Dwelling policy

Question 1

Dwelling Program Eligibility

Answer 1

Dwellings that may be insured under the Dwelling Program may be owner-occupied or tenant-occupied, but they must be used principally for residential purposes, with up to 4 dwelling units and no more than 5 roomers or boarders. As long as the dwellings are used primarily as a residence, certain incidental business occupancies that do not involve retail sales are allowed, including professional offices, instructional studios, beauty shops, and schools.

Question 2

Mobile homes

Answer 2

are eligible for coverage only under the Basic Form and only if they meet certain qualifications, such as being permanently affixed to a foundation. Farm dwellings are not eligible for coverage and would require different insurance.

Question 3

Which of the following is not eligible for the Dwelling Program?

Answer 3

A dwelling located on farm property

Question 4

Farm dwellings

Answer 4

are not eligible for coverage and requires different coverage

Question 5

Coverage A

Answer 5

Dwelling

Question 6

Coverage B

Answer 6

Other structures

Question 7

Coverage C

Answer 7

Personal property

Question 8

Coverage D

Answer 8

Fair rental value

Question 9

Coverage E

Answer 9

Additional living expenses

Question 10

Coverage A- Dwelling

Answer 10

Dwelling coverage applies to the residential dwelling described in the Declarations, including structures attached to the dwelling, such as an attached garage, carport, breezeway, or deck. Coverage is also provided for materials and supplies on or next to the described location used to construct, alter, or repair the dwelling or other structures. Unless otherwise covered in the policy, building equipment and outdoor equipment used to service the described location are considered part of the dwelling if they are located on the described location.

Coverage does not apply to land, including land on which the dwelling is located.

The forms allow the insured to select limits for Coverage A, but certain standards exist. Coverage A typically represents the dwelling’s replacement value. On the Broad Form, the standard Coverage A minimum is $12,000. On the Special Form, the standard Coverage A minimum is $15,000.

Question 11

Coverage B – Other Structures

Example:A shed storing a farming tractor owned by the insured owner-occupant would be covered under Coverage B, unless the shed also contained a filled, external gas can. A shed storing property owned by a commercial business, rather than the insured specifically, would also eliminate coverage for the structure under Coverage B.

Answer 11

Other structures coverage applies to structures other than the dwelling that are on the described location and that are detached from the dwelling by a clear space. This includes structures connected to the dwelling only by a fence, utility line, or similar connection. Structures eligible under this coverage include buildings, such as tool sheds or detached garages, or nonbuilding structures, such as swimming pools or gazebos.

Question 12

Coverage B Limit of Insurance

Answer 12

The limit of liability applicable to other structures is an amount equal to 10% of the Coverage A limit. On the DP–1, this amount is contained within the Coverage A limit. On the DP–2 and DP–3, this is in addition to the Coverage A limit.

Question 13

All of the following are covered under Coverage B - Other Structures of a Dwelling policy, except:

Answer 13

Construction materials

Question 14

Coverage C – Personal Property

Answer 14

household and personal property (sometimes called contents) usual to the occupancy of a dwelling. Personal property includes anything the insured owns or uses, and anything owned or used by the insured’s family members who live with the insured, unless the personal property is excluded by the policy. Property not covered includes:

Motor vehicles, other than those used to service the described location or to assist people with disabilities, or those that are not required to be registered. Electrical equipment that is permanently installed in the vehicle is also excluded.
Data, including data stored in books of account, drawings, paper records, or computers and related equipment
Credit cards, funds transfer cards, and other access devices
Water or steam
Grave marker

Coverage only applies while the insured property is located at the described location, with some exceptions. If personal property is moved from the described location to a newly acquired principal residence, coverage will apply at each residence for up to 30 days or until policy expiration, whichever occurs sooner.

At the insured’s request, Coverage C will cover personal property of a guest or domestic employee while the property is on the described location. However, personal property of a tenant or boarder is not covered, as tenants and boarders will have their own insurance for their personal property.

Question 15

All of the following are types of property NOT covered under Coverage C - Personal Property of a Dwelling policy, except:

Answer 15

Canoes

Question 16

Coverage D – Fair Rental Value

Answer 16

applies when a portion of the described location is rented to others, and it provides insurance for indirect losses that occur as a result of covered direct losses to property insured under Coverages A, B, or C. This part of the policy pays the lost rent of that portion of the described location that is rented or held for rental to others at the time of a loss if the rental unit is unfit for its normal use because of the direct loss.

Payment will be made for the shortest time necessary to repair the damaged portion of the dwelling that is normally held for rental, even if that time extends beyond policy expiration. Expenses resulting from cancelling a lease are not covered. A deduction is made for any continuing expenses, meaning expenses that would continue without regard to whether the unit can be occupied (for example, electric bills or the mortgage payment).

If a civil authority prevents the insured from using the dwelling because a neighboring location was directly damaged by a peril insured against by the insured’s policy, the fair rental value will be paid for no more than 2 weeks.

Question 17

Coverage E – Additional Living Expense

example -

An insured lives in a home protected by the DP–3. After a fire loss makes the home uninhabitable until repairs can be made, the insured stays in a hotel and has to board their two dogs. Coverage for additional living expenses will cover these costs, as they only exist because a direct physical loss affected the property. This coverage will also cover increased food costs from having to dine out and increased gas expenses if the insured has to travel farther for work. Importantly, the policy would not pay for the entirety of the food and gas costs during the repair period—only the costs that exceed what the insured would have paid if the loss had not occurred.

Answer 17

Like Coverage D, Coverage E provides insurance for indirect losses that occur as a result of covered direct losses to property insured under Coverages A, B, or C. The policy pays any necessary increases in living expenses incurred by the named insured when a covered loss makes the unit in which the named insured lives uninhabitable. Payment is made only to the extent the insured’s household can maintain its normal standard of living.

Expenses like mortgage and electricity would not be paid because they are continuing expenses, meaning they would exist regardless of if a loss occurred.

Coverage E is automatically included in the DP–2 and DP–3, but it is not included in the DP–1 unless added by endorsement.

Question 18

dwelling policy forms

Answer 18

DP1 basic-

DP2 Broad-

DP 3 Special-

Question 19

DP1 basic form

Answer 19

As its name implies, the DP–1 provides basic insurance coverage to insure the dwelling, its contents, and other structures on the premises against three named perils: fire, lightning, and internal explosion. Internal explosion refers to explosions occurring within covered property.
Extended Coverage (EC) may be added for an additional premium, which would cover losses resulting from the following perils:

Windstorm and hail. This will cover losses to the inside of the building as long as wind or hail damaged the outside first and created an opening. For example, if the carpet is damaged because a window was left open during a hailstorm, that loss will not be covered.
Losses to awnings, outdoor radio and television antennas, and canoes and rowboats outside of the building are also not covered
Aircraft
Riot or civil commotion
Vehicles, such as losses caused by a vehicle driving into the dwelling
However, losses caused by a vehicle owned or operated by the insured or a resident are not covered, nor are losses to a fence, driveway, or walk caused by any vehicle
Volcanic eruption, not including loss caused by earthquake
Explosion, which would replace and expand internal explosion coverage originally provided in order to cover internal and external explosions
However, explosion does not include electric arcing, breakage of water pipes or pressure relief devices, or explosion of steam boilers
Smoke, not including smoke losses from agricultural smudging or industrial operations
If fire and EC perils are included, the insured may also purchase coverage against vandalism or malicious mischief (VMM) for an additional premium. If VMM is added, it excludes loss for vandalism occurring after 60 consecutive days of vacancy. The VMM peril also excludes loss by theft, larceny (theft of personal property), burglary, or pilferage. However, coverage is provided for building damage caused by burglars.

fire lightning and internal explosion basic covered perils

extended perils windreom hail aircraft volacnic reuption explosiob ad smoke

VMMM EXLCUSED BUILDING VACANT FOR 60+ DAYS

Question 20

DP2 - BROAD FORM

Answer 20

The Broad Form covers the dwelling, its contents, and other structures against named perils, including the basic perils available for the DP–1 (fire, EC, and VMM), as well as the following:

Damage by burglars – This coverage includes property damage caused by the burglar, but does not cover theft of the property itself. Coverage will not apply to dwellings that have been vacant for more than 60 days.

Falling objects – Coverage is for loss caused by any object outside of the dwelling that falls on its exterior, such as ice falling from a plane, falling trees, or space debris. The building’s interior is covered as long as the exterior is damaged first.
However, losses to outdoor antennas, awnings, and fences are not covered
Weight of ice, snow, or sleet – This coverage will not apply to awnings, fences, patios, or swimming pools
Accidental discharge or overflow of water or steam – The discharge or overflow must occur from within a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or from within a household appliance. This coverage does not cover loss to the system or appliance itself, only the resulting damage.
Coverage is not provided for loss to a building caused by constant or repeated leakage over a period of time, or for loss to a building that has been vacant for more than 60 days
Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, air conditioning, automatic fire protective sprinkler system, or an appliance for heating water
Freezing of a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or of a household appliance. The insured must have used reasonable care to maintain heat in the building, or shut off the water supply and drain all necessary systems or appliances (not including fire sprinkler systems).
Sudden and accidental damage from artificially generated electrical current – This covers loss resulting from man-made electricity or power surges
However, it does not apply to damage to tubes, transistors, electronic components, or circuitry contained in appliances, fixtures, computers, home entertainment units, or similar equipment

The Vehicle peril on the Broad Form is slightly more expansive than that which is provided by the Basic Form. Under the DP–2, the Vehicle peril only excludes loss to a fence, driveway, or walk caused by a vehicle owned or operated by the named insured or a resident.

Question 21

DP–3 (Special Form)

Answer 21

The Special Form offers the broadest coverage in the Dwelling Program. Unlike the DP–2, coverage for the dwelling and other structures is provided on an open perils basis, meaning the form insures against all direct physical loss to property and does not cover losses resulting from perils specifically excluded. Excluded perils include:

The exclusions listed in the General Exclusions section of the form
Collapse, except for coverage provided by Other Coverages
Freezing, thawing, or weight of water or ice on patios, fences, swimming pools, foundations, piers, docks, retaining walls, and other structures that support a building
Theft of property not part of a covered building or structure
Theft in or to a dwelling or structure under construction
Wind, hail, ice, snow, or sleet to trees, shrubs, plants, lawns, and outdoor radio and TV antennas and aerials
Vandalism and malicious mischief, theft or attempted theft, and any ensuing loss if the dwelling has been vacant for more than 60 consecutive days immediately before a loss
Constant or repeated seepage or leakage of water or steam over a period of time from within a plumbing, heating, air conditioning, or automatic fire protective sprinkler system, or from within a household appliance
Wear and tear, deterioration, or mechanical breakdown
Smog, rust, corrosion, mold, and wet or dry rot
Pollutants, unless the discharge is caused by a named peril applying to contents coverage
Smoke from agricultural smudging or industrial operations
Settling, cracking, bulging, or expansion of foundation, walls, floors, pavement, or patios
Birds, vermin, rodents, insects, or domestic animals, including infestation by any animal

Question 22

Which of the following Dwelling forms covers buildings on an open perils basis?

Answer 22

DP-3 Special Form

Question 23

Debris Removal

Answer 23

Debris Removal

The policy pays for the insured’s reasonable expenses for the removal of debris of covered property if the property is damaged by an insured peril. Debris removal expense is included in the limit of insurance that applies to the damaged property.

Improvements, Alterations, and Additions

If the insured is a tenant, they may use up to 10% of the Coverage C limit of insurance for a covered loss to improvements, alterations, and additions made or acquired at the insured’s expense to that part of the described location occupied only by the named insured. An example would be built-in cabinets installed by the tenant.

Under the DP–1, coverage is included in the limit of insurance. Under the DP–2 and DP–3, it is additional insurance.

Question 24

Under the Dwelling Program, what limit is provided for worldwide coverage?

Answer 24

10% of the Coverage C limit, included in the Coverage C limit

Question 25

Worldwide Coverage

Answer 25

The insured may use up to 10% of the Coverage C limit of liability for a covered loss to property insured under Coverage C while it is located anywhere in the world. This coverage does not apply to rowboats or canoes. Under the Basic Form, this coverage also excludes property of guests or domestic employees. This coverage is included in the Coverage C limit of liability.

Question 26

Rental Value and Additional Living Expenses

Answer 26

The insured may use up to 20% of the Coverage A limit of liability for a covered fair rental value loss. This amount is included in the Coverage A limit of insurance, meaning payments made under Coverage D will reduce the Coverage A limit. For DP–1 policies, some insurers may limit how this Coverage D limit applies on a month-to-month basis. In this case, the insurer will pay only 1/12 of the Coverage D limit for each month the rented part of the described location is unfit for normal use. Broad and Special Form policies offer coverage for loss in fair rental value under Coverage D and coverage for additional living expenses under Coverage E. The insured may use up to 20% of the Coverage A limit for losses covered under Coverage D and Coverage E. This amount is additional insurance, meaning it does not reduce the Coverage A limit.

Question 27

Reasonable Repairs

Answer 27

If covered property is damaged by an insured peril, the policy will pay the reasonable costs incurred by the named insured for necessary measures taken solely to protect covered property from further damage. An example would be temporarily tarping a hole in the roof damaged by hail.

Question 28

Property Removed

Answer 28

If property is being removed from the described location because it is endangered by a covered peril, coverage is provided for direct loss by any peril while removed.

Question 29

Which of the following is NOT true about the Dwelling Program's Property Removed Other Coverage?

Answer 29

Property coverage applies under the DP-1 policy for 30 days while the property is removed

Question 30

Fire Department Service Charge

Answer 30

Under all of the Dwelling forms, the policy will pay up to $500 for the named insured’s liability assumed by contract or agreement for fire department charges incurred when another city or district’s fire department is called to save or protect covered property from an insured peril.Coverage does not apply if the property is located within the limits of the city, municipality, or protection district furnishing the fire department response. Essentially, coverage is included for services provided by an assisting fire department.

Question 31

Applicable to the Broad and Special Forms Only

Answer 31

Coverage is provided for trees, shrubs, plants, or lawns on the described location for loss caused by the following perils: Fire or lightning Explosion Riot or civil commotion Aircraft Vehicles not owned or operated by the named insured or by a resident of the described location Vandalism or malicious mischief, including damage during a burglary, but not property theft The limit of insurance for this coverage is up to 5% of the Coverage A limit, with a maximum of $500 applying to any one tree, shrub, or plant. This is additional insurance.

Question 32

The limit of insurance for the Trees, Shrubs, and Other Plants Other Coverage is provided at what percentage of the Coverage A limit of a Dwelling policy?

Answer 32

5%

Question 33

Collapse

Answer 33

is defined as the abrupt falling down or caving in of a building, or any portion of a building, but only if it cannot be occupied for its intended purpose. If a building, or any portion of a building, is only in danger of falling down or caving in, or if it is still standing, it is not in a state of collapse. Collapse also does not include settling, cracking, shrinking, bulging, or expansion Under the DP–2 and DP–3, coverage is provided for direct physical loss to covered property involving collapse of a building, or any part of a building, but only if the cause of loss is: Any of the Broad Form named perils Hidden and unknown decay, or hidden and unknown insect or vermin damage Weight of contents, equipment, animals, or people, or the weight of rain that collects on the roof Use of defective materials or methods in construction, remodeling, or renovation if the collapse occurs during the course of the construction, remodeling, or renovation This coverage does not increase the limit of insurance applicable to the damaged property.

Question 34

Glass or Safety Glazing Material

Answer 34

Coverage is provided for the breakage of glass or safety glazing material if it is part of a covered building, storm door, or storm window. This coverage includes direct loss to glass or safety glazing material caused by earth movement, which is normally an excluded peril, as well as coverage for direct loss to covered property caused by the pieces, fragments, or splinters of broken glass or glazing material. Coverage does not apply if the dwelling was vacant for 60 consecutive days immediately before the loss. This Vacancy provision does not apply to losses caused by earthquake. Coverage does not increase the limit of liability applicable to the damaged property.

Question 35

Ordinance or Law

Answer 35

Ordinance or law coverage applies to increased costs incurred by the named insured due to the enforcement of any ordinance or law that requires or regulates the construction, demolition, remodeling, renovation, or repair of a covered building or structure damaged by a covered peril. If the named insured is the owner of the described location, they may use up to 10% of the Coverage A limit for these costs. If the named insured is a tenant of the described location, they may use up to 10% of the limit that applies to the Improvements, Alterations, and Additions Other Coverage. Whichever limit applies is additional insurance. Coverage is not provided for any loss in value of a building or structure, or due to costs incurred by ordinances that require pollution clean up, removal, or treatment

Question 36

General Exclusions

Answer 36

The Dwelling forms do not insure for any loss caused directly or indirectly by the following perils, regardless of any other cause or event that contributes concurrently or in any sequence to the loss.

Question 37

Ordinance or Law

Answer 37

The insurer will not pay for losses caused by the enforcement of any ordinance or law requiring or regulating: The construction, repair, remodeling, renovation, or demolition of property, including removal of any resulting debris Testing for, cleaning up, removing, treating, or otherwise responding to pollutants Pollutants include any solid, liquid, gaseous, or thermal irritant, including smoke, vapor, soot, acids, chemicals, and waste. This exclusion does not apply to the coverage provided by the Ordinance or Law Other Coverage provided by the Broad and Special forms.

Question 38

Earth Movement

Answer 38

The insurer will not pay for losses caused by earth movement, which includes: Earthquake, including land shock waves and tremors before, during, or after a volcanic eruption Landslide, mudflow, and mudslide Subsidence or sinkhole Earth sinking, rising, or shifting If a direct loss by fire, explosion, or breakage of glass or safety glazing material results from earth movement, the policy would then pay only for the ensuing loss.

Question 39

The Earth Movement exclusion contains all of the following perils, except:

Answer 39

Explosion

Question 40

Water

Answer 40

Flood, surface water, waves, tidal water, or overflow of a body of water, including any waterborne material carried by these water sources, regardless of whether or not it is driven by wind or storm surge Water that backs up through sewers or drains, or that overflows from a sump pump Water below the surface of the ground that exerts pressure on or seeps through a building, sidewalk, driveway, patio, foundation, swimming pool, or other structure Water or waterborne material escaping or overflowing from a dam, levee, or similar system This exclusion applies even if an act of nature is what causes the water to damage the property. If a direct loss by fire or explosion results from water damage, the ensuing damage would be covered.

Question 41

Dwelling forms do not cover loss by

Answer 41

ordinance or law earth movement water power failure neglect war nuclear hazard war intentional loss government action

Question 42

Earth movement exclusion earth movement includes fire explosion breakage of glass or safety glazing materials

Answer 42

earthquake land shock landlide mudflow mudslide subsidence or sinkhole earth sinking rising and shifting

Question 43

water exclusion

Answer 43

flood waves tidal water water that backs up through the sewer water sump pump u underground water water escaping from a dam

Question 44

Under the Water exclusion on a Dwelling policy, losses resulting from all of the following are excluded from coverage, except:

Answer 44

Water overflowing from a dishwasher

Question 45

Power Failure

Answer 45

The insurer will not pay for losses caused by the failure of power or other utility service if the failure takes place off the described location. Power failure occurring on the described location is covered. If an insured peril ensues on the described location as a result of the power failure, the ensuing loss would be covered Neglect-The insurer will not pay for losses caused by the insured’s neglect to use all reasonable means to save and preserve property at and after the time of a loss.

Question 46

What type of power failure is excluded under all of the Dwelling forms?

Answer 46

Power failure that occurs off the insured premises

Question 47

War

Answer 47

The insurer will not pay for losses caused by war, including the following and any consequence of the following: Undeclared war, civil war, insurrection, rebellion, or revolution Any warlike act by a military force Destruction or seizure or use for a military purpose The discharge of a nuclear weapon, even if accidental

Question 48

Nuclear Hazard

Answer 48

The insurer will not pay for losses caused by any nuclear reaction, radiation, or radioactive contamination, whether controlled or uncontrolled. Any fire resulting from the nuclear hazard is covered.

Question 49

Intentional Loss

Answer 49

The insurer will not pay for losses arising out of any act committed by or at the direction of an insured with the intent to cause a loss. The insurer will not pay for losses arising out of any act committed by or at the direction of the insured or any additional insured with the intent to cause a loss. In the event of an intentional act, coverage is excluded for all insureds, even those who did not commit or conspire to commit the act that causes the loss.

Question 50

Governmental Action

Answer 50

Coverage is not provided for losses caused by governmental action, which is the destruction, confiscation, or seizure of property described in Coverages A, B, or C by order of a governmental or public authority. This exclusion does not apply to action taken at the time of a fire to prevent its spread.

Question 51

DP–1 Exclusions

Answer 51

The Basic Form specifically excludes coverage for loss to lawns, plants, shrubs, and trees outside of buildings. The Broad and Special forms offer this coverage under the Trees, Shrubs, and Other Plants Other Coverage.

Question 52

DP–3 Exclusions

Answer 52

The Special Form does not provide coverage for faulty, inadequate, or defective planning, zoning, development, surveying, design, repair, construction, or renovation. However, if a covered loss to the dwelling or other structures ensues from this faulty work, that loss is covered.

Question 53

coverages for DP-2 and 3

Answer 53

burglar damage fire lightning falling objects explosion

Question 54

Exclusions for dp2 -3

Answer 54

intentional loss flood or sump pump backup off premises utility failure war earthquake or landslide

Question 55

Dwelling policies contain a number of conditions commonly found in property policies

Answer 55

concealment or fraud Apprasial mortgage clause waiver or change recovered property dueties in the event of loss subrogation no benefit to bailee asssignment loss payale clause pair or set clause abandonment liberalization clause death policy period

Question 56

Under the Recovered Property condition on a Dwelling policy, what happens if the insurer pays for lost property and then recovers the property?

Answer 56

The insurer must notify the insured of the recovered property, and the insured may choose to keep either the property or the claim payment

Question 57

Deductible

Answer 57

For any one loss, the amount payable by the insurer is equal to the amount of loss that exceeds the deductible shown on the Declarations page. If two or more deductibles are applicable to any one loss, only the highest deductible amount will apply.

Question 58

DP-1-Loss settlement

Answer 58

All covered property losses are settled on an actual cash value basis, but not more than the amount required to repair or replace the damaged property.

Question 59

DP–2 and DP–3

Answer 59

Personal property, awnings, carpeting, household appliances, outdoor antennas, outdoor equipment, and structures that are not buildings are settled on an actual cash value basis, but not more than the amount required to repair or replace the damaged property. Buildings and other structures covered by Coverages A and B are settled on a replacement cost basis, provided that the Coverage A limit is 80% of the full replacement cost of the building immediately before the loss. The policy will pay no more than the least of the following amounts: The applicable limit of liability The cost to replace the damaged part of the building with material of like kind and quality and for like use The necessary amount actually spent to repair or replace the damaged building

Question 60

If the insured does not meet the coinsurance requirement included in their Broad Form Dwelling policy, the insurer may pay any of the following amounts, except:

Answer 60

The replacement cost of the damaged part of the building

Question 61

DP–2 and DP–3 (continued)

Answer 61

The cost to repair and replace only includes ordinance or law expenses provided by the Ordinance or Law Other Coverage. If a building is rebuilt at a new premises, the insurer is only liable for the costs that would have been incurred at the original location. If insurance is not maintained to value, the policy will pay the greater of the following amounts: The limit of liability The actual cash value of the damaged part of the building The proportion of the loss that the limit bears to 80% of the building’s replacement cost The insurer will pay no more than the actual cash value of the damage until actual repair or replacement is complete. Exceptions to this apply if the loss is less than 5% of the Coverage A limit and less than $2,500. Further, the insured may first make claim for losses to buildings on an actual cash value basis, then later make claim for additional amounts to satisfy replacement cost settlement. To do this, the insured must notify the insurer within 180 days after the loss of their intent to repair or replace the damaged building.

Question 62

pro rata basis

Answer 62

If property is insured by another property policy, the insurer will pay on a pro rata If property is insured by a service agreement, such as a home warranty, the policy is excess insurance over any amounts payable under the agreement.

Question 63

Suit Against Us (Suit Against the Insurer)

Answer 63

To bring legal action against the insurer, all terms must be complied with and the suit must be brought within 2 years of the date of loss.

Question 64

Our option

Answer 64

The insurer may repair or replace any part of the damaged property with material and property of like kind and quality. To do this, the insurer must provide written notice within 30 days after receiving the proof of loss.

Question 65

Loss Payment

Answer 65

Losses are adjusted with the named insured and payable to the named insured unless someone else is named in the policy or legally entitled to receive payment. Loss is payable 60 days after receiving proof of loss and an agreement is reached, a final judgment is entered, or an appraisal award is filed.

Question 66

Cancellation

Answer 66

The insured may cancel the policy at any time, for any reason, by returning the policy to the insurer or by providing written notice of the date the cancellation takes effect. The insurer, on the other hand, is subject to more regulations, and it can only cancel for certain reasons by providing an advance written notice, as required by state law. Typically, if the policy is in effect for less than 60 days, the insurer may cancel for any reason. If the policy has been in effect for 60 days or more, the insurer may only cancel for certain reasons, like nonpayment of premium, a material misrepresentation, or substantial changes in the insured risk. If the policy is cancelled, the premium will be refunded on a pro rata basis either with the cancellation notice, when the policy is returned by the insured, or within a reasonable time after the cancellation effective date.

Question 67

Nonrenewal

Answer 67

In order for the insurer to nonrenew the policy, it must provide advance written notice at least 30 days before the policy’s expiration date. Proof of mailing is sufficient proof of notice

Question 68

Volcanic Eruption

Answer 68

Volcanic eruptions that occur within a 72-hour period will be considered one volcanic eruption.

Question 69

Selected Endorsements-Automatic Increase in Insurance Endorsement

Answer 69

The Automatic Increase in Insurance Endorsement is used to help offset inflation and, for that reason, may be referred to as the Inflation Guard Endorsement. It allows for an automatic annual increase in the Coverage A and Coverage B limits of insurance by the percentage shown on the endorsement. The increases are calculated per day, and will increase the dwelling coverage, as well as the premium, annually when the policy renews.

Question 70

The Automatic Increase in Insurance Endorsement added to a Dwelling policy will increase which coverage limits?

Answer 70

Coverage A and Coverage B

Question 71

Theft Coverages

Answer 71

Because none of the Dwelling forms include coverage for theft of personal property, two endorsements are available to be added to the policy in order for the named insured to have coverage for the peril of theft. The Broad Theft Coverage Endorsement may be added to any of the Dwelling forms if the described location is owner occupied. If the dwelling is tenant occupied, the Limited Theft Coverage Endorsement must be used.

Question 72

Broad Theft Coverage Endorsement

Answer 72

This endorsement covers direct physical loss to personal property owned or used by an insured caused by theft, attempted theft, or any connected vandalism or malicious mischief (subject to the standard 60-day Vacancy provision). Coverage can be provided for theft on the premises and off the premises. On-premises coverage is provided for covered property at the described location or placed for safekeeping in any bank, safe deposit company, or public warehouse. Personal property owned by a residence employee is also covered. Off-premises coverage is provided when covered property is away from the described location (not including that which is moved to a newly acquired principal residence) if the property is owned or used by an insured, or owned by a residence employee. If the insured wants off-premises coverage, on-premises is mandatory. Some of the items of personal property covered by the endorsement are subject to special limits of liability, meaning that regardless of the limit shown for the endorsement’s on- and off-premises coverages, any loss to these items is payable only up to the applicable per occurrence limit. Property subject to a special limit includes money, securities and passports, watercraft, trailers, jewelry and furs, firearms, and silverware and goldware. The endorsement does not cover the following property: The endorsement does not cover the following property: Aircraft, hovercraft, or their parts Motor vehicles and their equipment, except that coverage is given back for some portable electronic equipment and for vehicles used solely to service the residence or assist people with disabilities Property held for sale and other business property Animals, birds, and fish Property in the custody of a bailee Credit cards

Question 73

Limited Theft Coverage Endorsement

Answer 73

This endorsement is essentially the same as Broad Theft Coverage, except that coverage is only available for property on the premises. On-premises coverage is provided while property is at the described location, as long as the property is owned or used by the named insured or resident spouse, or if the property is owned by a residence employee. Coverage is also provided for property placed for safekeeping in any bank, safe deposit company, or public warehouse.

Question 74

All of the following statements are correct about the Broad Theft Coverage Endorsement, except:

Answer 74

It does not apply to the DP-1

Question 75

Dwelling Under Construction Endorsement

Answer 75

This endorsement is needed because eligibility for the dwelling property coverage requires insured dwellings to be occupied for residential purposes, and dwellings under construction are not occupied. When this endorsement is added, the named insured agrees to advise the insurer when construction is completed. The limit of liability for Coverage A is provisional and is based on the building’s value upon completion. The limit of insurance in place at any time prior to completion is a percentage of the final Coverage A limit, equal to the proportion the current value bears to the value on the completion date. Once construction is completed, occupancy of the dwelling is allowed for 30 days. The named insured must notify the insurer by the end of that period to obtain consent to occupy the dwelling and to adjust the policy premium.

Question 76

Personal Liability Supplement

Answer 76

The Dwelling forms only provide property coverage. If personal liability coverage is desired, the insured may obtain that coverage for an additional premium. The Personal Liability Supplement can be written as either a separate policy or a Dwelling policy endorsement to cover the insured’s liability exposures related to the residence premises, meaning the premises must be occupied by the insured. The supplement is essentially the same liability coverages provided by a Homeowners policy. It includes Coverage L – Personal Liability and Coverage M – Medical Payments to Others.

Question 77

Coverage L - Personal Liability

Answer 77

Personal liability coverage applies to claims made or suits brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which the policy applies. Payment will be made up to the limit of liability appearing on the Declarations for which an insured is legally liable. Coverage is also provided for defense costs in addition to the limits of liability. The standard limit of liability for Coverage L is $100,000 per occurrence.

Question 78

Coverage M - Medical Payments to Others

Answer 78

Coverage for medical payments to others applies to claims for the necessary medical expenses incurred or medically ascertained within 3 years from the date of bodily injury. Coverage does not apply to expenses incurred by the named insured or regular residents of the named insured’s household, except for residence employees. Coverage applying to others must arise out of injury to a person on an insured location with the insured’s permission, or to persons off an insured location if the injury is caused by the activities of an insured or of a residence employee while in the course of employment by the insured. Also covered are injuries to persons caused by an animal owned by or in the care of an insured, and injuries that arise out of conditions on an insured location. The standard limit of liability for Coverage M is $1,000 per person.

Question 79

Additional Coverages

Answer 79

The supplement includes Additional Coverages for claim expenses, first-aid expenses, and damage to the property of others. The Damage to Property of Others Additional Coverage provides a small amount of insurance to cover property damage occurrences without having to first determine the insured’s negligence.

Question 80

Exclusions

Answer 80

The Personal Liability Supplement does not provide coverage for certain perils or types of liability. These include: Motor vehicle, watercraft, aircraft, and hovercraft liability Expected or intended injury Liability resulting from an insured’s business conducted on an insured location Professional services War Communicable disease Sexual molestation, corporal punishment, and physical or mental abuse Controlled substance

Question 81

The Personal Liability Supplement includes all of the following Additional Coverages, except:

Answer 81

Personal and advertising injury liability

Question 82

Dwelling Under Construction Endorsement

Answer 82

T is having a new home built, and the home will be covered by a Broad Form Dwelling policy. Since the home is technically unoccupied, this endorsement is needed to provide coverage in the event a loss occurs during the building process.

Question 83

Limited Theft Coverage Endorsement

Answer 83

P rents a dwelling out to tenants. While the tenant is away, P's television inside the dwelling is stolen by burglars. The loss of the television is covered by this endorsement.

Question 84

Personal Liability Supplement

Answer 84

A guest on Z's property slips and falls while on the walkway to Z's front door, which results in a broken arm. This endorsement covers the guest's medical expenses for which Z is responsible.

Question 85

Automatic Increase in Insurance Endorsement

Answer 85

To account for inflation, J, the insured, selected this endorsement in order to increase the limit on J's dwelling by a certain percentage over the course of the policy period.

Question 86

Broad Theft Coverage Endorsement

Answer 86

L owns and lives in a dwelling covered by a Special Form Dwelling policy. While L is away from home, a robber threatens L and steals L's laptop. The loss of the laptop is covered by this endorsement.

Question 87

Other coverages

Answer 87

fire department service charge collapse improvemnets alterations addtions worldwide coverage glass or safety glazing material

Question 88

Endorsements

Answer 88

Limited theft automatic increase in insurance dwelling under construction personal liability supplement broad theft

Question 89

The Dwelling Program would provide coverage for which of the following windstorm or hail losses?

Answer 89

Rain damage to carpet after hail broke a window

Question 90

All of the following perils are included under the Dwelling Program's Broad Form, except:

Answer 90

Smoke damage from agricultural smudging

Question 91

A policyholder has a Special Form Dwelling policy. Which of the following statements about loss settlements is correct?

Answer 91

Personal property is valued on an actual cash value basis

Question 92

Which of the following describes the loss settlement basis for a fire damage claim to a dwelling insured under a DP-3 policy?

Answer 92

Replacement cost up to the Coverage A limit

Question 93

Under the Property Removed Other Coverage of a Dwelling policy, which of the following is incorrect?

Answer 93

The policy will not provide any coverage while insured property is being removed when endangered by a covered peril

Question 94

Which property is eligible for a Broad Form Dwelling policy?

Answer 94

A four-family dwelling with three roomers

Question 95

Which of the following properties is ineligible to be insured under a Dwelling policy?

Answer 95

Dwellings located on farms are not eligible. Dwellings must be used principally for residential dwelling purposes and cannot have more than 4 dwelling units. Incidental business occupancies, such as schools, studios, and offices, are permitted if the primary use of the dwelling is as a personal residence.

Question 96

Under a Dwelling Policy, the Debris Removal Other Coverage will pay for

Answer 96

The removal of the debris caused by an insured peril

Question 97

Under a Basic Form Dwelling policy, losses to the dwelling are paid on which basis?

Answer 97

Actual cash value

Question 98

A Basic Form Dwelling policy with Extended Coverage would cover all of the following losses, except:

Answer 98

A roof buckling due to the weight of snow

Question 99

Which Dwelling form does not cover losses resulting from frozen plumbing?

Answer 99

Basic Form

Question 100

The Dwelling Program would provide coverage for which of the following windstorm or hail losses?

Answer 100

Rain damage to carpet after hail broke a window

Question 101

Which of the following is true regarding Coverage A under a Dwelling policy?

Answer 101

Coverage is not included for wind loss to television antennas

Question 102

Losses under Coverage C of the DP-2 are valued on which loss settlement basis?

Answer 102

Actual cash value

Question 103

Under Dwelling policies, household and personal property, including property in transit between the insured's old and new residences, are covered under:

Answer 103

Coverage C

Question 104

S owns a property covered by a Broad Form Dwelling policy. After a fire loss to the dwelling, S's policy would cover all of the following, except:

Answer 104

All food costs incurred while the dwelling is repaired

Question 105

Under Coverage C of the Dwelling Special Form, coverage for all of the following is included, except:

Answer 105

Passports and evidences of debt

Question 106

Damaged household and personal property in transit between the insured's old and new residences is covered by the DP-1 for up to:

Answer 106

10% of the Coverage C limit

Question 107

The unendorsed Basic Dwelling Form would include which coverage?

Answer 107

Explosion from a gas leak inside the dwelling

Question 108

If an insured adds the Automatic Increase in Insurance Endorsement to their Broad Form Dwelling policy, what effect does it have on the policy?

Answer 108

It increases policy limits for the dwelling and other structures only

Question 109

The coverage provided by a Dwelling policy for fire department service charges has a limit of insurance equal to:

Answer 109

500$

Question 110

Damaged household and personal property in transit between the insured's old and new residences is covered by the DP-1 for up to:

Answer 110

10% of the Coverage C limit

Question 111

Dwelling and Homeowners policies define earth movement to include all of the following perils, except:

Answer 111

Volcanic eruption

Question 112

Which of the following claims would be covered under the DP-3?

Answer 112

Damage by vandalism to a dwelling vacant for 30 days before the loss

Question 113

On the Broad Form (DP-2), trees, shrubs, and other plants are protected against all of the following causes of loss, except:

Question 114

Property losses covered by a Basic Form Dwelling Policy are settled on which basis?

Answer 114

actual cash value

Question 115

K has a Broad Form Dwelling policy. Which coverage applies to the building described in the Declarations?

Answer 115

Coverage A

Question 116

Under a Broad Form Dwelling policy, losses to an unattached garage are paid on which basis?

Answer 116

Replacement cost

Question 117

All of the following are true regarding the Broad Theft Endorsement on a Dwelling policy, except:

Answer 117

Only on-premises coverage is available

Question 118

Detached structures on the insured premises are included in which coverage under a Dwelling policy?

Answer 118

Coverage B

Question 119

Of the Dwelling policy forms, which one does not cover a loss caused by accidental discharge of water from a refrigerator located in a covered dwelling?

Answer 119

Basic Form (DP-1)

Question 120

If an insured adds the Automatic Increase in Insurance Endorsement to their Broad Form Dwelling policy, what effect does it have on the policy?