Questions - Chapter 14

Question 1

A homeowner’s insurance policy includes coverage for:

A. structure and contents only.
B. personal liability only.
C. both structure/ contents and personal liability.
D. neither structure/contents nor personal liability.

Answer 1

14-1 C

Question 2

The type of homeowner’s insurance policy that is known as “all risk” is:

A. HO-2.
B. HO-3.
C. HO-4.
D. HO-6.

Answer 2

14-2 B

Question 3

The clause within a homeowner’s insurance policy that penalizes the policyholder for underinsuring the property is:

A. exclusion.
B. subrogation.
C. condition.
D. co-insurance.

Answer 3

14-3 D

Question 4

An insured hazard or risk is known as:

A. endorsement.
B. liability.
C. peril.
D. condition.

Answer 4

14-4 C

Question 5

The type of homeowner’s insurance that is known as “renter’s insurance” is:

A. HO-2.
B. HO-3.
C. HO-4.
D. HO-6.

Answer 5

14-5 C

Question 6

Flood insurance policies are typically:

A. purchased from private insurance companies.
B. purchased from the federal government.
C. purchased from FEMA.
D. part of the homeowner’s insurance policy.

Answer 6

14-6 A

Question 7

The type of homeowner’s insurance policy that is associated with ownership of a condominium is:

A. HO-2.
B. HO-3.
C. HO-4.
D. HO-6.

Answer 7

14-7 D

Question 8

If a seller sells his/her house and retains possession for 30 days after the closing, they will most likely be:

A. required to purchase a HO-4 policy.
B. allowed to retain their previous homeowner’s policy.
C. covered under the buyer’s new insurance policy.
D. required to purchase some type of property damage policy.

Answer 8

14-8 A

Question 9

The basic homeowners insurance policy typically covers what types of perils?

A. Fire
B. Fire and Flood
C. Liability and Casualty
D. All types of natural perils

Answer 9

T14-1 A

The most basic of policies is based on the New York standard form policy which covered only fire damage.

Question 10

In North Carolina, homeowners insurance policies and insurers are regulated by:

A. The North Carolina Human Relations Commission
B. The NC Department of Insurance
C. The North Carolina Real Estate Commission
D. The NC Department of Natural Resources

Answer 10

T14-2 B

Question 11

Which of the following is required in order to obtain homeowners insurance and be an “insured” under a policy,

A. The insured must be the owner of the property
B. The property must be the primary residence of the insured
C. The insured must have an insurable interest in the property
D. Only the owner of a property can be the “insured” under a homeowners policy of insurance

Answer 11

T14-3 C

People other than an occupant owner can be the named “insured” in the property. However, in order to be insured that person or entity must have an insurable interest.

Question 12

A homeowner’s policy which provides both casualty and liability coverage is best referred to as a:

A. Blanket Policy
B. Standard Policy
C. Package Policy
D. Extended Coverage Policy

Answer 12

T14-4 C

Package policies provide coverage for structural and improvement losses as well as providing protection from the liability and injury to others

Question 13

The most popular type of homeowners insurance policy and the one usually required by lenders is which policy?

A. HO-1
B. HO-2
C. HO-3
D. HO-4
E. HO-5

Answer 13

T14-5 C

An HO-3 policy covers fire, other named perils and is a package type policy covering both damage to the home and liability

Question 14

An HO-4 policy typically provides what type of coverage?

A. Condominiums
B. An owner’s rental properties
C. An owner’s vacation homes
D. A renter’s personal property

Answer 14

T14-6 D

Question 15

If a homeowner wanted to verify that they were insured for a particular named peril, which of the following would they obtain from their insurance provider to add particular coverage?

A. Endorsement
B. Condition
C. Peril
D. Exclusion

Answer 15

T14-7 A

An endorsement or rider adds coverage for a particular peril or type of property

Question 16

All of the following are performed under The National Flood Insurance Program, EXCEPT:

A. Mandates flood insurance for certain areas
B. Establishment of flood plains
C. NFIP issuance of policies for flood plains
D. Obtainment of a flood certification

Answer 16

T14-8 C

NFIP does not issue policies or insure properties. The insurance coverage is provide by private companies and insurers

Question 17

Which document provides information regarding the claims history of the property for the last 7 years?

A. Policy rider
B. Flood certification
C. CLUE report
D. Peril endorsement

Answer 17

T14-9 C

A CLUE (Comprehensive Loss Underwriting Exchange) Report is a report from a database maintained by insurance companies that contains a 7 year history of claims against the property

Question 18

Every homeowner’s policy contains the concept of co-insurance and requires that the homeowner insure at least what percentage of the value of the property?

A. 50%
B. 80%
C. 90%
D. 100%

Answer 18

T14-10 B

Question 19

All of the following can cause insurance issues in a real estate transaction, EXCEPT:

A. The owner allowed the home to remain vacant for a substantial period of time
B. The seller wishes to remain in the home beyond the closing date
C. The buyer wishes to occupy the home before the closing date
D. Both parties agree with the insurer to assign the insurance policy at closing

Answer 19

T14-11 D

Insurance policies are assignable with the permission of the insurer. It is rare in a residential transaction, but common in a commercial transaction.