Unit 7 - Homeowners Insurance

Question 1

Homeowners Policy

Answer 1

•Package policy
•Multiline
•Includes both property and liability

Question 2

Homeowners Eligability

Answer 2

•Owner occupied (special version for a renter)
•No more than 4-family dwelling
•Primary purpose as a residence
•Dwellings under construction are eligible (for owner-occupant)
•Mobile homes (require mobile home endorsement)
•Farm dwellings NOT eligible

Question 3

Insureds

Answer 3

•Named insured including a resident spouse
•Resident relatives
•Anyone under the age of 21 and in the care of an insured (foster child and exchange student)
•Full-time student under age 24, relative, and prior resident
•Represenative of the named insured in the event of death

Question 4

Cancellation of Homeowners policy

Answer 4

•cancelation by insurance company
-During the first 60 days for any reason- minimum 10 days notice

-Other reasons after 60 days-minimum 30 days notice
>Material misrepresentation
>Substancial change in the risk

No payment of premium-10 days’ advance notice

Question 5

Nonrenewal by insurance company

Answer 5

•30 days’ advance notice

Question 6

Standard Mortgage Clause

Answer 6

•Can pay the premium
•File a claim up to Insurable interest
•Recieve advance notice of cancellation
•Dishonesty of insured doesn’t prevent mortgagee from collecting

Question 7

Homeowners Policies

Answer 7

•HO-2 Broad Form: owner occupant
•HO-3 Special Form: owner occupant
•HO-4 Tenants of Renters
•HO-5 Comprehensive Form: owner occupant
•HO-6 Condominium Owners
•HO-8 Modified Form

Question 8

Dwelling

Answer 8

•Including property attached
•Materials on the premises used in construction
•No coverage for a renter

Question 9

Other Structures—separated by a clear space

Answer 9

•Not attached to dwelling
•Not used for business purposes

Question 10

Personal Property

Answer 10

•Not attached to the dwelling
•Anywhere in the world
•Guest’s property (if requested)

Question 11

Personal Property Excluded

Answer 11

•Pets
•Motorized vehicles (unless used to service the premises)
•Property of renters or boarders

Question 12

Personal property—Special limits for theft

Answer 12

•$1,500 - jewelry, watches, and furs
•$2,500 - firearms and related items
•$2,500 - silverware, Goldware, and
pewter ware

Question 13

Personal property — Special limits for ALL losses

Answer 13

•$200–money and securities
•$1,500–watercraft and related items
•$1,500–trailers
•$2,500–business personal property on premises
•$1,500–business personal property away from premises
•$1,500–portable electronic apparatus away from the premises

Question 14

Personal property—Loss of Use

Answer 14

Indirect losses due to loss of use of home caused by a covered peril

•Additional living expenses
•Rental income

Question 15

Personal property-Debris removal

Answer 15

•Expenses paid if caused by covered peril
•Removal of fallen trees covered if they damaged a covered structure or blocking roadway
• Maximum of $1,000 for tree debris removal per occurrence and $500 per tree

Question 16

Personal property—Reasonable Repairs

Answer 16

•Pays cost for repairs necessary to protect from additional loss

Question 17

Personal property—Trees, shrubs, and other plants

Answer 17

•Maximum of 5% of coverage A, in addition to limit (10% of coverage C for HO-4 and HO-6)
•Maximum of $500 per tree

Question 18

Fire department service charge

Answer 18

•Maximum of $500
•No Desuctible

Question 19

Property removed

Answer 19

•Protect from a sure and certain loss
•ALL perils for 30 days

Question 20

Credit cards, forgery, and counterfeit money

Answer 20

•Maximum $500
•No deductible

Question 21

Exception for HO-8

Answer 21

•Broken glass covered

Question 22

Personal property—Loss assessment

Answer 22

•Loss assessment by homeowners association
-Maximum of $1,000
-Damage to property caused by a covered peril
-Deductible applied once

Question 23

Other additional coverages in HO-2, 3 and 5

Answer 23

•Collapse
-Caused by a covered peril
-Not earthquake
•Landlord’s furnishings-$2,500
•Grave markers-$5,000
•Ordinance or law- increased cost up to 10% x dwelling limit

Question 24

Peril

Answer 24

•Cause of Loss

Question 25

Peril—Basic

Answer 25

•Fire, Lightning, explosion, wind, hail, smoke, aircraft, vehicles, volcanic eruption, vandalisim and malicious mischief, riot/civil commotion, and theft (all homeowners covers theft, not automatically covered in dwelling property policies)

Question 26

Peril—Exclusions

Answer 26

•Theft by the insured
•Theft from dwelling under construction
•Theft from rental portion of premises
•Theft of watercraft off of the premises
•Mysterious disappearance

Question 27

Peril—Broad

Answer 27

•All basic perils plus:
-Falling objects
-Accidentsl discharge of water (not flood)
-Weight of ice, sleet, or snow
-Freezing of plumbing (if care used)
-Artificially generated current
-Sudden tearing and breaking of heating and cooling system

Question 28

Peril—Special

Answer 28

•Open Peril
-All direct causes of loss (to the dwelling and other structures) unless specifically excluded

Question 29

Excluded Perils in All Homeowners Policies

Answer 29

•Enforcement of law or ordinance regulating construction, repair, or demolition
•Earth movement, including earthquake and mine subsidence
•Flooding and overflow from a sump pump
•Power interruption that takes place off the residence premises
•War
•Nuclear hazard
•The insured’s failure to save and preserve property after a loss, or to protect it from loss
•Losses caused intentionally by the insured or by someone else else at the insured’s direction
•Destruction, confiscation, or seizure of property by the government or a public authority

Question 30

Peril—Claims Payment

Answer 30

•Actual cash value (replacement - depreciation)
-Personal property
-Awnings, carpeting, appliances, outdoor antennas, and outdoor equipment
-Structures that are not buildings

•Replacement
-Dwelling and other structures
-If insured for at least 80%

Question 31

PropertyEndorsements- Personal property replacement cost

Answer 31

•Insures personal property on a replacement cost basis instead of ACV

Question 32

The scheduled personal property endorsement provides a separate schedule of insurance for items of personal property

Answer 32

•Insured against open perils
•Replacement coverage
•Usually no deductible

Question 33

Permitted incidental occupancies

Answer 33

•Removes $2,500 limit on business personal property

Question 34

Earthquake

Answer 34

•Land movement including volcanic eruption
•One deductible for 72 hours

Question 35

Limited fungi, wet or dry rot, or bacteria

Answer 35

•Caused by a covered peril while the policy is in force

Question 36

Home day care

Answer 36

•Premium based on number of children

Question 37

Two Major coverages in Section II

Answer 37

•Coverage E
•Coverage F

Question 38

Section II—Personal liability

Answer 38

•Bodily injury and property damage

-Insured at fault
-Anywhere in the world

Question 39

Section II—Medical Payments

Answer 39

•To others (not the insured)
•No-fault
•On or off premises if due to insured’s activities
•Covers domestic employees (on or off premises)
•Three years

Question 40

Section II—Liability Exclusions

Answer 40

•Liability for injury or damage that is expected or intended by the insured
•Liability assumed through a contract