Question 1

What is meant by "Medical Payments to others?" Why does the coverage exist?

Accepted Answer

The Medical Payments to others section pays for medical services within 3 years of the date of injury to generally non
insureds on a no
fault basis. The coverage is designed to minimize the probability of a suit under Coverage E (legal liability).

Question 2

The named insured leaves a suitcase filled with clothing on the seat of his unattended,unlocked automobile. The loss is valued at $900 replacement cost and a depreciated value of $700.The HO-2 contract has a $200 deductible on Section I. How much will the HO-2 contract pay for this loss?

Accepted Answer

A) $0 (because the clothing was in an automobile) 
B) $700 
C) $500 
D) $0 (because the automobile was unlocked) 
A) $0 (because the clothing was in an automobile) 
B) $700 
C) $500 
D) $0 (because the automobile was unlocked) C

Question 3

Mary's house is burglarized and $22,000 of jewelry is stolen. What is the maximum amount her HO-2 policy,will pay for this loss?

Accepted Answer

A) $12,000 
B) $9,600 
C) $2,500 
D) $1,500 
A) $12,000 
B) $9,600 
C) $2,500 
D) $1,500 D

Question 4

Which of the following is NOT covered by the HO-2 Form?

Accepted Answer

A) additional living expense and rental value 
B) death (loss)of domestic anIrals 
C) personal liability defense costs 
D) loss of trees, shrubs and other plants 
A) additional living expense and rental value 
B) death (loss)of domestic anIrals 
C) personal liability defense costs 
D) loss of trees, shrubs and other plants

Question 5

The liability coverage of the HO policy commits the insurer to defend lawsuits brought against the homeowner,even if the lawsuits are frivolous and groundless.

Accepted Answer

A) True 
 B)False

Question 6

Mr.Green's 24-year old son still lives at home while attending college part-time. The son also has an apartment near his college campus. His stereo is stolen from the apartment. The stereo has a $1,400 replacement cost,and an actual cash value of $900. If there is a $100 deductible on Section I,how much will the HO-2 contract pay for the stolen stereo?

Accepted Answer

A) $800 
B) $900 
C) $0, because the son is not covered by the contract 
D) $1,400 
A) $800 
B) $900 
C) $0, because the son is not covered by the contract 
D) $1,400

Question 7

A coinsurance requirement,if not met,serves to limit the recovery of loss under the policy.

Accepted Answer

A) True 
 B)False

Question 8

Joe owns a house on which he carries a $400,000 HO-2 policy.The replacement cost of the house is $600,000.A fire loss occurs that has a replacement cost of $10,000. How much can Joe collect under his HO-2 policy?

Accepted Answer

A) $15,462 
B) $10,000 
C) $30,000 
D) $ 8,333 
A) $15,462 
B) $10,000 
C) $30,000 
D) $ 8,333

Question 9

Ira is a homeowner covered by an HO-2 policy. He lives with his wife and three teenage children,plus one teenage foster child. Who in the household is not covered for personal liability by the HO policy?

Accepted Answer

A) Ira's foster child 
B) Ira's wife 
C) Any of the Ira's three teenage children 
D) All of the persons listed above are covered 
A) Ira's foster child 
B) Ira's wife 
C) Any of the Ira's three teenage children 
D) All of the persons listed above are covered

Question 10

Adding coverage to the HO contract by endorsement increases the insureds premium.

Accepted Answer

A) True 
 B)False

Question 11

The appraisal procedure set forth in the HO policy is designed to settle all disputes arising between insured and insurer without courtroom litigation.

Accepted Answer

A) True 
 B)False

Question 12

Beverly has an HO-2 contract with a $100,000 per occurrence limit on the Liability coverage. She rents out her basement to a college student,and the student's personal property is damaged by Beverly's negligence. The student sues her for $3,000. How much will the HO policy pay for this loss?

Accepted Answer

A) $0 is paid because this liability is excluded 
B) $0 is paid due to the care, custody and control exclusion 
C) $3,000 is paid because the loss is not excluded 
D) $3,000 is paid under the property section and not the legal liability section 
A) $0 is paid because this liability is excluded 
B) $0 is paid due to the care, custody and control exclusion 
C) $3,000 is paid because the loss is not excluded 
D) $3,000 is paid under the property section and not the legal liability section

Question 13

The homeowners policy agrees to cover the peril of collapse in the "Additional Coverage" section and not as a specified peril because of:

Accepted Answer

A) concurrent causation 
B) morale hazard 
C) all perils are not defined in the contract 
D) collapse of buildings should not be covered 
A) concurrent causation 
B) morale hazard 
C) all perils are not defined in the contract 
D) collapse of buildings should not be covered

Question 14

What is the contractual significance of having high limits of legal liability coverage in the HO contract?

Accepted Answer

If the insured has purchased high limits

Question 15

All of the following are available under one of the HO forms except:

Accepted Answer

A) personal liability insurance 
B) theft insurance 
C) medical payments coverage for others 
D) automobile physical damage coverage 
A) personal liability insurance 
B) theft insurance 
C) medical payments coverage for others 
D) automobile physical damage coverage

Question 16

Mary's house catches on fire. $9,000 of her jewelry is destroyed by the fire. What is the maximum amount her HO-2 policy will pay for this loss?

Accepted Answer

A) $12,000 
B) $9,600 
C) $2,500 
D) $1,500 
A) $12,000 
B) $9,600 
C) $2,500 
D) $1,500

Question 17

The HO policy provides professional liability insurance coverage to the insured,provided the work leading to the lawsuit is done at home.

Accepted Answer

A) True 
 B)False

Question 18

Intentional torts are usually not covered by liability insurance policies.

Accepted Answer

A) True 
 B)False

Question 19

With respect to the HO dwelling coverage,select the most accurate statement:

Accepted Answer

A) if the amount of insurance carried divided by 80% of the replacement cost equals 1 or greater, the company will pay the replacement cost minus the deductible, but no more than the policy limit 
B) if the amount of insurance carried divided by 80% of the replacement cost equals 1 or greater, the company will pay replacement cost minus the deductible 
C) if the amount of insurance divided by 80% of the replacement cost equals 1 or greater, the company will multiply that result by the loss, subtract the deductible, then pay that amount 
D) the insurer must only pay actual cash value for any loss unless the insured has insurance equal to 100% of the replacement cost of the property 
A) if the amount of insurance carried divided by 80% of the replacement cost equals 1 or greater, the company will pay the replacement cost minus the deductible, but no more than the policy limit 
B) if the amount of insurance carried divided by 80% of the replacement cost equals 1 or greater, the company will pay replacement cost minus the deductible 
C) if the amount of insurance divided by 80% of the replacement cost equals 1 or greater, the company will multiply that result by the loss, subtract the deductible, then pay that amount 
D) the insurer must only pay actual cash value for any loss unless the insured has insurance equal to 100% of the replacement cost of the property

Question 20

The HO policy's Mortgage Clause continues to protect the lender (mortgagee)even if the insured/homeowner has committed fraud against the insurer.

Accepted Answer

A) True 
 B)False

Exam 10: Homeowners Insurance

What is meant by "Medical Payments to others?" Why does the coverage exist?

The named insured leaves a suitcase filled with clothing on the seat of his unattended,unlocked automobile. The loss is valued at $900 replacement cost and a depreciated value of $700.The HO-2 contract has a $200 deductible on Section I. How much will the HO-2 contract pay for this loss?

Mary's house is burglarized and $22,000 of jewelry is stolen. What is the maximum amount her HO-2 policy,will pay for this loss?

Which of the following is NOT covered by the HO-2 Form?

The liability coverage of the HO policy commits the insurer to defend lawsuits brought against the homeowner,even if the lawsuits are frivolous and groundless.

A coinsurance requirement,if not met,serves to limit the recovery of loss under the policy.

Joe owns a house on which he carries a $400,000 HO-2 policy.The replacement cost of the house is $600,000.A fire loss occurs that has a replacement cost of $10,000. How much can Joe collect under his HO-2 policy?

Ira is a homeowner covered by an HO-2 policy. He lives with his wife and three teenage children,plus one teenage foster child. Who in the household is not covered for personal liability by the HO policy?

Adding coverage to the HO contract by endorsement increases the insureds premium.

The appraisal procedure set forth in the HO policy is designed to settle all disputes arising between insured and insurer without courtroom litigation.

Beverly has an HO-2 contract with a $100,000 per occurrence limit on the Liability coverage. She rents out her basement to a college student,and the student's personal property is damaged by Beverly's negligence. The student sues her for $3,000. How much will the HO policy pay for this loss?

The homeowners policy agrees to cover the peril of collapse in the "Additional Coverage" section and not as a specified peril because of:

What is the contractual significance of having high limits of legal liability coverage in the HO contract?

All of the following are available under one of the HO forms except:

Mary's house catches on fire. $9,000 of her jewelry is destroyed by the fire. What is the maximum amount her HO-2 policy will pay for this loss?

The HO policy provides professional liability insurance coverage to the insured,provided the work leading to the lawsuit is done at home.

Intentional torts are usually not covered by liability insurance policies.

With respect to the HO dwelling coverage,select the most accurate statement:

The HO policy's Mortgage Clause continues to protect the lender (mortgagee)even if the insured/homeowner has committed fraud against the insurer.

Fundamentals and Terminology

Defining the Insurable Event

Risk Management

Financial Services Companies

Insurance Occupations

the Insurance Market: the Economic Problem

Insurance Regulation

Insurance Contracts

Basic Property and Liability Insurance Contracts

the Personal Auto Policy

Professional Financial Planning

Life Insurance Policies

Standard Life Insurance Contract Provisions And Options

Annuities

Medical Expense and Disability Insurance

Advanced Topics in Risk Management

Commercial Property Insurance

Commercial Liability Insurance

Bonding,Crime Insurance and Reinsurance

Employee Benefits

Social Security

Unemployment and Workers Compensation Insurance

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