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Flashcards in TB - Dwelling Insurance Deck (10)
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The insurance carries a DP-2 with $10,000 contents coverage. He owns a canoe and stores it at a lake in a private non-owned garage. Fire destroys the garage and the boat. How much coverage will his policy provide?

Up to $1,000

Up to $500

Nothing

$1,500

Nothing!!!

(The extension of coverage that applies to personal property off the premises of 10% does not extend to cover rowboats and canoes)

1

An insurer home is covered under a DP-3 form. The policy provides $20,000 in coverage in a home that would cost $50,000 to replace. When high winds destroy a roof, it is determined that it will cost $2000 to replace it. Assuming he actual cash value of the roof is $750, how much will the insured collect for the loss?


$2000

$1600

$1000

$1750

$1,000

(In order to receive replacement cost coverage under the DP-3 form for structures, an insurer must carry at least 80% of he dwelling replace net value. The value of the dwelling is $50,000 so the insured should have carried at least $40,000. Since this insured only carried $20,000, he is 50% underinsured! The policy will pay 50% of the loss, or $1000!)

2

Mr. Simpson owns a dwelling in a rural area close to a small wooded area. He is covered under a DP-3 form. A deer sees his reflection in a picture window and jumps through and enters the dwelling causing sever wall and floor damages. Some of the furniture is damaged and must be replaced. He is covered for $100,000 on the dwelling and $50,000 on the contents. Which of the following would apply to this loss?


The entire loss would be denied

Pay replacement cost on the dwelling and and ACC for the contents loss

Pay replace my cost o the dwelling and the contenders

Deny the contents claim and pay the dwelling loss on a replacement cost basis

Deny the contents claim and pay the dwelling loss on replacement cost basis!

(Since DP-3 is an open peril form as regards the dwelling, this type of loss is not excluded, the dwelling damage is covered. The contents coverage is provided in a broad named peril basis. This type of loss would not be covered for the contents damage as it is not listed peril)

3

The insured is covered under a DP-1 dwelling form with coverage on the dwelling in the amount of $100,000. He has a detached garage valued at $10,000. Both structures are destroyed by a fire. What is he total amount recoverable under the policy?


$110,000

$100,000

$95,000

$105,000

$100,000!!!

(Under DP-1 form the 10% of Coverage A for other detached structures is NOT additional coverage. It is part of the dwelling limit. The policy cannot pay more than the total dwelling limit of $100,000)

4

The insured lived close to Mount Saint Helens and carried a DP-2 policy. The volcano erupted and the movement of the earth caused his home to collapse. He reports the claim as a volcanic eruption loss. what do you feel would be the result of this claim?


The claim would be covered under the peril of volcanic eruption

A portion of the claim based on a deductible percentage would be paid

The claim would be denied

The claim would be paid for ACV only under these circumstances

The claim would be denied

5

A water pipe has burst and the insured has suffered floor and ceiling in his two story home. He is covered under a DP-2 form with dwelling and contents coverage. The building codes now require that special piping installation is needed at an additional cost of $500 over and above the normal cost to repair. His dwelling limit is $100,000. What will the policy pay if the normal cost to repair is $400?


The policy will pay a total of $400

The policy will pay a total of $900

The policy will pay $500

The policy will pay $700

The policy will pay a total of $900

6

Mr. Jones purchases a policy on the dwelling in the amount of $40,000. His wife also purchases a policy in the amount of $20,000 unbeknown to her husband from another company. In case of a $15,000 loss, what will her company pay on the loss?


$5,000

$15,000

$10,000

$7,500

$5,000

(The other insurance clause deals with this issues. Her company has one third of the total coverage. Therefore her company will pay $5000 or one third of the claim!)

7

The insured has purchased a DP-3 form to cover his dwelling that is valued at a replacement cost of $100,000. He insured it for $60,000 and has a $30,000 fire loss. What can he expect to be paid?


$30,000

$25,000

$22,500

$15,000

$22,500

(An insured has not complied with the 80% requirement for replacement cost coverage. He is underinsured by 25%. He should have carried $80,000 and instead carried only $60,000. The policy will pay 75% of the $30,000 or $22,500. The company can also pay the ACV of the loss.)

8

The insured has forgotten to close an upstairs window. A storm blows through and wind and water severely damage the contents and floor of the dwelling. The insured carries a DP-2 dwelling form. What will be the outcome of this loss?


The loss will be paid under the peril of wind

The loss will be paid in an actual cash value for the contents damage

The claim will be denied

The dwelling damage is covered in a replacement cost basis if the insured carried 80% to the value and the contents loss will be paid on an ACV basis

The claim will be denied!

(The claim will be denied because the peril of wind did not create an opening in the structure)

9

The insured is covered under a DP-3 with contents coverage. He has a hunting rifle stolen by forcible entry into the dwelling. The front door is severely damaged and must be replaced. Which of the following is a true statement regarding this loss?


The entire claim will be denied

Only the damage caused by the burglars will be paid

The theft of the guns is covered under personal property

Both the damage to the door and and the theft will be covered

Only the damage caused by the burglars will be paid

(Only the damage to the door will be covered under the burglar damage peril. Theft is not a covered peril under the dwelling program unless endorsed on the policy)