Deck 21: Homeowners Insurance,section Ii

Question 1

Persons insured for personal liability under the homeowners policy include which of the following?
I.Relatives while visiting the named insured.
II.Overnight guests who are not relatives of the named insured.

A)I only
B)II only
C)both I and II
D)neither I nor II

Answer 1

D

Question 2

For which of the following situations would there be personal liability coverage under the homeowners policy?
I.The named insured accidentally injures her husband with a chain saw.
II.The named insured breaks his wife's valuable vase while practicing his golf swing.

A)I only
B)II only
C)both I and II
D)neither I nor II

Answer 2

D

Question 3

Section II of the homeowners policy has exclusions applying to all of the following EXCEPT

A)activities of the named insured's minor children.
B)business activities.
C)transmission of a communicable disease.
D)intentional injuries.

Answer 3

A

Question 4

Which of the following statements about buying homeowners insurance is true?

A)There is no reason to carry insurance for more than 80 percent of a dwelling's replacement cost.
B)The deduction for depreciation will be increased if a personal property replacement cost endorsement is purchased.
C)Premiums often can be reduced substantially by selecting a higher deductible.
D)There is little reason to compare cost since the lack of competition results in little price variation among companies.

Question 5

Tom is planning to build a home.He is weighing many factors,including construction materials,location,and other considerations.Which of the following statements is true with regard to homeowners insurance and Tom's new home?

A)The higher the construction costs are in the area,the lower Tom's homeowners insurance premiums will be.
B)The lower the homeowners deductible selected,the lower the premium will be.
C)Older homes cost more to insure than newer homes.
D)A wood frame home costs less to insure than a brick home.

Question 6

Factors that affect the cost of homeowners insurance include which of the following?
I.Construction material
II.Deductible amount

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 7

Which of the following statements about the scheduled personal property endorsement to the homeowners policy is (are)true?
I.It provides named-perils coverage on scheduled items.
II.It can be used to insure valuable items such as jewelry,silverware,and coin collections.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 8

Which of the following statements about an earthquake endorsement for a homeowners policy is (are)true?
I.The endorsement also covers landslides and volcanic eruptions.
II.The coverage for earthquakes is written without a deductible.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 9

Liability arising out of all of the following are covered under the personal injury endorsement to the homeowners policy EXCEPT

A)property damage.
B)false arrest.
C)libel.
D)slander.

Question 10

Which of the following statements about the additional coverages included in Section II of the homeowners policy is true?

A)Damage to property of others is covered only if the insured is legally liable.
B)Damage to property arising out of a business engaged in by the insured is covered.
C)Interest that accrues on a judgment after the judgment is awarded but before the judgment is paid is covered under claims expenses.
D)First aid expenses incurred by the insured for a bodily injury covered under the policy are not covered.

Question 11

Which of the following statements about the additional coverage for damage to property of others in Section II of the homeowners policy is true?

A)The maximum amount of coverage is $25,000 per occurrence.
B)Payments are made on the basis of the replacement cost of the damaged property.
C)There is coverage for property damage arising out of a business engaged in on a full-time basis by an insured.
D)There is coverage for intentional property damage by any insured who is a teenager.

Question 12

Which of the following situations would be covered under Section II of a homeowners policy?
I.The insured is sued by his girlfriend because he infected her with the AIDS virus.
II.The insured's son is sued after a friend suffered serious injury as a result of using illegal drugs sold to him by the son.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 13

Liability arising out of all of the following are covered under the personal injury endorsement to the homeowners policy EXCEPT

A)bodily injury.
B)malicious prosecution.
C)slander.
D)invasion of privacy.

Question 14

Which of the following statements about endorsements to the homeowners policy is (are)true?
I.The purpose of the inflation guard endorsement is to help prevent home owners from being under-insured.
II.The purpose of the watercraft endorsement is to provide coverage for watercraft when they are used outside the United States.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 15

All of the following persons are insured for personal liability under the homeowners policy EXCEPT

A)children of the named insured under age 24 who are attending college full time and temporarily residing elsewhere.
B)foster children under the age of 21 who reside with the named insured.
C)nonresident employees of the named insured.
D)the spouse of the named insured if a resident of the same household.

Question 16

Which of the following statements about the personal property replacement cost endorsement used with the homeowners policy is (are)true?
I.The damaged or destroyed property must be repaired or replaced,no matter the size of the loss.
II.It is designed primarily for antiques and fine art.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 17

Which of the following situations is covered under Section II of an unendorsed homeowners policy?

A)injuries which occur at a park resulting from a motorcycle owned by the insured
B)injuries resulting from an auto not subject to registration because it is in dead storage
C)injuries resulting from an auto rented by the insured while on a vacation
D)injuries resulting from a trailer being pulled by the insured's auto

Question 18

Which of the following statements regarding watercraft liability under Section II of an unendorsed HO-3 policy is (are)true?
I.No coverage is available for watercraft liability.
II.Liability arising out of the use of watercraft that are under certain length and horsepower limits is covered.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 19

All of the following situations are excluded from coverage under Section II of the homeowners policy EXCEPT

A)the rental of a spare bedroom which is used by the tenant as an office.
B)the use of a rented airplane to take a vacation.
C)the ownership of a ten-unit apartment house as an investment.
D)the performance of professional services by the insured at the residence premises.

Question 20

All of the following losses are covered under Section II of an unendorsed Homeowners 3 policy EXCEPT

A)The homeowner accidentally dropped a bowling ball,injuring another bowler's foot.
B)A baby sitter slipped and fell at the insured's home,breaking her ankle and incurring medical expenses.
C)The insured slandered a city council member at a city council meeting.
D)The insured's dog bit a neighbor.

Question 21

Which of the following statements is (are)true concerning the use of an individual's credit history as an insurance rating factor?
I.Individuals with poor credit histories,as a group,generally file more homeowners claims than do individuals with good credit histories.
II.The use of credit history as an insurance rating factor is controversial.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 22

A credit-based score that is highly predictive of future claims cost is an individual's

A)CLUE score.
B)insurance score.
C)loss ratio score.
D)underwriting score.

Question 23

Robert purchased an unendorsed Homeowners 3 policy.He is concerned that if his personal property is destroyed,the insurer will take depreciation into consideration when determining the loss settlement and will pay him less than the amount needed to purchase new property.Which endorsement can Robert add to his Homeowners 3 policy to address this concern?

A)inflation guard endorsement
B)personal injury endorsement
C)personal property replacement cost endorsement
D)earthquake endorsement

Question 24

All of the following losses are excluded from coverage under Section II of an unendorsed Homeowners 3 policy EXCEPT

A)Phyllis,a medical technician,misread a lab test and the patient is suing her.
B)While using his canoe,Bert hit another canoe.The other canoe sank.Bert is being sued.
C)Violet runs a for-profit daycare service in her home.The parents of a child injured while in Violet's care are suing Violet.
D)The homeowner's son was injured when he fell off a swing in the homeowners's yard.

Question 25

Gail lives in southern Illinois,near the New Madrid Fault Line.She added an earthquake endorsement to her Homeowners 3 policy.All of the following statements about the endorsement are true EXCEPT

A)The deductible is expressed as a percentage of the coverage limit rather than as a dollar amount.
B)The endorsement also covers landslides and volcanic eruptions.
C)Aftershocks occurring within 72 hours of an earthquake are considered part of the same occurrence.
D)The endorsement also covers flood losses.

Question 26

Which of the following statements is true regarding the Homeowners 3 policy and identity theft?

A)Identity theft is covered under Coverage D -- Loss of Use.
B)Identity theft is covered under Coverage C -- Personal Property.
C)Identity theft is covered under Coverage E -- Personal Liability.
D)Identity theft is covered by adding an endorsement.

Question 27

Which of the following statements concerning the scheduled personal property endorsement with agreed value loss settlement?
I.The endorsement provides "all-risks" coverage on the scheduled property.
II.Losses under the endorsement are settled on an actual cash value basis.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 28

Which of the following losses would be covered under the medical payments coverage of the Homeowners 3 policy?

A)injuries to another person arising out of the insured's negligent operation of a vehicle
B)medical payments resulting from the transmission of a communicable disease
C)injury to a resident employee at the insured's home
D)workers compensation medical payments

Question 29

One of the "Tips for Buying a Homeowners Policy" is to consider purchasing a personal umbrella policy.What coverage is provided by a personal umbrella policy?

A)blanket property coverage for any damage caused by water
B)excess liability coverage and coverage for some liability claims excluded by underlying policies
C)all-risk,replacement cost,property coverage
D)coverage for business and professional liability

Question 30

Which of the following losses would be covered under the personal liability coverage (Coverage E)of an unendorsed Homeowners 3 policy?

A)liability arising out of the manufacture and sale of illegal narcotics
B)liability arising out of damage to a neighbor's property that occurred over time
C)liability arising out of a business operated in the home.
D)liability arising out of bodily injury to an insured

Question 31

Lu would like to save money on her homeowners premium.All of the following steps will help her to reduce her homeowners premium EXCEPT

A)raising the deductible in the homeowners policy to a higher amount.
B)shopping around a homeowners policy.
C)installing burglar alarms,smoke detectors,and dead-bolt locks.
D)insuring the value of the land beneath the house.

Question 32

Which of the following statements is (are)true concerning the home business insurance coverage endorsement?
I.It increases the coverage on business personal property at the insured residence from $2,500 to the Coverage C limit.
II.It excludes coverage for liability arising out of the home business.

A)I only
B)II only
C)both I and II
D)neither I nor II

Question 33

Tom and Tammy Evans were ready to purchase a home.The home was to serve as collateral for their mortgage loan.Two insurers declined to insure the home,citing "an adverse CLUE report." Why would an insurer reject a homeowners insurance application because of an adverse CLUE report?

A)because the previous owner had defaulted on the mortgage loan
B)because the home is located in an area where the zoning law had been changed
C)because there had been previous property insurance claims filed on the home
D)because the home is located in an area that does not have a certified fire department

Question 34

Reggie just purchased a home.A friend told him to consider insurance coverage for natural disasters when insuring the home.Losses from all of the following perils are covered under an unendorsed Homeowners 3 policy EXCEPT

A)tornadoes.
B)floods.
C)hurricanes.
D)forest fires.