Question 1

Which of the following homeowner's policies provides coverage for the damage caused by the accidental discharge of water or steam?
A)HO-7
B)HO-2
C)HO-8
D)HO-9
E)HO-1

Accepted Answer

HO-2 is the best choice as it provides coverage for the accidental discharge of water or steam, including damage caused by a ruptured water heater or burst washing machine hose.

Question 2

A personal property floater and a personal liability umbrella policy offer similar coverage.

Accepted Answer

A personal property floater covers specific items that may not be fully covered by a standard homeowner's insurance policy, whereas a personal liability umbrella policy provides additional liability coverage beyond the limits of a standard homeowner's insurance policy. They offer different types of coverage and are not the same.

Question 3

A captive agent typically represents two to ten different insurance companies.

Accepted Answer

A captive agent represents only one insurance company and sells only its products, unlike independent agents who represent multiple insurance companies.

Question 4

A house with a replacement value of $110,000 is currently insured for $90,000. The house is damaged in a windstorm, causing a loss of $15,000. The insurance company will pay an amount equal to $15,000 less the deductible.

Accepted Answer

Since the house is insured for less than its replacement value but more than the loss amount, the insurance company will cover the loss up to the policy limit, minus any deductible, assuming the policy covers windstorm damage.

Question 5

Which of the following homeowner's policies is best suited to a renter of an apartment?
A)HO-1
B)HO-2
C)HO-3
D)HO-4
E)HO-8

Accepted Answer

HO-4, also known as renter's insurance, is specifically designed for individuals who are renting an apartment or home. It provides coverage for the renter's personal property as well as liability protection. The other HO policies are designed for homeowners who own and occupy their homes.

Question 6

Negligence occurs when someone:
A)is not insured.
B)fails to act as an insured.
C)fails to act in a reasonable manner.
D)admits an error.
E)is more than 18 years of age.

Accepted Answer

Negligence is defined as the failure to take proper care in doing something, leading to damage or injury to another. This typically involves failing to act in a way that a reasonable person would under similar circumstances.

Question 7

The federal government has introduced a subsidized flood insurance program for homeowners and tenants living in designated communities.

Accepted Answer

The National Flood Insurance Program (NFIP) is a program created by the United States federal government to provide flood insurance to property owners, renters, and businesses in communities that participate in the NFIP and adhere to floodplain management regulations designed to reduce future flood damage.

Question 8

Uninsured motorists protection usually provides protection to the insured's car if a hit-and-run incident occurs.

Accepted Answer

Uninsured motorists protection typically covers bodily injury to the insured and passengers, not damage to the vehicle itself, in the event of an accident with an uninsured or hit-and-run driver.

Question 9

The principle of indemnity will prevent:
A)the act of one person from being assigned to another.
B)an insured from collecting more than what he or she has lost.
C)a negligent third party from being held liable for damages if the injured party is insured.
D)a significant amount of loss control activity.
E)an insurer from ever waiving its right to subrogation.

Accepted Answer

The principle of indemnity in insurance ensures that the insured is compensated for their loss but does not profit from the insurance claim, thus preventing them from collecting more than what they have lost.

Question 10

Homeowner's co-insurance requires the insured to carry insurance protection equal to the market value of the house.

Accepted Answer

Homeowner's co-insurance requires the insured to carry insurance protection equal to a certain percentage of the total replacement cost of the house, usually at least 80%. It is not based on the market value of the house.

Question 11

Which of the following homeowner's policies provides coverage for damage caused by electrical current?
A)HO-7
B)HO-2
C)HO-8
D)HO-9
E)HO-1

Accepted Answer

HO-2 homeowner's policy provides coverage for damage caused by electrical current.

Question 12

Which of the following is a basic, seldom-used homeowner's policy with very narrow coverage?
A)HO-1
B)HO-2
C)HO-3
D)HO-4
E)HO-6

Accepted Answer

HO-1 is a basic form of homeowner's insurance that provides very narrow coverage, covering only a specific list of perils. It is seldom used today because most homeowners seek broader coverage options.

Question 13

A liability suit could result against you if:
A)lightning strikes your home.
B)your son falls down the stairs of your home.
C)your automobile is stolen.
D)your dog bites your neighbor.
E)smoke from the fireplace fills your house.

Accepted Answer

Liability suits typically arise from situations where an individual's actions or negligence causes harm to another person. In this case, if your dog bites your neighbor, you could be held liable for any injuries or damages caused by your pet. The other scenarios listed do not directly involve harm to another person due to the homeowner's actions or negligence.

Question 14

Insurance policies provide the opportunity for claims arbitration to settle any disputed liability claims.

Accepted Answer

Insurance policies often include an arbitration clause that allows for claims arbitration as a method to resolve disputed liability claims, providing a potentially faster and less expensive alternative to litigation.

Question 15

The premiums for homeowner's insurance policies are affected by the type of structure and its location.

Accepted Answer

The premiums for homeowner's insurance policies are affected by the type of structure (e.g. single-family home, condo, mobile home) and its location (e.g. in a high-risk flood zone, near a fire station). Other factors that may affect premiums include the age and condition of the property, the coverage amounts and deductibles selected, and the insurance company's underwriting guidelines.

Question 16

The personal property floater:
A)provides either blanket or scheduled coverage of items that are not covered adequately in a standard homeowner's policy.
B)is available to meet the needs of "innocent" victims of accidents who are negligently injured by uninsured, underinsured, or hit-and-run motorists.
C)is a specialized inland marine policy covering boats and trailers used with boats.
D)covers against liability caused by the ownership or use of items of personal property.
E)is an additional amount of insurance equal to a specified percentage of the replacement value of the property.

Accepted Answer

The personal property floater is designed to provide either blanket or scheduled coverage for items that may not be adequately covered under a standard homeowner's policy, such as valuable jewelry, art, or electronics. This type of policy allows for more comprehensive coverage for specific, high-value items.

Question 17

Suppose you carelessly, but unintentionally, knocked someone down a flight of stairs in your home. You would be covered by your homeowner's insurance.

Accepted Answer

Homeowner's insurance typically covers accidents that occur on your property, including unintentional injuries to guests. However, it's important to review the specific terms and coverage limits of your policy to ensure you have adequate protection.

Question 18

Increasing the amount of the deductible is the only way to bring down the cost of homeowner's insurance.

Accepted Answer

There are multiple ways to reduce the cost of homeowner's insurance, such as improving home security, bundling policies, maintaining a good credit score, and shopping around for the best rates, in addition to increasing the deductible.

Question 19

Never discuss liability at the scene of an accident, or with anyone other than the police and your insurer.

Accepted Answer

Discussing liability at the scene of an accident can potentially harm your case and admitting fault can be used against you in court. It is best to only discuss the details of the accident with the police and your insurance company.

Question 20

Floods are covered under most homeowner's insurance policies.

Accepted Answer

Most standard homeowner's insurance policies do not cover flood damage; separate flood insurance is typically required.

Quiz 10: Protecting Your Property

Which of the following homeowner's policies provides coverage for the damage caused by the accidental discharge of water or steam?

A personal property floater and a personal liability umbrella policy offer similar coverage.

A captive agent typically represents two to ten different insurance companies.

A house with a replacement value of $110,000 is currently insured for $90,000. The house is damaged in a windstorm, causing a loss of $15,000. The insurance company will pay an amount equal to $15,000 less the deductible.

Which of the following homeowner's policies is best suited to a renter of an apartment?

Negligence occurs when someone:

The federal government has introduced a subsidized flood insurance program for homeowners and tenants living in designated communities.

Uninsured motorists protection usually provides protection to the insured's car if a hit-and-run incident occurs.

The principle of indemnity will prevent:

Homeowner's co-insurance requires the insured to carry insurance protection equal to the market value of the house.

Which of the following homeowner's policies provides coverage for damage caused by electrical current?

Which of the following is a basic, seldom-used homeowner's policy with very narrow coverage?

A liability suit could result against you if: