Homeowners 3 Flashcards
1
Q
ISO forms and their functions:
A
- HO-2: Broad Form (cheap but provides more coverage than HO-8.)
- H0-3: Special Form (Middle of road.)
- HO-4: Contents Broad form (renters)
- HO-5: Comprehensive Form (Best coverage and high end)
- HO-6: Condominium Form (Condo)
- HO-8: Modified Coverage Form (Limited coverage)
2
Q
Types of coverage:
A
- Named peril Coverage
- Extended coverage
- Broad form coverage
3
Q
Extended coverage endorsements cover these 7 events along with the perils of fire and lightening:
A
- Windstorm
- Hail
- Explosion
- Riot or civil commotion
- Vehicles
- Aircraft
- Smoke
4
Q
Broad Form Endorsement covers these 9 events:
A
- Vandalism
- Theft
- Falling objects
- Weight of ice, snow, or sleet
- Damage from a steam or hot water system
- Accidental discharge or overflow of water or steam
- Freezing of plumbing, heating, air conditioning systems, or domestic appliances
- Sudden and accidental damage from artificially generated electrical current
- Sudden and accidental tearing apart, cracking, burning or bulging.
5
Q
Broad form perils (18):
A
- Fire: has to be hostile (uncontrollable or started accidentally)
- Lightning: natural (not artificial)
- Explosion: not covered are explosions outside covered building, burst water pipes, electrical arcing, pressure relief device rupture, storm boiler or steam pipes owned by insured.
- Windstorm: hurricane, tropical storm, tornadoes included, but not limited to.
- Hail: 2 exclusions.
- Riot: 3 or more people trying to disturb the peace with violent public disorder. -Aircraft: Does not require physical contact ( could be sonic boom from nearby crash). Covers damage by model and hobby aircraft.
- Vehicles: Does not require physical contact. (HO-2 form excludes vehicle damage to fence driveway or walkway caused by a resident of the insured home.)
- Smoke: Must be accidental and sudden (Excludes damage caused by agricultural smudging or industrial operations.)
- Theft: excluded: by insured, under construction, rental section of non insured, off premises at secondary property.
- Falling objects: no coverage inside building unless object punctures roof or wall first before damaging inside property then it is covered.
- Ice and snow: weight to properties and property inside
- VMM (vandalism and malicious mischief): Not for buildings vacant (no people or belongings) more than 60 consecutive days immediately before the loss. Under construction is not vacant.
- Discharge: Excludes system or appliance that it escaped from, 60+ days vacant properties, sumps, constant seepage, freezing, off premises accidental discharge or overflow.
- Tearing apart: rupture, cracking, burning or bulging of steam or hot water heating system (or appliance for heating water), AC system, fire sprinklers. Excludes coverage for system or appliance that was affected.
- Freezing: Excludes homes that are vacant, unoccupied or under construction, unless insured maintains reasonable care to maintain heat, or shuts off water and drains system.
- Artificial current: Excludes any electrical current that is not naturally generated, for example, lightning. Excludes losses to circuitry, tubes, transistors, electronic components of appliances, fixtures, computers, or electronics.
- Volcano: Excludes, earthshakes, landshock waves or ground tremors.
6
Q
Exclusions to wind and hail:
A
1: watercraft, trailers, furnishings, equipment, and outboard engines or motors only covered when inside fully enclosed building.
2: Damage caused by rain, sand, sleet, snow, or dust is only covered if the wind or hail first made the opening that allowed the elements in to a building to damage personal property, (building itself does not apply accept in the Broad Form).
7
Q
Named peril forms:
A
- ) H0-2 (Broad): insures all 17 Broad Form perils; Covers insured’s house and personal property. Excludes earthquakes, damage to fence, driveway or walkway if caused by resident of resident premises.
- ) HO-4 (Contents Broad Form): renters; insures against all Broad Form perils; only personal property.
- ) HO-6 (Unit Owner’s Form): aka Condo Form; owner’s belongings; insures all finished surfaces of the individual condominium unit; insures against broad form perils.
- ) HO-8 (Modified Coverage Form): Covers fewer perils; Covers property at ACV (deducts depreciation for age, condition and wear); considers fair market value of home; cheaper. Covered perils: Fire, lightning, windstorm, hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism or malicious mischief, theft, volcanic eruption.
8
Q
Open Peril Special Form Endorsement:
A
- HO-3 and HO-5
- Covers damages caused by all perils, except those specifically excluded.
- If loss is caused by unlisted peril it is covered.
9
Q
Open-Peril Forms
A
- HO-3: (most popular coverage) dwelling and other structures; Named peril coverage for personal property (covered against all broad form perils)
- HO-5: Same as HO-3, except that it covered structures and personal property; most comprehensive coverage available.
10
Q
6 Sections of a homeowners policy
A
- ) Dec page
- ) Insuring agreement
- ) Definitions
- ) Section 1- Property coverage:
- Coverage A: Dwelling
- Coverage B: Other structures
- Coverage C: Personal Property
- Coverage D: Loss of Use
- Additional Property Coverages
- Exclusions
- Conditions - ) Section 2- Liability Coverage:
- Coverage E: Personal Liability
- Coverage F: Medical Payments
- Additional Liability Coverages - ) General Conditions and Endorsement
11
Q
Dec page details:
A
- Policyholder name
- address
- premium
- deductible
- policy term
- limits of coverage
- endorsements
12
Q
You, your means:
A
insured
13
Q
We, Us means
A
insurer
14
Q
Insured means
A
- ) person named on dec page
- ) residents of household: relatives, under 21 in insured’s care.
- ) FT students, under age 24, away at school.
15
Q
Residence premises refers to (9):
A
- ) Dwelling listed on dec page
- ) other buildings, grounds where insured lives
- ) Building bought for use as a dwelling
- ) premises used in connection with the above
- ) Any premises the insured rents regularly but does not own
- ) Vacant land, except farm land
- ) Land the insured owns or rents in order to build a one to four unit residence
- ) Cemetery plots
- ) Premises the insured occasionally rents, unless for business purposes.
16
Q
Personal lines definition
A
Insurance an individual takes out on a risk owned for personal reasons (a home, mini van, land etc.)
17
Q
Homeowners insurance definition
A
insurance for property inhabited by the insured, includes house, apartment, and condominiums.
18
Q
Insurance Service Office (ISO) Forms:
A
- HO-2: Broad form- named peril
- HO-3: Special form- all peril for structure; named peril for contents
- HO-4: Renter’s insurance- named peril
- HO-5: Comprehensive form- all peril coverage for both structure and contents
- HO-6: named peril for finished surfaces and owner’s belongings
- HO-8: Modified coverage form- limited named perils.
19
Q
Coverage A- Dwelling
A
Property covered:
- Dwelling
- Structures attached to dwelling
- Materials located in or near the “residence premises” used to construct, alter, or repair dwelling.
- Items that service dwelling (AC compressor, fuel tanks)
- Under HO-6 (Condo Form): alterations, appliances, fixtures, and improvements that are part of building contained within residence.
20
Q
Coverage B- Other structures
A
- Detached structures including: Garages, gazebos, fences, mailboxes, lampposts, sheds
- Amount of B is only a percentage of A. 10% is common. Paid in addition to limit for A.
- Excludes structures used at all for business, rental or held for rental.
- Covers structures rented to an insured or tenant of the primary dwelling; garages rented as private garages.
21
Q
Coverage C- Personal Property
A
- Real property: Buildings, elements attached to buildings, building materials/supplies that are located on or next to the residence premises and intended for use on those premises.
- Personal Property: All property that does not qualify as real property; covered anywhere in the world.
Limits:
- ) Property usually situated at the residence premises : full coverage
- ) Property usually situated somewhere other than the residence premises: 10% of Coverage C limit or $1,000, whiceh si greater.
22
Q
Coverage C Special limits:
A
- $200: Coins and money
- $1500: securities, accounts, deeds, letters of credit, manuscripts, personal records, passports, tickets, and stamps.
- $1500: Theft of jewelry, watches, furs, and precious stones.
- $2500: Theft of firearms
- $2500: Theft of silver, gold and platinum
- $1500: Boats and their trailers, furnishings, equipment, and engines
- $1500: Other types of trailers
- $2500: Personal property used for a business
- $1500: personal property used for a business when away from the residence.
- $1500: Portable electronics and accessories that are in a vehicle
- $250: Antennas, tapes, wires, records, disks and other media while in a vehicle.
23
Q
Coverage C exclusions:
A
- Pets
- motor vehicles
- aircraft and hovercraft (but hoppy aircraft are covered)
- Property of a renter or boarder
- Personal property the insured is renting out
- Credit cards
- Value of water or steam, such as from a heating system (but water in a residential pool is covered under coverage C)
- Sometimes Mysterious disappearance
24
Q
Coverage D- Loss of use
A
For indirect losses that result from direct losses.
Coverages include:
- ) Additional Living Expenses (ALE)
- ) Fair Rental Value (FRV)
- ) Prohibited Use (aka Civil Authority)
25
Q
ALE requirements
A
- Dwelling must be uninhabitable
- Damage must have been caused by a covered peril
- Only covers costs that exceed the insured’s normal living expenses
26
Q
FRV details
A
- Indemnifies insured for lost rent if tenant has to move out due to covered damages
- Pays lost rental income until it is habitable again
- Only pays net loss: Subtracts any expenses that do not continue while the tenant is gone.
-Coverage does not include losses due to cancelled lease or agreement
27
Q
Civil Authority coverage details
A
- Pays for ALE and FRV when a civil authority prevents the insured from using the home
- Civil authority: any government entity acting on behalf of, or to protect people or property.
- Only applies if the damage was caused by a peril covered in the insured’s policy.
28
Q
Coverage D limits
A
- Measured in time rather than dollars
- designed to cover the insured until the dwelling is habitable
- Allow additional living expenses and fair rental value to extend beyond the policy expiration date if needed.
- ADL paid until the shorter of two timeframes: repaired/replaced, or household can settle elsewhere
- FRV paid: for the shortest amount of time needed to restore to rentable condition
- Civil authority pays ALE and FRV up to a maximum of 2 weeks until access to home is restored.
29
Q
Coverage D deductibles
A
- ADL and FRV= subject to policy deductible
- Civil authority= not subject to any deductible
- HO deductibles apply once for each occurrence so coverage A losses will usually end up covering the deductible.
30
Q
12 additional coverages
A
- ) Debris removal
- ) Reasonable repairs
- ) Trees, shrubs, etc. (named perils: lightning, vandalism, fire; $500 per plant)
- ) Fire Dept. Charge ($500 limit; no deductible)
- ) Loss assessment (condo owners; limit $1000 or $2500 per claim)
- ) Property removal (if covered peril is imminent; once moved, covered for 30 days)
- ) Credit card fraud, forgery, etc. (Limit $500)
- ) Collapse and Glass breakage (covered when caused by hidden decay or insects, weight, defective materials during construction; Collapse not covered if caused by earth movement (settling, shrinking, expansion, cracking or bulging); Excluded: awnings, fences, patios, swimming pools, underground pipes, septic tanks, foundations, retaining walls, docks)
- ) Ordinance or law (pays difference between old construction and new code required construction during repair or damage due to a covered peril.; 10% of Coverage A limit as additional insurance (available even if policy limit is exhausted))
- ) Landlord’s furnishings (Limit: $2500)
- ) Building additions and alteration (For HO-4 and HO-6; Covers structural alterations made at renter’s or condo unit owner’s own expense)
- ) Grave markers: (limit: $5000)
31
Q
Debris removal limits:
A
The limit for the type of property involved.
- Debris from dwelling: coverage A limit
- Debris from other structures: subject to Coverage B limit
- Debris from personal property: Subject to coverage C limit.
-when needed debris removal can pay an additional 5% of the applicable limit for each type of coverage (A, B, or C)
32
Q
Named peril vs Open peril
A
Named peril: narrow coverage= few exclusions
Open peril: wide coverage= many exclusions
33
Q
Exclusions to HO property coverage (9):
A
- Ordinance
- Earth movement
- Water damage
- Off premises power failure
- Neglect
- War
- Nuclear hazard
- Intentional acts
- Mechanical breakdown
34
Q
Section 1 conditions:
A
- Interest
- Deductible
- Duties: if there are two or more deductibles under a policy, the highest deductible amount applies.
- Concealment
- Loss settlement
- Pair or set
- Appraisal
- Other insurance
- Suit against us
- Our option
- Loss payment
- Abandonment
- Mortgage
- No benefit to bailee
- Nuclear hazard
- Recovered property
- Volcano
- Policy period
35
Q
Section 1: Duties after loss:
A
Insured must:
- notify police if the loss my have involved a crime.
- notify the insurer about what property was involved, and the circumstances surrounding the loss.
- submit a description of how, where, and when the loss occurred.
- Try to prevent further damages, and keep track of expenses incurred doing this.
- Give the insurer a list of damaged property.
36
Q
Section 2 conditions:
A
- Limit of liability
- Severability
- Duties After “Occurrence”
- Duties of an injured person
- Claim payment
- Suit against us
- Bankruptcy
- Other insurance
- Policy period
- Concealment or fraud
37
Q
Section 2: duties after loss:
A
Insured must:
- Report the claim in a reasonable time frame
- Allow an adjuster to examine the loss
- Allow physical examinations
- Let the insurer know any pertinent information
38
Q
Section 2: Duties of an injured person:
A
- Give insurer proof of occurrence
- Authorize examination of medical records
- Submit to a physical examination
39
Q
Suit against us:
A
- Insured cannot take action against an insurer unless the insured has fully complied with all the terms of a policy
- No one has the right to join an insurer in taking action against its insured
- No action can be taken against an insurer until the obligation of the insured is determined by the insurer.
40
Q
Section 1 and 2 conditions:
A
- Subrogation
- Cancellation
- Nonrenewal
- Liberalization
- Waiver or change
- Assignment
- Death
41
Q
Loss settlement
A
Personal property is usually covered at ACV:
- ) ACV valuation subtracts depreciation from cost of new item
- ) age and condition (wear and tear) of item are factors of its depreciation
If residence and other structures are covered for RC:
- ) Replacement is of like, kind, quality of original structure
- ) Insured must show what has already been spent on repair, if any.
42
Q
Homeowners liability coverage can pay for:
A
- medical bills
- lost wages
- pain and suffering
- inconvenience
- property damage
43
Q
Liability coverages: Coverage E
A
- *personal liability:
- pays for bodily injury and property damage to 3rd party if inured is found negligent.
- Applies even if the insured’s property causes a 3rd party damages.
- Never pays the insured.
- Must be result of policyholder’s negligence, and partly the fault of the insured.
- min coverage: $100,000.
- Pays insured’s legal defense fees
- Legal defense: insurer pays fees all the way to the end of the lawsuit, even if the limit is exceeded.
- Insurer has the right to settle damages with the claimant however it wants.
44
Q
Liability coverages: Coverage F:
A
- *Medical payments
- No fault coverage
- For medical expenses incurred by third party due to an accident on insured’s premises
- only necessary, reasonable medical charges.
- $1,000 minimum limit.
Covered medical expenses:
- Medical services
- Surgery
- X rays
- Dental costs
- Ambulance services
- Hospital stays
- Professional nursing
- Prosthetic devices
- Funeral services
45
Q
Liability coverages: Additional coverages (4):
A
- ) Property of others: Exclusions: Pays nothing covered by section 1; No coverage for intentional damage by persons 13 or over; No coverage for insured’s property; No coverage for property of tenants or residents.
- ) First Aid: Does not pay for first aid of insured, but does for others.
- ) Claims Expenses: Covers: cost to investigate claim; expenses incurred by insured (lost wages up to $250/day); Interest on judgements that accrue after the judgement; Premiums for bonds required in a suit defended by the insurer.
- ) Loss assessment: Pays up to $1000 for assessments of property association member; kicks in when injury or damage is not excluded under section 2 or when the liability is for an act committed by an elected director or officer, not a paid employee of the association. No coverage for assessments charged by a governmental body.
46
Q
Liability coverage exclusions: E
A
- Bodily injury and property damage to the insured
- Bodily injury to persons covered by workers compensation insurance
- Damage to property rented by insured, occupied or used by insured, or held in insured’s custody and care.
- Liability for contracts; however covered when relating to ownership, maintenance, or use of insured location, or if inured had assumed others; liability before an occurrence.
47
Q
Liability coverage exclusions: F:
A
- insured person
- anyone who lives on residence premises regularly
- anyone eligible for workers comp or disability for the occurrence
- Harm to a resident employee who is not in the course of employment, or is not at premises at time of occurrence
- Harm from nuclear reactions.
48
Q
Exclusions to both coverages E and F
A
- Intentional or malicious harm to third party by insured
- harm from war
- disease transmitted from insured to third party
- Sexual molestation or abuse by insured
- Drug use, sale, manufacture, possession.
49
Q
Liability Vehicle exclusions
A
- Harm or damage caused by insured’s automobile use (exceptions: vehicles for property maintenance, handicapped persons, or those in storage. Recreational vehicles are covered under certain conditions
- Aircraft
- Watercraft (if owned by insured, motor is 25 hp or greater; if rented by insured, motor is 50hp or greater; rented or owned, sailboats 26 feet or greater.
50
Q
Liability Business exclusions
A
- Third party losses due to insured’s business.
- Third party losses from insured’s failure to render business services.
51
Q
HO endorsements
A
- Sinkhole collapse
- sewer backup
- earthquake
- hurricane (coverage can be removed)
- ordinance or law
- Personal property replacement cost
- Inflation guard
- Scheduled personal property.
52
Q
Endorsements can add coverage for:
A
- sinkhole collapse
- sewer backup (up to $5,000, deductible applies)
- Earthquake
- Ordinance or law
53
Q
Endorsements can remove coverage for:
A
Hurricane damage (if a state program already provides this coverage)
54
Q
For increased premium, endorsements can add:
A
- Replacement cost valuation rather than ACV
- Inflation Guard to automatically increase limits
- Scheduled personal Property, such as jewelry, furs, collectibles
