Dwelling and Homeowners Flashcards
P & C
What are the four main components/concerns to consider when you purchase a property policy?
Structure, Personal Property, Loss of Use, and Liability
What is structure?
Rebuild, repair, or replace the walls and roof of the house, shed, or other structures on the property.
What is personal property?
Repair or replace personal belongings (ex. clothing and furniture)
What is loss of use?
Pays for missed rent income* and/or additional cost of living while a property is unable to be used following a peril.
** Called Fair Rental Value on Dwelling Policies
What is liability?
Pays if someone was hurt on the premise, or actions of the insured off the premise.
What determines which components the insurance will allow in the policy?
Depends on the type of property (house, rental, commercial building, etc.) and how it is used (residential or business)
What are the two types of losses that a property owner can be exposed to?
Direct Loss and Indirect Loss
What are direct losses?
are ones that cause direct physical damage to the property
What are indirect losses?
This is the loss that is lost due to the direct lost.
When is an indirect loss covered?
Only if the Direct Loss is covered
What is always excluded on dwelling/homeowners?
Flood
What type of loss is sometimes called Consequential Losses and what are they about?
Indirect losses and they are about time and money
What is proximate causes of loss included in?
Direct Losses
What is a proximate cause of loss?
Are damages that occur separately, but next to, close to the direct loss.
What is the most common proximate cause of loss?
Is wet walls/furniture that are a result of the fire dept. putting out a fire.
What peril is covered on ALL property policies?
Fire
What is a peril that is ALWAYS EXCLUDED?
Outside water coming into the property.
In what two wats will insurance companies protect properties?
Named Peril or Open Peril
What is a peril?
is the CAUSE of loss, the events that happen, that lead to the destruction of the property/bodily injury. Such as fire or accidental injury.
-These are things you are either covered for or not covered for
What is a named peril?
A peril that says “only this is covered” This peril policy lists out the perils that are covered. In order for this policy to cover the peril it MUST be listed on the policy.
What different levels is a named peril policy offered at?
Basic or Broad
What is an open peril policy?
This peril policy says “anything BUT this is covered”. Everything is covered UNLESS it is listed as excluded. Is referred to as a “all risk” policy since it will cover all risks not excluded.
What are the two types of open peril policies?
Special and Comprehensive Policies belong to this peril
What is a covered peril?
is what TRIGGERS a policy to provide coverage.
What is coverage?
describes two things: what building/thing is covered and for how much money. Property policies usually have the same type of this, it’s the PERILS covered that makes policies different from each other.
What categories do policies break further down into?
“Major Coverages” and ““Additional/Supplementary Coverages”
How are the Main Coverages identified?
Coverage A, Coverage B, etc
What are additional or supplementary coverages?
These coverages are seen as extensions to the major coverages. These coverages complement the major coverages and are built into the premium.
What is the ultimate key difference between a Homeowners and Dwelling Policy?
The key difference is whether the house is “owner occupied” or not
What does owner occupied mean?
Means the owner of the house/policy resides in the house.
What policy requires that the owner of the home is occupying the residence?
Homeowners
What concerns does a Homeowners policy include?
All four main property concerns: Structure (walls & roof), personal property, loss of use, and owner liabilty
What concerns does a dwelling policy include?
Comes standard with Structure (walls & roof) and loss of use.
-Personal Property & Liability can be purchased for an additional premium
What policies are typically purchased by landlords?
Dwelling Policies
What do landlords primarily want to insure?
Walls & Roof- Structure and Loss of rental income if they can’t rent out following a peril.
What is Coverage A on a dwelling policy?
1-pays to repair, rebuild, or replace the walls & roof of the building/structure
2- Coverage amount is based on the Rebuild Cost of the individual house (insurer usually sets this amount, based on home features)
3-Also will pay out for covered perils for anything next to the property that will become part of the property (pallet of wood, etc.)
4- Covers anything used to service the property (e.g. lawnmower)
What type of coverage is Coverage A on a dwelling policy considered?
“Main Coverage” & once value is established the rest of the coverage becomes a percentage of A.
What is Coverage B on a dwelling policy?
1- pays to repair, rebuild, or replace other structures on the property that are not the main house or attached to the main house (e.g. shed, detached garage, ect.)
What percentage standard does Coverage B on a dwelling policy come with?
10% of coverage A
What is Coverage C on a dwelling policy?
1- pays to repair or replace personal property
What coverages does NOT automatically come with a dwelling policy?
Coverage C- Personal Property
If Coverage C is added to a dwelling policy how is coverage paid out?
1- its a flat amount the owner chooses
2- is NOT a percentage of Coverage A
What is Coverage D on a dwelling policy?
1- pays out the Fair Rental Value of a property to the owner if the property is uninhabitable following a covered peril.
2- will pay the owner until the repairs are done OR when the money available is depleted.
What is Coverage E on a dwelling policy?
1- pays the owner for additional living expenses if the property is uninhabitable following a covered peril
2- only kicks in if the owner lives there and will stop until the repairs are done OR the money is deplete
What type of dwelling coverage is only available on a DP1 form?
Coverage E- not included but can be endorsed.
How much coverage percentage does dwelling Coverages D and Coverages E get?
1- Together get 20% of Coverage A
2- Money is used between Coverage D & E, its capped at 20% of Coverage A
What are the three types of Dwelling Policies?
Basic, Broad, and Special
What makes dwelling policies different since Coverages are all the SAME?
Is what perils will trigger the coverage to kick in
What is a Basic dwelling policy know as?
DP1
What is a basic dwelling policy’s coverage?
-Three covered perils: Fire, Lightening, and Internal Explosion
-two package options under the basic dwelling policy ECP or ECP+VMM
What is Extended Coverages Perils (ECP)?
It’s a package of perils that you can add to the three already covered on dwelling DP1/Basic policy. WHARVES
Wind
Hale
Aircraft/Vehicles
Riot/Civil Commotion
Volcanic Eruption
Explosions
Smoke
What are the two package options under a basic dwelling policy?
Basic ECP and Basic ECP + VMM
What can the owner purchase if they have purchased ECP?
VMM- Vandalism and Malicious Mischief
What MUST be purchased prior to purchasing VMM?
ECP
What is VMM?
Vandalism and Malicious Mischief
What type of payout following a claim based on a DP1/Basic Form?
Actual Cash Value for everything
What is NOT covered on DP1?
Trees
What Coverage must be endorsed to be on a DP1?
Coverage E
For a dwelling DP1 Coverage B must come out of what value and what %?
Coverage A Value, its not an additional 10% ontop of coverage A
What is a broad dwelling policy known as?
DP2
What is a DP2?
1- Broad Dwelling Policy
2- Comes automatically with ALL the basic perils
3- Plus the perils known as BBB-Ice Golf
How much are trees covered for under DP2/Broad?
$500/per tree
BBB Ice Golf: What do the B perils stand for?
Bursting of heading systems
Burglary Damage
Breaking of Water Heaters
BBB Ice Golf: What perils does the ICE stand for?
I-Ice, Snow, or Sleet Weight
C-Collapse of a building or part of a building
E-Electrical damage (artificially generated)
BBB Ice Golf: What perils does the Golf stand for?
G-glass breakage
O- Objects from falling outside
L- Leakage of water or steam damage
F- Freezing of Plumbing
What is a Dwelling Special Form also known as?
DP3
What is a Dwelling Special Form?
1- Known as DP3
2- Covers everything the DP1 & DP2 + coverage any other perils that happen unless it is excluded (its an open peril)
Since DP3 is an open perils, it covers what peril for Coverage A & Coverage B?
Theft- meaning the theft of property that is next to the house that will become apart of the house or things used to service the property.
What are the two main exclusions on all policies?
Water Damage and Earth movement
Can be owner or tenant occupied
Dwelling Policies
What is considered the main coverage of dwelling policies?
The walls & roof residential property as well as the fair renter value of the property
What do homeowner policies require?
owner must live at the house. Meaning they must live at the property they wish to insure.
What content coverage does homeowners policies come with?
Coverage A- Structure
Coverage B- Other Structures
Coverage C- Contents
Coverage D- Loss of Use
Coverage E- Liability
What content coverage does dwelling policies come with?
Coverage A- Structure
CoverageD- fair rental value
How are homeowners policies categorized?
By bother perils and type of residence
What are the Homeowner Named Perils?
HO2, HO4, HO6, Limited Perils HO8
All even numbered policies specifically Broad Perils
The only exception is HO8 which has limited perils
What are the Homeowners Open Perils?
HO3 & HO5 (odd numbered HO policies)
If insured has a regular house, what Homeowner forms can they choose between?
HO2, HO3, HO5
Which they choose will be baed on which perils they want covered for the structure and contents inside
HO2 will cover what perils?
(regular home option)
All Broad form perils for bother structure (Coverage A) and the Contents (Coverage C)
HO3 will cover what perils?
(regular home option)
Will cover the
-structure (coverage A) under OPEN perils
-Contents (Coverage C) under NAMED perils
HO5 will cover what perils?
(regular home option)
Will cover the:
-Structure (Coverage A) under OPEN peril
-Contents (Coverage C) under OPEN peril
If insurance is for a renter, what Homeowner form(s) can they choose between?
HO3 Policy ONLY
Unique because it doesn’t care about walls & roof
HO3 does not have coverage a or b
If insurance is for condo owner, what homeowner form(s) can they choose from
-HO6
-Unique because the walls and roof will be rebuilt by the condo association to a basic model.
-Meaning HO6 only covers the cost of upgrades to the house (difference in cost between basic model and upgraded material)
-Another unique aspect is instead of Coverage B, the insured just adds the amount they need into Coverage A
