Question 1

Which of the following losses to a dwelling would be covered under an unendorsed Homeowners 3 policy?

Accepted Answer

A) smoke damage resulting from agricultural operations of a neighboring farmer 
B) damage to the structure caused by a flash flood 
C) damage to the structure caused by the weight of heavy snow 
D) damage to a floor caused by water backing up through a sewer pipe 
A) smoke damage resulting from agricultural operations of a neighboring farmer 
B) damage to the structure caused by a flash flood 
C) damage to the structure caused by the weight of heavy snow 
D) damage to a floor caused by water backing up through a sewer pipe C

Question 2

A dwelling with a replacement cost of $150,000 was insured under a Homeowners 3 policy for $100,000 at the time the roof was destroyed by a windstorm.The actual cash value of the loss was $9,000,but it will cost $12,000 to replace the roof.Assuming no deductible,what will the insurer pay to settle this loss?

Accepted Answer

A) $8,000 
B) $9,000 
C) $10,000 
D) $12,000 
A) $8,000 
B) $9,000 
C) $10,000 
D) $12,000 C

Question 3

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. B

Question 4

Which of the following types of water damage is covered under an unendorsed Homeowners 3 policy?

Accepted Answer

A) damage from flood 
B) damage from water backing up through a drain 
C) damage from water below the surface of the ground that seeps into a basement 
D) damage from water that overflows from a malfunctioning washing machine 
A) damage from flood 
B) damage from water backing up through a drain 
C) damage from water below the surface of the ground that seeps into a basement 
D) damage from water that overflows from a malfunctioning washing machine

Question 5

David has a Homeowners 3 policy that provides $280,000 of insurance on his dwelling,which has a current replacement value of $400,000.Ignoring any deductible,how much will David collect if a kitchen with a replacement value of $24,000 but an actual cash value of $18,000 is destroyed in a fire?

Accepted Answer

A) $18,000 
B) $20,000 
C) $21,000 
D) $24,000 
A) $18,000 
B) $20,000 
C) $21,000 
D) $24,000

Question 6

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.

Question 7

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

Question 8

Mike and Susan built their "dream home." They insured their home for its full replacement cost.They also added an endorsement that will pay up to an additional 20 percent of the policy limit in case the cost of rebuilding the home after a loss is greater than the policy limit.The basis under which Mike and Susan insured their home is called

Accepted Answer

A) actual cash value. 
B) valued policy coverage. 
C) extended replacement cost. 
D) guaranteed replacement cost. 
A) actual cash value. 
B) valued policy coverage. 
C) extended replacement cost. 
D) guaranteed replacement cost.

Question 9

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

Question 10

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 11

All of the following losses are subject to special limits of liability under the Homeowners 3 policy EXCEPT the

Accepted Answer

A) theft of firearms. 
B) destruction by fire of property used for business purposes. 
C) storm damage to a boat at a marina. 
D) destruction of jewelry by fire. 
A) theft of firearms. 
B) destruction by fire of property used for business purposes. 
C) storm damage to a boat at a marina. 
D) destruction of jewelry by fire.

Question 12

Jose and Maria would like "all-risks" coverage on their home and their personal property.Which unendorsed homeowners form provides this coverage?

Accepted Answer

A) Homeowners 2 
B) Homeowners 3 
C) Homeowners 4 
D) Homeowners 5 
A) Homeowners 2 
B) Homeowners 3 
C) Homeowners 4 
D) Homeowners 5

Question 13

Darla purchased an unendorsed Homeowners 3 policy.While the policy was in force,a fire occurred that destroyed a living room set.The living room set cost $4,000 new,but was 25 percent depreciated when the loss occurred.Replacement furniture will cost $4,400.Assuming no deductible,how much will Darla receive from her insurer?

Accepted Answer

A) $3,000 
B) $3,300 
C) $3,400 
D) $4,400 
A) $3,000 
B) $3,300 
C) $3,400 
D) $4,400

Question 14

Which of the following statements about the additional coverages under Section I of the Homeowners 3 policy is true?

Accepted Answer

A) There is coverage for the reasonable cost incurred to protect property from further damage after a covered loss occurs. 
B) There is unlimited coverage for furnishings of the landlord in an apartment on the premises that is rented to others. 
C) Property removed from the premises because it is endangered by an insured peril is covered on a named-perils basis while it is outside the insured premises. 
D) Damage caused by the settling of the insured structure is covered as a collapse. 
A) There is coverage for the reasonable cost incurred to protect property from further damage after a covered loss occurs. 
B) There is unlimited coverage for furnishings of the landlord in an apartment on the premises that is rented to others. 
C) Property removed from the premises because it is endangered by an insured peril is covered on a named-perils basis while it is outside the insured premises. 
D) Damage caused by the settling of the insured structure is covered as a collapse.

Question 15

The major difference between the Homeowners 2 policy and the Homeowners 3 policy is the

Accepted Answer

A) insured perils for the dwelling. 
B) insured perils for personal property. 
C) type of liability coverage provided. 
D) amount of coverage for other structures. 
A) insured perils for the dwelling. 
B) insured perils for personal property. 
C) type of liability coverage provided. 
D) amount of coverage for other structures.

Question 16

All of the following statements about the Homeowners 6 (unit-owners form)policy are true EXCEPT

Accepted Answer

A) It includes personal liability coverage. 
B) It covers personal property on an "all-risks" basis. 
C) It provides limited coverage for improvements and alterations. 
D) It provides limited coverage for loss assessments. 
A) It includes personal liability coverage. 
B) It covers personal property on an "all-risks" basis. 
C) It provides limited coverage for improvements and alterations. 
D) It provides limited coverage for loss assessments.

Question 17

Michelle had four matching end tables in her home.A fire damaged the home,destroying two of the end tables.Michelle's home was covered by an unendorsed Homeowners 3 policy.Which of the following is true with regard to the settlement for the end tables in this case?

Accepted Answer

A) Loss to a pair or set is excluded under the policy. 
B) The insurer will pay the difference in actual cash value of the property before and after the loss. 
C) The insurer will pay the replacement cost of the loss. 
D) If a partial loss to a pair or set occurs,the insurer is liable for replacement of the entire pair or set. 
A) Loss to a pair or set is excluded under the policy. 
B) The insurer will pay the difference in actual cash value of the property before and after the loss. 
C) The insurer will pay the replacement cost of the loss. 
D) If a partial loss to a pair or set occurs,the insurer is liable for replacement of the entire pair or set.

Question 18

Which of the following statements about eligibility requirements for homeowners insurance is (are)true?
I.A contract can be written on a twenty-unit apartment complex as long as the tenants are families.
II.Separate forms are available for renters and condominium owners.

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 19

All of the following statements about covered perils and loss settlement under an unendorsed Homeowners 3 policy are true EXCEPT

Accepted Answer

A) The dwelling is covered on an all-risk basis. 
B) Personal property losses are settled on a replacement cost basis. 
C) Losses to the dwelling may be settled on an actual cash value basis. 
D) Personal property is covered on a named-perils basis. 
A) The dwelling is covered on an all-risk basis. 
B) Personal property losses are settled on a replacement cost basis. 
C) Losses to the dwelling may be settled on an actual cash value basis. 
D) Personal property is covered on a named-perils basis.

Question 20

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

Exam 20: Homeowners Insurance,section I

Which of the following losses to a dwelling would be covered under an unendorsed Homeowners 3 policy?

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

Which of the following types of water damage is covered under an unendorsed Homeowners 3 policy?

David has a Homeowners 3 policy that provides $280,000 of insurance on his dwelling,which has a current replacement value of $400,000.Ignoring any deductible,how much will David collect if a kitchen with a replacement value of $24,000 but an actual cash value of $18,000 is destroyed in a fire?

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

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?

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.

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

All of the following losses are subject to special limits of liability under the Homeowners 3 policy EXCEPT the

Jose and Maria would like "all-risks" coverage on their home and their personal property.Which unendorsed homeowners form provides this coverage?

Which of the following statements about the additional coverages under Section I of the Homeowners 3 policy is true?

The major difference between the Homeowners 2 policy and the Homeowners 3 policy is the

All of the following statements about the Homeowners 6 (unit-owners form)policy are true EXCEPT

Michelle had four matching end tables in her home.A fire damaged the home,destroying two of the end tables.Michelle's home was covered by an unendorsed Homeowners 3 policy.Which of the following is true with regard to the settlement for the end tables in this case?

Which of the following statements about eligibility requirements for homeowners insurance is (are)true? I.A contract can be written on a twenty-unit apartment complex as long as the tenants are families. II.Separate forms are available for renters and condominium owners.

All of the following statements about covered perils and loss settlement under an unendorsed Homeowners 3 policy are true EXCEPT

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

Risk in Our Society

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Introduction to Risk Management

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Types of Insurers and Marketing Systems

Insurance Company Operations

Financial Operations of Insurers

Government Regulation of Insurance

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Analysis of Insurance Contracts

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Life Insurance Contractual Provisions

Buying Life Insurance

Annuities and Individual Retirement Accounts

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Employee Benefits: Group Life and Health Insurance

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