged property as possible to be treated as part of the dwelling. Which one of the following items that sustained fire damage is considered part of Millard's dwelling?

- Oriental rug - Tool shed C - Central air-conditioning system - Power lawn mower

Which of the following is not an intentional loss that would be excluded under a homeowners policy?

- Jonathan hires a teenager to throw a Molotov cocktail through the window of his insured home to burn it down. C - While mowing his front yard, Jonathan enters his house for a minute and when he returns, discovers that the lawnmower is gone. - Jonathan suggests to his friend Mickey that he wishes his wife's jewelry would be stolen so Jonathan can collect the insurance money. Mickey steals the jewelry while visiting Jonathan's house. - Jonathan wants a new stereo, so he leaves his old stereo in the rain and tells the insurance company that a ruptured pipe ruined the stereo.

Kathie is the only person named in the declarations of her homeowners insurance policy. When her policy refers to an "insured," this most likely includes all the following EXCEPT:

- Kathie's husband - Kathie C - Kathie's next-door neighbor - Kathie's father-in-law who lives in her house

Assuming the home is insured, which of the following losses is covered under the insured's homeowners policy?

- Lance is building his own home when some construction materials are stolen. C - Materials that Martin is using to renovate the home he lives in are stolen. - Ted's new home is about halfway through construction when the load of exterior bricks is stolen. - Just as construction begins, materials being used to build Victor's new home are stolen.

Beatriz claims that a racing bike worth $1,500 was stolen from a storage locker she rents. While adjusting her homeowners insurance claim, Lonnie discovers that the insurer just revised its homeowners policy, without any change in the premium, to limit storage locker coverage to $1.000. The insurer started using the new policy edition a month ago, with no change in premium, but Beatriz's policy was issued before the new policy was in use. How, if at all, does the liberalization clause in Beatriz's policy affect this claim?

- Lonnie will pay only $1,000 on Beatriz's claim. - It doesn't affect the claim because there was no change in premium for the revised policy. - It doesn't affect the claim because liberalization applies only to changes involving both broadenings and restrictions of coverage. C - It doesn't affect the claim because liberalization applies only to broadenings of coverage.

Sandy takes in boarders in her five-bedroom house. She insures the home with an HO 3. Which of the following boarders would have coverage for his or her belongings under Sandy's policy?

- Mary, a visitor from another city - Marsha, her best friend - Misty, her former college roommate C - Mandy, her sister

Stephen and Hope own their single-family home, which is located on a lot with a garage that contains his woodworking shop (for his hobby), a treehouse for their children, and a swimming pool. Their motor home is parked behind the garage. Which one of the following is not included in their homeowners policy's definition of residence premises?

- Motor home - Swimming pool - Treehouse - Garage

Most homes in a canyon were badly damaged by a wildfire that left James' home unscathed. Officials prohibit James from entering the canyon for 10 days until debris has been cleared from the canyon's only access road. What, if any, coverage in James's homeowners policy pay for his additional living expenses until he can return home?

- No coverage applies because James's house was not damaged. C - Civil authority prohibits use coverage applies. (The prohibited use provision covers additional living expenses for up to two weeks when a civil authority prohibits residents from accessing their undamaged homes in a damaged neighborhood). - Additional living expense coverage applies. - Fair rental value coverage applies.

Sylvia is vacationing in Rome when her jewelry is stolen from her hotel room. Assuming theft is a covered peril, how will her homeowners policy respond, if at all?

- No coverage will be provided because the loss took place outside the United States. C - Coverage is provided for personal property anywhere in the world. - The loss will be covered only if she took out a special endorsement for coverage while traveling. - The loss will be covered only if the jewelry was scheduled.

When a hurricane damages homes on South Padre Island, the state emergency management agency orders an evacuation of the entire island. Gilligan and Ginger's home is not damaged, but they are prevented from returning to their home. What kind of coverage will they have under Coverage D-loss of use on their HO 3?

- None, because their home is not damaged. - Additional living expenses for one day C - Additional living expenses for up to 2 weeks - Additional living expenses for their food bill only

When Hugh died, his daughter Patti became the executor of his estate. However, Hugh was the only person named in the declarations of his homeowners policy. As Hugh's legal representative, what protection, if any, does Patti have while the estate is being settled?

- Patti has no protection under Hugh's homeowners policy because coverage terminates at the death of the named insured. - Patti has no protection under Hugh's homeowners policy because she is not a named insured. C - As Hugh's legal representative, Patti is covered for the premises and property covered by his homeowners policy (If the named insured dies, a homeowners policy covers his or her legal representative for the premises and property covered by the policy). - Because Hugh's homeowners policy provides coverage for the named insured(s) living in the household, and Hugh is dead, the policy no longer provides any coverage.

Maxine owns a set of expensive crystal stemware. Her toddler opens the cabinet where they are stored and breaks two of the pieces. Maxine's insurance company may choose to settle the claim in any of the following ways, EXCEPT:

- Pay the difference between the actual cash value of the set before and after the loss. C - Pay to replace the entire set. (In the case of a loss to a pair or set for items other than jewelry, the insurance company has the choice to repair or replace or pay the difference between actual cash value of the property before and after the loss. In the case of jewelry pair or set, the loss will paid at replacement cost). - Replace the broken pieces. - Repair the broken pieces.

Ramiro's homeowners insurance policy makes several references to an "insured location." Which one of the following locations qualifies as an insured location?

- Ramiro's office in a downtown building owned by his employer - Parking space near his office provided by his employer - Room in a nursing home where Ramiro's mother lives C - Hotel room that Ramiro occupies while on a vacation (Although the definition of "insured location" is broad enough to include a hotel room where the insured is temporarily living, it does not include an office in an employer's building, a rented parking space, or a relative's room in a nursing home).

Rueben is out of town when a pipe bursts, damaging his home. Which of the following expenses related to this loss is not covered under his homeowner's policy?

- Repairing the warped paneling - Replacing the ruined sofa C - Bill for the water that escaped from the pipe - Cleaning the soaked carpet

Jamar bought his home entertainment system from AAA Audiophonix on a time payment plan. To comply with the terms of his loan, Jamar had AAA listed as a loss payee in his homeowners policy from Roadrunner Insurance Company. Jamar's policy terminated at the end of the policy term when he failed to pay the renewal premium. What if anything does the loss payable clause require Roadrunner to do now?

- Roadrunner must give AAA 90 days' advance notice of the nonrenewal. - Now that the policy has terminated, Roadrunner has no further obligations. C - Roadrunner must notify AAA that the policy was not renewed. (When a policy is canceled or nonrenewed, the insurer must notify the loss payee in writing). - Roadrunner is still obligated to pay AAA for any loss to the equipment in which it has an insurable interest.

Mia and Steve buy a new house and insure it with a homeowners policy. Which of the following items would not be covered under Coverage C-Personal Property of their policy?

- Steve's riding lawnmower C - Steve and Mia's wooden deck - Steve's home theater equipment - Mia's formal dresses

While she was dressing for the ball, Tania discovered that her diamond-studded watch was missing from the jewel box where she normally keeps it. Several weeks after Bluebonnet Insurance Company paid $1,500 of her theft claim, Tania found the missing watch inside a shoe. What can Tania do to comply with the terms of her homeowners policy?

- Tania does not need to do anything, and she can keep the insurance money. - Tania is guilty of concealment, and her policy is automatically terminated. - File a revised police report. C - Tania should deliver either the watch or return the $1,500 to Bluebonnet.

Victor suffers a property loss when his insured home is damaged in a tornado. The damage includes extensive loss to the antique furniture in his living room. Victor and his insurer disagree on the loss payment amount. What if anything can be done to rectify this situation?

- The insurer can research the furniture at various auctions and offer Victor a settlement based on the research. - Victor must concur with the insurer and accept the loss payment offered. - The insurer must agree to Victor's valuation of the lost property. C - They can each appoint an appraiser to appraise the loss with an umpire.

Edward is concerned about one of the exclusions in his homeowners insurance policy, but when he asks his agent about it, the agent simply agrees to waive that particular exclusion. What else needs to happen to make this waiver effective?

- The liberalization clause in Edward's policy should be applied. - Nothing; the agent's oral waiver is sufficient. C - The waiver or policy change should be in writing, and it should be made by the insurer. - Edward's existing policy should be canceled and replaced with one that has a built-in waiver.

The homeowners form covers direct physical loss to personal property caused by aircraft. Which of the following is not an example of this type of direct physical loss?

- The windows of an insured home are shattered when an Air Force jet flies overhead and causes a sonic boom. - When a space satellite falls back to earth, a piece of it falls through the roof of the insured's metal shed. C - The insured's small airplane is damaged when it is rolled out of the hanger at the airport. - The roof of the insured home is damaged when a piece of an airplane falls through it.

Mueller Properties owns a strip shopping center which is insured against the basic causes of loss. Vandals break into the building at night after the businesses close and steal electrical and plumbing fixtures. What is true about coverage for the losses due to this vandalism?

- There is no coverage because the building was unattended at the time of the loss. - There is coverage because vandalism is a covered cause of loss. - There is no coverage because vandalism is only covered under the broad form. C - The theft of fixtures is not covered, but other building damage is covered (Vandalism is a covered peril in the basic form, but loss due to theft is specifically excluded).

Caleb is adjusting a homeowners property claim under a policy in which only Tisha is mentioned in the declarations, where she is listed as the named insured. To comply with the terms of Tisha's policy, Caleb should conduct all negotiations with

- Tisha's attorney. - Tisha's insurance agent. - Tisha's banker. C - Tisha.

Francis converted the garage behind her house into an office where she operates a seasonal tax preparation service. She must walk 50 feet outside to get from her house to the garage, but this separation keeps her family from interfering with her work. Would Francis's standard, unendorsed homeowners insurance policy cover damage to the former garage that is now her office?

- Yes, it is covered under Coverage C-Personal Property. C - No, it is not covered. - Yes, it is covered under Coverage A-Dwelling. - Yes, it is covered under Coverage B-Other Structures.

The collapse additional coverage in a homeowners policy applies only when what happens?

- a flood leads to the collapse - a structural building component sags by at least two inches C - all or part of the building falls or caves in - damage is caused by earth movement

Jordan converts her home's attached garage into an apartment that is normally occupied year-round by students who pay $300 per month. One tenant accidentally starts a fire in the apartment and Jordan is unable to rent the space for three months while it is repaired. Which coverage in Jordan's homeowners insurance policy covers her rental income loss?

- additional living expense - fair rental value - reasonable repairs - civil authority prohibits use

The repair shop lost the vacuum cleaner that Stewart had taken there for repairs. In this transaction, the repair shop was a(n)

- assignee C- bailee - bailor - assignor

Some of the exclusionary provisions in the homeowners policy are designed to prevent recovery under the legal doctrine of concurrent causation that some courts have adopted. Under this theory,

- coverage applies if a loss is caused by two or more perils. C- coverage applies if a loss is caused by a covered peril as well as by an excluded peril. - coverage applies if a loss is caused by no more than two excluded perils. - coverage applies only if a loss is caused by at least two covered and concurrent perils.

Janice decides to buy a home in a neighborhood near a factory. The factory emits a great deal of smoke. What coverage, if any, will be available under a homeowners policy for any damage that the smoke causes to Janice's home and belongings?

- coverage for damage to her house and personal property . - coverage for damage to her house only. C - No coverage is available for smoke losses from industrial operations (Damage caused by smoke from agricultural or industrial sources is excluded). - coverage for damage to her personal property only.

Sixty percent of Darryl's home was damaged by a tornado. Because the home did not comply with current building codes, Darryl must tear down the undamaged 40 percent and rebuild it with more expensive components. The ordinance or law additional coverage in his HO 3 homeowners insurance policy provides a limited amount of coverage for all the following expenses EXCEPT

- extra cost of more expensive building components that meet the current code. - costs of removing debris of the undamaged portion after it has been demolished. C - replacement cost of repairing the damaged portion of his home (Coverage A covers the replacement cost of damage to the building, which is all that would be needed if the building code did not change the picture and lead to expenses to which the ordinance or law additional coverage would apply). - costs of demolishing the undamaged portion of his home.

The sudden and accidental tearing apart, cracking, burning, or bulging peril applies to the

- fireplace and chimney of an insured home. - walls of an insured home. - foundation of an insured home. C - steam or hot water system in an insured home. (The covered cause of loss is "sudden and accidental tearing apart of a heating system or appliance.")

Property Only Conditions

- insurable interest and limit of liability - duties after loss - loss settlement - loss to a pair or set - appraisal - other insurance and service agreement - suit against insurer - repair or replace option - loss payment - abandonment of property - mortgage clause - no benefit to bailee - nuclear hazard clause -recovered property - volcanic eruption period - policy period - concealment or fraud - loss payable clause

The neglect exclusion in a homeowners policy pertains to the

- insurer's neglect in responding to and paying a covered claim. C - insured's neglect to reasonably protect the covered property during and after a loss. - insured's failure to make a claim in a timely manner. - insurer's neglect to provide adequate coverage for the insured's property.

Melvin lives in the country and insures his home with an HO 3. With regards to losses related to animals, which of the following would be covered?

- losses caused by rodents C - losses caused by a bear - losses caused by termites - losses caused by the neighbor's dog while in Melvin's care

Eugene smoked a box of imported cigars before filing a homeowners insurance claim stating that the cigars had been destroyed by fire. Juliana is the adjuster assigned to the claim, which she denies due to the

- misrepresentation - lack of a covered peril C - intentional loss exclusion (Fire is a covered peril, and Eugene did not misrepresent the cause of the loss. However, Juliana can safely cite the intentional loss exclusion in denying this spurious claim). - neglect exclusion

Under the terms of a homeowners policy liberalization clause, if the insurer broadens the policy's coverage without increasing the premium, the change automatically takes effect on the date of the change, as long as the change occurs

- no more than 120 days following the end of the current policy period. - no more than 45 days before the start of the current policy period - at least 90 days before the start of the current policy period C - within 60 days before or during the current policy period. (If the insurer broadens the policy's coverage without increasing the premium, the change automatically takes effect on the date of the change, as long as the change occurs within 60 days before or during the policy period).

Because she has sold her house, Josefa wants to stop the coverage on her homeowners insurance policy nine months before the end of the policy term and get a refund of the unused premium. What action must she take to end her coverage?

- nonrenewal - abrogation - subrogation C - cancellation

Like nearly all policies, the homeowners policy excludes coverage for

- nuclear hazards but retains coverage for war losses. - war but retains coverage for nuclear hazards. C - war and nuclear hazards. - catastrophic windstorms.

Darlene kicked out a tenant after discovering that he had been building dirty bombs in her basement. She then discovered that the radioactive materials used in these bombs had contaminated her home. The adjuster handling Darlene's HO 3 claim will presumably

- pay the decontamination costs because her policy provides open perils coverage on the building. C - deny the claim due to the nuclear hazard clause in the policy. (The nuclear hazard clause excludes coverage for any radioactive contamination claim). - deny the claim and recommend she subrogate against the former tenant. - deny the claim for cleanup costs but pay the additional living expenses.

Loss Settlement; These property losses are settled on an actual cash value (ACV) basis at the time of the loss:

- personal property - awnings, carpeting, household appliances, outdoor - antennas, and any outdoor equipment, whether attached to the building or not - structures that are not buildings - grave markers, including mausoleum

Insured Duties After Loss

- promptly notify the insurer or its agent - notify police about a theft - notify credit card or electronic fund transfer card - companies about a loss - protect property from further harm - cooperate with the insurer during the investigation of the claim - prepare an inventory of damaged personal property - if requested by the insurer, show damaged property, provide documentation, and submit to examination under oath - provide sworn proof of loss to the insurer within 60 days of a request

The porch of Owen's house was damaged when Kenya's car slid off the road and ran into it. After his homeowners insurer paid to repair Owen's porch, the insurer attempted to recover its costs from Kenya. What provision in Owen's homeowners policy gives the insurer a right to collect from Kenya?

- recovered property C - subrogation - loss settlement - assignment

The two matching gas lampposts at the base of Hiram's driveway were installed 20 years ago. If a car damages one of the lampposts, the "Loss to a Pair or Set" condition in Hiram's homeowners Policy Special Form 3 (HO 3) policy permits his insurer to do any of the following EXCEPT:

- repair the damaged lamppost to restore it to its pre-loss condition. - pay the difference between the pre-loss and post-loss actual cash value of the pair of matching lampposts. - replace the damaged lamppost with one that matches the remaining lamppost. - pay Hiram half the value of the pair of lampposts.

In addition to repairing fire damage, an extra $10,000 is needed to bring the insured's house up to the current building code. Fletcher, who was adjusting the claim, intended to deny coverage for the extra money, based on the homeowners policy's ordinance or law exclusion. However, after reviewing reading the policy, he ended up paying it anyway. Why?

- the ordinance or law exclusion does not apply to fire losses. - the ordinance or law exclusion does not apply to Coverage A. - the ordinance or law exclusion is not subject to a deductible. C - an additional coverage in the homeowners policy provides limited coverage for these costs (an additional coverage in the homeowners policy provides limited coverage for these costs that are otherwise excluded.)

A runaway truck plowed into Eddy's house. Before the damage could be repaired, the debris from the truck and the house had to be removed. The additional coverage for debris removal in Eddy's homeowners insurance policy

- will cover the expense of removing the debris from the truck and house. C - covers only the expense of removing the debris from the house. (Under the debris removal coverage, the insurer will pay for the removal of debris of covered property. The house is covered property under Eddy's policy, but the truck is not). - provides no debris removal coverage for vehicle damage. - covers only the expense of removing the debris from the truck.

During an unusually cold winter, Cheri's furnace broke down while she was out of town. Because the furnace was not operating, temperatures in her house dropped below freezing. Pipes burst and water damaged the walls and floors. Cheri has an HO 3. For which damage, if any, should the insurer pay?

C - Cost of repairing the water damage alone (The mechanical breakdown of the furnace is excluded. However, the water damage is covered because Cheri exercised reasonable care to maintain heat while she was gone; she presumably did not expect the furnace to break down). - Cost of repairing the furnace and the water damage. - None of the damage is covered. - Cost of repairing the furnace alone.

Jamie rents a two-bedroom apartment in a 12-unit apartment building where she lives with her two-year-old son. She wants to insure the personal property in their apartment. Which Insurance Services Office, Inc. (ISO), homeowners form, if any, would be appropriate for Jamie's situation?

C - HO 4 (The Homeowners Policy Contents Broad Form 4 (HO 4) is designed for tenants of houses or apartments). - HO 2 - HO 6 - None is suitable for Jamie because she does not own a home.

Don lives in a historical home with detailed millwork, marble bathrooms, and stained glass windows. The market value of the home is $400,000, but it would cost much more than that to rebuild with comparable levels of materials and craftsmanship. Which policy form is the most appropriate for insuring Don's home?

C - HO-8 (The HO-8 is most useful for insuring homes with a sizeable replacement cost but a substantially lower market value. In this case in the event of a total loss, the insurance company will only pay $400,000, which is not enough to rebuild with comparable materials but enough to buy a similar house in the same neighborhood). - HO-3 - HO-4 - HO-6

Eva bought a single-family home in community that has a clubhouse, swimming pool, snow removal, and other amenities which are supported by homeowners' association dues. Unfortunately, the association has inadequate property insurance on the clubhouse and charges Eva $750 as her share of paying for uninsured windstorm damage to the clubhouse roof. What is true about her HO 3 policy coverage for this expense?

C - Her loss assessment additional coverage applies. - No coverage applies because her house was not damaged. - Ordinance or law additional coverage applies. - Additional living expense coverage applies.

When a fallen tree limb punches a hole in her home's roof, Lesley buys a tarp and hires a handyman to place it over the hole. She then notifies her insurance company that provides her HO 3 policy. What will the insurer do?

C - It will pay for the tarp and its installation under her "reasonable repairs" additional coverage (With the reasonable repairs additional coverage, the insurer agrees to pay for any reasonable costs incurred by the named insured to protect covered property from further damage following its initial damage by a covered peril). - It will pay for the tarp but not for its installation under her "reasonable repairs" additional coverage. - It will pay for the handyman but not for the tarp under her "reasonable repairs" additional coverage. - It will deny coverage for the tarp and its installation because Lesley did not have the insurer's prior permission to make this temporary repair.

Lloyd's homeowners policy includes Coverage D-Loss of Use. Which of the following losses or expenses is not covered under Coverage D-Loss of Use?

C - Lloyd sells his fire-damaged house and pays a mover to move his personal property to another house. - Although his house is not damaged, Lloyd is forced to stay in a hotel while fire fighters extinguish a fire in a nearby chemical plant. - After a fire, Lloyd cannot collect rent from a tenant who normally occupies the upstairs apartment. - Lloyd stays in a hotel while the fire damage to his house is being repaired.

The conditions in Joey's homeowners policy state that the insurer may cancel the policy for any reason with only 10 days' advance notice. However, he thinks the state in which he lives may have more favorable notice requirements. Where in Joey's policy might he find whether that is the case?

C - State-specific endorsement attached to the policy - Exception to the conditions - Declarations - Codicil attached to the policy

Which of the following is an example of a loss assessment charge that a homeowners policy would cover?

C - The Golden Beachfront Estates Homeowners Association charges each of its members $100 in loss assessment charges for the hurricane-damaged marina and clubhouse. (Loss assessment coverage is used when the association's coverage is inadequate or unavailable to cover a property loss due to a covered peril, so members of the association are assessed to help pay for the damage). - The Shakers Village Homeowners Association charges each of its members $300 in loss assessment charges for damage to its clubhouse in a major earthquake. - The Pompeii Villas Homeowners Association charges each of its members $600 in loss assessment charges for damage to the community game room after a volcanic eruption causes a major land tremor. - The Kon Tiki Homeowners Association charges each of its members $200 in loss assessment charges for the clubhouse patio furniture that was swept away in a flood.

When the power went off during an ice storm, the faulty burner in Sue's gas furnace did not shut down. The furnace set Sue's house on fire. How should the adjuster respond to Sue's resulting claim under her homeowners policy?

C - The adjuster should pay the claim because the loss is covered. - The adjuster should deny coverage, citing the power failure exclusion. - The adjuster should deny coverage and recommend that Sue sue the power company. - The adjuster should deny coverage because Sue apparently neglected to maintain the furnace.

Terence took his TV to McCray's shop for repairs. When Terrence returned to pick up the TV, he found that the shop had burned down. He submitted a fire claim under his homeowners insurance policy. The adjuster handling Terence's claim pointed out that according to the "No Benefit to Bailee" provision in Terence's policy,

C - The policy does not protect McCray. - The insurer protects McCary but not Terence. - The insurer protects both Terence and McCary. - The insurance does not cover Terence's property while it is in another party's custody.

The water exclusions in Clarabelle's HO 3 policy would not preclude coverage for any loss to her dwelling or personal property caused by a(n)

C - bathtub overflowing -storm surge. - unusually high tide. - tsunami.

Cracks develop in the wall of Arnold's basement when the earth supporting it settles while a work crew is digging the excavation for a new house to be built next door. Arnold has an HO 3 homeowners policy with no modifying endorsements. The damage to Arnold's house is

C - excluded by the earth movement exclusion. (Earth movement is an excluded peril.) - covered by the earthquake peril that applies to the dwelling coverage. - covered because the earth movement that damaged his house did not result from natural causes. - covered because the earth movement that damaged his house had a manmade cause.

Because the pine trees Micah planted along the edge of his property reduce road noise and ensure privacy, he is glad to learn that his homeowners policy provides limited coverage to replace one or more of these trees if it is destroyed or damaged by a(n)

C - nonowned vehicle (Limited coverage applies for tree damage caused by certain specified perils, including damage caused by vehicles not owned or operated by a resident of the residence premises). - ice storm - heavy snowfall - windstorm

The ensuing loss exception to the wear and tear exclusions in a homeowners policy stipulates that, for certain perils, any ensuing loss to the dwelling and other structures

C - not excluded by any other provision in the policy is covered - not excluded by any other provision in the policy is not covered - excluded by any other provision in the policy is covered - is always excluded regardless of any other provision in the policy covering a direct loss

All homeowners policies, regardless of the form number, provide coverage under Section II-Casualty. What is Section II coverage?

C - personal liability and medical payments (The Section II coverages on all homeowners policy forms are personal liability and medical payments). - personal liability and loss of use - personal property and loss of use - dwelling and other structures

During a power outage, the electric sump pump in Donald's basement failed and water damaged the personal property kept there. Donald's HO 3 policy

C - specifically excludes this type of loss. (The water damage exclusion precludes coverage for various forms of flooding, including water that overflows or is discharged from a sump or related device). - covers this loss if it was caused by a mechanical breakdown. - covers this water damage loss. - covers this loss only if it was caused by a power outage.

Gertude's will specified that, upon her death, her son Dirk would became the executor of her estate. As Gertrude's legal representative of the deceased, Dirk's protection under her homeowners insurance policy is described under what policy condition?

C- "death" - "assignment" - "survival" - "termination"

Jefferson and his wife Rosalinda own a 100-year-old home with plaster walls, solid oak doors, and other construction features not usually used in modern homes. They would replace these components with wallboard and hollow-core doors if the original walls and doors were damaged. Which Insurance Services Office, Inc. (ISO), homeowners policy might best meet this couple's needs?

C- HO 8 (The Homeowners Modified Form 8 (HO 8) is used to insure an older dwelling based on the amount required to repair or replace the property using common construction materials and methods). -HO 5 -HO 6 - HO 4

Mel owns a large home which he has insured. Which of the following items on his property is an example of an "other structure" as defined in Coverage B of his homeowners policy?

C- Swimming pool Two-foot-tall garden statue Attached garage Addition constructed off the kitchen

Danny is adding a family room to his insured home. The lot next door is vacant, so he stores his materials there while he is constructing the family room. What kind of coverage is available if a wildfire destroys the building materials?

C- The materials are covered because they are considered part of the dwelling. - The materials are not covered because they are not on Danny's property. - The materials are not covered because wildfire is an excluded peril. - The materials are not covered because Danny is making the renovations, not a contractor.

The HO-5 is called the comprehensive form because it provides coverage not found in other homeowners forms. What coverage does the HO-5 form provide that isn't found in the other forms?

C- open perils for personal property (The HO-5 form provides open perils coverage on both dwelling and personal property) theft liability open perils for appurtenant structures

Debra and Larry buy a large house and rent one of the rooms to Jane, Larry's sister. Their home is insured with an HO 3. A tornado destroys the house. It will take several months to rebuild the home, so Jane cancels her lease. Which of the following is covered under loss of use coverage for the HO 3?

C: Debra and Larry's rent for a home of similar size while their house is being rebuilt (Coverage D of the HO 3 covers Debra and Larry's additional living expenses in temporary quarters while their house is being rebuilt due to damage by a covered cause of loss). - Cost of rebuilding the destroyed house - Jane's moving expenses. - Jane's rent at another location.

Roxanne has a standard HO 3 homeowners insurance policy with no added endorsements. She discovers that her diamond earrings have been stolen and notifies her insurance agent. The earrings were worth $5,000, but her insurance covers only a portion of the loss because her policy contains a(n)

C: sublimit for loss of jewelry. (The HO 3 covers jewelry, but theft losses to jewelry are limited by a dollar sublimit; $1,500 is the typical sublimit). - exclusion for any loss to jewelry. - unscheduled jewelry exclusion. - exclusion for jewelry worth more than $1,500.

Leopoldo's two-car garage is connected to his house by a ten-foot enclosed breezeway. Which coverage of Leopoldo's homeowners insurance policy provides coverage against damage to his garage?

Coverage D Coverage C Coverage B C- Coverage A