Homeowners Insurance Endorsements CA Flashcards
An insured carries a Personal Property Replacement Cost endorsement attached to his Homeowners policy and he has suffered a $2,000 loss to covered personal property. He submits a claim for actual cash value (ACV) at the time of the loss and notifies the insurer that he intends to make a claim for replacement cost later. The insurer will pay the replacement cost claim later if which of the following two conditions are met?
Answer Choices: Select the Correct Answer
If the cost to repair or replace is more than $500 and the insured has already had the property repaired or replaced.
If the cost to repair or replace is less than $500.
If the cost to repair or replace is more than $1,000 and the insured has already had the property repaired or replaced.
If the insured has received two estimates to repair or replace the property and submitted those to the insurance company.
The correct answer is: If the cost to repair or replace is more than $500 and the insured has already had the property repaired or replaced.
EXPLANATION:
If the cost to repair or replace the property is more than $500, the insurer will pay the actual cash value for the loss, until the actual repair or replacement is made.
Personal property that is covered under the Personal Property Replacement Cost Endorsement of a Homeowners policy is damaged and a claim has been filed. The replacement cost of the property at the time of the loss is $2,500. The full cost to repair the property is $2,000. The Coverage C limit of the Homeowners policy is $8,000. No special limits apply to this property and there is no limit applied to the type of property being claimed. Which of the following is the amount that will be paid under the endorsement?
Answer Choices: Select the Correct Answer
$2,500.
$2,000.
$8,000.
$500.
$2,000. is correct.
EXPLANATION:
The endorsement will pay the smallest amount of the replacement cost at the time of the loss, the full repair cost, the Coverage C limit, any applicable special limits, or the limit that applies to the type of property being claimed.
The Mobile Home endorsement may be attached to which of the following Homeowners forms?
Answer Choices: Select the Correct Answer
The HO-2 or HO-3 only.
The HO-6 only.
The HO-2 or HO-5 only.
The HO-3 only.
The HO-2 or HO-3 only. is correct.
EXPLANATION:
The endorsement can only be attached to the HO-2 or HO-3 forms. An insured who is renting a mobile home may have an HO-4 form written to cover personal property, but the endorsement can only be attached to the HO-2 or HO-3 forms.
The Homeowners forms exclude coverage for loss resulting from “earth movement” but the peril of “earthquake” can be added by endorsement as an insured peril for:
Answer Choices: Select the Correct Answer
Coverages A & B.
Coverages A, B, and C.
Coverages A, B, C, and D.
Coverages A, B, C, D, E & F.
Coverages A, B, and C. is correct.
EXPLANATION:
The Earthquake Endorsement to a Homeowners policy adds “earthquake” as a covered peril for Coverages A, B, and C.
The Scheduled Personal Property endorsement to a Homeowners form covers personal property:
Answer Choices: Select the Correct Answer
On a named perils basis.
For the broad form perils.
On a blanket basis for all personal property owned by the insured.
On an open peril basis.
On an open peril basis. is correct.
EXPLANATION:
The Scheduled Personal Property endorsement covers personal property on an open peril basis. None of the other answer choices apply to this endorsement.
Under the Permitted Incidental Occupancy endorsement added to a Homeowner policy, which of the following would NOT be considered an insured location:
Answer Choices: Select the Correct Answer
The office in the insured’s home used for his tax preparation.
A secondary location off the premises covered by the Homeowners form that is used for the insured’s business.
A room in the insured’s home that is used for art instruction.
A photography studio in the insured’s residence.
A secondary location off the premises covered by the Homeowners form that is used for the insured’s business. is correct.
EXPLANATION:
Another location, off the residence premises, used for the insured’s business would not qualify for coverage under this endorsement.
The Homeowners policies allow for the attachment of the Personal Injury endorsement. Which of the following exposures would be covered under this endorsement?
Answer Choices: Select the Correct Answer
Injury suffered by a person who was assisting the insured in removing black mold from his premises.
Slander committed by the insured, who is a drug dealer and makes false statements against another drug dealer.
Bodily injury suffered by a third-party that was struck by the insured while driving his vehicle.
An insured’s oral statements to others that harmed the reputation of another person.
An insured’s oral statements to others that harmed the reputation of another person. is correct.
EXPLANATION:
An insured’s oral statements to others that harmed the reputation of another person would be covered under the Personal Injury endorsement. The other three situations listed are excluded.
Which of the following statements is TRUE regarding the “Indentity Fraud Expense” endorsement to a Homeowners policy?
Answer Choices: Select the Correct Answer
It provides $5,000 to cover the expenses incurred as the direct result of any one “identity fraud” event first discovered during the policy period.
It provides $15,000 to cover the expenses incurred as the direct result of any number of “identity fraud” events occurring during the policy period.
It provides $5,000 to cover the expenses incurred as the direct result of any number of “identity fraud” events occurring during the policy period.
It provides $15,000 to cover the expenses incurred as the direct result of any one “identity fraud” event first discovered during the policy period.
It provides $15,000 to cover the expenses incurred as the direct result of any one “identity fraud” event first discovered during the policy period. is correct.
EXPLANATION:
The Identity Fraud Expense endorsement provides $15,000 to cover the expenses incurred as the direct result of any one “identity fraud” event first discovered during the policy period.
Time Element coverage under the Home Business Insurance endorsement of a Homeowners policy is subject to:
Answer Choices: Select the Correct Answer
A 72-hour time deductible.
A $250 deductible.
A $500 deductible.
A 36-hour time deductible.
A 72-hour time deductible. is correct.
EXPLANATION:
Time element coverage under the Home Business Insurance endorsement is subject to a A 72-hour time deductible.
Which of the following businesses would be eligible for coverage by the Home Business Insurance Endorsement of the Homeowners policy?
Answer Choices: Select the Correct Answer
An internet sales company, owned by the named insured, in partnership with her daughter, who lives down the street.
A named insured who is employed by an internet business and works out of his home.
A medical transcribing business owned by the named insured, in partnership with her husband.
A corporate billing service, owned by the named insured, in conjunction with a friend who lives across town.
A medical transcribing business owned by the named insured, in partnership with her husband. is correct.
EXPLANATION:
To be eligible for coverage under the Home Business Insurance Endorsement, 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. (If a relative is part of the business, but does not reside in the home, the business cannot be covered under this endorsement.)
Which of the following statements concerning the Limited Fungi, Wet or Dry Rot, or Bacteria Coverage Endorsement to the Homeowners policy is true?
Answer Choices: Select the Correct Answer
It provides up to $100,000 of coverage for property damage losses and $250,000 for liability losses arising out of these substances.
The endorsement is used to add coverage to the property and/or liability sections of a Homeowners policy.
The limit of liability for this endorsement is a sublimit within the total Coverage B limit on the Homeowners policy, and coverage is on an aggregate basis.
It excludes the costs to testing the air around the insured’s property to confirm that fungi are present.
The correct answer is: The endorsement is used to add coverage to the property and/or liability sections of a Homeowners policy.
EXPLANATION:
It may be used to add coverage to the property and/or liability sections of a Homeowners policy. The coverage amounts are scheduled on the endorsement. The limit of liability is a sublimit of COVERAGE E, not Coverage B as listed in the answer choice.
The Assisted Living Care Coverage endorsement to a Homeowners policy insures the person scheduled on the endorsement for:
Answer Choices: Select the Correct Answer
Coverages E and F.
Coverages C and F.
Coverages C, E, and F.
Coverages C and E.
The correct answer is: Coverages C and E.
EXPLANATION:
The Assisted Living Care Coverage endorsement to a Homeowners policy insures the person scheduled on the endorsement for Coverages C and E.
All of the following are covered under the Limited Fungi, Wet or Dry Rot, or Bacteria Coverage endorsement, EXCEPT:
Answer Choices: Select the Correct Answer
Spores.
Fungi that are in a product that is intended for consumption.
Mold or mildew.
By-products that are produced or released by fungi.
Fungi that are in a product that is intended for consumption. is correct.
EXPLANATION:
All of the answer choices are covered under the endorsement, EXCEPT: Fungi that are in a product that is intended for consumption.
Which of the following is NOT covered by the Limited Fungi, Wet or Dry Rot, or Bacteria Coverage endorsement Section I scheduled amount?
Answer Choices: Select the Correct Answer
Periodic testing of the building to test for the possible existence of fungi.
Removal of fungi.
The cost to tear out and replace any part of the building as needed to gain access to the fungi.
The cost of the medical bills for guests who stayed in the house and became ill due to mold exposure.
The cost of the medical bills for guests who stayed in the house and became ill due to mold exposure. is correct.
EXPLANATION:
The only answer choice that is NOT covered under the Section I scheduled amount because Section I is “property coverage”. “The cost of the medical bills for guests who stayed in the house and became ill due to mold exposure.” Would be a Section II - Liability coverage.
The “Refrigerated Property Coverage” endorsement provides up to ______ of coverage with a ______ deductible.
Answer Choices: Select the Correct Answer
$500 / $50
$500 / $100
$5,000 / $1,000
$1,000 / $100
The correct answer is: $500 / $100
EXPLANATION:
The “Refrigerated Property Coverage” endorsement provides up to $500 of coverage with a $100 deductible.
