Chapter 22

Question 1

A ____ ____ on a private dwelling is designed for the owner-occupants of a one, two, three or four family dwelling used exclusively for private residential purposes

Answer 1

homeowner’s policy

Question 2

A one-family dwelling may not be occupied by more than __ additional family or more than __ roomers or boarders.

Answer 2

one, two

Question 3

The following forms are used in the current ISO homeowners (HO) program:
HO-2 (broad form)
HO-3 (\_\_ form)
HO-4 (contents broad form)
HO-5 (comprehensive form)
HO-6 (unit-owners form
HO-8 (\_\_\_ \_\_\_ form)

Answer 3

modified coverage

Question 4

a named perils policy that insures the dwelling, other structures, and personal property against loss from certain listed perils.

Answer 4

Homeowners 2

Question 5

insures the dwelling and other structures against direct physical loss to property.

Answer 5

Homeowners 3

Question 6

designed for tenants who rent apartments, houses, or rooms.

Answer 6

Homeowners 4

Question 7

insures the dwelling, other structures, and personal property against direct physical loss to property.

Answer 7

Homeowners 5

Question 8

designed for the owners of condominium units and cooperative apartments.

Answer 8

Homeowners 6

Question 9

a modified coverage form that covers loss to the dwelling and other structures on the basis of repair cost, which is the amount required to repair or replace damaged property using common construction materials and methods.

Answer 9

Homeowners 8

Question 10

there are four basic coverages and several additional coverages in Section 1 of the Homeowners 3 policy:
Coverage A: Dwelling
Coverage B: Other structures
Coverage C: \_\_\_\_ \_\_\_\_\_
Coverage D: Loss of use
Additional coverages

Answer 10

Personal property

Question 11

Coverage A covers the dwelling on the residence premises as well as any structure attached to the dwelling. Thus, the home and ____ _____ or carport would be insured under this section.

Answer 11

attached garage

Question 12

____ and ____ intended for construction or repair of the dwelling or other structures are also covered.

Answer 12

Materials and supplies

Question 13

Coverage B insures other structures on the residence premises that are ___ from the dwelling by clear space. This coverage includes a detached garage, tool shed, or horse stable. Structures connected to the dwelling only by a fence, utility line, or other similar connections are considered to be “other structures.”

Answer 13

separated

Question 14

Under the HO-3 policy, ___% the insurance on the dwelling applies as additional insurance to the other structures.

Answer 14

10

Question 15

The current form covers a structure that contains business property owned by the insured or tenant of the dwelling, provided such property does not include ___ or ___ ___, other than fuel in a permanently installed fuel tank in a vehicle parked in the structure.

Answer 15

gaseous, liquid fuel

Question 16

Personal property owned or used by an insured is covered ___________. This provision also includes borrowed property.

Answer 16

anywhere in the world.

Question 17

In addition, after a loss and at the named insured’s request, the insurance can be extended to cover the personal property of a ____________ while the property is in any residence occupied by the insured.

Answer 17

guest or resident employee

Question 18

the amount of insurance on personal property is equal to __% of the amount of insurance on the dwelling, which can be increased if desired. The insurance on personal property covers you ______

Answer 18

50, both on and off the premises.

Question 19

an important limitation applies to personal property away from the premises if the property is usually located at another residence, such as personal property in a _______ or ___. In such cases, the off-premises coverage is limited to __% of Coverage C, or $1,000, whichever is greater.

Answer 19

vacation home or cabin, 10

Question 20

The 10 percent limitation does not apply to personal property that is moved from the residence premises because the residence premises is being _______

Answer 20

repaired or remodeled and is not a fit place in which to live or store property.

Question 21

The 10 percent limitation also does not apply to personal property in a newly acquired principal residence for __ days from the time the named insured begins to move the property there. The amount of insurance under Coverage C applies in full to such property during the 30-day period. The insurer must be notified within __ days for full protection to continue.

Answer 21

30

Question 22

The policy specifically addresses personal property in ___. This property is covered for up to 10% of the Coverage C limit, or $1,000, whichever is greater. These limits do not apply to property being placed in storage while the residence premises is being repaired or rebuilt, or because the residence is not fit for habitation or storage of property.

Answer 22

self storage facilities.

Question 23

Because of __ ___ and loss-adjustment problems, and a desire by the insurer to limit its liability, certain types of property have a maximum dollar limit on the amount paid on any loss.

Answer 23

moral hazard

Question 24

a list of covered property with specific amounts of insurance.

Answer 24

schedule

Question 25

Coverage D provides protection when the residence premises cannot be used because of ______. The amount of additional insurance under this coverage is __% of the amount of insurance on the dwelling.

Answer 25

a covered loss

Question 26

Three benefits are provided under Coverage D: additional living expense, fair rental value and

Answer 26

prohibited use

Question 27

the increase in living expenses actually incurred by the insured to maintain the family’s normal standard of living.

Answer 27

additional living expenses.

Question 28

means the the rental value of that part of the residence premises rented to others or held for rental less any expenses that do not continue while the premises are not fit for habitation.

Answer 28

fair rental value

Question 29

The policy pays the reasonable cost of ___ ____ incurred by the insured to protect the property from further damage after a covered loss occurs.

Answer 29

necessary repairs

Question 30

the insurer will pay up to $500 if the named insured is liable by a contract or agreement for a __ ___ charge when they are called to protect covered property from an insured peril.

Answer 30

fire department

Question 31

if property is ___ from the premises because it is endangered by an insured peril, direct loss from any cause is covered for a maximum of 30 days while the property is ____.

Answer 31

removed

Question 32

losses of an unauthorized manner, covered up to a maximum of up to $500.

Answer 32

credit card, forgery and counterfeit money.

Question 33

the insurer pays up to $1,000 for any ___ ______ charged against the named insured by a corporation or association of property owners to which the insured belongs because of the direct loss to property collectively owned by all members.

Answer 33

loss assessment

Question 34

abrupt falling down or caving in of a building or any part of a building with the result that the building or part of the building cannot be occupied for its intended use.

Answer 34

collapse

Question 35

the policy covers the breakage of ___ or ___ ___ material that is part of a covered building, storm door or storm window.

Answer 35

glass, safety glazing

Question 36

the homeowner’s policy will pay up to $2,500 for loss to the named insured’s ____ that is regularly rented out or held for rental by an insured.

Answer 36

furnishings

Question 37

The named insured can apply up to 10% of the amount of insurance under coverage A to cover the increased costs of construction or repair because of some ________

Answer 37

ordinance or law

Question 38

direct physical losses are covered except ___ ___ specifically excluded.

Answer 38

certain losses

Question 39

means there is an unbroken chain of events between the occurrence of a covered peril and damage or destruction of the property.

Answer 39

proximate cause

Question 40

an assembly of three or more persons who commit a lawful or unlawful act in a violent or tumultous manner, to the terror or disturbance of others.

Answer 40

riot

Question 41

theft of personal property of an insured student while at a residence is covered if the student has been there any time during the ___ days immediately preceding the loss.

Answer 41

90

Question 42

exclusion means that if a single loss is caused by two or more perils that occur concurrently or in any sequence, and one peril is covered under the policy and the other peril is excluded, the entire loss is excluded.

Answer 42

concurrent causation losses.

Question 43

Section 1 of the homeowners policy contains numerous conditions. The most important include the following:
-insurable interest and limit of liability
-deductible
-duties after a loss
\_\_\_\_ \_\_\_\_
-loss to a pair or set
\_\_\_ clause
-other insurance and service agreement

Answer 43

loss settlement, appraisal

Question 44

section 1 conditions cont’d:

• suit against the insurer
• insurer’s option to repair or replace the damaged property with like property
• ___ ___
• no abandonment of property
• ___ clause
• policy period
• concealment or fraud

Answer 44

loss payment, mortgage

Question 45

if more than one party has an insurable interest in the property, the insurer’s liability for any one loss is limited to

Answer 45

each insured’s insurable interest at the time of loss, but not to exceed the maximum amount of insurance.

Question 46

in states that are vulnerable to catastrophes, insurers can use ___ ___ rather than dollar deductibles to limit their exposure to catastrophe losses from natural disasters.

Answer 46

percentage deductible

Question 47

The following duties are required after a loss:

1. give prompt notice
2. ____________
3. prepare an inventory of damaged personal property.
4. exhibited the damaged property.
5. file a proof of loss within 60 days after the insurer’s request

Answer 47

protect the property

Question 48

covered losses to personal property are settled on the basis of _________ at the time of loss but not to exceed the amount necessary to repair or replace the property.

Answer 48

actual cash value

Question 49

covered losses to the dwelling and other structures are paid on the basis of ___ ___ with no deduction for depreciation

Answer 49

replacement cost

Question 50

some insurers make this endorsement available, pays up to an extra 20% or more above the policy limits.

Answer 50

extended replacement cost endorsement

Question 51

used when insured and insurer agree that the loss is covered but the amount of the loss is in dispute.

Answer 51

appraisal clause