Question 1

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.

Accepted Answer

Identity theft is not automatically covered by a standard Homeowners 3 policy, but can be added with an endorsement.

Question 2

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

Accepted Answer

Personal liability coverage typically covers liability for damage to others' property, such as a neighbor's, but not for illegal activities, business operations, or injuries to the insured themselves.

Question 3

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

Accepted Answer

The personal property replacement cost endorsement ensures that the policyholder is compensated for the cost of replacing the damaged or destroyed item with a new one of like kind and quality, without deduction for depreciation, and is not specifically designed for antiques and fine art, which often require specialized insurance coverage due to their unique valuation challenges.

Question 4

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.

Accepted Answer

The statement "The endorsement also covers flood losses" is false. Earthquake endorsements only cover earthquake-related damages and losses, not flood damages.

Question 5

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

Accepted Answer

The answer of Which of the following statements about the...

Question 6

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

Accepted Answer

A personal umbrella policy provides excess liability coverage and coverage for some liability claims excluded by underlying policies, such as homeowners and auto insurance. It does not provide blanket property coverage or coverage for business and professional liability.

Question 7

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

Accepted Answer

CLUE (Comprehensive Loss Underwriting Exchange) is a database of insurance claims maintained by LexisNexis. Insurance companies use this database to assess the risk of insuring a property. An adverse CLUE report means that there have been previous property insurance claims filed on the home, which indicates a higher risk of future claims. Insurers may reject a homeowners insurance application if there is an adverse CLUE report.

Question 8

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.

Accepted Answer

Premiums can often be reduced by selecting a higher deductible, as the insured is assuming more of the risk. However, it is important to ensure that the deductible selected is affordable in case of a loss. The other options are not accurate. Homeowners should carry insurance for the full replacement cost of their dwelling, and a personal property replacement cost endorsement typically increases coverage without deducting for depreciation. Finally, there can be significant price variation among insurance companies, making it important to compare costs.

Question 9

Which of the following losses would be covered under Section II of an unendorsed Homeowners 3 policy?
A)The homeowner accidentally dropped a bowling ball,injuring another bowler's foot.
B)The homeowner's nanny was injured on her day off while hiking at a state park.
C)The insured slandered a city council member at a city council meeting.
D)The homeowner's dog bit the homeowner's daughter.

Accepted Answer

Section II of a Homeowners 3 policy typically covers personal liability claims arising from bodily injury or property damage caused by the insured or their family members. The loss in option A involves bodily injury caused by the insured, therefore it would be covered under Section II. The losses in options B, C, and D do not involve bodily injury or property damage caused by the insured, therefore they would not be covered under Section II of the policy.

Question 10

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.

Accepted Answer

Older homes generally cost more to insure than newer homes because they are considered to be at higher risk for certain types of damage, and they may not be built to current building codes.

Question 11

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

Accepted Answer

The answer of Which of the following statements about an...

Question 12

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

Accepted Answer

The personal property replacement cost endorsement is the endorsement that would address Robert's concerns. This endorsement ensures that in the event of a loss, the insurer will pay for the replacement cost of the items without taking depreciation into account. This means that Robert would receive the full amount needed to purchase new property, rather than a depreciated amount.

Question 13

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

Accepted Answer

Both statements are true. Studies have shown that individuals with poor credit histories tend to file more claims, and the use of credit history as an insurance rating factor has been a topic of debate and controversy.

Question 14

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.

Accepted Answer

Insuring the value of the land beneath the house is not necessary for a homeowner's policy as it only covers the structure of the house and personal belongings inside. The other options listed are all effective ways of reducing a homeowner's premium.

Question 15

Which of the following statements concerning the scheduled personal property endorsement with agreed value loss settlement is (are)true?
I.The endorsement provides open-perils ("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

Accepted Answer

The first statement is true, as the scheduled personal property endorsement provides open-perils coverage on the scheduled property. The second statement is false, as losses under the endorsement are settled on an agreed value basis (not actual cash value).

Question 16

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 homeowner's yard.

Accepted Answer

Under Section II of an unendorsed Homeowners 3 policy, personal liability and medical payments to others are covered, but there are exclusions for business activities and professional services. Bert's accident with his canoe does not fall under these exclusions, making it the exception where coverage would not be excluded.

Question 17

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

Accepted Answer

Statement I is true, as the endorsement increases the coverage on business personal property at the insured residence from $2,500 to the Coverage C limit. Statement II is false, as the endorsement actually includes liability coverage for the home business, subject to certain limitations and exclusions.

Question 18

Reggie just purchased a home.A friend told him to consider insurance coverage for natural disasters when insuring the home.A loss from which of the following perils is covered under an unendorsed Homeowners 3 policy?
A)tsunami
B)earthquake
C)flood
D)forest fire

Accepted Answer

Forest fire is typically covered under an unendorsed Homeowners 3 policy, while the other options (tsunami, earthquake, and flood) usually require additional endorsements or separate policies.

Question 19

A credit-based score that is highly predictive of future claims cost is an individual's
A)CLUE score.
B)insurance score.
C)motor vehicle record score.
D)underwriting score.

Accepted Answer

An insurance score is a credit-based score that uses information from an individual's credit report to predict the likelihood of future claims. It is highly predictive of future claims cost and is commonly used by insurance companies to determine rates and coverage. CLUE score, motor vehicle record score, and underwriting score do not specifically use credit information to predict claims cost.

Question 20

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 an automobile
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

Accepted Answer

The medical payments coverage of the Homeowners 3 policy provides for payment of necessary medical expenses incurred within three years of an accident that causes bodily injury. The coverage applies to injuries sustained by non-resident individuals on the insured's premises or injured by the insured's activities. Therefore, injuries to a resident employee at the insured's home would be covered under this policy. Choices A, B, and D are not covered under the medical payments coverage of the Homeowners 3 policy.

Quiz 21: Homeowners Insurance,section II

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

Which of the following losses would be covered under the personal liability coverage (Coverage

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.

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

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.

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?

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?

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

Which of the following losses would be covered under Section II of an unendorsed Homeowners 3 policy?

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?

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.

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

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

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.

Reggie just purchased a home.A friend told him to consider insurance coverage for natural disasters when insuring the home.A loss from which of the following perils is covered under an unendorsed Homeowners 3 policy?

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

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