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Property & Casualty Insurance License Exam > Unit 7 - Homeowner Policies > Flashcards

Unit 7 - Homeowner Policies Flashcards

1
Q

What is a package policy or multiline policy?

A

A policy that provides property and liability insurance in a single policy (like homeowner insurance).

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2
Q

Is homeowner policy a monoline or multiline policy?

A
  • multiline policy
  • Section I (Property) + Section II (Liability) = Homeowner Policy
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3
Q

What requirements must be met to get a homeowner policy?

A
  1. named insured = owner occupany (renters can only insure personal property)
  2. no more than 4 family unit dwelling
  3. primary purpose = residence
  4. dwellings under construction are eligible (for owner occupant)
  5. mobile homes require a mobile home endorsement
  6. NOT a farm dwelling
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4
Q

On a homeowner policy, who is covered under the policy?

A
  • named insured + resident spouse
  • resident relatives
  • anyone <21 and in care of insured (e.g. foster child / exchange student)
  • full time student < 24 relative and prior resident (in college)
  • representative of the named insured in event of death
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5
Q

When can the insurer cancel a homeowner policy?

A

Insurer can cancel:
* during first 60 days for any reason with min of 10 days notice
* If after 60 days, can cancel for material misrepresentation or substantial change in risk
* for non payment of premium with 10 days’ advance notice

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6
Q

Who retains the right of nonrenewal for a homeowner policy?

A

The insurer, with 30 days advance notice

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7
Q

What is the standard mortgage clause?

A
  • specifies the rights and duties of a mortgagee under the policy, including:
  • can pay the premium, if named insured does not
  • can file a claim up to insurable interest
  • can receive advance notice of cancellation
  • the dishonesty of the insured does not prevent the mortgagee from collecting
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8
Q

List the forms / types of homeowner insurance policies.

A
  • HO-2 - broad form for both dwelling and personal property; owner occupant
  • HO-3 - Special form for dwelling, broad for personal property, owner occupant
  • HO-4 - Broad form for personal property only; Tenants or renters
  • HO-5 - Comprehensive form - special form for both dwelling and personal property- owner occupant
  • HO-6 - Broad form for personal property; Condominium form; owner occupant
  • HO-8 - Modified form for special risks
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9
Q

Under Section I of homeowner policy, list the four separate coverages

A
  1. Coverage A - dwelling (not for HO-4 tenants. HO-6 condo users insures only interior walls and floors. Standard limit is $5k but can be increased)
  2. Coverage B - other structures (not for HO-4 tenants) - not attached to dwelling and not used for business purposes
  3. Coverage C - personal property (not attached to dwelling, anywhere in world and guest property (if requested). Limits of $1000 or 10% of Coverage C whichever is larger
  4. Coverage D - loss of use (additional living expenses due to a claim)
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10
Q

What classes of property are specifically excluded from Coverage C of a homeowner policy?

A
  • pets
  • motorized vehicles (unless used to service the premises)
  • property of renters or boarders
  • credit cards
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11
Q

List the coverage limits for Coverage C of a homeowner policy.

A
  • Money / coins / precious metals - $200
  • Securities / manuscripts / paper property - $1500
  • Watercraft incl trailers and equipment - $1500
  • Trailers not used with watercraft - $1500
  • Jewelry, watches, furs, precious stones - $1500
  • Silverware, gold plated flatwarie, tea sets - $2500
  • Firearms and equipment - $2500
  • Property in the home used for business purposes - $2500
  • Property away from home used for business but not in a vehicle - $1500
  • Portable electric equipment in a car (e.g. cell phone) - $1500
  • Computers, etc used for business away from home but not in a car - $1500
  • Media used with electronic equipment in or upon motor vehicle - $1500
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12
Q

List the basic named perils in a homeowner policy

A

* Fire
* Lighting
* INternal explosion
* Plus: WCSHAVVER
* Wind
* Civil disturbance
* Smoke (excludes agricultural smudging and industrial operations)
* Hail
* Airplane
* Vehicle (not owned or operated)
* Volcanic eruption
* Explosion (external)
* Riot
* PLUS: V&MM (if not vacant > 60 days)
* Vandalism
* Malicious Mischief
* Theft - all homeowner policies cover this, but not automatically covered in a dwelling policy

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13
Q

What are the theft exclusions in a homeowner policy?

A
  • theft by insured
  • theft from dwelling under construction
  • theft from rental portion of property
  • theft of watercraft off the premises
  • mysterious disappearance
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14
Q

List the broad name perils of a homeowner policy

A

Covers ALL BASIC + WCSHAVVER + V&MM +
BIG AFFECTS
* Burglary
* Ice, sleet and snow (weight of)
* Glass breakage
* Accidental discharge of water
* Freezing objects
* Falling objects
* Electrical current
* Collapse
* Tearing asunder
* Smoke - includes fireplace smoke

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15
Q

What is the Special or Open Peril Coverage of a homeowner policy?

A

Homeowner policy that provides coverage for all causes of direct damage to the dwelling and other structures, except for specifically listed excluded perils.

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16
Q

What are the exclusions of an Open Peril / Special Coverage policy for homeowners?

A
  • war and acts of war
  • neglect - failure to save your property during or after a loss
  • water damage - can be covered in certain areas
  • earth movement - can be covered in certain areas
  • power failure - off residence premises
  • ordinance or law - regulatign construction, repair and demolition
  • intentional loss by insured
  • nuclear hazard
  • governmental action - destruction, confiscation and seizure of property
  • loss to property - faulty zoning, bad repair, faulty construction, defective maintenance
17
Q

List the coverages by form type in a homeowner policy

A
18
Q

What additional coverages are found in a homeowner policy for no additional premium?

A
  • Debris removal - expenses paid if caused by covered peril. Removal of fallen tree covered if damaged a covered structure or blocking roadway. Max of $1k for tree debris removal per occurence and $500 per tree.
  • Reaonsable repairs - pays for costs of repairs necessary to protect from additional loss.
  • Trees, shrubs and other plants - maximum 5% of Coverage A in addition to limit. Max $500 / tree.
  • Fire department surcharge - up to $500. no deductible applied. does not apply if dwelling is outside city limit.
  • Property removed - protects from sure and certain loss during move for 30 days
  • Credit card, ETF or Access Device, Forgery and Conterfeit money - up to $500 with no deductible, resulting from theft, forgery or alteration of insured’s check, or acceptance of counterfeit money
  • Loss assessment by a HOA - max of $1000, damage to property caused by covered peril, deductible applied once
  • Glass / safety glazing material - breaking of glass that is part of dwelling, including windows and storm doors. Not available under HO-8
19
Q

List other additional coverages in forms of Homeowner policy.

A
20
Q

What are section 1 claims values for a homeowner policy?

A
  • ACV (replacement cost - depreciation) for: Personal property, awnings, carpeting, appliances, outdoor antennas and outdoor equipment, structures that are not buildings.
  • Replacement cost for dwellings and other structures, if insured at least at 80% of replacement cost
21
Q

What are the limits of Section I Conditions of a homeowner policy?

A
22
Q

What is a deductible?

A
  • portion of loss that the insured must pay before the insurance company will pay its share
  • range in $500-$2500
23
Q

What are the limits of HO-4 and HO-6 forms

A
24
Q

List the available property endorsements for a homeowner policy

A
  • scheduled personal property - increases limits on valuable personal property listed
  • personal property replacement cost - insures at replacement cost instead of ACV
  • permitted incidental occupancies - overrides exclusions that pertain to business activites at the premises. Eliminates Coverage B exclusion for separate structures for business activities and eliminates the $2500 limit on BPP
  • earthquake endorsement - allows for damage caused by earthquake. insured only has to pay one deductible for any aftershocks that occur within 72 hours of original earthquake
  • limited fungi, wet or dry rot or bacteria - only used with HO-3 and HO-5
  • home day care - covers day care operations, excludes corporal punishment, premium based on number of children
25
Q

What is Section II cover in a homeowner policy?

A
  • general liability
  • this section is the same in all homeowner forms
26
Q

List the two mjaor coverages provided under Section II of a homeowner’s policy.

A
  1. Coverage E - personal liability
  2. Coverage F - medical payments to others
27
Q

What does Coverage E cover in a Section II of homeowner policy?

A
  1. bodily injury (BI)
  2. property damage (PD)
  3. insured at fault
  4. anywhere in the world

Limit is $100,000 per one occurence but can be increased with more premium.

28
Q

What is Coverage F in a Section II homeowner policy?

A

medical payments to others within 3 years of an accident that causes bodily injury
* to others (not the insured)
* no fault
* on or off premises if due to insured’s activities
* covers domestic employees (on and off premises)
* 3 years
* limit of $1000 per person per accident
* sometimes called guest medical

29
Q

What is watercraft coverage in a homeowner policy?

A
  • Includes: boats in storage, sailing vessles <26’ in length or more than 26’ in length if not owned by or rented to the insured
  • Boats with inboard motors of 50 hp or less
  • boats with outboard motors of 25 hp or less
30
Q

List Section II exclusions

A
  1. liability for injury or damagethat is expected or intended by the insured
  2. liability assumed through contract
  3. personal injury losses
  4. BI or PD from business pursuits
  5. BI or PD from rental properties
  6. liability from cars, airplanes and boats
  7. liability from transmitting disease
  8. drug abuse or sexual molestation
31
Q

List Section II suplementary payments that are paid in addition to the limit of liability

A

Provided at no additional charge. Paid in addition to policy limits.
BAILED
* Bonds
* Aid
* Interest - post judgment
* Loss of earnings - while in court, $250 / day
* Expenses - travel expenses to court
* Defense costs - attorney fees and court costs
* First aid expenses - for first aid to others - not included in policy limit
* Damage to property of others - up to $1000 / occurence without regard to legal liability

Property & Casualty Insurance License Exam (5 decks)

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