Question 1

Section I of the Homeowners 3 policy provides coverage for which of the following?

Accepted Answer

A)  loss of use 
B)  personal liability 
C)  disability of the homeowner 
D)  medical payments 
A)  loss of use 
B)  personal liability 
C)  disability of the homeowner 
D)  medical payments A

Question 2

Which homeowners policy is designed for the tenants of a 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 B

Question 3

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 C

Question 4

Which of the following statements about the appraisal clause in the Homeowners 3 policy is (are) true?
I.It is used to determine a value for personal property when the policy is issued.
II.It is used to help settle disputes over the amount of a loss after a loss has occurred.

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 5

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 6

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 7

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)  There is no coverage for the increased cost of construction or repair to comply with an ordinance or law. 
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)  There is no coverage for the increased cost of construction or repair to comply with an ordinance or law.

Question 8

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 9

Which of the following statements concerning the coverage of collapse of the dwelling under an unendorsed Homeowners 3 policy is true?

Accepted Answer

A)  There is no coverage for collapse, regardless of the cause of the collapse. 
B)  Collapse is covered if it is caused by one of the Coverage C perils. 
C)  If collapse is caused by an earthquake, the loss is covered. 
D)  There is no coverage for collapse unless the proper endorsement is added to the policy. 
A)  There is no coverage for collapse, regardless of the cause of the collapse. 
B)  Collapse is covered if it is caused by one of the Coverage C perils. 
C)  If collapse is caused by an earthquake, the loss is covered. 
D)  There is no coverage for collapse unless the proper endorsement is added to the policy.

Question 10

The concurrent causation exclusion in the Homeowners 3 policy specifies that:

Accepted Answer

A)  if two or more perils jointly cause a loss, there is no coverage if one of the perils is excluded. 
B)  if the insured has two or more policies in force at the time of the loss, the loss is not covered. 
C)  if the insured has two or more policies in force at the time of the loss, the loss is pro-rated between the insurers. 
D)  if two or more perils jointly cause a loss, there is coverage as long as one of the perils is covered. 
A)  if two or more perils jointly cause a loss, there is no coverage if one of the perils is excluded. 
B)  if the insured has two or more policies in force at the time of the loss, the loss is not covered. 
C)  if the insured has two or more policies in force at the time of the loss, the loss is pro-rated between the insurers. 
D)  if two or more perils jointly cause a loss, there is coverage as long as one of the perils is covered.

Question 11

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 roof with a replacement value of $16,000 but an actual cash value of $10,000 is destroyed in a fire?

Accepted Answer

A)  $10,000 
B)  $12,000 
C)  $14,000 
D)  $16,000 
A)  $10,000 
B)  $12,000 
C)  $14,000 
D)  $16,000

Question 12

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

Accepted Answer

A)  damage from a flood caused by torrential rain 
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 a flood caused by torrential rain 
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 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

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 15

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 16

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 17

The purpose of the appraisal clause in the Homeowners 3 policy is to

Accepted Answer

A)  determine the appropriate amount of homeowners insurance to purchase. 
B)  set a value on the home for estate purposes if the homeowner dies. 
C)  settle valuation disputes between the insurer and insured after a loss has occurred. 
D)  determine a mortgage lender's insurable interest after a loss has occurred. 
A)  determine the appropriate amount of homeowners insurance to purchase. 
B)  set a value on the home for estate purposes if the homeowner dies. 
C)  settle valuation disputes between the insurer and insured after a loss has occurred. 
D)  determine a mortgage lender's insurable interest after a loss has occurred.

Question 18

Which of the following statements about covered perils under the personal property coverage (Coverage C) of the Homeowners 3 policy is true?

Accepted Answer

A)  Theft losses to boats and watercraft are covered only if they occur at the insured's residence. 
B)  Damage from an explosion is covered only if the explosion is the result of fire or lightning. 
C)  Property damage from vehicles is covered only if it is caused by the insured. 
D)  Smoke damage is covered only if it arises from agricultural or industrial operations. 
A)  Theft losses to boats and watercraft are covered only if they occur at the insured's residence. 
B)  Damage from an explosion is covered only if the explosion is the result of fire or lightning. 
C)  Property damage from vehicles is covered only if it is caused by the insured. 
D)  Smoke damage is covered only if it arises from agricultural or industrial operations.

Question 19

All of the following statements about conditions under a Homeowners 3 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 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 22: Homeowners Insurance, Section I

Section I of the Homeowners 3 policy provides coverage for which of the following?

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

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

Which of the following statements about the appraisal clause in the Homeowners 3 policy is (are) true? I.It is used to determine a value for personal property when the policy is issued. II.It is used to help settle disputes over the amount of a loss after a loss has occurred.

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

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

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

Which of the following statements concerning the coverage of collapse of the dwelling under an unendorsed Homeowners 3 policy is true?

The concurrent causation exclusion in the Homeowners 3 policy specifies that:

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 roof with a replacement value of $16,000 but an actual cash value of $10,000 is destroyed in a fire?

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

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 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.

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 purpose of the appraisal clause in the Homeowners 3 policy is to

Which of the following statements about covered perils under the personal property coverage (Coverage C) of the Homeowners 3 policy is true?

All of the following statements about conditions under a Homeowners 3 policy are true 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?

Risk and Its Treatment

Insurance and Risk

Introduction to Risk Management

Enterprise Risk Management and Related Topics

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

Auto Insurance

Auto Insurance (continued)

Homeowners Insurance, Section II

Other Property and Liability Insurance Coverages

Commercial Property Insurance

Commercial Liability Insurance

Crime Insurance and Surety Bonds

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