Chapter 23

Question 1

The section 2 liability coverages in the homeowners policy provide the following two coverages:
Coverage E: Personal liability, $100,000 per occurrence
Coverage F: _________

Answer 1

medical payments to others, $1,000 per person

Question 2

protects an insured when a claim or suit for damages is brought because of bodily injury or property damage allegedly caused by an insured’s negligence.

Answer 2

personal liability insurance

Question 3

the minimum amount of liability insurance is ____ per occurrence. The insurance amount is a single limit that applies to both bodily injury and property damage liability on a per occurrence basis.

Answer 3

100,000

Question 4

defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions, which results in bodily injury or property damage during the policy period. Can be a sudden accident, or it can be a gradual series of incidents that occur over time.

Answer 4

occurrence

Question 5

under coverage E, the insurer also agrees to provide __ ___ even if the suit is groundless, false or fraudulent.

Answer 5

legal defense

Question 6

as a practical matter, most personal liability suits are settled ____

Answer 6

out of court

Question 7

defense coverage continues until _________

Answer 7

policy limits are exhausted by payment of a judgement or settlement.

Question 8

personal liability insurance is based on legal liability. before the insurer will pya any sums for damages, you must be _______

Answer 8

legally liable

Question 9

____ ____ to others is not based on legal liability. the insured is not required to be legally liable for coverage to apply.

Answer 9

medical payments

Question 10

pays the reasonable medical expenses of another person who is accidentally injured while on an insured, resident employee, or animal owned by or in the car of an insured.

Answer 10

medical payments to others

Question 11

the insurer will pay for necessary medical expenses incurred within __ years from the date of the accident. the medical expenses covered are the reasonable charges for medical and surgical procedures, x-rays, dental care, ambulances, hospital stays, etc.

Answer 11

3

Question 12

medical payments coverage does not apply to _________

Answer 12

you or to regular residents of your household, other than a residence employee.

Question 13

medical payments to others applies only to the following persons and situations:

1. a person on the ___ ___ with the permission of an insured.
2. a person off the insured location, if the bodily injury:
   - arises out of a condition on the insured location or the ways immediately adjoining
   - is caused by ___ of an insured
   - is caused by a residence employee in the course of employment by an insured
   - is caused by an ___ owned by or in the care of an insured.

Answer 13

insured location, activities, animal

Question 14

Insured locations include the following:

1. residence premises shown in the declarations
2. any residence acquired during the policy period
3. ____ ____ or __ ____
4. nonowned premises where an insured is temporarily residing, such as a motel room
5. vacant land other than farmland
6. land owned or rented to an insured on which a residence is being built for an insured
7. ___ ___ or ____ ___
8. part of a premises occasionally rented to an insured for nonbusiness purposes

Answer 14

rented garage or storage unit, cemetery plots or burial plots

Question 15

liability arising out of cars, trucks, mopeds, motorcycles, and motorbikes is ________

Answer 15

not covered in most cases.

Question 16

vehicles that are covered in coverage E and F:

• vehicle in storage on an insured location
• vehicle used solely to ______
• vehicle designed to assist the handicapped
• vehicle designed for ___ ___ off public roads and is not owned by the insured
• liability arising out of the use of a ___ ___ ___ owned by an insured is also covered.

Answer 16

service a residence, recreational use, motorized golf cart

Question 17

business activities that are covered by coverage E and F:

• activities for which no insured received more than ___ in total compensation for the 12 months prior to the policy period
• ___ ___ for which no money is received except for expenses
• providing home care services without compensation
• providing home daycare services to a relative

Answer 17

$2,000, volunteer activities

Question 18

legal liability out of rentals covered by coverage E and F:

• if a house is occasionally rented and used only as a ____
• if part of residence is rented to others
• if part of insured residence is rented, and used as an office, ___, studio or ___ ___
• insured under age 21 who is involved in part-time or occasional self-employed business with no employees

Answer 18

residence, school, private garage

Question 19

Section 2 additional coverages include:

• first aid expenses
• ___ expenses
• damage to property of others
• ___ ____ charges

Answer 19

claim, loss assessment

Question 20

paid as an additional coverage, the insurer pays the court costs, attorney fees, and other legal expenses incurred in providing a legal defense.

Answer 20

claim expenses

Question 21

paid by the insurer for expenses incurred by the insured for bodily injury covered under the policy.

Answer 21

first aid expenses

Question 22

pays up to $1,000 per occurrence for property damage caused by an insured.

Answer 22

damage to property of others

Question 23

damage to property of others also contains exclusions:

• property covered under section 1
• intentional property damage by an insured age __ or older
• property owned by an insured
• property owned by or rented to a tenant
• ___ liability
• act or omission in connection with the premises
• motor vehicles, aircraft, watercraft, or hovercraft.

Answer 23

13, business

Question 24

the homeowners policy provides coverage of $1,000 for certain liability ___ ____

Answer 24

loss assessments

Question 25

numerous endorsements to a homeowners policy, one’s covered in class are:

• earthquake endorsement
• personal property replacement cost loss settlement endorsement
• scheduled ___ ___ endorsement(with agreed value loss settlement)
• identity theft

Answer 25

personal property

Question 26

covers direct physical loss to property covered under Section 1 caused by this. coverage includes shock waves and tremors related to a volcanic eruption. a ___ ___ is defined as all earthquake shocks that occur within a 72 hour period.

Answer 26

earthquake endorsement, single earthquake

Question 27

the base deductible for an earthquake endorsement is a __ of the limit stated in declarations that applies either to the dwelling or to personal property, whichever is greater.

Answer 27

percentage

Question 28

in some states where earthquakes occur frequently, or the risk of an earthquake is high, deductibles of __to__% of the coverage limit are typically used.

Answer 28

10-20

Question 29

under this endorsement, claims are paid on the basis of replacement cost with no deduction for depreciation. the endorsement applies to personal property, awnings, carpets, domestic appliances, and outdoor equipment.

Answer 29

personal property replacement cost less settlement endorsement

Question 30

the replacement cost endorsement for personal property has several important limitations. the amount paid is limited to the smallest of the following amounts:

• replacement cost at the time of loss
• full repair cost
• coverage C limit, if applicable
• any special dollar limits in the policy
• for loss to any item, the limit of __ that applies to the item.

if the cost to repair or replace exceeds $___, the property must actually be repaired or replaced to receive replacement cost. otherwise, only the actual cash value is paid.

Answer 30

liability, 500

Question 31

the ___________ provides additional coverage for nine classes of property. depending on the needs of an insured, individual items are scheduled and insured for a specific amount. the categories are as follows:

1. jewelry
2. furs
3. cameras
4. ___ ___
5. silverware
6. golfers equipment
7. ___ ___
8. postage stamps
9. rare and current coins

Answer 31

scheduled personal property endorsement (with agreed value loss settlement), musical instruments, fine arts

Question 32

endorsement that reimburses crime victims for the cost of restoring their identity and cleaning up their credit report.

Answer 32

identity theft endorsement

Question 33

identity theft insurance covers only expenses incurred and not any __ ___ that the thief may steal.

Answer 33

dollar amount

Question 34

suggestions for buying a homeowners policy:

• carry adequate insurance
• add necessary ____
• shop around for a homeowners policy
• consider a higher property insurance deductible
• take advantage of ____
• dont ignore ___ and ____
• improve your credit record
• consider purchasing a personal umbrella policy

Answer 34

endorsements, discounts, earthquake and floods

Question 35

the home must be insured for at least ___ percent of its replacement cost to avoid a penalty if a partial loss to the dwelling occurs. however, you should seriously consider insuring your home for __ percent of its replacement cost.

Answer 35

80, 100

Question 36

a higher deductible can _________.

Answer 36

substantially reduce your premiums.

Question 37

insurers offer a wide variety of discounts based on numerous factors, such as including age of the home, fire and smoke alarms, __ ___, dead-bolt locks, and fire extinguishers

Answer 37

sprinkler systems

Question 38

___ and __ are specifically excluded, and not many people are insured for this, which could cause them to lose a substantial amount of money if a loss occurs from this.

Answer 38

floods and earthquakes

Question 39

provides an additional 1-10 million of liability insurance after the underlying coverage is exhausted. covers liability out of personal injury, including coverage for libel, slander and defamation of character. covers your home, personal activities, and provides excess insurance on cars, boats and recreational vehicles

Answer 39

personal umbrella policy