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Licensing > Chapter 5 - Homeowners > Flashcards

Chapter 5 - Homeowners Flashcards

1
Q

There are six standard Homeowners Forms:

A

Broad Form (HO–2), Special Form (HO–3), Contents Broad Form (HO–4), Comprehensive Form (HO–5), Unit-owners Form (HO–6), and Modified Coverage Form (HO–8.)

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2
Q

What coverages are included in HO-2, HO-3, HO-5 & HO-8?

A

All 6 coverages: A, B, C, D, E & F

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3
Q

All homeowners forms, with the exception of the Contents Broad Form ____ and Unit-owners Form ______, require the named insured to be the owner/occupant of the insured dwelling.

a. HO-8 & HO-5
b. HO-2 & HO-4
c. HO-3 & HO-2
d. HO-4 & HO-6

A

d. HO-4 & HO-6

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4
Q

HO-2, HO-3, HO-5 & HO-8 must all be..

a. Tenant Occupied
b. Owner Occupied
c. Commercial Occupied

A

b. Owner Occupied

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5
Q

HO-4 & HO-6 requires what kind of occupancy?

A

Tenant Occupancy

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6
Q

If a dwelling is insured with HO-2, HO-3, HO-4, HO-5 & HO-8 it must be a…

  • select all that apply*
    a. 1, 2, 3, or 4 family dwelling
    b. can be a 1 to 8 family dwelling
    c. Named Insured must live in dwelling
    d. Tenants only can occupy dwelling
A

a. 1, 2, 3, or 4 family dwelling
c. Named Insured must live in dwelling
(has to be their primary residence)

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7
Q

In what way is the HO–5, Comprehensive Form different from the HO–3, Special Form?

A. Personal property is valued at actual cash value
B. The dwelling is valued at replacement cost
C. Personal property is insured on an open perils basis
D. The dwelling is insured on an open perils basis

A

C. Personal property is insured on an open perils basis

***The HO-5 Comprehensive Form covers personal property for open perils whereas the HO-3 policy covers it for named perils.

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8
Q

An owner of a condominium unit would purchase which Homeowner form?

A. HO-4
B. HO-6
C. HO-8
D. HO-2

A

B. HO-6, Unit-owners Form

***The HO-6 covers the personal property of the condominium unit owner as well as building coverage.

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9
Q

What perils are not covered with an HO-8 form?

A
  • 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
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10
Q

What Homeowners form would this coverage provide?

“The insured property was vandalized, and the windows and fence were damaged. The insurer pays the claim on a replacement cost basis.”

A

HO-3 (Special Form)

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11
Q

What Homeowners form would this coverage provide?

“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.”

A

HO–5 (Comprehensive Form)

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12
Q

What Homeowners form would this coverage provide?

“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.”

A

HO–6 (Unit-Owners Form)

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13
Q

What Homeowners form would this coverage provide?

“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.”

A

HO–4 (Contents Broad Form)

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14
Q

What Homeowners form would this coverage provide?

“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.”

A

HO–8 (Modified Form)

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15
Q

What Homeowners form would this coverage provide?

“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.”

A

HO–2 (Broad Form)

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16
Q

Insured means..

A
  • The named insured & his/her resident spouse
  • resident relatives
  • under 21 & in insured’s care
  • full-time students under 24 (who lived in household before moving to college)
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17
Q

A related, full-time student away at school and under what age is considered an insured on the Homeowner policy?

A. 20
B. 19
C. 18
D. 24

A

D. 24

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18
Q

Insured Location means:

A
  • 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
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19
Q

A house burned down worth $500,000. How much money would cover personal items?

a. $5,000
b. $20,000
c. $150,000
d. $250,000

A

d. $250,000

***The automatic limit of insurance for Coverage C (contents/ personal property) is 50% of the limit for Coverage A.

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20
Q

HO-4 is designed for ______.

A

Tenants.

HO-4 for rent

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21
Q

What is insured under an HO-4 policy?

A

Personal Property & Personal Liability.

(provides NO coverage for buildings or other structures)

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22
Q

HO-6 is designed for ___.

A

owners and tenants of condominium or cooperative units.

coverage is provided for the portion of the building NI owns

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23
Q

What is insured under an HO-6?

A

Personal Property , Personal Liability & the portion of the building they own.

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24
Q

Which homeowners policies require the owner to be the named insured?

A

HO-2, HO-3, HO-5 & HO-8

***H-4 in a renter & H-6 is an owner of a rental

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25
Q

Can Dwellings under construction be insured? If so, what are the stipulations?

A

Yes, dwellings under construction can be insured. They must become the primary residence of the named insured upon completion.

26
Q

What type of peril coverage is HO-2?

A

Named Perils for Coverage A, B & C

27
Q

Losses on a HO-2 under coverages A & B are valued on what cost basis?

a. Actual Cash Value
b. Replacement Value
c. Similar Replacement

A

b. Replacement Value

**Coverage C on a HO-2 are valued at an ACV basis

28
Q

What type of peril coverage is HO-3?

A

Open Perils.

29
Q

Losses on a HO-3 under coverages A & B are valued on what cost basis?

A

A & B are valued at replacement cost, same as an HO-2.

30
Q

Under an HO-3, Coverage C insured on what type of basis?

A

Named Peril basis and replaced on an ACV basis.

31
Q

Does an HO-4 policy provide coverage to the dwelling or other structures?

A

No, it insures the tenants personal property against the 16 named perils, and valued on an ACV basis.

***same as HO-2 & HO-3

32
Q

What form provides the broadest coverage of any of the homeowners forms?

A

HO-5

33
Q

What peril type is HO-5 covered?

A

Open Perils, under coverages A, B & C.

34
Q

What cost basis is A, B & C losses under HO-5?

A

A & B is replacement cost and C is ACV,

35
Q

what type of perils coverage is a HO-6?

A

Named Perils

36
Q

What type of coverages are on a HO-6?

A

A & C

***B does not appear, but additional structures can be added to A

37
Q

HO-8 has what type of peril coverage?

A

Named Peril

38
Q

What is the loss valuation method for HO-8?

A

ACV, unless exact materials can not be found, then it is replaced with materials that are similar.

39
Q

What type of home would HO-8 cover?

A

Victorian Home, or Historic Home that can not simply be rebuilt

40
Q

What are the perils insured against in an HO-2?

A 
*  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
41
Q

What perils are covered in an HO-3 (C - Personal Property)?

A

insured against the 16 named perils (HO-2)

42
Q

What perils are covered in an HO-3 (A&B)?

A

Open Perils (all but exclusions)

43
Q

What is HO-5 perils insured against?

A

Open Perils (all but exclusions)

44
Q

Coverage for injury resulting from invasion of privacy is covered under which Homeowners endorsement?

A. Business Pursuits
B. Personal Injury
C. Permitted Incidental Occupancies
D. Additional Residence Rented to Others

A

B. Personal Injury

***The Personal Injury Endorsement provides coverage for non-physical injuries to others, such as libel, slander, false arrest, defamation, invasion of privacy, and other such offenses.

45
Q

Under an HO-3 policy, what is the coinsurance requirement?

A. 50%
B. 90%
C. 75%
D. 80%

A

D. 80%

***If Coverage A is less than 80% at the time of a loss to the dwelling, a penalty will be applied to the partial dwelling loss claim payment.

46
Q

Which of the following best describes the Debris Removal coverage under the Homeowners policy?

A. The policy will pay the insured for removing debris from a covered loss
B. Debris Removal applies only to loss by fire, lightning, and windstorm
C. The debris must be removed within 30 days of the loss
D. Coverage is limited to 10% of the Coverage A Limit

A

A. The policy will pay the insured for removing debris from a covered loss

***Debris removal provides payment of the named insured’s reasonable expenses for the removal of debris of covered property if a covered loss occurs.

47
Q

Coverage for injury resulting from invasion of privacy is covered under which Homeowners endorsement?

A. Permitted Incidental Occupancies
B. Business Pursuits
C. Additional Residence Rented to Others
D. Personal Injury

A

D. Personal Injury

***The Personal Injury Endorsement provides coverage for non-physical injuries to others, such as libel, slander, false arrest, defamation, invasion of privacy, and other such offenses.

48
Q

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:

A. Residence premises
B. Other structures
C. Nonbusiness premises
D. Dwelling structures

A

A. 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.

49
Q

An HO-3 policy provides coverage on which basis?

A. Open perils coverage on the dwelling and broad form coverage on the personal property
B. Replacement cost coverage on both the dwelling and personal property
C. Open perils coverage on both the dwelling and personal property
D. Broad form perils coverage on both the dwelling and personal property

A

A. Open perils coverage on the dwelling and broad form coverage on the personal property.

***The HO-3 provides open perils coverage on the dwelling, and coverage for personal property is provided on a named perils basis like the HO-2. Losses to the dwelling are paid at replacement cost, and losses to personal property are paid at actual cash value.

50
Q

Under the Homeowners Forms, Coverage C includes which type of coverage?

A. Special Damages
B. Additional Living Expense
C. Contents and Personal Property
D. Other Structures

A

C. Contents and Personal Property

***Coverage “C” for Contents

51
Q

First Aid Expenses under the Homeowners Policy would cover:

A. Members of the insured’s family while on or off the premises
B. A neighbor who gets injured while helping the insured install a carpet
C. The Named Insured while on or off the premises
D. Nonfamily residents of the household while on the premises

A

B .A neighbor who gets injured while helping the insured install a carpet

***First Aid Expenses coverage applies to first aid to others caused by Bodily Injury covered under the policy, but does not pay for first aid to an insured.

52
Q

The following coverages are all found under Section I of the Homeowners Policy, except:

A. Personal Property
B. Other Structures
C. Personal Injury Liability
D. Dwelling

A

C. Personal Injury Liability

***Section I of the Homeowners Policy contains Property coverages. Liability coverages are set forth in Section II of the Policy.

53
Q

What is the limit of insurance available under an HO-3 policy for a tree totally damaged in a hail storm?

A. $500
B. 0%
C. $250
D. $1,000

A

B. 0%

***The max is $500 butt hailstorms are not covered.

54
Q

The Homeowners Policy provides coverage for all of the following, except:

A. A motorized wheelchair
B. A riding lawn mower pulling a two-wheel garden trailer
C. A motorized golf car being driven on a public beach
D. An ATV on the insured’s premises

A

C. A motorized golf car being driven on a public beach

***In order for coverage to apply, a motorized golf car must be used on a golfing facility or within a private residential community for approved purposes.

55
Q

Which of the following residents in the insured’s dwelling is eligible to receive medical payments under Section II of a Homeowners Policy?

A. The named insured’s spouse
B. A tenant who lives in a portion of the insured’s residence
C. The named insured
D. A residence employee

A

D. A residence employee

***A residence employee injured in the course of employment would be eligible for Medical Payments under the insured’s policy.

56
Q

The HO-5 personal property coverages are insured on which basis?

A. Modified Perils
B. Open Perils
C. Basic Perils
D. Broad Perils

A

B. Open Perils

***The HO-5 is the broadest policy providing open perils coverage on Coverages A, B, and C.

57
Q

Which of the following would not be eligible to purchase a Homeowners Policy?

A. A person who provides daycare in their home
B. A person who owns and occupies a two-family dwelling
C. A person whose dwelling contains an accounting office
D. A person who owns and lives on a farm

A

D. A person who owns and lives on a farm

58
Q

When using a neighbor’s lawnmower, the insured strikes a large rock and causes $2,000 in damage to the neighbor’s automobile. Which policy coverage of the insured’s Homeowners policy may pay for part of the damage?

A. Dwelling, since the lawnmower is equipment used to service the residence
B. Personal liability
C. Loss of use
D. Personal property

A

B. Personal Liability

***Coverage E - Personal Liability in Section II provides personal liability coverage for property damage to others due to actions of the insured. Under the Additional Coverage Damage to Property of Others, the limit is $1,000 of coverage. Dwelling, Personal Property, and Loss of Use are all coverages under Section I.

59
Q

Which of the following is true concerning the Home Day Care Coverage Endorsement to the Homeowners Policy?

A. It extends Section II coverages to the insured’s home day care business
B. It covers injury to an employee, as well as attendees, arising out of day care operations
C. It provides Commercial General Liability coverage for the day care operation
D. It covers injury to attendees while loading or unloading them from draft or saddle animals

A

A. It extends Section II coverages to the insured’s home day care business

***The Home Day Care Coverage Endorsement extends the coverage of the Homeowners Section II to the Day Care Business.

60
Q

All of the following are defined as insured locations under the Homeowners Policy, except:

A. Cemetery plots
B. A non-owned premises where the insured is temporarily residing
C. Any premises named in the Declarations
D. Farmland owned by the insured

A

D. Farmland owned by the insured.

***Farmland is not insured, farmland can be insured through a separate policy

61
Q

The Home Day Care endorsement does not provide which of the following?

A. Coverage for a day care employee
B. Medical payments
C. A policy year aggregate limit for personal liability and medical payments
D. Coverage on the residence premises

A

A. Coverage for a daycare employee

***Injury to any employee arising out of the day care business is not covered.

62
Q

Choose the answer that is true regarding the HO-4 and HO-6.

A. The amount of insurance on the condominium containing the personal property is 10% of the Coverage C amount of insurance
B. The HO-4 is used to insure the personal property and personal liability of the insured, but does not include the building itself
C. Losses are paid on a replacement cost basis
D. Both provide open perils coverage on the personal property

A

B. The HO-4 is used to insure the personal property and personal liability of the insured, but does not include the building itself

***Since the insured under the HO-4 form does not own the structure, there is no coverage on the building. The HO-6 offers dwelling coverage under Coverage A for alterations, fixtures, and improvements to the building, but not the dwelling itself.

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