Homeowners review
Bad fortune, cookie!
Character is like a tree and reputation like its shadow. The shadow is what we think of it; the tree is the real thing.
Abraham Lincoln
What is covered … objects?
1. All of the following are covered under the dwelling coverage (Coverage A) of the Homeowners 3 policy EXCEPT a. the land on which the insured dwelling is located. b. any structure attached to the dwelling. c. materials and supplies intended for alteration or repair of the dwelling. d. materials and supplies intended for construction of a detached garage.
a
The dwelling and contents are destroyed by a windstorm…Able didn’t protect his assets.
Where are contents covered… ?
Which of the following statements about the personal property coverage (Coverage C) of the Homeowners 3 policy is (are) true? I. The coverage applies only in the United States and Canada. II. The full amount of coverage applies only if the property is permanently located at any residence of the insured. a. I only b. II only c. both I and II d. neither I nor II
d
Freda’s camera is stolen from her car at the convention site garage.
Where is it covered… ?
Betty’s personal property is insured for $100,000 under her Homeowners 3 policy. If she usually keeps some personal property at a mountain cabin that she owns, how much coverage for this property is available under her homeowners policy? a. $40,000 b. $50,000 c. $10,000 d. $20,000
c
Henry and Rita own a lake house. All the furnishings are stolen.
How is it covered … perils?
Which of the following losses to a dwelling would be covered under an unendorsed Homeowners 3 policy? a. damage to the structure caused by the weight of heavy snow b. damage to a floor caused by water backing up through a sewer pipe c. damage to the structure caused by a flash flood d. smoke damage resulting from agricultural operations of a neighboring farmer
a
Cal’s new home flooded …the rains overwhelmed the city storm water runoff drainage system.
How much is covered … property
subject to limitations?
The Homeowners 3 policy limits the amount of coverage provided on certain personal property (e.g. coin collections and silverware). This personal property can be adequately insured by a. adding a schedule to the policy listing the property with specific amounts of insurance. b. storing the property away from the home at another location. c. adding an appraisal clause to the policy. d. lowering the deductible which applies to personal property losses.
a
Barry bought Brenda a beautiful engagement ring for $8,000. He didn’t advise anyone.
What is ALSO covered… ?
All of the following statements about the coverage for loss of use (Coverage D) under the Homeowners 3 policy are true EXCEPT a. The duration of payments for additional living expenses is limited to a maximum of 15 days. b. There is coverage if civil authorities prohibit the insured from using the premises because of a loss to a neighboring premises from an insured peril. c. There is coverage for the fair rental value of any part of the premises rented to others. d. If a covered loss makes the home unfit for living, the insurer pays additional living expenses the insured may incur as a result of the loss.
a
Helen’s fries start a kitchen fire. During reconstruction she lives at the executive suites and eats all her meals out.
What is NOT covered… ?
Linda wants to purchase a homeowners policy, but she has some valuable personal property to which internal policy limits apply. Her agent said that she could obtain coverage under her homeowners policy by attaching a list of this valuable property with specific amounts of insurance. Such a listing is called a(n) a. schedule. b. binder. c. warranty. d. application.
a
George and Helga collect antique figurines. They are destroyed in a fire.
How much is covered… ?
All of the following statements about covered perils and loss settlements under an unendorsed Homeowners 3 policy are true EXCEPT a. Losses to the dwelling may be settled on an actual cash value basis. b. Personal property losses are settled on a replacement cost basis. c. Personal property is covered on a named-perils basis. d. The dwelling is covered on an all-risk basis.
b
Pat insures her jewelry for the optional coverage limit of $5000, for a single loss by theft. The per object limit is $2500. Some is kept at the bank. She loses a stone from her dinner ring, valued at $3000.
What is legal liability
coverage … perils? Scope?
Which of the following statements about the insurer’s obligation to provide a legal defense under the personal liability coverage (Coverage E) of the homeowners policy is (are) true? I. The insurer agrees to defend the insured only if the suit is not groundless, false, or fraudulent. II. The insurer’s obligation to defend the insured ceases after the amount paid for damages from an occurrence equals the policy limit. a. I only b. II only c. both I and II d. neither I nor II
b
Carla’s friend George is bitten by her golden retriever.
What is medical payments
coverage … perils? Scope?
All of the following are considered insured locations for medical payments to others (Coverage F) under a homeowners policy EXCEPT a. a hall rented by the insured for her daughter’s graduation party. b. farmland owned by the insured. c. a new vacation home purchased by an insured during the policy period. d. a motel room where an insured is temporarily residing.
b
Fritz is playing basketball with a neighbor, and scrapes the neighbor off the pavement after a particularly good shot. Injuries are suffered.
.
What is NOT covered… ?
Section II of the homeowners policy has exclusions applying to all of the following EXCEPT a. intentional injuries. b. transmission of a communicable disease. c. activities of the named insured’s minor children. d. business activities.
c
Pat’s 10 year old son settles the argument over the soccer ball in front of the referee. The obnoxious opposing player suffers a broken ankle.
What conditions apply… ?
Ted purchased a home. To fund the purchase, he borrowed $140,000 from ABC Bank, pledging the home as collateral. Shortly after purchasing the home, Ted lost his job. He could not find another job and could not pay the mortgage each month. Ted set fire to the home. The claims adjuster suspected arson, and an investigation proved that Ted intentionally caused the loss. Under the mortgage clause of the Homeowners 3 policy, how will this loss be settled? a. The insurer will pay Ted the actual cash value of the loss as intentional loss is not excluded. b. The insurer has no liability because the loss was intentional. c. The insurer will pay ABC the value of its insurable interest and pay Ted the value of his insurable interest. d. The insurer will pay ABC the value of its insurable interest and then attempt to recoup the loss payment from Ted.
d
Ike has a duplicate policy covering his gun collection. He keeps this information to himself, when signing the proof of loss, when it’s stolen.
Which persons are protected… ?
Persons insured for personal liability under the homeowners policy include which of the following? I. Relatives while visiting the named insured. II. Overnight guests who are not relatives of the named insured. a. I only b. II only c. both I and II d. neither I nor II
d
Cousin Colin is visiting and brings his potato gun. His son Kyle shoots out our insured’s son’s eye, while they are playing with it.
What vehicle usage is covered… ?
Which of the following situations is covered under Section II of an unendorsed homeowners policy? a. injuries resulting from a trailer being pulled by the insured’s auto b. injuries resulting from an auto rented by the insured while on a vacation c. injuries which occur at a park resulting from a motorcycle owned by the insured d. injuries resulting from an auto not subject to registration because it is in dead storage
d
The Capgood’s rent a pop-up trailer to take to the lake. While its parked at the camp site, a fellow camper trips over the hitch and in injured.
Which boat
usage is covered… ?
Which of the following statements regarding watercraft liability under Section II of an unendorsed HO-3 policy is (are) true? I. No coverage is available for watercraft liability. II. Liability arising out of the use of watercraft that are under certain length and horsepower limits is covered. a. I only b. II only c. both I and II d. neither I nor II
b
Dr. Mallard is golfing while at a medical convention. He runs the rented golf cart into a tree root, it collides with the tree and his friend Dr. Duckworth rolls out and is injured.
What injuries are covered… ?
Which of the following statements about the coverage for medical payments to others (Coverage F) under the homeowners policy is true? a. Medical payments are made only if the insured is not legally liable. b. Covered medical expenses are limited to emergency room charges. c. Medical payments may be made for any resident of the named insured’s household. d. Medical expenses incurred within 3 years of an accident are covered.
d
Eileen’s injuries include substantial, long term reconstructive work on her teeth and jaw, after she falls off your swing set.
Where does persons end… ?
Persons insured under Section I of the Homeowners 3 policy include which of the following? I. A spouse of the named insured if living in the same household II. The named insured’s children who are under age 24 and who are fulltime college students a. I only b. II only c. both I and II d. neither I nor II
c
Peter is part of a hazing event at college, where a pledge dies after consuming too much tequila.
What forms to choose… ?
Jose and Maria would like “all-risks” coverage on their home and their personal property. Which unendorsed homeowners form provides this coverage? a. Homeowners 5 b. Homeowners 2 c. Homeowners 4 d. Homeowners 3
a
Edward is having trouble purchasing insurance, so places his HO coverage in the FAIR Plan, using an HO-A offered by the Texas plan.
What cost decisions available… ?
Which of the following statements about buying homeowners insurance is true? a. There is no reason to carry insurance equal to more than 80 percent of a dwelling’s replacement cost. b. Premiums often can be reduced substantially by selecting a higher deductible. c. The deduction for depreciation will be increased if a personal property replacement cost endorsement is purchased. d. There is little reason to compare cost since the lack of competition results in little price variation among companies.
b
Your client is interested in using her insurance dollar wisely. She thinks $100,000 is sufficient coverage for her personal legal liability exposures.