Question 1

All of the following are general exclusions under Section I of the Homeowners 3 policy EXCEPT

Accepted Answer

A) losses due to earthquake. 
B) losses due to the failure of the insured to use all reasonable means to save and preserve property after the time of a loss. 
C) losses resulting from a power failure caused by an insured peril at the residence premises. 
D) losses due to radiation from a nuclear power plant. 
A) losses due to earthquake. 
B) losses due to the failure of the insured to use all reasonable means to save and preserve property after the time of a loss. 
C) losses resulting from a power failure caused by an insured peril at the residence premises. 
D) losses due to radiation from a nuclear power plant. C

Question 2

Which of the following statements about the Homeowners 3 policy is (are)true?
I.Losses to the dwelling are always settled on an actual cash value basis.
II.Coverage on personal property is limited to $5,000.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II D

Question 3

All of the following are additional coverages under Section I of the Homeowners 3 policy EXCEPT

Accepted Answer

A) the reasonable expenses of removing debris of covered property after an insured loss. 
B) fire department service charges for which the insured is liable by contract or agreement. 
C) damage to trees and shrubs caused by a windstorm. 
D) losses incurred from the unauthorized use of a stolen credit card. 
A) the reasonable expenses of removing debris of covered property after an insured loss. 
B) fire department service charges for which the insured is liable by contract or agreement. 
C) damage to trees and shrubs caused by a windstorm. 
D) losses incurred from the unauthorized use of a stolen credit card. C

Question 4

If the insurer broadens coverage during the policy period without an increase in premium,and the broadened coverage is not part of a general program revision,the insured is entitled to the broadened coverage under which policy provision?

Accepted Answer

A) waiver of policy provisions 
B) subrogation 
C) liberalization clause 
D) pair or set clause 
A) waiver of policy provisions 
B) subrogation 
C) liberalization clause 
D) pair or set clause

Question 5

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

Accepted Answer

A) lowering the deductible which applies to personal property losses. 
B) storing the property away from the home at another location. 
C) adding a schedule to the policy listing the property with specific amounts of insurance. 
D) adding an appraisal clause to the policy. 
A) lowering the deductible which applies to personal property losses. 
B) storing the property away from the home at another location. 
C) adding a schedule to the policy listing the property with specific amounts of insurance. 
D) adding an appraisal clause to the policy.

Question 6

Which of the following statements about the coverage for other structures (Coverage B.under the Homeowners 3 policy is true?

Accepted Answer

A) The coverage applies to a detached garage or tool shed on the residence premises. 
B) Structures attached to the dwelling by a fence or utility line are considered to be part of the dwelling rather than other structures. 
C) Coverage applies even if the other structure is used for business purposes. 
D) There is no coverage for a private garage if it is rented to a tenant of the dwelling. 
A) The coverage applies to a detached garage or tool shed on the residence premises. 
B) Structures attached to the dwelling by a fence or utility line are considered to be part of the dwelling rather than other structures. 
C) Coverage applies even if the other structure is used for business purposes. 
D) There is no coverage for a private garage if it is rented to a tenant of the dwelling.

Question 7

Ted purchased a home.To finance the purchase,he borrowed $140,000 from ABC Bank,pledging the home as collateral for the loan.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?

Accepted Answer

A) The insurer has no liability because the loss was intentional. 
B) The insurer will pay Ted the actual cash value of the loss as intentional loss is not excluded. 
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. 
A) The insurer has no liability because the loss was intentional. 
B) The insurer will pay Ted the actual cash value of the loss as intentional loss is not excluded. 
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.

Question 8

All of the following statements about the cancellation of a Homeowners 3 policy are true EXCEPT

Accepted Answer

A) The insurer may cancel a new policy for any reason if it has been in force for less than 60 days and is not a renewal policy. 
B) At least 100 days' notice of cancellation must be given if an insurer cancels a policy for nonpayment of premium. 
C) A policy written for longer than 1 year can be cancelled for any reason on the anniversary date by giving the insured at least 30 days' notice of cancellation. 
D) After a policy has been in force for at least 60 days,it can be cancelled by the insurer if the risk has increased substantially since the policy was issued. 
A) The insurer may cancel a new policy for any reason if it has been in force for less than 60 days and is not a renewal policy. 
B) At least 100 days' notice of cancellation must be given if an insurer cancels a policy for nonpayment of premium. 
C) A policy written for longer than 1 year can be cancelled for any reason on the anniversary date by giving the insured at least 30 days' notice of cancellation. 
D) After a policy has been in force for at least 60 days,it can be cancelled by the insurer if the risk has increased substantially since the policy was issued.

Question 9

Cal is renting an apartment.Which homeowners policy is specially designed to insure renters?

Accepted Answer

A) HO-2 
B) HO-3 
C) HO-4 
D) HO-6 
A) HO-2 
B) HO-3 
C) HO-4 
D) HO-6

Question 10

Which of the following statements about the Homeowners 8 policy is (are)true?
I.Losses to the dwelling are settled on a replacement cost basis if the dwelling is insured for its full market value.
II.It is designed primarily for expensive,newer,dwellings.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 11

All of the following statements about conditions under a homeowners policy are true EXCEPT

Accepted Answer

A) If an insurer broadens coverage without an additional premium during the policy period,the broadened coverage applies immediately to the present policy. 
B) A waiver or change in any policy provision must be approved in writing by the insurer to be valid. 
C) The insurer must give written consent for an assignment of the policy to be valid. 
D) If the named insured dies,coverage automatically ceases with respect to any property of the deceased. 
A) If an insurer broadens coverage without an additional premium during the policy period,the broadened coverage applies immediately to the present policy. 
B) A waiver or change in any policy provision must be approved in writing by the insurer to be valid. 
C) The insurer must give written consent for an assignment of the policy to be valid. 
D) If the named insured dies,coverage automatically ceases with respect to any property of the deceased.

Question 12

Which homeowners policy is designed for the tenants of rented premises?

Accepted Answer

A) Homeowners 2 
B) Homeowners 4 
C) Homeowners 6 
D) Homeowners 8 
A) Homeowners 2 
B) Homeowners 4 
C) Homeowners 6 
D) Homeowners 8

Question 13

Which of the following is (are)included among the duties of an insured following a loss covered under the Homeowners 3 policy?
I.To file a proof of loss within a specified time period after the insurer's request
II.To prepare an inventory of damaged personal property

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 14

Which of the following statements is (are)true regarding how the Homeowners 3 policy handles the peril of collapse?
I.Collapse is specifically excluded,and there are no exceptions to the exclusion.
II.Collapse that is caused by a Coverage C peril is covered.

Accepted Answer

A) I only 
B) II only 
C) both I and II 
D) neither I nor II 
A) I only 
B) II only 
C) both I and II 
D) neither I nor II

Question 15

Which of the following statements about the Homeowners 6 (unit-owners form)policy is true?

Accepted Answer

A) It includes personal liability coverage. 
B) It covers personal property on an open-perils basis. 
C) It covers the dwelling on an open-perils basis. 
D) It is designed for tenants who rent an apartment or a home. 
A) It includes personal liability coverage. 
B) It covers personal property on an open-perils basis. 
C) It covers the dwelling on an open-perils basis. 
D) It is designed for tenants who rent an apartment or a home.

Question 16

Which of the following statements about covered perils and loss settlement under an unendorsed Homeowners 3 policy is true?

Accepted Answer

A) The dwelling is covered on a named-perils basis. 
B) Personal property losses are settled on an actual cash value basis. 
C) Losses to the dwelling are always settled on an actual cash value basis. 
D) Personal property is covered on an open-perils basis. 
A) The dwelling is covered on a named-perils basis. 
B) Personal property losses are settled on an actual cash value basis. 
C) Losses to the dwelling are always settled on an actual cash value basis. 
D) Personal property is covered on an open-perils basis.

Question 17

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)

Accepted Answer

A) binder. 
B) schedule. 
C) application. 
D) warranty. 
A) binder. 
B) schedule. 
C) application. 
D) warranty.

Question 18

The homeowners policy excludes a loss brought about by two or more perils where one peril is covered under the policy and the other perils are excluded.This situation is called

Accepted Answer

A) ordinance or law. 
B) proximate cause. 
C) concurrent causation. 
D) nullification. 
A) ordinance or law. 
B) proximate cause. 
C) concurrent causation. 
D) nullification.

Question 19

Ellen believes the value of the loss to her home is $30,000.The insurer has offered $18,000 to settle the loss.If Ellen and the insurer cannot agree on the value of the loss,which homeowners policy provision specifies how this dispute will be settled?

Accepted Answer

A) insurer's option 
B) appraisal clause 
C) loss payment clause 
D) mortgage clause 
A) insurer's option 
B) appraisal clause 
C) loss payment clause 
D) mortgage clause

Question 20

Betty's 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?

Accepted Answer

A) $10,000 
B) $20,000 
C) $40,000 
D) $50,000 
A) $10,000 
B) $20,000 
C) $40,000 
D) $50,000

Exam 20: Homeowners Insurance,section I

All of the following are general exclusions under Section I of the Homeowners 3 policy EXCEPT

Which of the following statements about the Homeowners 3 policy is (are)true? I.Losses to the dwelling are always settled on an actual cash value basis. II.Coverage on personal property is limited to $5,000.

All of the following are additional coverages under Section I of the Homeowners 3 policy EXCEPT

If the insurer broadens coverage during the policy period without an increase in premium,and the broadened coverage is not part of a general program revision,the insured is entitled to the broadened coverage under which policy provision?

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

Which of the following statements about the coverage for other structures (Coverage B.under the Homeowners 3 policy is true?

All of the following statements about the cancellation of a Homeowners 3 policy are true EXCEPT

Cal is renting an apartment.Which homeowners policy is specially designed to insure renters?

Which of the following statements about the Homeowners 8 policy is (are)true? I.Losses to the dwelling are settled on a replacement cost basis if the dwelling is insured for its full market value. II.It is designed primarily for expensive,newer,dwellings.

All of the following statements about conditions under a homeowners policy are true EXCEPT

Which homeowners policy is designed for the tenants of rented premises?

Which of the following is (are)included among the duties of an insured following a loss covered under the Homeowners 3 policy? I.To file a proof of loss within a specified time period after the insurer's request II.To prepare an inventory of damaged personal property

Which of the following statements is (are)true regarding how the Homeowners 3 policy handles the peril of collapse? I.Collapse is specifically excluded,and there are no exceptions to the exclusion. II.Collapse that is caused by a Coverage C peril is covered.

Which of the following statements about the Homeowners 6 (unit-owners form)policy is true?

Which of the following statements about covered perils and loss settlement under an unendorsed Homeowners 3 policy is true?

The homeowners policy excludes a loss brought about by two or more perils where one peril is covered under the policy and the other perils are excluded.This situation is called

Ellen believes the value of the loss to her home is $30,000.The insurer has offered $18,000 to settle the loss.If Ellen and the insurer cannot agree on the value of the loss,which homeowners policy provision specifies how this dispute will be settled?

Betty's 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?

Risk and Its Treatment

Insurance and Risk

Introduction to Risk Management

Advanced Topics in Risk Management

Types of Insurers and Marketing Systems

Insurance Company Operations

Financial Operations of Insurers

Government Regulation of Insurance

Fundamental Legal Principles

Analysis of Insurance Contracts

Life Insurance

Life Insurance Contractual Provisions

Buying Life Insurance

Annuities and Individual Retirement Accounts

Health-Care Reform; Individual Health Insurance Coverages

Employee Benefits: Group Life and Health Insurance

Employee Benefits: Retirement Plans

Social Insurance

The Liability Risk

Homeowners Insurance,section II

Auto Insurance

Auto Insurance and Society

Other Property and Liability Insurance Coverages

Commercial Property Insurance

Commercial Liability Insurance

Crime Insurance and Surety Bonds

Filters