Personal Lines - Homeowners Flashcards
Anton is purchasing a homeowners policy for his house in the woods. He wants to make sure he is covered for damage done to his home by wild animals. Which of the following would be his LEAST expensive option?
A.
HO-8
B.
HO-2
C.
HO-3
D.
HO-5
C.
HO-3
Greg is sitting in his home when he feels the ground shake and give way beneath him. He is just able to escape before a large portion of his house falls into an enormous hole. Which endorsement would help Greg cover the losses caused by the ground falling out from underneath his home?
A.
Sewer Backup endorsement
B.
Sinkhole Collapse endorsement
C.
Hurricane Damage endorsement
D.
Earthquake endorsement
B.
Sinkhole Collapse endorsement
Sinkhole collapse is usually an exclusion, but coverage can be added by endorsement to cover damages such as the type Greg suffered here.
Mary Jane’s house is damaged by a kitchen fire, and the tenant that has been renting her upstairs bedroom has to move out. It takes Mary Jane two months to repair the damage, plus an additional four months to find a new tenant. How many months of lost rental income can Mary Jane expect to receive from her insurer?
A.
None - loss of rental income is not covered under a homeowner’s policy
B.
4 months
C.
2 months
D.
6 months
C.
2 months
To make some extra money, Denise turns her storage shed into a small dwelling and rents it out to a tenant. Shortly after the tenant moves in, a drunk driver crashes into the storage shed apartment, demolishing it. Would Coverage B - Other Structures of Denise’s homeowners policy cover the repairs to the shed-apartment? Why or why not?
A.
No, because it was wired to the home and therefore an attached structure.
B.
Yes, up to 10% of Denise’s homeowner’s policy.
C.
Yes, because Coverage B insures unattached structures.
D.
No, because the shed-apartment was wholly rented out.
D.
No, because the shed-apartment was wholly rented out.
This damage would not be covered under Denise’s homeowners policy because the shed-apartment was wholly rented out.
Under Coverage F – Medical Payments to Others, the Payment of Claim provision states:
A.
all payments made under Coverage F will be paid at actual cash value.
B.
Coverage F is voluntary coverage: even if a claim is paid, it is not an admission of the insurer’s liability.
C.
no payments will be made until the insurer’s liability has been determined.
D.
the insurer reserves the right to demand a proof of loss before paying an indemnity under Coverage F.
B.
Coverage F is voluntary coverage: even if a claim is paid, it is not an admission of the insurer’s liability.
Under Coverage F – Medical Payments to Others, the Payment of Claim provision states that Coverage F is voluntary coverage: even if a claim is paid, it is not an admission of the insurer’s liability.
During a heavy rainstorm, Ben’s basement flooded and suffered extensive water damage. Which section of Ben’s Homeowners 3 policy will cover this damage?
A.
Coverage C – Personal Property
B.
None
C.
Discharge of Steam or Water
D.
Coverage A – Dwelling
B.
None
Homeowners policies do not cover property damage caused by water, so the water damage in Ben’s basement is not covered.
Mike is wanting to upgrade his homeowner’s insurance so he will have the best coverage possible. “You get what you pay for;” says Mike, “and, I’m purchasing total peace of mind.” Which policy is Mike referring to?
A.
HO-3
B.
HO-8
C.
HO-5
D.
HO-2
C.
HO-5
The HO-5 is the most comprehensive homeowners coverage available.
The Liberalization clause in a homeowners policy:
A.
states that the insurer is obligated to pay out only up to the limit set by the policy, but must do so within 60 days of receiving proof of loss.
B.
states that only losses occurring during the policy period will be paid.
C.
applies not only to changes made during the policy period, but also to any changes made up to 60 days before the policy went into effect.
D.
voids the policy if the insured deliberately conceals or misstates pertinent info.
C.
applies not only to changes made during the policy period, but also to any changes made up to 60 days before the policy went into effect.
Paul lives in an area where property values are appreciating rapidly. He would like his homeowner’s policy to reflect the increase in the value of his home. Which endorsement might Paul purchase to accomplish this?
A.
Inflation Guard
B.
Increased Limits on Personal Property
C.
Additional Structures
D.
Valuation Endorsement
A.
Inflation Guard
The Inflation Guard endorsement automatically adjusts coverage limits according to the construction cost index in a community.
Which homeowners policy is the most basic, only providing coverage on a named-peril basis and only paying actual cash value for all covered damages?
A.
HO-2
B.
HO-5
C.
HO-8
D.
HO-4
C.
HO-8
The HO-8 form is the most basic homeowners policy. It only provides coverage on a named-peril basis and pays actual cash value for all covered damages.
Which of the following perils is NOT covered under the HO-2 Broad Form?
A.
Fire
B.
Theft
C.
Windstorm
D.
Earthquake
D.
Earthquake
Fire, windstorm, and theft are all named (specified) perils in the HO-2 Broad Form. Earth movement is a policy exclusion.
Just two days before a hurricane hits New Orleans, Jim brings most of his valuable items (TV, stereo, jewelry, firearms, etc.) to his parents’ house in Hammond, to keep them safe from the storm. Two weeks later, Jim’s valuables are destroyed when a flood sweeps through Hammond, severely damaging his parents’ house. Under which peril are the valuables covered?
A.
Flood
B.
Water
C.
Accidental Discharge or Overflow of Water
D.
Windstorm
D.
Windstorm
Under Property Removal Coverage, when the insured moves property to safeguard it from an imminent peril, that property remains covered for 30 days under the original peril that the insured was trying to protect it from. Since Jim was trying to keep his valuables safe from a hurricane (remember, a hurricane is a type of windstorm), they are covered under the peril of windstorm, no matter what actually damages them during that time.
Removal of Debris coverage would pay for the cleanup of which of the following occurrences?
A.
A windstorm blows shingles from the policyholder’s roof all over the policyholder’s front yard.
B.
A neighbor’s trampoline blows over the policyholder’s fence and into the policyholder’s yard.
C.
A windstorm overturns a dumpster near a policyholder’s home, blowing hundreds of pounds of garbage onto the policyholder’s property.
D.
Several very large branches fall from a dead tree in the policyholder’s backyard, without causing damage to the home.
A.
A windstorm blows shingles from the policyholder’s roof all over the policyholder’s front yard.
Sam’s house is underinsured. It has a replacement cost of $200,000, but Sam’s policy only covers losses up to $80,000. During a violent hailstorm, Sam’s $20,000 roof is completely destroyed. Assuming his insurer requires the standard 80% level of coverage, how much will Sam receive as a settlement for the roof (ignore the deductible)?
A.
$20,000
B.
$10,000
C.
$15,000
D.
$5,000
B.
$10,000
The loss settlement provision in the HO policy states that, if the property is underinsured, the policy will pay a portion of the loss calculated as follows: (Amount of insurance / 80% of the property value) x the covered loss. 80% of Sam’s property value is $160,000 (200,000 x 80%), so divide his policy limit by that number. $80,000/$160,000 = 0.5. Now, multiply Sam’s loss by this number ($20,000 x 0.5) and the result is $10,000.
Which of the following sections of a homeowners policy lists the facts that are particular to the homeowner and the insured property?
A.
Definitions page
B.
Insuring agreement
C.
Declarations page
D.
Insured conditions page
C.
Declarations page
The declarations page of a homeowners policy lists all the important facts that are particular to the homeowner and the insured property.
