Chapter 2 Flashcards
What is the maximum number of units in residential dwellings insurable by a dwelling policy?
Up to four units
If an insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis at both locations for how long?
30 days
A gas stove exploding int he dwelling is an example of which named peril?
Internal explosion
Replacement cost coverage is provided in both the broad and special form dwelling policies when the amount of insurance on the dwelling is what percentage?
At least 80% of the replacement cost.
What are extended covered perils on a basic Dwelling policy?
Windstorm or hail, explosion, smoke, aircraft and vehicles, riot or civil commotion, volcanic eruption, and vandalism and malicious mischief.
What do dwelling policies insure?
Dwelling only, contents only, or both dwelling and contents.
Which dwelling policy coverage will insure a garage not attached to the primary insured dwelling?
Coverage B–other structures.
Which dwelling coverage form(s) will pay for the replacement cost of a dwelling?
DP-2 (Broad) and DP-3 (Special)
DP-3 (Special) is an open-peril form. What does that mean?
All perils are insured unless specifically excluded.
Under what conditions can broad theft coverage be added to a dwelling policy?
If the insured is the owner-occupant of the dwelling
A basic dwelling policy automatically provides coverage against what?
Fire, lightning, and internal explosion
In dwelling policies, what is the purpose of the automatic increase in insurance endorsement that increases the amount of insurance by an annual percentage?
To offset the effects of inflation
In dwelling policies, within how many years of a loss may an insured bring a lawsuit against the insurer?
2 years
What are the 3 types of coverage available in dwelling policies?
Basic, broad, and special
Which dwelling form is called the Broad form?
DP-2
Under Coverage C – Personal Property in the dwelling policy, when will a guest’s property be covered?
Only when the property is at the insured location
An insured’s house becomes uninhabitable due to damage by a fire. As a result, the insured has to rent an apartment until repairs are made. Which type of coverage under the dwelling policy will pay for the expense of renting the apartment?
Coverage E – Additional Living Expenses
If 3 volcanic eruptions happen within 48 hours, and each contributes to property damage, how many deductibles will apply in the dwelling policy?
1 deductible (all instances of volcanic eruptions that occur within a 72-hour period are considered 1 occurrence)
What are some of the exclusions found in all 3 dwelling forms?
Earth movement, water damage, power failure, neglect, war, nuclear hazard, intentional loss, freezing of plumbing, ordinance or law, and government action
In dwelling policies, any volcanic activity will be considered part of one occurrence if it all happens within how many hours?
72 hours
What are the 5 coverages of dwelling policies?
Coverage A – Dwelling, Coverage B – Other Structures, Coverage C – Personal Property, Coverage D – Fair Rental Value, and Coverage E – Additional Living Expenses
When will damage to the interior of the building be covered under the falling objects peril in the broad form of the dwelling policy?
Only if the interior damage is a direct result of exterior damage from a falling object
Which dwelling form provides open peril coverage on the building?
DP-3 (Special)
Which of the 3 DP forms provides the most limited coverage?
DP-1 (Basic)
Which dwelling policy coverage will provide protection for contents damaged by fire in an insured dwelling?
Coverage C – Personal Property
An insured is a member of the neighborhood association and has become liable for damage to a third party. Each member of the association has been assessed a portion of the loss equal to $2,000. How much will the Loss Assessment additional coverage of the insured’s homeowner’s liability pay?
The policy will pay up to $1,000 per occurrence for the insured’s share of loss assessment charged against them as owner or tenant of the residence premises during the policy period by a corporation or association of property owners.
Which of the following coverages in the dwelling policy would provide protection to contents damaged by fire?
-Coverage A
-Coverage B
-Coverage C
-Coverage D
Coverage C– personal property provides coverage for the contents of an insured dwelling.
The HO-3 homeowners policy provides:
-Basic coverage for the dwelling and broad form coverage for personal property
-All-risk coverage for both the dwelling and personal property
-Open peril coverage on the dwelling and broad form coverage on personal property.
-Open peril coverage on the dwelling and basic form coverage on personal property.
The open peril coverage applies to property insured under Coverages A and B only.
How long is the policy period for NFIP flood insurance?
-6 months
-10 months
-1 year
-2 years
NFIP flood insurance has a policy term of 1 year.
The dwelling insured on HO-2, HO-3, or HO-5 forms is covered for replacement, provided that it is insured for at least what percentage of replacement cost on the date of loss?
80%, HO-2, -3, and -5 provide replacement cost coverage if the house is insured for at least 80% of its value on the date of the loss.
The insured’s mother-in-law broke her leg falling down the front steps of the insured’s premises. The insured’s homeowners’ medical payments coverage will:
-apply to injuries of any guests or visitors
-pay only if the mother-in-law has no health insurance on her own.
-Share equally in the cost with the mother-in-law’s health insurance.
-Pay as excess over the mother-in-law’s health insurance
Apply to injuries of any guests or visitors.
Dwelling policy coverage C- personal property will cover all of the following EXCEPT:
-Hobby aircraft
-computer software
-Animals and birds
-Canoes
-Animals, birds and fish, are among the types of property that will not be covered by Personal Property Coverage.
How much coverage is provided under a homeowner’s policy theft or unauthorized use of a credit card?
$5,000.
Which type of losses are covered by the standard fire policy?
The only type of loss covered by the Standard Fire Policy is direct losses caused by the named perils. Direct loss means actual physical damage to, or destruction of, the insured property.
All of the following are characteristics of the dwelling policy EXCEPT:
The dwelling must be owner-occupied. Dwelling policies ensure residential exposures with only limited service-type business exposures allowed. The dwelling can be completed or under construction, and can be owner-or tenant occupied. The dwelling policy can insure the dwelling only, content only, or both.
What policy condition in HO policies states that insurance applies separately to each insured?
Severability of insurance means that the insurance applies separately to each insured. This condition does not increase the insurer’s liability for any one occurrence.
