Chapter 20 Risk management and insurance
Terms in this set (48)
Which of the following statements is (are) true regarding renters insurance?
I. Renters insurance is needed if you rent a house, but is not needed if you rent an apartment.
II. The ISO renter's policy provides "all-risks" coverage on the insured's personal property.
Neither I nor II
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 the Homeowners 6 (unit-owners form) policy are true EXCEPT
It covers personal property on an "all-risks" basis.
Which homeowners policy is designed for the tenants of rented premises?
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.
Neither I nor II
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.
Neither I nor II
The major difference between the Homeowners 2 policy and the Homeowners 3 policy is the
insured perils for the dwelling.
Persons insureds 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
Both I and II
Section I of the Homeowners 3 policy provides coverage for all of the following EXCEPT
All of the following are covered under the dwelling coverage (Coverage A) of the Homeowners 3 policy EXCEPT
the land on which the insured dwelling is located.
Which of the following statements about the coverage for other structures (Coverage B) under the Homeowners 3 policy is true?
The amount of insurance on other structures is equal to a percentage of the coverage on the dwelling.
All of the following losses are subject to special limits of liability under the Homeowners 3 policy EXCEPT the
destruction of jewelry by fire.
Which of the following statements about the personal property coverage (Coverage C) of the Homeowners 3 policy is (are) true?
I. The coverage applies only in the United States and Canada.
II. The full amount of coverage applies only if the property is permanently located at any residence of the insured.
Neither I nor II
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
adding a schedule to the policy listing the property with specific amounts of insurance.
Which of the following property is covered under the personal property coverage (Coverage C) of the Homeowners 3 policy?
a bicycle owned by a foster child living with the named insured
All of the following statements about the coverage for loss of use (Coverage D) under the Homeowners 3 policy are true EXCEPT
The duration of payments for additional living expenses is limited to a maximum of 15 days.
Which of the following statements about the additional coverages under Section I of the Homeowners 3 policy is true?
There is coverage for the reasonable cost incurred to protect property from further damage after a covered loss occurs.
All of the following are additional coverages under Section I of the Homeowners 3 policy EXCEPT
damage to trees and shrubs caused by a windstorm
All of the following are covered perils under the personal property coverage (Coverage C) of an unendorsed Homeowners 3 policy EXCEPT
Which of the following losses to a dwelling would be covered under an unendorsed Homeowners 3 policy?
damage to the structure caused by the weight of heavy snow.
Which of the following statements about covered perils under the personal property coverage (Coverage C) of the Homeowners 3 policy is true?
Theft losses to boats and watercraft are covered only if they occur at the insured's residence.
Which of the following types of water damage is covered under an unendorsed Homeowners 3 policy?
damage from water that overflows from a malfunctioning washing machine.
All of the following are general exclusions under Section I of the Homeowners 3 policy EXCEPT
losses resulting from a power failure caused by an insured peril at the residence premises.
Which of the following is (are) included among the duties of an insured following a loss covered under the Homeowners 3 policy?
both I and II
Which of the following statements about the replacement cost provision of the Homeowners 3 policy is true?
Except for small losses, the insured must repair or replace the damaged property in order to receive full replacement cost.
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?
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.
Under the Homeowners 3 policy, all of the following are options of the insurer for settling claims EXCEPT
paying the claim with insurance company stock.
All of the following are duties of the mortgagee under the standard mortgage clause EXCEPT
to reimburse the insurer for any loss payments.
All of the following statements about the cancellation of a Homeowners 3 policy are true EXCEPT
At least 100 days notice of cancellation must be given if an insurer cancels a policy for nonpayment of premium.
All of the following statements about conditions under a homeowners policy are true EXCEPT
If the named insured dies, coverage automatically ceases with respect to any property of the deceased.
Cal is renting an apartment. Which homeowners policy is specially designed to insure renters?
Shauna purchased a condominium unit. Which homeowners policy is specially designed for condominium unit owners?
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?
The insurer will pay the difference in actual cash value of the property before and after the loss.
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?
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)
All of the following are additional coverages provided under Section I of the Homeowners 3 policy EXCEPT
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?
) 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?
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?
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?
The insurer will pay ABC the value of its insurable interest and then attempt to recoup the loss payment from Ted.
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
extended replacement cost.
Jose and Maria would like "all-risks" coverage on their home and their personal property. Which unendorsed homeowners form provides this coverage?
All of the following statements about covered perils and loss settlement under an unendorsed Homeowners 3 policy are true EXCEPT
Personal property losses are settled on a replacement cost basis.
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.
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)
If there is a conflict between state law and a provision in a homeowners policy
the state law takes precedence.
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?
The cost of the hotel room is covered under the "prohibited use" coverage of Part D.
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