Chapter 5 Homeowners Flashcards
Eligibility
All homeowners forms, with the exception of the Contents Broad Form (HO–4) and Unit-owners Form (HO–6), require the named insured to be the owner/occupant of the insured dwelling. The dwelling must be the principal residence of the named insured, and incidental business occupancies such as offices, studios, and schools are permitted.
The Contents Broad Form (HO–4) and Unit-owners Form (HO–6) are written to insure the personal property and personal liability of the named insured who does not own the building in which he/she lives. The HO–4 is designed for tenants of residential units (i.e., dwellings and apartment units) and provides no coverage for buildings and other structures. The HO–6 is designed for the owners and tenants of condominium or cooperative units. Coverage is provided for the portion of the building the named insured owns (or is responsible for insuring), personal property, and personal liability.
Eligible residential dwellings are those containing one to four residential units and no more than 2 roomers or boarders per family. Dwellings under construction, and that will be the primary residence of the named insured upon completion of construction, are also eligible for coverage.
HO–2 (Broad Form)
This form provides named perils coverage for the dwelling (Coverage A), other structures (Coverage B), and personal property (Coverage C). The 16 named perils are:
Fire or lightning Windstorm or hail Explosion Riot or civil commotion Aircraft Vehicles Smoke Volcanic eruption Vandalism or malicious mischief Theft (limited) Falling objects Weight of ice, snow, or sleet Accidental discharge or overflow of water or steam Sudden and accidental tearing apart, cracking, burning, or bulging of heating or air conditioning systems (HVAC) Freezing Sudden and accidental damage from artificially generated electrical current
Losses under Coverages A and B are valued on a replacement cost basis. Although coverage for personal property (Coverage C) is provided on the same named perils basis as the dwelling and other structures are, losses are valued on an actual cash value (ACV) basis.
This form does not cover loss to a fence, driveway or walk caused by a vehicle owned or operated by the insured.
HO–3 (Special Form)
In the Special Form (HO–3), the dwelling and other structures (Coverages A and B) are insured on an open perils basis, meaning all perils are insured if they aren’t specifically excluded in the policy. Losses to the dwelling and other structures are valued on a replacement value basis just as they are in the HO–2. The Special Form (HO–3) specifically excludes the following causes of loss under Coverage A and B:
Collapse, except as provided by Additional Coverages
Freezing of household appliances or a plumbing, heating, air conditioning, or automatic fire protective system unless the insured has taken reasonable care to maintain heat in the building or shut off the water supply and drained the appliances and systems of water
Freezing, thawing, pressure or weight of water or ice on patios, fences, swimming pools, foundations, piers, docks, retaining wall
Theft in or to a dwelling under construction, including construction-related materials and supplies
Vandalism and malicious mischief, including ensuing loss, if the dwelling has been vacant for more than 60 consecutive days immediately before the loss
Mold, fungus, or wet rot unless resulting from accidental discharge or overflow of water or steam that is hidden from view
Wear and tear, marring, deterioration, mechanical breakdown, latent defect, inherent vice, smog, rust, corrosion, dry rot
Smoke from agricultural smudging or industrial operations
Pollution including discharge, dispersal, seepage, migration, or release of smoke, vapor, fumes, acids, or other chemicals unless such discharge is caused by a Coverage C Peril Insured Against
Settling, cracking, bulging, or expansion of foundation, walls, floors, pavements, patios
Birds, vermin, rodents or insects
Animals owned or kept by an insured
Personal property (Coverage C) is insured on a named perils basis that includes the same 16 named perils in the Broad Form (HO–2). Coverage C losses are valued on an actual cash value basis. It Includes losses to a fence, driveway or walk caused by a vehicle owned or operated by the insured.
The burden of proof for losses to the dwelling and other structures falls to the insurer because coverage is provided on an open perils basis. On the other hand, the burden of proof for losses to personal property falls to the insured to show which of the 16 named perils caused the loss.
HO–4 (Contents Broad Form)
The Contents Broad Form is also known as the renter’s or tenant homeowners policy. It doesn’t provide any coverage for the dwelling or other structures because it’s designed to insure those who are tenants. The HO–4 insures personal property under Coverage C against loss from the 16 named broad form perils found in the HO–2 and HO–3 forms. Personal property losses are valued on an actual cash value basis, as they are on the HO–2 and HO–3 forms.
HO–5 (Comprehensive Form)
The Comprehensive Form provides the broadest coverage of any of the homeowners forms. Coverage A - Dwelling, Coverage B - Other Structures, and Coverage C - Personal Property provide insurance on an open perils basis.
Losses to the dwelling and other structures are valued on a replacement cost basis, losses to personal property are valued on an actual cash value basis.
In what way is the HO–5, Comprehensive Form different from the HO–3, Special Form?
Personal property is insured on an open perils basis
HO–6 (Unit-Owners Form)
The Unit-owners Form provides named perils coverage to the owner of a condominium or cooperative unit under Coverage A - Dwelling and Coverage C - Personal Property. Coverage B does not appear in this form; however, if the owners of condominiums or cooperative units wish to insure other structures, the value of other structures may be included in the Coverage A limit of insurance.
The form insures real property (building and building items) for which the insured is responsible under the bylaws of the condominium association or cooperative corporation. It also insures personal property of the insured while anywhere in the world.
An owner of a condominium unit would purchase which Homeowner form?
The HO-6 covers the personal property of the condominium unit owner as well as building coverage.
HO–8 (Modified Form)
The loss valuation method for the Modified Coverage Form is typically Actual Cash Value (ACV). However, if exact materials are not available, they may be replaced with materials that will perform the same function and have the same efficiency, even if they aren’t of like kind and quality.
The Modified Coverage Form is often used to insure older homes when the replacement and market values of the dwelling are disproportionate or if a moral / fire hazard would be created if insurance were written at 100% of replacement cost.
An example of a dwelling that would be insured under this coverage form is an old Victorian home. If the property were destroyed in a loss, the insured would not want to restore or replace it exactly as it was before the loss, or they may not be able to find the necessary materials to recreate the dwelling exactly as it was. Instead of insuring the dwelling for its replacement value of $1,200,000, the insured could insure it for a much lower amount of insurance using this form.
The HO-8 does not cover the following perils:
Falling objects
Weight of ice, sleet, or snow
Accidental discharge of water or steam
Accidental tearing apart, cracking, burning, or bulging of heating or air conditioning systems
Freezing
Sudden and accidental damage from artificially generated electrical current
Determine which of the following coverages under each form is provided on a named perils or open perils basis
Named Perils Basis HO-2 Coverage C HO-2 Coverage B HO-2 Coverage A HO-3 Coverage C HO-4 Coverage C HO-6 Coverage A HO-6 Coverage C
Open Perils Basis HO-3 Coverage A HO-3 Coverage B HO-5 Coverage C HO-5 Coverage B HO-5 Coverage A
Match the Homeowners form to the coverage it would provide.
HO–4 (Contents Broad Form)
R is a tenant of a house, and their couch is damaged by accidental discharge of water. The insurer pays the claim on an actual cash value basis.
HO–5 (Comprehensive Form)
The insured property and some contents inside are damaged after a deer broke into the home. The insurer pays for damages to the building on a replacement cost basis and damages to personal property on an actual cash value basis.
HO–3 (Special Form)
The insured property was vandalized, and the windows and fence were damaged. The insurer pays the claim on a replacement cost basis.
HO–8 (Modified Form)
The insured property is damaged in a hailstorm. Because of the age of the home, the insurer pays for materials that will perform the same function as the original materials.
HO–2 (Broad Form)
J is teaching a family member, T, how to drive J’s car. T accidentally drives into J’s garage and fence, causing damages. The damages to the garage are covered on a replacement cost basis, but the damage to the fence would not be covered under this form.
HO–6 (Unit-Owners Form)
The insured condo is damaged by burglars. The insurer pays for the damage to the property, but it does not cover the contents that do not belong to the insured.
The named insured is the person or persons designated on the policy’s declarations page and should be the party or parties holding deed to the property being insured. In situations where real property is owned by a trust, the named insured will be the trustee(s) living in the insured dwelling.
Insured means:
The named insured and his or her resident spouse if the resident spouse is a member of the named insured’s household.
Other residents of the named insured’s household who are:
Relatives of the named insured, meaning they are related by blood, marriage, or adoption
Under the age of 21 and in the care of any insured
Full-time students living away at college if they:
Are under age 24 and related to the named insured
Were a resident of the named insured’s household before moving away to college, OR
Are under age 21 and in the care of the named insured or a resident relative
Under Section II Liability Coverages, any person or organization legally responsible for covered animals or watercraft owned by an insured, unless custody of such animals or watercraft is in the course of “business” — as defined by the policy.
With respect to a “motor vehicle” to which liability coverage applies, persons using a covered vehicle on an insured location with the insured’s consent, and persons while engaged in the employment of the named insured or a resident relative.
A related, full-time student away at school and under what age is considered an insured on the Homeowner policy?
24
Insured Location means:
The residence premises
The part of any other premises, structures, or grounds used by the insured as a residence if it is shown in the Declarations or acquired by the named insured during the policy period for use as a residence
Any premises described above used by the named insured, such as a boat slip
Any premises not owned by an insured and where the insured is temporarily residing, such as hotel rooms and summer vacation rentals
Vacant land, other than farm land, owned by or rented to an insured
Land owned by or rented by an insured on which a 1, 2, 3, or 4-family dwelling is being built as a residence for an insured
Individual and family cemetery plots or burial vaults of an insured
Any part of a premises occasionally rented to an insured for other than business purposes, such as a banquet hall where a wedding reception is hosted
Residence Employee means:
An employee of, or leased under an agreement to, an insured, whose duties are related to the maintenance or use of the residence premises. These duties include household and domestic services, such as those of a gardener or nanny.
A person who performs similar duties elsewhere that are not related to any business of the insured, such as a person hired to paint the insured’s house, as long as the insured doesn’t own a business that paints houses.
Residence Premises means:
The 1-family dwelling where the named insured resides.
The 2-, 3-, or 4-family dwelling in which the named insured resides in at least one of the family units.
That part of any other building where the insured resides.
The residence premises also includes other structures and the grounds at that location, such as the 5 acres upon which the insured resides, including the barn, detached garage, and swimming pool.
Business means:
A trade, profession, or occupation engaged in on a full-time, part-time, or occasional basis.
Any other activity engaged in for money or other compensation, EXCEPT:
Volunteer activities for which no compensation is received other than expense reimbursement.
Home daycare services for which no compensation is received other than the mutual exchange of day care services.
Rendering home daycare services to a relative of an insured.
Any other activity not described above for which no insured receives more than $2,000 in compensation during the 12 months before the current policy term.
Deductibles
The deductible applies to all losses unless otherwise noted in the policy. With respect to any one loss, the policy will only pay that part of the total of all loss payable under Section I that exceeds the deductible amount shown in the declarations — subject to the policy limits.
Although the standard homeowners policy deductible is $250, an insured may choose a higher or lower deductible. As the deductible increases, the policy premium decreases. For example, the premium for a policy with a $1,000 deductible will be less than a premium for a policy with a $250 deductible.
Section I – Property Coverages
Homeowners Coverages Section I Section II Coverage A - Dwelling Coverage E - Personal Liability Coverage B - Other Structures Coverage F - Medical Payments to Others Coverage C - Personal Property
Coverage D - Loss of Use
Coverage A – Dwelling
The policy covers:
Dwelling on the residence premises shown in the declaration, including structures attached to the dwelling.
Materials and supplies located on or next to the residence premises used to construct, alter, or repair the dwelling or other structures on the residence premises. For example, the pile of lumber in the insured’s back yard that will be used to construct a deck off the kitchen.
The policy does not cover:
Land on which the dwelling is located.
Theft in, to, or from a dwelling under construction, including materials used in the construction.
Vandalism and malicious mischief including ensuing loss, if the dwelling was vacant for more than 60 consecutive days immediately before the loss.
When a limit of liability is chosen for Coverage A – Dwelling, the other three property coverages (B, C, and D) are automatically issued at limits equaling a specific percentage of the Coverage A limit of liability. If these limits are inadequate, the insured may purchase higher limits.
In most cases, the insurer requires the named insured to purchase insurance in an amount that is no less than 80% of the dwelling’s replacement value. If, at the time of a loss, the amount of insurance on the dwelling is less than 80% of the dwelling’s replacement value, a penalty will be applied to partial losses. If 80% replacement cost is not carried, ACV will apply.
Coverage A – Dwelling does not cover vandalism and malicious mischief if the dwelling has been vacant for how many days?
60 days
Coverage B – Other Structures
The policy covers other structures on the residence premises that are set apart from the dwelling by a clear space. Structures connected to the dwelling by only a fence or utility line are considered set apart, for example, sheds, detached garages, built-in pools.
No coverage is provided under Coverage B for 4 types of property:
Land, including land on which the other structures are located.
Other structures rented or held for rental to anyone who isn’t a tenant of the dwelling, unless the other structure is used solely as a private garage.
Other structures from which any “business” is conducted.
Other structures used to store business property that is owned by someone other than an insured or a tenant of the dwelling.
This insurance limit is 10% of the Coverage A limit of liability, does not reduce the Coverage A limit of liability, and may be increased by endorsement.
Coverage C – Personal Property
The policy covers personal property owned or used by an insured while it’s anywhere in the world. After a loss, and at the named insured’s request, it covers property owned by others while it’s on the residence premises occupied by an insured or property owned by a guest or residence employee while located in any residence occupied by an insured.
Coverage for property at another residence is limited. If personal property is usually located at an insured’s residence other than the residence premises, coverage is limited to 10% of Coverage C or $1,000, whichever is greater. For example: property usually located in a student’s dormitory or at the insured’s summer home. This limit doesn’t apply to property being moved because it’s being repaired or rebuilt, located in a newly acquired principle residence during the first 30 days after being moved, or the residence premises is not fit to live in or store property in.
Special limits of liability apply to certain categories of personal property.
Special Limits
of Liability
Money, bank notes, bullion, coins, medals, etc. $200
Securities, deeds, evidences of debt, notes other than bank notes,
manuscripts, passports, tickets and stamps $1,500
Watercraft of all types, including their trailers, furnishings,
equipment, engines, and outboard motors. Loss resulting from
wind or hail is excluded unless in a fully enclosed building
$1,500
Trailers or semi-trailers not used with watercraft of all types $1,500
Loss by theft of jewelry, watches, furs, precious or semiprecious
stones $1,500
Loss by theft of fi rearms and related equipment, such as holsters
and ammunition. $2,500
Loss by theft of silverware, goldware, pewterware, platinumware,
tea sets, trays, trophies, and fl atware. $2,500
Property on the residence premises used primarily for business
purposes (e.g., a personal computer used by the insured in a
home-based business). The limit does not apply to a personal
computer used by the insured occasionally when bringing
work home from the offi ce, and used primarily for personal and
household purposes.$2,500
Property away from the residence premises used primarily
for business purposes. This limit doesn’t apply to electronic
apparatus. Different editions of the homeowners policy provide
different limits of insurance for this coverage.
$500
Electronic apparatus and accessories while in or on a motor
vehicle, but only if equipped to be operated by power from the
motor vehicle while still being capable of operation by other power
sources. Accessories include antennas, tapes, wires, records,
disks, etc.
$1,500
Electronic apparatus and accessories used primarily for “business”
purposes while away from the residence premises and NOT in
or upon a motor vehicle, but only if equipped to be operated by
power from the motor vehicle while still being capable of operation
by other power sources. Accessories include antennas, tapes,
wires, records, disks, etc.
$1,500
All of the following special limits of Coverage C are correct, except:
$2,500 for business property away from premises
Coverage C – Personal Property (continued)
Property not covered under Coverage C includes:
Property specifically described and insured elsewhere, such as on another policy or by endorsement to the homeowners policy
Animals, birds, or fish
Motor vehicles, including equipment, parts, and electronic equipment and accessories that can only be operated by the motor vehicle. An exception exists (meaning coverage is provided) for motor vehicles not required to be registered for use on public roads, used solely to service an insured’s residence, or designed to assist the handicapped
Aircraft, including its parts, except model or hobby aircraft is covered if it’s not used or designed to carry people or cargo
Hovercraft, including its parts
Property of roomers, boarders, and other tenants—except those related to an insured
Property in an apartment regularly rented, or held for rental, to others by an insured—except for property covered under the additional coverage, Landlord’s Furnishings
Property rented or held for rental to others off the residence premises
Business data, credit cards, and electronic fund transfer cards—including data stored in books of account, on paper records, or on computers
Water or steam
This insurance limit is 50% of the Coverage A limit of liability, does not reduce the Coverage A limit of liability, and may be increased by endorsement.
The amount of insurance provided for Coverage C is what percentage of Coverage A on a HO–3, Special Form?
50%
The Coverage C limit is 50% of Coverage A in the standard Homeowner policy, and may be increased.
Coverage D – Loss of Use
Three types of coverage are provided under Coverage D and all are for indirect, or consequential, loss.
The limit of insurance appearing on the declarations for Coverage D is the total limit payable for all three types of coverage provided. For example, a wildfire burns near the insured’s home. If direct damage from the wildfire occurs to the residence premises, Additional Living Expense and Fair Rental Value coverages are triggered. If direct damage from wildfire occurs to the named insured’s neighbors, and a civil authority evacuates the named insured, Civil Authority Prohibits Use coverage is triggered.
Additional Living Expense
If a property loss covered by Section I of the policy makes the residence premises unfit to live in, the policy pays for any necessary increase in living expenses incurred by the named insured to maintain the household’s normal standard of living. Payment is made for the shortest time necessary to repair or replace the damage. If the insured must relocate permanently, payment will be made for the shortest time it takes the insured to settle at the new location.
Fair Rental Value
If a property loss covered by Section I of the policy makes that part of the residence premises rented to others unfit to live in, the policy pays for the fair rental value of such premises—less any continuing expenses—while it’s unfit to live in. Payment is for the shortest time required to repair or replace the rented portion of the premises.
Civil Authority Prohibits Use
If a civil authority prohibits the named insured from using the residence premises as a result of direct damage to neighboring premises by a peril insured against under the homeowners policy, the policy pays losses under Additional Living Expense and/or Fair Rental Value for no more than two weeks.
Coverage D – Loss of Use/ Limits of coverage
Loss and expenses due to the cancellation of a lease or agreement are NOT covered.
Limits of Coverage – The automatic limits of insurance for Coverage D vary by the homeowners form of coverage:
30% of Coverage A for forms HO–2, HO–3, and HO–5
30% of Coverage C for form HO–4
50% of Coverage C for form HO–6
10% of Coverage A for form HO–8
Click here for a printable PDF of HO Coverages.
Match the Coverage D limit of insurance with the correct policy/policies.
30% of Coverage A
HO–2, HO–3, and HO–5
10% of Coverage A
HO–8
50% of Coverage C
HO–6
30% of Coverage C
HO–4
The automatic limit for Coverage D – Fair Rental Value is what percentage of Coverage A under an HO–3, Special Form?
30%
Identify under which coverage part of a homeowners policy the following items would be covered
Coverage A
Installed carpeting
Fireplace
Tile floors
Coverage B
Fence
Swimming Pool
Detached garage
Coverage C
Home computer
Money
Furniture
Section I – Additional Coverages
Debris Removal
The policy will pay the named insured’s reasonable expenses for the removal of debris of covered property if a covered loss occurs.
Payment is included in the limit of insurance for covered property that is damaged. If debris removal expenses and expenses for damaged property exceed the applicable limit of insurance, this coverage will provide additional insurance equal to 5% of the limit available for such expense. For example, the insured’s shed burns to the ground. The Coverage B limit of liability is $10,000. This coverage will pay a total of $10,000 plus $500 ($10,000 times 5%) for the replacement value of the shed plus debris removal expenses.
A limit of $1,000 applies for reasonable expenses to remove from the residence premises debris of the insured’s trees felled by windstorm, hail, or the weight of ice, snow, or sleet.
Reasonable Repairs
When the insured’s property has been damaged by a covered peril, this coverage pays the reasonable costs incurred by the named insured to take necessary measures to protect covered property damaged by a covered peril against further damage. For example, a tree falls on the dwelling’s roof. The insured’s expenses to place a tarp over the hole in the roof would be covered. This coverage does not increase the limit of insurance that applies to the covered property.
Trees, Shrubs, and Plants
Coverage is provided for trees, shrubs, plants, or lawns on the residence premises for the following perils: fire or lightning, explosion, riot or civil commotion, aircraft, vehicles not owned or operated by a resident of the residence premises, vandalism or malicious mischief, and theft. Coverage is NOT provided for any other peril, including windstorm or hail.
The limit of insurance is up to 5% of the Coverage A limit of liability and applies to all trees, shrubs, plants, or lawns. The most paid for loss to any one tree, shrub, or plant is $500. This limit is additional insurance.
No coverage is provided for property grown for “business” purposes.
Fire Department Service Charge
This coverage pays up to $500 for the named insured’s contractual liability to pay fire department charges incurred by a fire department that is called to save or protect covered property by a peril insured against. Covered charges must be incurred by a fire department other than that of the jurisdiction in which the covered property is located. For example, a neighboring fire department is called to assist the fire department of the jurisdiction in which the insured property is located. This coverage is additional insurance, and the policy deductible does not apply.
Property Removed
Coverage is provided for loss to covered property by any cause while being removed from a premises endangered by a peril insured against. Coverage applies for no more than 30 days while removed. For example, if a wildfire threatens the insured’s home and property is removed, loss to the removed property that is caused by flood or earthquake would be covered during the first 30 days the property is removed. However, if flood threatened the insured’s home, coverage wouldn’t apply because the endangering peril is not a peril insured against.
Credit Cards, Electronic Fund Transfer Card, Forgery, and Counterfeit Money
Coverage up to $500 is provided for the insured’s legal responsibility because of theft or unauthorized use of credit cards, electronic fund transfer cards or access devices issued to an insured. Loss to an insured caused by forgery, alteration of a check or negotiable instrument, or counterfeit money is also covered. Exclusions exist for use of a covered card or device by a resident of the named insured’s household, by a person entrusted with a card or access device, the insured’s failure to comply with credit card requirements, business use of a card, or the insured’s dishonesty. This coverage also includes defense.
Loss Assessment
Coverage up to $1,000 is provided for the named insured’s share of loss assessment charged during the policy period by a corporation or association of property owners. The assessment must be made because of direct loss to property owned collectively by all members AND that was caused by a Peril Insured Against under this policy. This coverage is additional insurance.
Collapse
Coverage is provided for the abrupt falling down or caving in of a building, or a portion of a building, if the building cannot be occupied for its intended purpose after the collapse.
Direct physical loss from collapse must be caused by a Coverage C named peril, hidden decay, hidden insect or vermin damage, weight of contents, equipment, animals, people, the weight of rain collecting on a roof, or the use of defective materials or construction methods.
The policy does not cover collapse of awnings, fences, patios, swimming pools, underground pipes, cesspools, etc., unless damage is the direct result of the collapse.
This coverage does not increase the limit of insurance that applies to the damaged property.
Glass or Safety Glazing Material
Coverage is provided for:
The breakage of glass or safety glazing material that is part of a covered building, storm door, or storm window, including loss caused by earth movement.
Direct physical loss to covered property caused solely by the pieces, fragments, or splinters of broken glass or safety glazing material.
NO coverage is provided for loss occurring on the residence premises if the dwelling was vacant for more than 60 consecutive days before the loss, except coverage is provided for loss caused by earthquake. This coverage does not increase the limit of insurance that applies to the damaged property.
Landlord’s Furnishings
Up to $2,500 coverage is provided for appliances, carpeting, and household furnishings owned by the named insured and located in each apartment on the residence premises that is rented to others. Coverage is provided for the 15 named perils (the Coverage C perils, with the exception of theft). This coverage does not increase the limit of insurance applying to the damaged property.
Ordinance or Law
The insured may use up to 10% of the Coverage A limit of insurance for increased costs the insured incurs due to the enforcement of any ordinance or law that requires or regulates:
Construction, demolition, remodeling, renovation, or repair of that part of a covered building damaged by an insured peril.
The demolition or reconstruction of the undamaged part of a covered building, when that building must be totally demolished because of damage by an insured peril to another part of that covered building.
The remodeling, removal, or replacement of the portion of the undamaged part of a covered building to complete the remodeling, repair, or replacement to that part of the covered building damaged by an insured peril.
This coverage is additional insurance.
Grave Markers
The policy will pay up to $5,000 for grave markers, on or away from the residence premises, for loss caused by a peril insured under Coverage C. This coverage does not increase the limits of insurance that apply to the damaged, covered property.
The Landlord’s Furnishings endorsement provides up to $ _______ of coverage.
2,500
This endorsement provides up to $2,500 coverage for appliances, carpeting and household furnishings in a rental apartment located in the residence premises.
Section I – Exclusions
The policy does not provide for loss caused directly or indirectly by any of the following perils, even if they are caused concurrently or over a widespread area.
Ordinance or Law
Losses resulting from the enforcement of an ordinance or law regulating the construction, repair, remodeling, renovation or demolition of a building are excluded except what is provided in the additional coverage, Ordinance or Law.
Earth Movement
Losses resulting from: earthquake, including land shock waves or tremors before and after volcanic eruptions, landslides, mudslides, mudflow, subsidence, or sinkhole, and any earth sinking, rising, or shifting. Direct loss by fire or explosion that ensues is covered. Loss by theft resulting from earth movement is also covered.
Water Damage
Water damage means flood, surface water, tidal water, overflow of a body of water, water or water-borne material that backs up through sewers or drains or that overflows from a sump pump, and water that exerts pressure on or seeps or leaks through a building, foundation, swimming pool, or other structure. Direct loss by fire, explosion, or theft resulting from water damage is covered. Water damage is excluded whether caused by human, animal, or natural forces.
Power Failure/ Section I exclusion
If the failure of power or utility services takes place off the residence premises, this exclusion applies. However, if the failure of power or utility services takes place on the residence premises and is caused by a Peril Insured Against, it doesn’t apply.
Neglect/ Section I exclusion
There is no coverage for losses if the insured fails to use all reasonable means to save and preserve covered property at and after the time of a loss.
War/ Section I exclusion
War includes the following, including any consequences of: undeclared war, civil war, insurrection, rebellion or revolution, warlike act by a military force or personnel, destruction, seizure or use for a military purpose. Discharge of a nuclear weapon is deemed warlike even if it occurs accidentally.
Nuclear Hazard/ Section I exclusion
Damage is excluded by any nuclear reaction, radiation or radioactive contamination, or a consequence of any of these.
Intentional Loss/ Section I exclusion
No coverage applies to any loss that arises out of any act an insured commits or conspires to commit with the intent to cause loss. In the event of intentional loss, no insured is entitled to coverage, including innocent insureds (those who did not cause the loss, but are covered on the same policy as the person who caused the loss).
Governmental Action/ Section I exclusion
The destruction, confiscation, or seizure of covered property by order of any governmental or public authority is excluded. The exclusion doesn’t apply to such acts taken at the time of a fire to prevent its spread, if the fire loss would be covered under the policy.
Which of the following is a Section I exclusion in the Homeowners policy?
Governmental action
Governmental action is the destruction, confiscation, or seizure of covered property by order of the government and is excluded in the Homeowners policy.
Sort the following occurrences into Additional Coverages or Exclusions
Additional Coverages
Loss to covered property by any cause while being removed from a premises endangered by a peril insured against
Reasonable costs incurred by the named insured to protect covered property damaged by a covered peril against further damage
Reasonable expenses for the removal of debris of covered property if a covered loss occurs
Coverage for the abrupt falling down or caving in of a building that cannot be occupied for its intended purpose after the collapse
Exclusions
Water damage resulting from a flood, surface water, overflow of a body of water, or sewer back-up
Power failure taking place off the residence premises
Losses resulting from earthquake, landslides, or mudslides
Coverage for a loss that arises out of any act committed by the insured with the intent to cause a loss
Section I – Selected Property Endorsements
Mobile Home Insurance
Depending upon the insurer, insurance for mobile homes may be insured on a homeowners policy by adding a Mobile Home endorsement. If the insurer doesn’t allow the addition of such an endorsement to its homeowners policy, a separate Mobile Homeowners policy must be written.
Under ISO (Insurance Services Office) rules, an owner occupied mobile home may be covered under an HO–2 or HO–3 by endorsement. The endorsement amends the definition of Coverage A (Dwelling) to include a mobile home. Tenants of a mobile home may insure their personal property under an HO–4 if the insurer’s underwriting guidelines permit.
Other Structures on the Residence Premises – Increased Limits
If the Coverage B limit of insurance is inadequate to insure all other structures on the residence premises (10% of Coverage A), this endorsement allows the insured to purchase increased limits for other structures listed in the endorsement. The increased limits generate an additional premium charge.
Water Back Up and Sump Discharge or Overflow
This endorsement allows the insured to buy back some coverage that is excluded under the Water Damage exclusion. It provides up to $5,000 of coverage for direct physical loss to property insured under Section I (Coverages A, B, and C) caused by water or waterborne material that:
Backs up through sewers or drains, or
Overflows from a sump, sump pump, or related equipment.
Coverage is provided even if the sump overflow is caused by equipment breakdown. A special deductible of $250 applies and replaces any other deductible that may otherwise apply. Coverage doesn’t apply if damage is caused by the negligence of an insured.
The Water Back Up and Sump Discharge or Overflow endorsement provides how much coverage for damaged property?
5,000
This endorsement provides up to $5,000 of coverage for property directly damaged by water that backs up through sewers or drains or overflows from a sump pump.
Personal Property Replacement Cost Endorsement
This endorsement changes the valuation method for most property insured under Coverage C from actual cash value (ACV) to replacement cost. It also applies to awnings, outdoor antennas and equipment, carpeting, and household appliances.
If the following classes of property are separately described and specifically insured in this policy and NOT subject to agreed value loss settlement, the endorsement also applies to jewelry, furs and fur garments, cameras and related equipment, musical instruments and related equipment, silverware, goldware, pewterware, and golfer’s equipment. Other classes of property separately described and specifically insured are NOT subject to this endorsement.
Property NOT eligible for coverage under this endorsement—and that is subject to actual cash value loss settlement—includes antiques, fine arts, paintings and similar articles of rarity or antiquity that cannot be replaced, memorabilia, souvenirs, collectors’ items, articles whose ages and histories contribute to their value, articles not maintained in good or workable condition, and articles that are outdated or obsolete and are stored or not being used.
This endorsement only changes loss valuation—it doesn’t change other policy provisions, including perils insured against or exclusions.
Scheduled Personal Property Endorsement
This endorsement is used to increase limits of liability for certain categories of personal property and to broaden the perils insured against that apply to that property. Coverage is provided on an open-perils basis and contains very few exclusions; including wear and tear, insects or vermin, war, and nuclear hazard.
Some additional exclusions and restrictions apply for fine arts, postage stamps, coins, and the breakage of art glass windows, glassware, statuary, marble, bric-a-brac, porcelains, and similar fragile articles. This endorsement is also referred to as a Personal Article Floater.
Newly acquired property of a class already insured on the endorsement is automatically covered. The insurer must be notified within 30 days (90 days for fine arts) if new property is acquired. Scheduled property is insured worldwide and the Section I deductible does not apply to this endorsement.
Earthquake Endorsement
Coverage for a loss caused by earthquake, including land shock waves or tremors before, during, or after a volcanic eruption, is provided to property insured under Coverage A (Dwelling), B (Other Structures), and C (Personal Property). A single earthquake is defined as 1 or more earthquake shocks that occur within a 72-hour period.
The coverage does not cover loss resulting from flood of any nature, or the cost of filling land.
A deductible that is a percentage of Coverage A (Dwelling) or Coverage C (Personal Property), whichever is greater, is included.
Limited Fungi, Wet or Dry Rot, or Bacteria Coverage Endorsement
This endorsement provides a basic property limit option of $10,000 on an annual aggregate basis during the policy period for:
Loss caused by fungi, wet or dry rot, or bacteria.
Cost of:
Testing the air or property to confirm the existence of fungi, wet or dry rot, or bacteria.
Removal of fungi, wet or dry rot, or bacteria.
Tearing out and replacing any part of the building or other covered property to gain access to fungi, wet or dry rot, or bacteria.
Insurers also can offer higher optional coverage limits of $25,000 and $50,000.
Permitted Incidental Occupancies Endorsement
With respect to Section I, Coverage B (Other Structures), this endorsement covers a structure of the residence premises, specifically described, for direct physical loss by an insured peril for a specified limit of insurance when used to conduct a business.
The endorsement also allows the Coverage C (Personal Property) special limit of $2,500 to apply to the described business.
Identity Theft Expense
This endorsement will pay up to $15,000 for expenses resulting from an instance of identity fraud discovered during the policy period.
The endorsement does not cover losses arising out of business activity. It carries a $500 deductible and the insured must notify the insurer within 60 days of the loss.
Determine which coverage is an Additional Coverage and which is available as an endorsement.
Additional Coverages Grave Markers Landlord's Furnishings Loss Assessment Credit Cards, Electronic Fund Transfer Card or Access Device, Forgery, and Counterfeit Money Property Removed Reasonable Repairs
Endorsements
Water Back-Up and Sump Discharge or Overflow
Limited Fungi, Wet or Dry Rot, or Bacteria Coverage
Scheduled Personal Property
Earthquake
Identity Theft Expense
Mobile Home Insurance
Homeowner Section II
The language contained in Section II – Liability Coverages is identical in each of the homeowners forms. It provides the same coverages contained in a standalone Comprehensive Personal Liability (CPL) policy. Section II coverages are not subject to a deductible.
Coverage E – Personal Liability
Insurance is provided for claims made and suits brought against an insured because of bodily injury or property damage caused by an occurrence for which the insurance applies.
The policy pays up to the limit of liability for the damages for which an insured is legally liable, including prejudgment interest awarded against an insured.
The policy provides a defense, at the insurer’s expense, even if the suit is groundless, false, or fraudulent. The insurer may investigate and settle any claim or suit it decides is appropriate. The duty to defend ends when the policy limits have been exhausted by payment of a judgment or settlement. Payments for defense costs are made in addition to the limit of liability appearing on the declarations.
Coverage F – Medical Payments to Others
The policy will pay necessary medical expenses that are incurred or medically ascertained within 3 years from the date of an accident causing bodily injury. Legal liability, negligence, and fault do not trigger this coverage. Medical payments to others is a goodwill coverage and designed to discourage the submission of liability claims.
Medical expenses are the reasonable charges for medical, surgical, X-ray, dental, ambulance, hospital, professional nursing, prosthetic devices, and funeral services. Coverage does not apply to the insured or regular residents of the insured’s household (except residence employees). However, coverage does apply to:
A person on the insured location with the permission of an insured.
A person off the insured location if the bodily injury:
Arises out of a condition on the insured location or the immediate surroundings.
Is caused by the activities of an insured.
Is caused by a residence employee in the course of employment by the insured.
Is caused by an animal owned by or in the care of an insured.
All of the following are covered by Coverage F – Medical Payments to Others, except:
An injury to the insured while mowing the lawn
Coverage under this section does not apply to the insured and regular residents in the insured dwelling.
Section II – Additional Coverages
The following coverages are provided and payments are made in addition to the limit of liability appearing on the declarations.
Claim Expenses (Supplementary Payments) Includes the insurer’s expenses for defending a claim, along with reasonable expenses incurred by an insured at the insurer’s request. Also covered as claim expenses are premiums on bonds required in a suit defended by the insurer, the insured’s actual loss of earnings up to $250 a day for assistance in the investigation or defense of a claim or suit, and post-judgment interest.
First Aid Expenses
Includes expenses incurred by an insured for rendering first aid to others who sustain bodily injury covered under the policy. No coverage is provided for first aid to an insured.
Damage to Property of Others
Pays up to $1,000, at replacement cost, for property damage to property of others caused by an insured. Payment is made regardless of negligence. For example, damage caused by an insured to a borrowed lawn mower. Coverage does not apply to property damage:
Covered under Section I of the policy.
Caused intentionally by an insured who is 13 years of age or older.
To any property owned by an insured.
To property owned by or rented to a tenant of an insured or a resident of the named insured’s household.
Arising out of a business engaged in by an insured; acts or omissions in connection with premises owned, rented, or controlled by an insured that is not the insured location; the ownership, maintenance, occupancy, operation, use, loading or unloading of aircraft, hovercraft, watercraft, or motor vehicles.
Loss Assessment
Provides up to $1,000 of coverage for the insured’s share of loss assessments charged by a corporation or association of property owners during the policy period. The loss assessment must be the result of bodily injury or property damage not otherwise excluded by the policy or liability for an elected director, officer, or trustee who serves on the board of the association or corporation without being compensated.
Section II Additional Coverages includes Damage to Property of Others for what limit of insurance?
$1,000.
Up to $1,000 will be paid under this coverage for property damage by the insured to another person’s property, regardless of fault.
Determine which of the following coverages is associated with either Section I or Section II of a homeowners policy
Section I
Loss to an insured caused by forgery or alteration of a check
A deductible applies to all losses unless otherwise specified
Fair rental value if property loss makes part of a residence that is rented to others unfit to live in
Additional living expenses incurred by a named insured due to a loss by a covered peril
Section II
Damage to property of others caused by an insured
Expenses for defending a claim
Coverages are not subject to a deductible
Bodily injury claims made against the insured who is legally liable
Section II – Exclusions
The Section II exclusions fall into 4 distinct categories:
- Exclusions that apply to Section II – Coverages E and F and the Additional Coverages
- Exclusions that only apply to Coverage E – Personal Liability and Coverage F – Medical Payments to Others
- Exclusions that only apply to Coverage E – Personal Liability
- Exclusions that apply only to Coverage F – Medical Payments to Others
Exclusions Applying to Section II in its Entirety
Motor Vehicle Liability – The Motor Vehicle Liability exclusion applies to all coverages in Section II. No coverage is provided for “motor vehicle” liability if at the time of an occurrence, the “motor vehicle” involved in the loss was registered for use on public roads or wasn’t registered but was required to be registered. In addition, no coverage is provided for vehicles that are being operated in or practicing for racing, rented to others, used to carry people or cargo for a fee, or used for any business purpose.
Exceptions to the exclusion, meaning coverage is given back, exist for the following:
Vehicles in dead storage on an insured location, meaning they are physically unable to be driven, because their batteries have been removed and they’re up on blocks.
Vehicles used solely to service an insured’s residence.
Vehicles designed to assist the handicapped, so long as the vehicle is being used to assist a handicapped person, or it is parked on an insured location.
A motorized golf cart used on a golfing facility for purposes approved by the facility or within a private residential community and used as approved by the community.
Vehicles designed for recreational use off public roads IF they are not owned by an insured OR are owned by an insured and used on an insured location.
Aircraft Liability
– No coverage is provided for “aircraft liability” as defined in the policy.
Hovercraft Liability
No coverage is provided for “hovercraft liability” as defined in the policy.
Which of the following is excluded under the Section II exclusions?
Vehicle used to assist the handicapped and parked in a public lot
Exclusions Applying to Coverages E and F
Expected or intended injury is excluded and applies even if the insured intended a different outcome. For example, the insured intended to hit Bob, but hit Joan instead. An exception exists for the use of reasonable force to protect persons or property. Previous editions of the homeowners policy only gave back coverage for the protection of persons.
Coverage is excluded for bodily injury or property damage arising out of, or in connection with, a business conducted from an insured location OR engaged in by any insured, regardless of where the occurrence takes place. The exclusion applies if the insured owns a business or is employed by a business; no distinction is made between the two.
Coverage is excluded for bodily injury or property damage arising out of the rendering of or failure to render, professional services.
No coverage is provided for bodily injury or property damage arising out of a premises owned, rented by, or rented to others by an insured if the premises isn’t an “insured location.”
No coverage is provided for bodily injury or property damage arising from any type of war, warlike act, or destruction, seizure, or use for a military purpose—including accidental discharge of a nuclear weapon.
Bodily injury or property damage arising out of the transmission of a communicable disease by an insured is excluded.
Bodily injury and property damage arising out of sexual molestation, corporal punishment, or physical or mental abuse is excluded.
Bodily injury or property damage arising out of the use, sale, manufacture, delivery, transfer, or possession of a controlled substance is excluded. An exception to the exclusion exists for the legitimate use of prescription drugs by a person following the orders of a licensed physician.
Coverages E and F don’t apply to bodily injury sustained while using a watercraft that is:
An inboard motorboat owned by an insured, except while in storage
An inboard motorboat with more than 50 horsepower, rented by an insured
An outboard motorboat with more than 25 horsepower, owned by an insured
Sailing vessels 26 feet or more in length, owned or rented by an insured
Exclusions Only Applying to Coverage E – Personal Liability
For any loss assessment, except as provided under the Additional Coverage, Loss Assessment.
Under any contract entered into by an insured. Exceptions exist if the contract is a written contract that relates directly to the ownership, maintenance, or use of an insured location or the liability of others is assumed by the named insured prior to an occurrence.
Property damage to property owned by an insured.
Property damage to property rented to, occupied by, used by, or in the care of an insured. This is the care, custody, or control exclusion and an exception exists for property damage caused by the perils of fire, smoke, or explosion. Keep in mind that the Additional Coverage, Damage to Property of Others, provides $1,000 of coverage on a replacement cost basis to minimize this exclusion.
Bodily injury to anyone eligible to receive benefits from any workers’ compensation, occupational disease law, or non-occupational disability law.
Bodily injury or property damage for which an insured is covered under any nuclear energy liability policy.
Bodily injury to the named insured or any insured.
Exclusions Only Applying to Coverage F – Medical Payments to Others Coverage does not apply to bodily injury:
To a residence employee if the bodily injury occurs off an insured location AND NOT in the course of the residence employee’s employment by the insured.
To any person who is eligible to receive benefits voluntarily provided or required by law under any workers’ compensation, occupational disease law, or non-occupational disability law.
From any nuclear reaction, nuclear radiation, or radioactive contamination—regardless of how caused.
To any person other than a residence employee of an insured who regularly resides on any part of the insured location. This includes roommates and tenants as well as any insured.
Limit of Liability
A per occurrence limit applies to losses covered under Coverage E – Personal Liability and a per person limit applies to losses covered under Coverage F – Medical Payments to Others.
Severability of Insurance
Insurance applies separately to each insured; however, this condition doesn’t increase the limit of liability per any one occurrence.
Duties After Occurrence
The named insured or another insured is responsible for performing the following duties. The insurance company has no duty to provide coverage if the named insured’s failure to comply with the following duties is prejudicial to the insurance company.
Give the following information in written notice to the insurer or its agent as soon as is practical:
The policy number
The identity of the named insured
Reasonably available information about the time, place, and circumstances of the occurrence
Names and addresses of any claimants and witnesses
Cooperate with the insurer in the investigation, settlement, or defense of any claims
Promptly forward any notice, demand, summons, or other process to the insurer
At the insurer’s request, aid the insurer in making a settlement, pursuing subrogation attempts, taking the case to court, and procuring evidence
With respect to Damage to Property of Others, submit to the insurer, within 60 days after a loss, a sworn statement of loss and show the damaged property
No insured shall, except at his/her own expense, voluntarily make payment, assume obligation, or incur expense other than for first aid at the time of bodily injury
Duties of an Injured Person – Coverage F – Medical Payments to Others
This condition applies to third party claimants who are pursuing coverage under the policy. The injured person, or someone acting on his or her behalf, must:
Give the insurer written proof of the claim as soon as practical—and under oath, if required.
Authorize the insurer to obtain copies of medical records and reports.
Submit to a physical exam by a doctor of the insurer’s choice when and as often as the insurer reasonably requires.
Payment of Claim – Coverage F – Medical Payments to Others
This condition states that payment under Coverage F is not an admission of liability.
Legal Action Against Insurer
All parties must comply with policy provisions before any suit may be brought against the insurer. Also, no one has the right to enjoin the insurance company as a party to any action against an insured.
Bankruptcy of an Insured
Bankruptcy or insolvency of an insured does not relieve the insurer of its obligations under the policy.
Other Insurance
insurance is excess over any other collectible insurance, except insurance written specifically as excess insurance over this policy.
Policy Period
The policy only applies to bodily injury or property damage that occurs during the policy period.
Concealment or Fraud
The policy does not provide coverage to an insured who, whether before or after a loss, has intentionally concealed or misrepresented any material fact or circumstance, engaged in fraudulent conduct, or made false statements relating to this insurance.
The duties required of an injured person seeking coverage under Medical Payments to Others include all of the following, except:
Help the insurer in settling the claim
Selected Homeowner Section II Endorsements
Home Day Care Endorsement
The endorsement extends Section I and II coverages to the home day care “business” described in the schedule provided it is conducted by an insured on the residence premises. The endorsement typically imposes a policy year aggregate limit for the sum of personal liability and medical payments to others losses. The limit corresponds to the Coverage E limit shown in the Declarations, with a per person per accident sublimit for day care-related medical expenses equal to Coverage F.
The endorsement does not cover injury to any employee arising out of the “business,” as described.
Personal Injury Endorsement
The endorsement adds liability coverage for “personal injury,” which is defined to include the following offenses:
False arrest, detention, or imprisonment.
Malicious prosecution.
The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling, or premises that a person occupies, committed by or on behalf of its owner, landlord, or lessor.
Oral or written publication of material that violates a person’s right of privacy, slanders or libels a person or organization, or disparages a person’s or organization’s goods, products, or services.
Insurance provided by the endorsement does not apply to “personal injury” that is:
Caused by or at the direction of an insured with the knowledge the act would violate another’s rights and inflict personal injury.
Arising out of oral or written publication of material:
With the knowledge of its falsity.
That took place before the inception date of the policy.
Arising out of a criminal act committed by, or at the direction of, an insured.
Arising out of contractual liability assumed by an insured other than an indemnity agreement that relates directly to the ownership, maintenance, or use of the premises.
An offense related directly or indirectly to the employment of an injured party by an insured.
Arising out of or in connection with a business conducted from an insured location or engaged in by an insured.
Arising out of civic or public activities performed by an insured for pay.
Sustained by the named insured or an insured.
Actual, alleged, or threatened:
Discharge, dispersal, seepage, migration, etc., of pollution.
Ingestion of, inhalation of, contact with, exposure to, existence of, or presence of any “fungi,” wet or dry rot, or bacteria.
Home Business Endorsement
The endorsement provides for both business property and liability coverages for a variety of home businesses. The business must be owned by the named insured, or by a partnership, joint venture, or organization comprised solely of the named insured and resident relatives.
It also includes coverage for premises operations, advertising injury, and personal injury. However, there is no coverage for professional services.
Watercraft Liability Endorsement
The endorsement amends the liability exclusion pertaining to certain types of watercraft liability. The exclusion is deleted and replaced with a revised exclusion, which states that Coverage E and F don’t apply to “watercraft liability” if the involved watercraft is being:
Operated in or practicing for any prearranged or organized race, speed contest, or competition. Sailing vessels and predicted log cruises are not excluded.
Rented to others
Used to carry people or cargo for a charge
Used for any “business” purpose
If the watercraft is a sailing vessel or one powered by an inboard or inboard-outdrive engine or motor, Coverages E and F don’t apply to bodily injury sustained by any employee in the course of employment. Such exclusion applies if the employee’s principal duties are in connection with the maintenance, operation, or use of a watercraft designated in the endorsement.
Which of the following boats is covered under the Watercraft Liability endorsement?
A 20-foot sail boat
This endorsement covers sail boats with or without power, and property damage or bodily injury arising out of the ownership, maintenance, use, loading, or unloading of the described watercraft.
Limited Fungi, Wet or Dry Rot, or Bacteria Coverage Endorsement
The endorsement covers the insured’s liability exposure in the event that a third party claims illness as a result of exposure to mold and the insured is deemed liable for the illness. The basic liability limit is currently $50,000 on an annual aggregate basis during the policy period for all fungi, wet or dry rot, or bacteria related damages. Insurers can also offer a higher optional liability coverage limit of $100,000.
Permitted Incidental Occupancies Endorsement
The endorsement modifies the Section II exclusions of liability and medical payments in connection with business pursuits of the insured to allow the necessary and incidental use of the premises for the business described on the endorsement. The premises must be occupied principally as the insured’s residence; the business must be conducted by an insured; and there can be no other business conducted on the premises.
The endorsement is commonly used for a studio, office, or private school type of occupancy. It does not cover bodily injury to any employee of the insured, except residence employees in the course of their employment.
Business Pursuits Endorsement
The endorsement extends liability coverage for the insured’s involvement in a business that the insured does not own, have financial control over, or have a partnership interest in. The pursuit must be named in the endorsement, and is commonly added for those in the teaching, sales, and clerical professions.
Match the Homeowners Section II endorsement to the risk it would cover.
Watercraft Liability
The insured is concerned about any injuries that could occur taking people tubing on their boat.
Permitted Incidental Occupancies
The insured’s property is mainly used for residence, and they occasionally teach piano lessons out of their home.
Business Pursuits
A salesperson has several business products in their home. The salesperson does not have any financial responsibility in this company, but wants liability coverage for the sales products.
Home Day Care
An insured wants liability coverage for the children they watch with their at-home business. However, this would not cover any employees.
Limited Fungi, Wet or Dry Rot, or Bacteria Coverage
While visiting the insured’s home, the visitor gets sick due to the mold in the insured’s property.
Personal Injury
An insured is concerned about accidentally slandering someone.
Home Business
The insured owns a business they run out of their home. They want coverage for premises operations, advertising injury, and personal injury.
Which of the following is true regarding the HO-4 and HO-6 forms?
They are used to insure the personal property and personal liability of the insured, but do not include the structure itself
All of the following are true of a Homeowners Policy, except:
The HO-2 provides open perils coverage on the dwelling
The HO-2 covers the dwelling and contents against the Broad Form Perils.
Which of the following is NOT a residence premises in the Homeowners Policy?
Premises rented occasionally to the named insured for nonbusiness purposes
A location rented occasionally to the named insured for nonbusiness purposes is an insured location.
All of the following are true of a Homeowners Policy, Coverage F, except:
Under Coverage F, payments apply to necessary medical expenses incurred within a maximum of 1 year
Coverage F will pay for expenses incurred up to three years after the accident.
Which form is designed for Tenants?
HO-4
Which statement is false concerning a Homeowners Policy?
The HO-4 covers the dwelling against the Broad Form Perils
There is no coverage for the dwelling under an HO-4, only contents coverage.
Liability for use of which of the following vehicles is not covered by the Homeowners policy?
Dune buggy used on a public beach
An owned vehicle designed for recreational use off public roads must be used on the insured premises for coverage to apply.
The HO-8 form settles losses to the building on what valuation method?
Functional Replacement Value
The loss valuation method for HO-8 is typically Actual Cash Value (ACV). However, if exact materials are not available, they may be replaced with materials that will perform the same function and have the same efficiency, even if they aren’t of like kind and quality.
Under Section II of the Homeowners Policy, a one or two family dwelling where the insured resides in one of the units, including other structures and grounds at that location, is defined as:
Residence premises
.The residence premises is either a 1, 2, 3, or 4 family dwelling in which the named insured resides. The residence premises also includes other structures and the grounds at that location, such as the 5 acres upon which the insured sits, including the barn, detached garage, and swimming pool.
Under Coverage C special limits of liability, Homeowners policies cover:
Theft of furs and jewelry up to $1,500
The limit for loss by theft of jewelry and furs is $1,500. Money is covered up to $200, theft of firearms and related equipment is covered up to $2,500, and watercraft are covered up to $1,500.
Which of the following is not true of the HO-2?
The HO-2 pays for losses on an open perils basis
The HO-2 insures the dwelling and contents against the broad form perils.
What is the limit of insurance available under an HO-3 policy for a tree totally damaged in a hail storm?
0%
The most paid for a covered tree is $500 but coverage is not provided for windstorm or hail losses.
Under the Watercraft Liability endorsement, an injury to which of the following people WOULD be covered under Coverages E and F?
A guest of the insured
Which of the following would be covered under the Damage to Property of Others additional coverage of the Homeowners Policy?
Damage caused intentionally by the insured’s 10-year-old son
Intentional damage by a child under age 13 is covered.
Which of the following is eligible to receive medical payments under Section II of a Homeowners Policy?
A residence employee
The residence employee is eligible, if injured in the course of employment.
Total loss does coinsurance apply?
No
