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Property & Casualty Insurance License Exam > Unit 6 - Dwelling Insurance > Flashcards

Unit 6 - Dwelling Insurance Flashcards

1
Q

What is a dwelling insurance policy?

A
  • Different from homeowner policy
  • Not required to be owner occupied
  • Covers risks like rental properties, older homes, hunting cabins, lake houses
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2
Q

What is another name for a dwelling insurance policy?

A

monoline policy (because they insure only property)

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3
Q

What types of properties do dwelling insurance policies cover?

A
  • vacation homes
  • rental property
  • 1-4 unit dwellings / boarders
  • properties under constuction
  • mobile homes that are permanently attached
  • NOTE - farm dwellings are NOT eligible for this policy
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4
Q

List the four coverages in a dwelling policy.

A
  • Coverage A - dwelling, materials and supplies
  • Coverage B - other structures -separate but contained within a fence, etc. Cannot include be used for commercial, manufacturing or farming
  • Coverage C - personal property contained in the dwelling for the policyholder. does not provide coverage for tenant property. 10% of Coverage C amount covers personal property owned by policyholder anywhere in the world.
  • Coverage D - fair rental value - loss of rents. limited to 20% of insurance policy value or 2 weeks if a civil authority prohibits use due to nearby accident
  • Coverage E - additional living expenses including motel, dining, laundry and transportation expenses(covered in DP-2 and DP-3) Can be added to DP-1 by endorsement
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5
Q

What personal property is not covered by Coverage C in a dwelling policy?

A
  • animals, birds, fish
  • aircraft
  • motor vehicles, other than motorized equipment to maintain property
  • boats, other than rowboats and canoes
  • accounts, bills, currency, money and securities
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6
Q

List the other coverages that are automatically included in DP-1 form of a dwelling policy.

A
  • Other structures - up to 10% of Coverage A limit
  • Debris removal
  • Property removed - for up to 5 days
  • Reasonable repairs - to protect from further damage
  • Tenant Improvements, alterations and additions
  • Fire department service charges - up to $500. no deductible applies.
  • Worldwide coverage - up to 10% of Coverage C limit
  • Rental value - up to 20% of Coverage A limit for loss of fair rental value; payouts reduce limit of liability coverage
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7
Q

What coverages are included in DP-2 and DP-3, in addition to DP-1 for no additional premium?

A
  • Trees, shrubs and other plants - max $500 each up to 5% of Coverage A
  • Collapse - must be caused by the event covered
  • Glass or safety glazing materia
  • Ordinance of law - 10% of coverage A
  • Property removed - covered for 30 days (instead of 5 days on DP-1)
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8
Q

How does DP-1 pay claims? (on what basis?)

A

Actual Cash Value = Replacement Cost - Depreciation

Insureds must cover their buildings with insurance equal to 80% or more of the full replacement cost, at the time of loss.

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9
Q

How does DP-2 and DP-3 pay claims? (on what basis?)

A

Replacement Cost

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10
Q

What basic form perils are covered in DP-1?

A
  1. Fire
  2. Lightening
  3. Internal explosion
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11
Q

Are extended coverage perils included in a dwelling policy?

A

Yes, for an additional premium.

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12
Q

What are basic extended coverage perils?

A
  1. Wind
  2. Civil Comotion
  3. Riot
  4. Explosion (internal + external)
  5. Volcanic Eruption
  6. Vehicles (not if caused by insured, not to any fence, etc.)
  7. Aircraft
  8. Smoke (excludes from fireplace)
  9. Hail
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13
Q

Can you add VM&M to basic dwelling policy with extended coverage?

A

Yes, for an additional premium, in addition to the extended coverage premium.
VM&M does not cover damage to glass, losses by theft, larceny, burglary, or vandalism if vacant > 60 days.

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14
Q

What is broad form of coverage (DP-2)?

A

Broad form coverage = DP-1 coverage + extended coverage + vandalism and malicious mischief + the following additional coverages: BIG AFFECT
* Burglary damage
* Ice, sleet and snow - weight of
* Glass breakage
* Accidential discharge of water
* Freezing objects
* Falling objects
* Electrical current
* Collapse
* Tearing assunder

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15
Q

What are common exclusions to DP-2 (Broad form coverage)

A
  • weight of ice/snow or falling objects on awnings, fences, patios, swimming pools, docks and retaining walls
  • accidental discharge of water from continous leaking
  • flood
  • burlary if property vacant > 60 days
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16
Q

What are the covered perils in a special form DP-3 policy?

A
  • risks of direct physical loss are covered except for the exclusions listed
  • provides open peril coverage on the dwelling and other structures
  • personal prpoerty is covered on a named broad peril basis
17
Q

What are some common exlusions to a special form DP-3 policy?

A

Under coverages A and B - exclusions are:
* intentional damage
* theft
* freezing of plumbing (if unoccupied and care not taken)
* wear and tear
* foundations

18
Q

List the general exclusions on a dwelling policy.

A
  • Ordinance or law
  • Earthquake
  • Flood
  • War
  • Nuclear
  • Intentional losses
  • Government seizure
19
Q

List common conditions of a dwelling policy.

A

** Loss settlement **- ACV for personal property, ACV for dwelling for DP1, but replacement cost for DP2 and DP3 (as long as insurance coverage >= 80% of replacement cost)
** our option **- lets insurer the right to repair or replace with like kind materials within 30 days of claim notification
*** deductible clause **- only the amount of loss over the deductibe will be paid, up to limit of liability
* pair or set condition - can repair or replace part of the set or pay the difference between ACV before and after loss
* Loss payment condition - loss will be paid within 60 days after reaching an agreement with insured
* other insurance condition - if loss is covered by other insurance, insurer only pays for it’s proportion of loss
* recovered property condition - if insured or insurer recovers property on which the insurer has made loss payment, the other party must be notified

20
Q

On what schedule is a personal liability coverage added to a dwelling policy?

A

Coverage L covers personal liability for bodily injury or property damage including:
1. at fault
1. bodiliy injury to others
1. property damage to others
1. both on or off premises
1. Min limit is $100k,

21
Q

What is Coverage M in a dwelling policy?

A

Medical payments to others:
* Insurer will pay medical expenses up to 3 years after the incident
* min limit of $1,000 / person
* no fault
* covers both on and off premises

22
Q

What are additional supplemental coverages for Coverage M that do not cost extra?

A

Think of BAILED:
* Bonds
* Aid (first)
* Interest - pre and post judgment
* Loss of earnings
* Expenss
* Defense costs

23
Q

What are some exclusions for Coverage M?

A
  1. War
  2. Losses expected or intended by insured
  3. Transfer of disease by insured
  4. Sexual molestation, bodily punishment or physical or mental abuse
  5. Drugs - selling, use or possession
  6. Rental of a premise not eligible
  7. Locations not listed as insured location
  8. Ownership/maintenace/use/loading of watercraft, aircraft or vehicles
24
Q

What are some exclusions for Coverage L?

A
  • damage for property owned by insured
  • damage to property rented to / occupied by insured
  • losses covered by workers comp
  • losses charged against insured as member of association, corporation or community of property owners
  • injury to minor of insured or relative that live in same household
25
Q

What is the residential theft coverage endorsement of a dwelling policy?

A
  • Not automatically included
  • covers both on and off premises
  • can be BROAD - owner occupied
  • or can be LIMITED - not owner occupied
  • covers theft, attempted theft, vandalism and malicious mischief
26
Q

What are some exclusions to the residential theft coverage endorsement of a dwelling policy?

A
  • animals
  • credit cards
  • property in mail
  • aircraft
  • other insurance property
  • tenant’s property
  • business property
  • property in custody of others
  • motor vehicles
27
Q

What are some special limits to the residential theft coverage endorsement of a dwelling policy?

A
  • $200 for monetary theft (coins/precious metals)
  • $1500 for securities, manuscripts, valuable paper property
  • $1500 for watercraft, trailers and equipment
  • $1500 for trailers not used with watercraft
  • $1500 for jewelry, watches, furs, precious and semi-precious stones
  • $2500 for firearms
  • $2500 for silverware, goldware and pewterware
    Limit is total of each category.
    Insured must notify the policy when a theft occurs.
28
Q

List 3 other endorsements in a dwelling policy.

A
  1. Automatic increase in insurance - annual increase in Coverage A, B amount of 4%, 6% or 8%
  2. Dwelling under construction - attached to provide coverage to intended occupant of a dwelling under construction is the named insured
  3. Mobile home - allows home and personal property to be insured (mobile home must be on a permanent foundation)

Property & Casualty Insurance License Exam (5 decks)

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