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Kaplan PC Certification Exam > Unit 7: Homeowners Insurance > Flashcards

Unit 7: Homeowners Insurance Flashcards

1
Q

Homeowners Policy

A
  • Package policy
  • Multiline (1. property, 2. casualty)
  • Includes both property and liability
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2
Q

Homeowners Eligibility

A
  • Owner occupied
  • No more than 4-family dwelling
  • Primary purpose as a residence
  • Dwellings under construction are eligible (for owner occupant)
  • Mobile homes (require endorsement)
  • Farm dwellings NOT eligible
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3
Q

Insureds

A
  • Named insured including a resident spouse
  • Resident relatives
  • Anyone under 21 and in the care of the insured
  • Full time student under age 24, relative, and prior resident
  • Representative of the named insured in the event of death
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4
Q

Cancellation

A
  • Insurance company can cancel during first 60 days for any reason (minimum 10 days notice)
  • After 60 days (min 30 days notice) for material misrepresentation or substantial change in the risk
  • Nonpayment of premium (10 days notice)
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5
Q

Nonrenewal by Insurer

A
  • At the end of the policy period, nonrenewed by insurance company (30 days notice)
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6
Q

Standard Mortgagee Clause

A
  • Can pay the premium
  • File a claim up to insurable interest
  • Receive advance notice of cancellation
  • Dishonesty of insured doesn’t prevent mortgagee from collection
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7
Q

HO-2

A

Broad Form; owner occupant

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8
Q

HO-3

A

Special Form; owner occupant

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9
Q

HO-4

A

Tenants or Renters

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10
Q

HO-5

A

Comprehensive Form; owner occupant

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11
Q

HO-6

A

Condominium Owners

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12
Q

HO-8

A

Modified Form (older homes)

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13
Q

Homeowners: Section I Property

A

A - dwelling
B - other structures
C - personal property
D - loss of use

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14
Q

Homeowners: Section I Property - Coverage A Dwelling

A
  • Including property attached
  • Materials on the premises used in construction
  • No coverage for a renter
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15
Q

Homeowners: Section I Property - Coverage B Other Structures

A
  • Separated by a clear space
  • Not used for business purposes
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16
Q

Homeowners: Section I Property - Coverage C Personal Property

A
  • Not attached to the dwelling
  • Anywhere in the world
  • Guest’s property (if requested)
  • Excluded: pets, motorized vehicles, property of renters or boarders
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17
Q

Special limits for theft

A

$1,500: jewelry, watches, and furs
$2,500: firearms and related items
$2,500: silverware, goldware, and pewterware

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18
Q

Special limits for ALL losses

A

$200: money and securities
$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

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19
Q

Loss of Use

A

Indirect losses due to loss of home cause by a covered peril

  • Additional living expenses
  • Rental income
20
Q

Additional Homeowners Coverages: Debris Removal

A
  • Expenses paid if caused by a covered peril
  • Removal of fallen trees covered if they damaged a covered structure or blocking a roadway
  • Maximum of $1,000 for tree debris removal per occurrence and $500 per tree
21
Q

Additional Homeowners Coverages: Reasonable repairs

A

Pays cost for repairs necessary to protect from additional loss

22
Q

Additional Homeowners Coverages: Trees, shrubs, and other plants

A

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

23
Q

Additional Homeowners Coverages: Fire department service charge

A

Maximum of $500

No deductible

24
Q

Additional Homeowners Coverages: Property removed

A

Protect from a sure and certain loss

ALL perils for 30 days

25
Q

Additional Homeowners Coverages: Credit cards, forgery, and counterfeit money

A

Maximum of $500

No deductible

26
Q

Additional Homeowners Coverages: Loss assessment

A

Loss assessment by a homeowners association

  • Maximum of $1,000
  • Damage to property caused by a covered peril
  • Deductible applied once
27
Q

Additional Homeowners Coverages in HO-2, 3, and 5

A
  • Collapse (caused by covered peril, not earthquake)
  • Landlord’s furnishings: $2,500
  • Grave markers: $5,000
  • Ordinance or law: increased cost up to 10% x dwelling limit
28
Q

Perils (causes of loss): Basic

A

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

29
Q

Perils (causes of loss): Broad

A

All basic perils plus:

  • falling objects
  • accidental 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
30
Q

Perils (causes of loss): Special

A

Open peril: all direct causes of loss (to the dwelling and other structures) unless specifically excluded

31
Q

Excluded Perils in All Homeowners Policies

A
  • 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 at the insured’s direction
  • destruction, confiscation, or seizure of property by the government or a public authority
32
Q

Claims Payment: ACV

A

replacement - depreciation

  • personal property
  • awnings, carpeting, appliances, outdoor antennas, and outdoor equipment
  • structures that are not buildings
33
Q

Claims Payment: Replacement

A
  • dwelling and other structures
  • if insured for at least 80%
34
Q

Personal property replacement cost endorsement

A

insures personal property on a replacement cost basis instead of ACV

35
Q

Scheduled personal property endorsement

A

provides a separate schedule of insurance for items of personal property

  • insured against open perils
  • replacement coverage
  • usually no deductible
36
Q

Permitted incidental occupancies endorsement

A

removes $2,500 limit on business personal property

37
Q

Earthquake endorsement

A
  • land movement including volcanic eruption
  • one deductible for 72 hours
38
Q

Limited fungi, wet or dry rot, or bacteria

A

caused by a covered peril while the policy is in force

39
Q

Home day care endorsement

A

premium based on the number of children

40
Q

Section II: Coverage E Personal Liability

A

bodily injury and property damage

  • insured at fault
  • anywhere in the world
41
Q

Section II: Coverage F Medical Payments

A
  • to others (not the insured)
  • no-fault
  • on or off premises if due to insured’s activities
  • covers domestic employees
  • three years
42
Q

Liability Exclusions pt 1

A
  • liability for injury or damage that is expected or intended by the insured
  • liability assumed through a contract
  • BI or PD arising out of business pursuits or the rendering of or failure to render professional services
  • BI or PD arising out of the rental of any part of the premises, except for the rental of part of an insured location as a residence
  • Liability arising out of ownership, maintenance, use, loading, or unloading of aircraft, watercraft, and motor vehicles (except one used to service the premises or assist the handicapped)
43
Q

Liability Exclusions pt 2

A
  • liability arising out of the transmission of a communicable disease by an insured
  • liability arising out of sexual molestation, corporal punishment, or physical or mental abuse; and liability arising out of the use, sale, manufacture, delivery, transfer, or possession of a controlled substance (does not apply to the legitimate use of prescription drugs)
44
Q

Section II Watercraft covered

A
  • watercraft not owned and not rented to an insured regardless of length or horsepower
  • watercraft owned or not owned by an insured
  • sailboats less than 26 feet
  • boats with inboard motors of 50 horsepower or less
  • boats with outboard motors of 25 horsepower or less
45
Q

Additional Coverages (automatically included)

A
  • defense costs - attorney fees, court costs, etc.
  • court- ordered bonds
  • post-judgment interest
  • reasonable expenses, such as the insured’s travel expenses to testify in court (lost income while in court $250/day)
  • first aid expenses - reimburses the insured for expenses that the insured incurs for first aid to others at the time of an accident
  • damage to property of others - pays up to $1,000 per occurrence for property damaged or destroyed by the insured, without regard to legal liability
  • loss assessment - pays up to $1,000 of the insured’s share of any loss assessment charged against the insured during the policy period by a corporation or association of property owners when the assessment is made as a result of an occurrence to which Section II applies

Kaplan PC Certification Exam (22 decks)

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