Chapter 14: Property Insurance Flashcards
The basic homeowners’ insurance policy typically covers what types of perils?
A. Fire
B. Fire and Flood
C. Liability and Casualty
D. All types of natural perils
A. Fire
(The most basic of policies is based on the New York standard form policy which covered only fire damage)
In North Carolina, homeowners’ insurance policies and insurers are regulated by:
A. The North Carolina Human Relations Commission
B. The NC Department of Insurance
C. The North Carolina Real Estate Commission
D. The NC Department of Natural Resources
B. The NC Department of Insurance
Which of the following is required in order to obtain homeowners insurance and be an “insured” under a policy,
A. The insured must be the owner of the property
B. The property must be the primary residence of the insured
C. The insured must have an insurable interest in the property
D. Only the owner of a property can be the “insured” under a homeowners policy of insurance
C. The insured must have an insurable interest in the property
(People other than an occupant owner can be the named “insured” in the property. However, in order to be insured that person or entity must have an insurable interest)
A homeowner’s policy which provides both casualty and liability coverage is best referred to as a:
A. Blanket Policy
B. Standard Policy
C. Package Policy
D. Extended Coverage Policy
C. Package Policy
(Package policies provide coverage for structural and improvement losses as well as providing protection from the liability and injury to others)
The most popular type of homeowners insurance policy and the one usually required by lenders is which policy?
A. HO-1
B. HO-2
C. HO-3
D. HO-4
E. HO-5
C. HO-3
(An HO-3 policy covers fire, other named perils and is a package type policy covering both damage to the home and liability)
An HO-4 policy typically provides what type of coverage?
A. An owner’s rental properties
B. An owner’s vacation homes
C. A renter’s personal property
D. Condominiums
C. A renter’s personal property
If a homeowner wanted to verify that they were insured for a particular named peril, which of the following would they obtain from their insurance provider to add particular coverage?
A. Condition
B. Peril
C. Exclusion
D. Endorsement
D. Endorsement
(An endorsement or rider adds coverage for a particular peril or type of property)
All of the following are performed under The National Flood Insurance Program, EXCEPT:
A. Establishment of flood plains
B. NFIP issuance of policies for flood plains
C. Obtainment of a flood certification
D. Mandates flood insurance for certain areas
B. NFIP issuance of policies for flood plains
(NFIP does not issue policies or insure properties. The insurance coverage is provide by private companies and insurers)
Which document provides information regarding the claims history of the property for the last 7 years?
A. Flood certification
B. CLUE report
C. Peril endorsement
D. Policy rider
B. CLUE report
(A CLUE (Comprehensive Loss Underwriting Exchange) Report is a report from a database maintained by insurance companies that contains a 7 year history of claims against the property)
Every homeowner’s policy contains the concept of co-insurance and requires that the homeowner insure at least what percentage of the value of the property?
A. 50%
B. 80%
C. 90%
D. 100%
B. 80%
All of the following can cause insurance issues in a real estate transaction, EXCEPT:
A. The owner allowed the home to remain vacant for a substantial period of time
B. The seller wishes to remain in the home beyond the closing date
C. The buyer wishes to occupy the home before the closing date
D. Both parties agree with the insurer to assign the insurance policy at closing
D. Both parties agree with the insurer to assign the insurance policy at closing
(Insurance policies are assignable with the permission of the insurer. It is rare in a residential transaction, but common in a commercial transaction)
