Chapter 2

Question 1

What is the maximum number of units in residential dwellings insurable by a dwelling policy?

Answer 1

Up to four units

Question 2

If an insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis at both locations for how long?

Answer 2

30 days

Question 3

A gas stove exploding int he dwelling is an example of which named peril?

Answer 3

Internal explosion

Question 4

Replacement cost coverage is provided in both the broad and special form dwelling policies when the amount of insurance on the dwelling is what percentage?

Answer 4

At least 80% of the replacement cost.

Question 5

What are extended covered perils on a basic Dwelling policy?

Answer 5

Windstorm or hail, explosion, smoke, aircraft and vehicles, riot or civil commotion, volcanic eruption, and vandalism and malicious mischief.

Question 6

What do dwelling policies insure?

Answer 6

Dwelling only, contents only, or both dwelling and contents.

Question 7

Which dwelling policy coverage will insure a garage not attached to the primary insured dwelling?

Answer 7

Coverage B–other structures.

Question 8

Which dwelling coverage form(s) will pay for the replacement cost of a dwelling?

Answer 8

DP-2 (Broad) and DP-3 (Special)

Question 9

DP-3 (Special) is an open-peril form. What does that mean?

Answer 9

All perils are insured unless specifically excluded.

Question 10

Under what conditions can broad theft coverage be added to a dwelling policy?

Answer 10

If the insured is the owner-occupant of the dwelling

Question 11

A basic dwelling policy automatically provides coverage against what?

Answer 11

Fire, lightning, and internal explosion

Question 12

In dwelling policies, what is the purpose of the automatic increase in insurance endorsement that increases the amount of insurance by an annual percentage?

Answer 12

To offset the effects of inflation

Question 13

In dwelling policies, within how many years of a loss may an insured bring a lawsuit against the insurer?

Answer 13

2 years

Question 14

What are the 3 types of coverage available in dwelling policies?

Answer 14

Basic, broad, and special

Question 15

Which dwelling form is called the Broad form?

Answer 15

DP-2

Question 16

Under Coverage C – Personal Property in the dwelling policy, when will a guest’s property be covered?

Answer 16

Only when the property is at the insured location

Question 17

An insured’s house becomes uninhabitable due to damage by a fire. As a result, the insured has to rent an apartment until repairs are made. Which type of coverage under the dwelling policy will pay for the expense of renting the apartment?

Answer 17

Coverage E – Additional Living Expenses

Question 18

If 3 volcanic eruptions happen within 48 hours, and each contributes to property damage, how many deductibles will apply in the dwelling policy?

Answer 18

1 deductible (all instances of volcanic eruptions that occur within a 72-hour period are considered 1 occurrence)

Question 19

What are some of the exclusions found in all 3 dwelling forms?

Answer 19

Earth movement, water damage, power failure, neglect, war, nuclear hazard, intentional loss, freezing of plumbing, ordinance or law, and government action

Question 20

In dwelling policies, any volcanic activity will be considered part of one occurrence if it all happens within how many hours?

Answer 20

72 hours

Question 21

What are the 5 coverages of dwelling policies?

Answer 21

Coverage A – Dwelling, Coverage B – Other Structures, Coverage C – Personal Property, Coverage D – Fair Rental Value, and Coverage E – Additional Living Expenses

Question 22

When will damage to the interior of the building be covered under the falling objects peril in the broad form of the dwelling policy?

Answer 22

Only if the interior damage is a direct result of exterior damage from a falling object

Question 23

Which dwelling form provides open peril coverage on the building?

Answer 23

DP-3 (Special)

Question 24

Which of the 3 DP forms provides the most limited coverage?

Answer 24

DP-1 (Basic)

Question 25

Which dwelling policy coverage will provide protection for contents damaged by fire in an insured dwelling?

Answer 25

Coverage C – Personal Property

Question 26

An insured is a member of the neighborhood association and has become liable for damage to a third party. Each member of the association has been assessed a portion of the loss equal to $2,000. How much will the Loss Assessment additional coverage of the insured's homeowner's liability pay?

Answer 26

The policy will pay up to $1,000 per occurrence for the insured's share of loss assessment charged against them as owner or tenant of the residence premises during the policy period by a corporation or association of property owners.

Question 27

Which of the following coverages in the dwelling policy would provide protection to contents damaged by fire? -Coverage A -Coverage B -Coverage C -Coverage D

Answer 27

Coverage C-- personal property provides coverage for the contents of an insured dwelling.

Question 28

The HO-3 homeowners policy provides: -Basic coverage for the dwelling and broad form coverage for personal property -All-risk coverage for both the dwelling and personal property -Open peril coverage on the dwelling and broad form coverage on personal property. -Open peril coverage on the dwelling and basic form coverage on personal property.

Answer 28

The open peril coverage applies to property insured under Coverages A and B only.

Question 29

How long is the policy period for NFIP flood insurance? -6 months -10 months -1 year -2 years

Answer 29

NFIP flood insurance has a policy term of 1 year.

Question 30

The dwelling insured on HO-2, HO-3, or HO-5 forms is covered for replacement, provided that it is insured for at least what percentage of replacement cost on the date of loss?

Answer 30

80%, HO-2, -3, and -5 provide replacement cost coverage if the house is insured for at least 80% of its value on the date of the loss.

Question 31

The insured's mother-in-law broke her leg falling down the front steps of the insured's premises. The insured's homeowners' medical payments coverage will: -apply to injuries of any guests or visitors -pay only if the mother-in-law has no health insurance on her own. -Share equally in the cost with the mother-in-law's health insurance. -Pay as excess over the mother-in-law's health insurance

Answer 31

Apply to injuries of any guests or visitors.

Question 32

Dwelling policy coverage C- personal property will cover all of the following EXCEPT: -Hobby aircraft -computer software -Animals and birds -Canoes

Answer 32

-Animals, birds and fish, are among the types of property that will not be covered by Personal Property Coverage.

Question 33

How much coverage is provided under a homeowner's policy theft or unauthorized use of a credit card?

Answer 33

$5,000.

Question 34

Which type of losses are covered by the standard fire policy?

Answer 34

The only type of loss covered by the Standard Fire Policy is direct losses caused by the named perils. Direct loss means actual physical damage to, or destruction of, the insured property.

Question 35

All of the following are characteristics of the dwelling policy EXCEPT:

Answer 35

The dwelling must be owner-occupied. Dwelling policies ensure residential exposures with only limited service-type business exposures allowed. The dwelling can be completed or under construction, and can be owner-or tenant occupied. The dwelling policy can insure the dwelling only, content only, or both.

Question 36

What policy condition in HO policies states that insurance applies separately to each insured?

Answer 36

Severability of insurance means that the insurance applies separately to each insured. This condition does not increase the insurer's liability for any one occurrence.