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Homeowners Insurance > Homeowners Insurance > Flashcards

Homeowners Insurance Flashcards

1
Q
  • Package policy
  • Multiline
  • Includes both property and liability
A

Homeowners Policy

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2
Q

Homeowners Eligibility

HINT: O.N.P.D.M.F

A
  • Owner occupied (special version for a renter)
  • No more than 4-family dwelling
  • Primary purpose as a residence
  • Dwellings under construction are eligible (for owner occupant)
  • Mobile homes (require mobile home endorsement)
  • Farm dwellings not eligible
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3
Q

Insureds in the homeowners policy include:

Who Covered

A
  • Named Insured
  • Relatives living inside the house
  • 21 and under residents (Exchange Student/foster care)
  • 24 under college students (Relatives)

the named insured who is the owner-occupant including a resident spouse;
■ any residents of the same household as long as they are relatives;
■ residents who are under 21 and reside in the same household (exchange student or foster child), or a resident relative living with the insured (uncle, aunt, or mother-in-law); and
■ full-time students under age 24 who are a relative of the insured and were a resident of the household before leaving for school.
If the named insured dies, the policy continues in force with the representative (executor of the estate, etc.) of the named insured until the policy can be replaced or expires

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4
Q

Cancellation by the insurance company

A
  • During the first 60 days for any reason—minimum 10 days’ notice
  • Other reasons after 60 days— minimum 30 days’ notice
  • Material misrepresentation
  • Substantial change in the risk
  • Nonpayment of premium—10 days’ advance notice
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5
Q

• Nonrenewal by insurance company—30 days’ advance notice

A

Nonrenewal By Insure

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6
Q
  • Can pay the premium
  • File a claim up to insurable interest
  • Receive advance notice of cancellation
  • Dishonesty of insured doesn’t prevent mortgagee from collecting
A

Standard Mortgagee Clause

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7
Q

.

A

.

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8
Q

Broad Form; owner occupant

What HO- ____

A

HO-2

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9
Q

Special Form; owner occupant

HO-___

A

■ HO-3—

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10
Q

Tenants or Renters

HO-___

A

HO-4

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11
Q

Comprehensive Form; owner-occupant

HO-___

A

HO-5

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12
Q

Condominium Owners

HO_

A

■ HO-6—

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13
Q

Modified Form for Special Risks

HO_

A

■ HO-8—

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14
Q

Four separate property coverages are provided by the homeowners policy under Section I:

A

■ Coverage A—dwelling
■ Coverage B—other structures
■ Coverage C—personal property
■ Coverage D—loss of use

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15
Q

Including property attached
• Materials on the premises used in construction
• No coverage for a renter
HO-4 Renters does not insure the dwelling.
HO-6—Condominium Owners does not insure the dwelling, but does include limited Coverage A for inside walls and floors. The standard Coverage A minimum limit for HO-6 is $5,000 (can be increased).

A

Coverage A- Dwelling

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16
Q

separated by a clear space
• Not attached to dwelling
• Not used for business purposes
(not included in the HO-4 renters policy)

A

Coverage B - Other Structures

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17
Q

Property away from the residence premises shown in the declarations is covered for up to 10% of the Coverage C limit or $1,000, whichever is greater. This is worldwide coverage. This restriction does not apply:
– to property being moved from the residence premises to a new principal residence (full coverage applies for 30 days from the start of the move); or
– when personal property is moved from the residence premises because the residence is being repaired or is unfit to live in (full coverage applies while it is at the temporary residence

A

Coverage C- Personal Property (included in all HO policies )

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18
Q

Coverage C- Exclusions
HInt:
A.V.A.P.C.R

A 
Animals 
Vehicles and aircraft
Property Boarders 
Credit Cards
 Rental property of APT

Animals, birds, or fish

■ Motorized vehicles or aircraft, including equipment and accessories (Motorized vehicles for the handicapped and vehicles use to service the premise, such as riding lawnmowers, are covered.)
■ Property of boarders (renting a room from the insured)
■ Property rented to others off the residence premises
■ Credit cards
■ Rental property that is part of the apartment

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19
Q

Coverage limit - Property
Note: $200 Money or related property, coins, and precious metals (does not apply to tableware)
$1,500 Securities, manuscripts, and other valuable paper property (includes the cost to research, replace, or restore the information from the lost or damaged property)
$1,500 Watercraft, including trailers and equipment
$1,500 Trailers not used with watercraft
$1,500 Theft of jewelry, watches, furs, and precious and semiprecious stones
$2,500 Theft of firearms and related equipment
$2,500 Theft of silverware, silver-plated ware, goldware, gold-plated ware, platinumware, platinum-plated ware and pewterware. This includes flatware, hollowware, tea sets, and trays and trophies made of or including silver, gold, or pewter.
$2,500 Property on the residence premises used primarily for business purposes
$1,500 Property away from premises used for business purposes, but not in or upon a motor vehicle
$1,500 Portable electronic equipment that is in a motor vehicle and uses its electrical system (cell phone)
$1,500 Media used with electronic equipment in or upon a motor vehicle

A

$200 Money or related property, coins, and precious metals (does not apply to tableware)
$1,500 Securities, manuscripts, and other valuable paper property (includes the cost to research, replace, or restore the information from the lost or damaged property)
$1,500 Watercraft, including trailers and equipment
$1,500 Trailers not used with watercraft
$1,500 Theft of jewelry, watches, furs, and precious and semiprecious stones
$2,500 Theft of firearms and related equipment
$2,500 Theft of silverware, silver-plated ware, goldware, gold-plated ware, platinumware, platinum-plated ware and pewterware. This includes flatware, hollowware, tea sets, and trays and trophies made of or including silver, gold, or pewter.
$2,500 Property on the residence premises used primarily for business purposes
$1,500 Property away from premises used for business purposes, but not in or upon a motor vehicle
$1,500 Portable electronic equipment that is in a motor vehicle and uses its electrical system (cell phone)
$1,500 Media used with electronic equipment in or upon a motor vehicle

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20
Q

Coverage D - loss of use (included in all HO policies) provides three types of coverages

A

■ -Non living Conditions

  • Policy holder make Non living Conditions
  • Law stop residence from living there

First, if a covered property loss makes the residence premises uninhabitable, the policy will cover additional living expenses related to maintaining the insured’s normal standard of living.
■ Second, if a covered loss to the insured’s property makes a part of the residence premises uninhabitable (in a multifamily dwelling) that is rented to others, the policy will cover the loss of fair rental value.
■ Third, if a civil authority prohibits the insured from using the residence premises as a result of direct damage to a neighboring premises by a peril insured against, the additional living expense or fair rental value loss will be covered for up to two weeks.

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21
Q

Basic Named Perils
Plus extended coverages:
Hint : WCSHAVVER and V&MM

A 
•	Fire, lightning, and internal explosion
---
•	Remember WCSHAVVER and V&MM
•	Wind
•	Civil commotion
•	Smoke
•	Hail
•	Aircraft
•	Vehicles
•	Volcanic eruption
•	Explosion
•	Riot
•	Plus V&MM (vandalism and malicious michief)
•	Theft (All homeowners policies cover theft; but it is not automatically covered in dwelling property policies.)
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22
Q

Theft coverage does not include the following

A 
Theft by Insured 
Theft Dwelling Under Constructions 
Theft to Rental
Theft of Warcraft 
 Mysterious disappearance	
Theft by the insured
•	Theft from dwelling under construction
•	Theft from rental portion of premises
•	Theft of watercraft off of the premises
•	Mysterious disappearance
23
Q

The Broad Form covers all of the basic named perils plus BIG AFFECT:

A 
Broad
•	All basic perils plus fire, lightning, internal explosion, WCSHAVVER and V&MM
•	Plus BIG AFFECT:
•	B—Burglary damage
•	I—Ice, sleet, and snow (weight of)
•	G—Glass breakage
•	A—Accidental discharge of water
•	F—Freezing objects
  • F—Falling objects
  • E—Electrical current
  • C—Collapse
  • T—Tearing asunder
24
Q

Note
The Special Form, provides coverage for all causes of direct damage to the dwelling and other structures except for specifically excluded perils.

A

The Special Form, provides coverage for all causes of direct damage to the dwelling and other structures except for specifically excluded perils.

25
Q

The following are the general exclusions applicable to all homeowners policies:
Hint:
W.N.W.E.P.O.I.N.G.L

A
  1. War or acts of war, including undeclared war or civil war
  2. Neglect—failure to save your property during or after a loss
  3. Water damage (can be covered in certain geographic regions)
  4. Earth movement (can be covered in certain geographic regions)
  5. Power failure—off residence premises
  6. Ordinance or law—regulating construction, repair, and demolition
  7. Intentional loss by insured or someone else at the insured’s direction
  8. Nuclear hazard
  9. Governmental action—destruction, confiscation, and seizure of property by government or public authority
  10. Loss to property—faulty zoning, bad repair workmanship, faulty construction materials, and defective maintenance
26
Q

Debris Removal pays expenses of the following:

A

Damage done to house or blocking roadway
$1,000 Tree Debris Removal Per Occurrence
$500 Per tree

Expenses paid if caused by covered peril
• Removal of fallen trees covered if they damaged a covered structure or blocking roadway
• Maximum of $1,000 for tree debris removal per occurrence and $500 per tree

27
Q

• Pays cost for repairs necessary to protect from additional loss

A

Reasonable Repairs

28
Q

Trees, Shrubs, and Other Plants covers:

A

• Maximum of $500 per tree and
$1,000 for all fallen shrubs and plants for debris removal
• Maximum 5% of coverage in addition to limit

29
Q

Fire Department Service Charge Covers:

A
  • Up to $500

* No deductible

30
Q

covers property against direct loss from any cause while it is being moved because the premises has been endangered by a covered peril. Coverage is for 30 days, and the limit for that property is not changed. For example, removing furniture off premises because of a hole in the roof caused by a covered peril would have coverage.

A

Property Removed

31
Q

pays up to $500 with no deductible for the insured’s legal obligation to pay losses resulting from:
– theft or unauthorized use of these cards;
– forgery or alteration of the insured’s checks; or
– the insured’s acceptance in good faith of counterfeit money
HINT C.E.A.F.C

A

■ Credit Card, Electronic Fund Transfer Card or Access Device, Forgery, and Counterfeit Money

32
Q

pays up to $1,000 for the insured’s share of a loss assessment charged against the insured by the association of property owners as a result of direct loss to property owned by the association. For instance, this coverage might pay a condominium owner’s assessment for repair of a community clubhouse that was damaged by lightning. The deductible applies only once, regardless of the number of assessments in a single occurrence

A

Loss Assessment

33
Q

covers the breakage of glass that is a part of a building, including windows and storm doors.

A

Glass or Safety Glazing Material

34
Q

Note
“Collapse” HO-2, HO-3,
HO-4, HO-5, and HO-6 Pays for direct physical loss to covered property involving collapse of a building caused by a covered peril or one of the additional perils listed for this additional coverage
“Landlord’s Furnishings”
HO-2, HO-3, and HO-5 Provides coverage of up to $2,500 for loss to appliances, carpeting, and other household furnishings in each apartment on the residence premises regularly rented or held for rental to others by an insured, caused by the perils specifically listed under this coverage in the policy

“Building Additions and Alterations

(Improvements and Betterments) “ HO-4 Covers fixtures, installations, and improvements made or acquired at the insured’s expense. Coverage is limited to 10% of the Coverage C amount.
“Grave Markers”
HO-2, HO-3,
HO-4, HO-5, and HO-6 Provides up to $5,000 for damage to grave markers and mausoleums caused by a peril covered under Coverage C
“Ordinance or Law Coverage”
HO-2, HO-3,
HO-4, HO-5, and HO-6 Pays up to 10% of the Coverage A limit for the increased cost to repair or rebuild a dwelling or other structure to conform to applicable building or land use codes. This
coverage is provided as an additional amount of insurance.

A

Note
“Collapse” HO-2, HO-3,
HO-4, HO-5, and HO-6 Pays for direct physical loss to covered property involving collapse of a building caused by a covered peril or one of the additional perils listed for this additional coverage
“Landlord’s Furnishings”
HO-2, HO-3, and HO-5 Provides coverage of up to $2,500 for loss to appliances, carpeting, and other household furnishings in each apartment on the residence premises regularly rented or held for rental to others by an insured, caused by the perils specifically listed under this coverage in the policy

“Building Additions and Alterations

(Improvements and Betterments) “ HO-4 Covers fixtures, installations, and improvements made or acquired at the insured’s expense. Coverage is limited to 10% of the Coverage C amount.
“Grave Markers”
HO-2, HO-3,
HO-4, HO-5, and HO-6 Provides up to $5,000 for damage to grave markers and mausoleums caused by a peril covered under Coverage C
“Ordinance or Law Coverage”
HO-2, HO-3,
HO-4, HO-5, and HO-6 Pays up to 10% of the Coverage A limit for the increased cost to repair or rebuild a dwelling or other structure to conform to applicable building or land use codes. This
coverage is provided as an additional amount of insurance.

35
Q
  • Actual cash value (replacement – depreciation)
  • Personal property
  • Awnings, carpeting, appliances, outdoor antennas, and outdoor equipment
  • Structures that are not buildings
A

Claims Payment

36
Q
  • Dwelling and other structures

* If insured for at least 80%

A

Replacement Cost

37
Q 
Coverage A	Dwelling
•	Bldg. & attached structures
•	Wall-to-wall
•	Built-in fireplace	
Primary Limit: what is it?
A

Must be 80% of Replacement Cost

38
Q

Coverage B Other Structures
• Detached garage, shed
what is the Primary Limit?

A

10% of Coverage A Limit

39
Q

Coverage C Personal Property
• On premises
• Other than primary residence
What is the Primary Limit?

A

50% of Coverage A Limit 10% of Coverage C Limit

*Primary Limit for HO-4 & HO-6

40
Q

Coverage D Loss of Use/Extra Expense
• Expenses not normally incurred
What is the Primary limit?

A

30% of Coverage A Limit

41
Q

■ The ___ endorsement provides a separate schedule of insurance for one or more of nine major categories of valuable property.

A

scheduled personal property

42
Q

■ The ___ replacement cost endorsement provides that the policy will reimburse losses to personal property on a replacement cost basis, rather than actual cash value (depreciated).

A

personal property

43
Q

■ The _____endorsement overrides the exclusions under the homeowners forms that apply to the insured’s business activities conducted on the residence premises. For instance, this endorsement eliminates the Coverage B exclusion if the insured is using a separate structure for business purposes. It also eliminates the $2,500 limit for business property on the residence premises with regard to furniture, supplies, and equipment used in the business listed in the endorsement.

A

permitted incidental occupancies

44
Q

■ The___ endorsement provides coverage for damage caused by land movement including volcanoes. If a major earthquake occurs, the insured only has to pay a single deductible for any aftershocks that occur within 72 hours of the original earthquake

A

earthquake

45
Q

■ The limited ____endorsement adds coverage to the property sections of the policy for property damage arising out of fungi, wet or dry rot, or bacteria. It is used only with HO-3 and HO-5. The limits for the coverages are scheduled in the endorsement.
– Fungi are defined as any type or form of fungus, including mold or mildew.
– Coverage only applies if the loss or costs resulted from a covered peril that occurred during the policy period. The insured must have used all reasonable means to save and preserve the property from further damage when the covered loss occurred.

A

fungi, wet or dry rot, or bacteria

46
Q

■ The ___ endorsement, extends liability coverage to apply to day care operations. The endorsement changes liability coverage from an occurrence to an aggregate limit. Loss due to corporal punishment is excluded. This endorsement is carefully underwritten. Note: The premium charged is based upon the number of children.

A

home day care

47
Q

There are two major coverages provided under Section II of the homeowners policy:

A

■ Coverage E—personal liability

■ Coverage F—medical payments to others

48
Q

____covers damages that the insured becomes legally obligated to pay because of bodily injury or property damage caused by an occurrence to which coverage applies. As used in the homeowners policy:
■ bodily injury (BI) means bodily harm, sickness, or disease, including required care, loss of services, and death; and
■ property damage (PD) means physical injury to or destruction of tangible property, including loss of use.

A

Coverage E—personal

49
Q

Note
Coverage E applies to liability for bodily injury or property damage arising out of an insured’s personal, nonbusiness activities that occur anywhere. Coverage E also applies to liability for bodily injury or property damage arising from insured locations. These include:
the premises described in the declarations;
■ residences newly acquired during the policy period;
■ locations where an insured is temporarily residing;
■ locations an insured is renting for nonbusiness use;
■ vacant land owned or rented by the insured (not farm land);
■ the insured’s land on which a residence is being built; and
■ cemetery plots or burial vaults.
The policy also states that the insurance company will provide a defense for the insured at the insurer’s expense, even when the insured is not at fault.
The base liability limit provided for any one occurrence is $100,000, but this can be increased for additional premium.

A

■ the premises described in the declarations;
■ residences newly acquired during the policy period;
■ locations where an insured is temporarily residing;
■ locations an insured is renting for nonbusiness use;
■ vacant land owned or rented by the insured (not farm land);
■ the insured’s land on which a residence is being built; and
■ cemetery plots or burial vaults.
The policy also states that the insurance company will provide a defense for the insured at the insurer’s expense, even when the insured is not at fault.
The base liability limit provided for any one occurrence is $100,000, but this can be increased for additional premium.

50
Q

Coverage F—medical payments to others pays all necessary medical expenses incurred within three years of an accident that causes bodily injury. This coverage applies to injuries:

A

On or Off the insured location

sustained while the injured party is on an insured location with any insured’s permission; or
■ sustained while the injured party is off the insured location if the injury arises out of a condition
– on an insured location or the ways immediately adjoining the insured location,
– caused by the activities of an insured (anywhere),
– caused by any residence employee in the course of employment, or
– caused by an animal owned by or in the care of any insured.
- • No fault

51
Q

NOte
Water Craft Coverage; The following types of watercraft are included:
Boats in storage
■ Sailing vessels
– Less than 26 feet in length
– More than 26 feet in length if not owned by or rented to the insured

■ Watercraft that are not sailing vessels with inboard or inboard/outdrive engines
– Less than 50 horsepower and not owned by the insured
– More than 50 horsepower and not owned by or rented to the insured
■ Watercraft that are not sailing vessels with an outboard engine
– Less than 25 horsepower
– More than 25 horsepower and the outboard engine is not owned by an insured
– More than 25 horsepower if the outboard engine is owned by an insured and the engine was
■ acquired during the policy period; or
■ acquired before the policy period, but only if it was declared at policy inception or within 45 days after acquisition

A

■ Boats in storage
■ Sailing vessels
– Less than 26 feet in length
– More than 26 feet in length if not owned by or rented to the insured

■ Watercraft that are not sailing vessels with inboard or inboard/outdrive engines
– Less than 50 horsepower and not owned by the insured
– More than 50 horsepower and not owned by or rented to the insured
■ Watercraft that are not sailing vessels with an outboard engine
– Less than 25 horsepower
– More than 25 horsepower and the outboard engine is not owned by an insured
– More than 25 horsepower if the outboard engine is owned by an insured and the engine was
■ acquired during the policy period; or
■ acquired before the policy period, but only if it was declared at policy inception or within 45 days after acquisition

52
Q

NOte: There are some important exclusions that apply to Coverages E and F, including:
Liability for injury or damage that is expected or intended by the insured
• Liability assumed through a contract
• Personal injury losses
• BI or PD arising out of business pursuits
• BI or PD arising out of the rental of any part of the premises
• Liability arising out of ownership, maintenance, use, loading, or unloading of aircraft, watercraft, and motor vehicles (except one used to service the premises or assist the handicapped)
• Liability arising out of the transmission of a communicable disease by an insured
• Liability arising out of sexual molestation, corporal punishment, or physical or mental abuse; and liability arising out of the use, sale, manufacture, delivery, transfer,
or possession of a controlled substance (does not apply to the legitimate use of prescription
drugs)

A

• Liability for injury or damage that is expected or intended by the insured
• Liability assumed through a contract
• Personal injury losses
• BI or PD arising out of business pursuits
• BI or PD arising out of the rental of any part of the premises
• Liability arising out of ownership, maintenance, use, loading, or unloading of aircraft, watercraft, and motor vehicles (except one used to service the premises or assist the handicapped)
• Liability arising out of the transmission of a communicable disease by an insured
• Liability arising out of sexual molestation, corporal punishment, or physical or mental abuse; and liability arising out of the use, sale, manufacture, delivery, transfer,
or possession of a controlled substance (does not apply to the legitimate use of prescription
drugs)

53
Q

Section II of the homeowners policy also provides the following supplementary payments. These are paid in addition to the limit of liability. Remember “BAILED”:

A

■ Bonds
■ Aid
■ Interest—postjudgment
■ Loss of earnings—lost income while in court—$250/day
■ Expenses—such as the insured’s travel expenses to testify in court
■ Defense costs—attorney fees, court costs, etc.
■ First aid expenses—reimburses the insured for expenses the insured incurs for first aid to others at the time of an accident

54
Q

NOTE
Section II endorsements include the following;
watercraft powered by outboard engines or motors exceeding
25 hp;
• watercraft powered by inboard or inboard/out-drive engines greater than 50 hp; and
• sailboats 26’ or more in length
• Business pursuits endorsement
• Business conducted away from the residence premises
• Only while in the employment of someone else
• Personal injury endorsement
• Libel, slander, false arrest, invasion of privacy, or malicious prosecution
• Permitted incidental occupancies endorsement
• Liability for home-based business
• Only covers business activity listed in the endorsement
• Home day care endorsement
• Premium based upon the number of children
• Sexual molestation and corporal punishment are excluded
• Limited fungi, wet or dry rot, or bacteria endorsement
• Liability coverage for all damages arising directly or indirectly
out of the actual, alleged, or
threatened contact with mold

A

• watercraft powered by outboard engines or motors exceeding
25 hp;
• watercraft powered by inboard or inboard/out-drive engines greater than 50 hp; and
• sailboats 26’ or more in length
• Business pursuits endorsement
• Business conducted away from the residence premises
• Only while in the employment of someone else
• Personal injury endorsement
• Libel, slander, false arrest, invasion of privacy, or malicious prosecution
• Permitted incidental occupancies endorsement
• Liability for home-based business
• Only covers business activity listed in the endorsement
• Home day care endorsement
• Premium based upon the number of children
• Sexual molestation and corporal punishment are excluded
• Limited fungi, wet or dry rot, or bacteria endorsement
• Liability coverage for all damages arising directly or indirectly
out of the actual, alleged, or
threatened contact with mold

Homeowners Insurance (2 decks)

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