Homeowners review

1
Homeowners review
Bad fortune, cookie!

2
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
3
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

4
The dwelling and contents are destroyed by a
windstormAble didnt protect his assets.
5
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

6
Fredas camera is stolen from her car at the
convention site garage.
7
Where is it covered ?
Bettys 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

8
Henry and Rita own a lake house. All the
furnishings are stolen.
9
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

10
Cals new home flooded the rains overwhelmed
the city storm water runoff drainage system.
11
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

12
Barry bought Brenda a beautiful engagement ring
for 8,000. He didnt advise anyone.
13
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

14
Helens fries start a kitchen fire. During
reconstruction she lives at the executive suites
and eats all her meals out.
15
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

16
George and Helga collect antique figurines. They
are destroyed in a fire.
17
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

18
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.
19
What is legal liability coverage perils? Scope?
Which of the following statements about the
insurers 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 insurers 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

20
Carlas friend George is bitten by her golden
retriever.
21
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 daughters
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

22
Fritz is playing basketball with a neighbor, and
scrapes the neighbor off the pavement after a
particularly good shot. Injuries are suffered.
 .
23
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 insureds minor children. d. business
activities.
c

24
Pats 10 year old son settles the argument over
the soccer ball in front of the referee. The
obnoxious opposing player suffers a broken ankle.
25
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

26
Ike has a duplicate policy covering his gun
collection. He keeps this information to himself,
when signing the proof of loss, when its stolen.
27
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

28
Cousin Colin is visiting and brings his potato
gun. His son Kyle shoots out our insureds sons
eye, while they are playing with it.
29
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 insureds 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

30
The Capgoods 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.
31
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

32
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.
33
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 insureds household. d. Medical expenses
incurred within 3 years of an accident are
covered.
d

34
Eileens injuries include substantial, long term
reconstructive work on her teeth and jaw, after
she falls off your swing set.
35
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 insureds children who
are under age 24 and who are full-time college
students a. I only b. II only c. both I and II d.
neither I nor II
c

36
Peter is part of a hazing event at college,
where a pledge dies after consuming too much
tequila.
37
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

38
Edward is having trouble purchasing insurance,
so places his HO coverage in the FAIR Plan, using
an HO-A offered by the Texas plan.
39
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 dwellings 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

40
Your client is interested in using her insurance
dollar wisely. She thinks 100,000 is sufficient
coverage for her personal legal liability
exposures.