Mod 2: Property and Casualty Insurance

Question 1

What are the 3 types of coverage generally available in a standard homeowners insurance policy?

Answer 1

1. Basic Coverage
2. Broad Coverage
3. Open-Perils Coverage

Question 2

What does section I of a homeowners policy cover?

Answer 2

Property Losses

Question 3

What does Section II of a homeowners policy cover?

Answer 3

Comprehensive liability insurance and medical payments to others, claim expenses, and damage to property of others

Question 4

HO-2 Policy

Answer 4

Broad Form

Provides broad coverage for the dwelling and personal property. In addition, this form broadens certain perisl and adds other perils.

Question 5

HO-3 Policy

Answer 5

Special Form

Most popular homeowners policy.
Real property is covered on an open perils basis. Personal property is covered on a named perils basis.

Question 6

HO-4 Policy

Answer 6

Contents Broad (Tenants or Renters) Form

Designed for tenants who do not own their dwelling.
Personal liability and personal contents coverage only

Question 7

HO-5 Policy

Answer 7

Comprehensive Form

Similar to the HO-3 policy except that personal property is written on an open-perils basis.

Question 8

HO-6 Policy

Answer 8

Unit (Condominium) Owners Form

Provides coverage for the condo owner’s personal belongings and any owned structural part of the building. Also provides liability protection.

Question 9

HO-8 Policy

Answer 9

Modified Form for Special Risks

Provides coverage for those who live in an older home that has a replacement cost exceeding its market value

Question 10

Section I of a Homeowner’s Policy

Insures the dwelling, including additions or other structures attached to the building.
Also includes limited coverage on landscaping around the dwelling.

Which coverage (A-F)

Answer 10

Coverage A

Question 11

Section I of a Homeowner’s Policy

Insures other structures (detached structures) on the premises of the dwelling.

Which coverage (A-F)

Answer 11

Coverage B

Question 12

Section I of a Homeowner’s Policy

Insures general personal property not specifically named within the contract for provision of specific coverage.

Which coverage (A-F)

Answer 12

Coverage C

Question 13

Section I of a Homeowner’s Policy

Provides loss-of-use coverage, which includes expenses incurred while the dwelling is uninhabitable due to damage caused by a covered peril.

Which coverage (A-F)

Answer 13

Coverage D

Question 14

Section II of a Homeowner’s Policy

Comprehensive liability insurance

Which coverage (A-F)

Answer 14

Coverage E

Question 15

Section II of a Homeowner’s Policy

Medical payments to others, claim expenses, damage to property of others

Which coverage (A-F)

Answer 15

Coverage F

Question 16

What are the 8 general exclusions to the property insuring agreement homeowners forms contain?

Answer 16

1. Ordinance or Law
2. Earth Movement
3. Water Damage
4. Power Failure
5. Neglect
6. War
7. Nuclear Hazard
8. Intentional Loss

Question 17

Protection for personal property that is in transit or that can be transported.

Answer 17

Inland Marine Insurance

Question 18

What are the 3 distinct values a home may be viewed as having?

Answer 18

1. Market Value
2. Assessed Value: value placed by the taxing authorities
3. Replacement Cost Value: What it would cost to replace the home as-is

Question 19

How much coverage do you need for a home?

Answer 19

You should insure the house for the cost to replace it (replacement cost)

Question 20

Is replacement value determined at the time of policy purchase or at the time of loss?

Answer 20

Time of loss

Question 21

How is actual cash value (ACV) determined?

Answer 21

Replacement Cost - Depreciation

Question 22

What factors affect the cost of a homeowners policy and its endorsements?

Answer 22

1. Construction: materials, age, upkeep
2. Location
3. Policy Type: HO-2 vs. HO-3, etc.
4. Deductible
5. Insurer: For example, some insurance companies offer a discount to those who have car insurance with them.

Question 23

What are general exclusions of personal liability insurance policies?

Answer 23

1. Business Pursuits
2. Rental of Property
3. Professional Liability
4. Motor Vehicles
5. Watercraft
6. Aircraft
7. Communicable Disease
8. War, sexual assault, sale of drugs, etc.

Question 24

What are stand-alone personal liability policies called?

Answer 24

Comprehensive Personal Liability (CPL) policies

Question 25

How much liability coverage is enough?

Answer 25

-At least as much liability coverage as net worth -An exception would be high income earners (e.g. doctors, lawyers) who need higher liability limits even as they are starting their careers and have more debt than assets.

Question 26

A type of policy that allows you to gain liability insurance beyond what your homeowners and automobile policies offer

Answer 26

Personal Liability Umbrella Policy (PLUP) *Sometimes called catastrophe liability insurance

Question 27

What are th 5 primary owner/driver factors used to determine automobile cost of insurance?

Answer 27

1. Age & gender of the driver 2. Use of the vehicle 3. Type of vehicle 4. The driver's record 5. Credit

Question 28

What is damage by collision?

Answer 28

When the insured hit something or the vehicle is overturnd

Question 29

What is Comprehensive Damage?

Answer 29

When something other tahn collision damages the insured's vehicle

Question 30

# Insurance Policies What are endorsements? | Definition

Answer 30

Coverage additions or deletions

Question 31

What are the 4 approaches used to provide business or commercial insurance?

Answer 31

1. Monoline Forms combination 2. Packaged coverage policies 3. Commercial package policy (CPP) for larger businesses 4. Businessowner's policy (BOP) for smaller businesses

Question 32

What are the 7 broad categories of coverage considered when creating comprehensive coverage for a business?

Answer 32

1. Commercial Property Insurance 2. Boiler and Machinery Insurance 3. Transportation Insurance 4. Crime Insurance 5. Commercial Liability Insurance 6. Commercial Automobile Insurance 7. Workers' Compensation and Employer's Liability Insurance

Question 33

What are the two forms of social insurance required for businessowners both large and small?

Answer 33

1. Worker's Compensation Insurance 2. Unemployment Compensation