Question 1

All of the following are duties of the mortgagee under the standard mortgage clause EXCEPT

Accepted Answer

A)  to reimburse the insurer for any loss payments. 
B)  to notify the insurer of any change in ownership of the property of which the mortgagee is aware. 
C)  to provide a proof of loss form if the insured fails to do so. 
D)  to pay the premium if the insured fails to do so. 
A)  to reimburse the insurer for any loss payments. 
B)  to notify the insurer of any change in ownership of the property of which the mortgagee is aware. 
C)  to provide a proof of loss form if the insured fails to do so. 
D)  to pay the premium if the insured fails to do so.

Question 2

Which of the following statements concerning coverage under the Homeowners 3 policy is true?

Accepted Answer

A)  If a power failure away from the insured dwelling causes a loss, the loss is covered. 
B)  If a Coverage C peril causes a collapse, the resulting damage is covered. 
C)  If an insured peril damages a portion of a pair or set (e.g. matching lamps or end tables), the insurer must pay the full value of the entire pair or set. 
D)  If a discharge from a home appliance causes the home to flood, the loss is excluded. . 
A)  If a power failure away from the insured dwelling causes a loss, the loss is covered. 
B)  If a Coverage C peril causes a collapse, the resulting damage is covered. 
C)  If an insured peril damages a portion of a pair or set (e.g. matching lamps or end tables), the insurer must pay the full value of the entire pair or set. 
D)  If a discharge from a home appliance causes the home to flood, the loss is excluded. .

Question 3

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. Ignoring any 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

Question 4

Which of the following statements about the personal property coverage (Coverage C) of the Homeowners 3 policy is (are) true?
I. There are special limits of liability that apply to certain types of personal property.
II. The full amount of coverage applies only if the property is permanently located at any residence of the insured.

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

Which of the following statements about the replacement cost provision of the Homeowners 3 policy is true?

Accepted Answer

A)  It applies to personal property losses only. 
B)  Except for small losses, the insured must repair or replace the damaged property in order to receive full replacement cost. 
C)  The insured is required to carry an amount of insurance equal to 100 percent of the replacement value of the insured property. 
D)  Loss settlements are equal to 50 percent of the value of the loss if the insured is carrying less than the required amount of insurance. 
A)  It applies to personal property losses only. 
B)  Except for small losses, the insured must repair or replace the damaged property in order to receive full replacement cost. 
C)  The insured is required to carry an amount of insurance equal to 100 percent of the replacement value of the insured property. 
D)  Loss settlements are equal to 50 percent of the value of the loss if the insured is carrying less than the required amount of insurance.

Question 6

Which of the following is a general exclusion under Section I of the Homeowners 3 policy?

Accepted Answer

A)  Water damage caused by accidental discharge from a household appliance. 
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 a windstorm. 
A)  Water damage caused by accidental discharge from a household appliance. 
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 a windstorm.

Question 7

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 8

Several different values can be considered when determining how much insurance should be carried on a dwelling (the Coverage A limit of the Homeowners 3 policy). The appropriate value that should be used is:

Accepted Answer

A)  the home's market value. 
B)  the home's actual cash value. 
C)  the home's appraised value for property tax purposes. 
D)  the home's replacement cost. 
A)  the home's market value. 
B)  the home's actual cash value. 
C)  the home's appraised value for property tax purposes. 
D)  the home's replacement cost.

Question 9

Brian purchased an unendorsed Homeowners 3 policy. Under the policy, Brian's detached garage is also covered. Which of the following statements regarding coverage on the garage is true?

Accepted Answer

A)  The garage is covered on a named-perils basis. 
B)  Any losses to the garage are settled on an actual cash value basis. 
C)  The cost of removing debris is included in the policy limit on the garage, but if the damage and cost of removing debris exceed the limit, an additional five percent of the policy limit is available. 
D)  The garage is covered under the dwelling coverage, Part A. 
A)  The garage is covered on a named-perils basis. 
B)  Any losses to the garage are settled on an actual cash value basis. 
C)  The cost of removing debris is included in the policy limit on the garage, but if the damage and cost of removing debris exceed the limit, an additional five percent of the policy limit is available. 
D)  The garage is covered under the dwelling coverage, Part A.

Question 10

A fire destroyed the home next door to Brad's home. The fire department chief was concerned that the damaged home would collapse on to Brad's home, so he ordered Brad to evacuate his home. Which of the following statements is true concerning the cost of Brad's hotel room while he is complying with the fire chief's order?

Accepted Answer

A)  The cost of the hotel room is not covered, as Brad's home was not directly damaged. 
B)  The cost of the hotel room is covered under the "fair rental value" coverage of Part D. 
C)  The cost of the hotel room is covered under the "prohibited use" coverage of Part D. 
D)  The cost of the hotel room is covered under the dwelling coverage of Part A. 
A)  The cost of the hotel room is not covered, as Brad's home was not directly damaged. 
B)  The cost of the hotel room is covered under the "fair rental value" coverage of Part D. 
C)  The cost of the hotel room is covered under the "prohibited use" coverage of Part D. 
D)  The cost of the hotel room is covered under the dwelling coverage of Part A.

Question 11

Persons insured under Section I of the Homeowners 3 policy include which of the following?
I.A spouse of the named insured if living in the same household
II.The named insured's children who are under age 24 and who are full-time college students

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 12

Under the Homeowners 3 policy, all of the following are options of the insurer for settling claims EXCEPT

Accepted Answer

A)  paying the claim in cash. 
B)  replacing the property. 
C)  repairing the property. 
D)  paying the claim with insurance company stock. 
A)  paying the claim in cash. 
B)  replacing the property. 
C)  repairing the property. 
D)  paying the claim with insurance company stock.

Question 13

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 14

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 15

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 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 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.

Question 16

Jose and Maria would like "open-perils" 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 17

Ted borrowed $140,000 from ABC Bank to purchase a home and pledged 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 monthly mortgage. 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 18

Following catastrophic hurricane losses, South Coast Insurance Company changed its deductible provision. Rather than using a specified dollar value, $250 for example; the dollar value of the deductible increases with the size of the loss. The type of deductible that South Coast changed to is called a(n)

Accepted Answer

A)  calendar-year deductible. 
B)  aggregate deductible. 
C)  straight deductible. 
D)  percentage deductible. 
A)  calendar-year deductible. 
B)  aggregate deductible. 
C)  straight deductible. 
D)  percentage deductible.

All of the following are duties of the mortgagee under the standard mortgage clause EXCEPT

Which of the following statements concerning coverage under the Homeowners 3 policy is true?

Which of the following statements about the replacement cost provision of the Homeowners 3 policy is true?

Which of the following is a general exclusion under Section I of the Homeowners 3 policy?

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.

Several different values can be considered when determining how much insurance should be carried on a dwelling (the Coverage A limit of the Homeowners 3 policy). The appropriate value that should be used is:

Brian purchased an unendorsed Homeowners 3 policy. Under the policy, Brian's detached garage is also covered. Which of the following statements regarding coverage on the garage is true?

Persons insured under Section I of the Homeowners 3 policy include which of the following? I.A spouse of the named insured if living in the same household II.The named insured's children who are under age 24 and who are full-time college students

Under the Homeowners 3 policy, all of the following are options of the insurer for settling claims EXCEPT

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.

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

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

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

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

Filters

Exam 22: Homeowners Insurance, Section I

All of the following are duties of the mortgagee under the standard mortgage clause EXCEPT

Which of the following statements concerning coverage under the Homeowners 3 policy is true?

Which of the following statements about the replacement cost provision of the Homeowners 3 policy is true?

Which of the following is a general exclusion under Section I of the Homeowners 3 policy?

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.

Several different values can be considered when determining how much insurance should be carried on a dwelling (the Coverage A limit of the Homeowners 3 policy). The appropriate value that should be used is:

Brian purchased an unendorsed Homeowners 3 policy. Under the policy, Brian's detached garage is also covered. Which of the following statements regarding coverage on the garage is true?

Persons insured under Section I of the Homeowners 3 policy include which of the following? I.A spouse of the named insured if living in the same household II.The named insured's children who are under age 24 and who are full-time college students

Under the Homeowners 3 policy, all of the following are options of the insurer for settling claims EXCEPT

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.

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

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

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

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

Filters