Download HO-3 Homeowners Insurance Policy Exam: Coverage and Claims and more Exams Insurance law in PDF only on Docsity!
Select the false statement listed below: In the HO- 3 policy, the ALE payments will be made only for: Select the single best answer: A. The shortest time necessary to repair or replace the damaged property, but not to exceed 24 months. B. If the insured does not rebuild, the time necessary for the insured to relocate in permanent living quarters, but not to exceed 24 months. C. ALE payments can run beyond the expiration of the policy. D. ALE payments are limited to incurred costs for the shortest of three time frames as dictated by the policy. E. ALE payments will not exceed 20% of Coverage A limits. ✔✔E. ALE payments will not exceed 20% of Coverage A limits. The insured has a HO- 3 policy in force. All of the losses are covered except: Select the single best answer: A. Shed rented to a tenant, to store furniture
State Farm Fire Independent Policy
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B. Detached garage used to operate a lawnmower repair shop C. Garage rented to the neighbor to store an antique automobile D. Basement used as an office for insured's bookkeeping business E. Garage (attached) rented to tenant to store fishing boat ✔✔B. Detached garage used to operate a lawnmower repair shop Jennifer Marco has a HO- 3 policy, with a Coverage B limit of $75,000, a $500 deductible, and no Option AI, ID, FA or JF. Which of the following statements is true concerning her personal property? Select the single best answer: A. Coverage for personal property applies for perils listed under Section I - Losses Insured, Coverage B - Personal Property and Section I - Additional Coverages. B. Coverage B applies only for items Jennifer owns, while anywhere in the world. C. The limit of liability for theft loss to jewelry and furs is $1000 or 10% of the Coverage B limit, whichever is greater. D. The limit of liability for tornado losses to firearms is $2,500. ✔✔A. Coverage for personal property applies for perils listed under Section I - Losses Insured, Coverage B - Personal Property and Section I - Additional Coverages. Under an HO-3 policy, deductibles apply to which of the following type(s) of losses.
The definition of an insured includes all of the following except: Select the single best answer: A. Person(s) listed on the Declaration Page B. Spouse, if a resident of the household C. Relatives, if residents of the household D. Any person under the age of 21 in the care of the named insured, resident spouse, or a resident relative E. Spouse ✔✔Spouse Joe Smith has a HO- 3 policy. He is a carpenter and has collected 100 2"X4" studs and 30 2"X6" rafters from various job sites. Joe has no specific plans to use the lumber. The lumber is covered under Coverage A. True or False ✔✔False Under an HO-3 policy, which of the following would be a Coverage B item? Select the single best answer: A. Satellite dish bolted to the eave of the house B. Free standing gas range C. Built-in microwave oven
D. Automatic garage door opener E. Water softener system ✔✔Free Standing gas range Under an HO-3 policy, which of the following would not be a Coverage A item? Select the single best answer: A. Automatic lawn sprinkler system B. Wall to wall carpet attached to the dwelling C. A new (in the box), built-in microwave oven the insured intends to install in his fishing cabin. D. A shed, on a foundation, rented to a neighbor to store the neighbor's boat E. Materials and supplies to build bookshelves in the basement of the residence premises and stored in the garage ✔✔E. Materials and supplies to build bookshelves in the basement of the residence premises and stored in the garage An HO- 3 homeowners policy with a $250 deductible is in force and the policy limits (Coverage A and Coverage B) are adequate to cover this damage. During a severe windstorm, rain blows through open windows and causes the following damage: Hardwood floor in the dining room $1, Water stains on the drywall $ 220 Water stains on the area rug $ Antique vase (broken by force of wind) $
other side with posts set in concrete. Since the awning has no foundation, it is not considered a Coverage A item. True or False ✔✔False Mike and Jennifer Reed have an HO - 3 policy in force with $250 deductible. Lightning struck the insured's house, damaging the house and the contents. Mike is a policeman and operates a engine repair shop in a shed on the insured premises. Jennifer is a sales representative and often has samples and merchandise at the house. The following items where listed on the personal property inventory forms submitted after the loss. Cash in Mike's billfold $35. Cash in Jennifer's purse $160. Change in piggy bank $25. Hand tools used in Mike's business $780. Jennifer's sales samples $320. Mike's police uniform $375. 4 hunting rifles $1,820. 3 shotguns $870. Use the information listed above to answer the following question. How much would you pay for the money listed in this loss? Select the single best answer:
A. $
B. $
C. $
D. $
E. None of the above ✔✔E Mike and Jennifer Reed have an HO - 3 policy in force with $250 deductible. Lightning struck the insured's house, damaging the house and the contents. Mike is a policeman and operates a engine repair shop in a shed on the insured premises. Jennifer is a sales representative and often has samples and merchandise at the house. The following items where listed on the personal property inventory forms submitted after the loss. Cash in Mike's billfold $35. Cash in Jennifer's purse $160. Change in piggy bank $25. Hand tools used in Mike's business $780. Jennifer's sales samples $320. Mike's police uniform $375. 4 hunting rifles $1,820. 3 shotguns $870.
4 hunting rifles $1,820. 3 shotguns $870. Use the information listed above to answer the following question. How much of the deductible, if any, would be absorbed in this loss? Select the single best answer: A. $ 0 B. $ C. $ D. $ E. $120 ✔✔ 250 Lightning hits a power transformer two streets away from the risk and knocks out the power to the entire area. The temperature is in the 20's and our insured's home is heated by an electric furnace. The insured has a HO-3 policy in force. ALE will be payable on this loss. True or False ✔✔False In the HO- 3 policy, resulting ALE and Fair Rental Value can be paid for up to two weeks if use of the premises is prohibited by civil authorities because of direct covered damage to a neighboring premises caused by a loss insured. True or False ✔✔True
An HO-3 policy is in force with coverage A limits of $75,000. The policy has a $1, deductible. The house is totally destroyed by a tornado and the cost to replace the house is $75,550 plus debris removal of $4,225 for a total claim of $79,775. All repairs have been completed. What is the amount of your final settlement? Consider the deductible in your calculations. Select the single best answer: A. $79, B. $78, C. $78, D. $77, E. $74,000 ✔✔ 78750 Our insured has a HO-3 policy in force. The insured premises is located on the Gulf Coast. The National Weather Bureau issued a hurricane warning affecting the insured premises on July 18th. The insured removed antique furniture and stored it in a warehouse 50 miles inland. The furniture was damaged by flood waters August 22nd. We will pay for the damage to the furniture. True or False ✔✔False
Under an HO- 3 policy with Option JF, which if the following statements is true concerning a jewelry loss? Select the single best answer: A. Coverage applies only for the sixteen Section I-Losses Insured, Coverage B-Personal Property named perils. B. The limit of liability for theft jewelry and furs is $1,000. C. Coverage only applies for the items listed on the schedule in the Declarations. D. Coverage is for accidental direct physical loss or damage unless otherwise stated. ✔✔D. Coverage is for accidental direct physical loss or damage unless otherwise stated. We insure Steve Smith with a HO- 3 policy. Steve works at the Acme Vacuum Co. On weekends and in the evenings he repairs vacuum cleaners in a detached building structure on the insured premises. The building is damaged by a severe windstorm. Since Steve owns his business and only works part time the damage will be paid under the Dwelling Extension coverage of the policy. True or False ✔✔False Judy Howard owns a home at 2500 Mocking Bird Lane. She had a HO-3 policy in force. She sold the home on June 5, XX and began moving her personal property to a new residence. On June 27 a tornado damaged the personal property at the new location. Judy's policy is still in force. She did not have a policy in force for the new location.
Select the single best answer: A. Coverage up to the Coverage B limits applies at the new location B. Coverage up to the Coverage B limits applies at the original location C. Judy would have to purchase an endorsement to provide coverage for the personal property during the moving process. D. A and B are both correct. E. None of the above are correct. ✔✔D. A and B are both correct. The cooling system for the insured's freezer is damaged due to a power failure and all food in the unit is spoiled before the insured becomes aware of the loss. You can pay for the food if there is a HO-3 policy in force. True or False ✔✔True Select the choice below that most accurately describes treatment of a deductible under the HO- 3 policy. Select the single best answer: A. The deductible may be partially absorbed. B. The deductible may be completely absorbed.
E. Actual cash value ✔✔Replacement cost In the HO- 3 policy, temporary repairs: Select the single best answer: A. Are available for reasonable and necessary costs incurred, caused by a loss insured. B. Provide an additional amount of insurance for temporary repairs to covered property. C. Are to protect the property from further immediate damage or loss. D. A, B and C are correct. E. A and C are correct ✔✔E. A and C are correct Option ID under the HO- 3 applies to: Select the single best answer: A. The dwelling and other building structures B. All covered structures C. The dwelling D. The dwelling and all other structures E. Both A and D ✔✔The dwelling and other building structures Which of the following statements can apply to Debris Removal Coverage in the HO- 3 policy?
Select the single best answer: A. Pay up to $500 in the aggregate for each loss to cover the reasonable expenses incurred in the removal of tree debris from the residence premises when the tree has caused a loss insured to Coverage A property. B. We will pay the reasonable expenses incurred in the removal of debris of covered property damaged by a loss insured. This expense is included in the limit applying to the damaged property. C. When the amount payable for the property damage plus the debris removal exceeds the limit for the damaged property, an additional 5% of that limit is available for debris removal expense. D. All of the above E. None of the above ✔✔all of the above Assume an HO-3 is in force. The insured's home is damaged by a severe windstorm and the family is forced to move into a motel for 2 weeks. The insured provided the following receipts. The water, electricity and telephone remained in service following the loss. Amount Paid Amount Normally Spent Mortgage Payment $985 $ Hotel Bills $1,075 $ Water $25 $ Electricity $125 $
Remove tree from fence in order to repair fence (two cuts with chainsaw) $ 50 Repair 24 LF of split-rail fence ($15 per foot) $ Remove tree debris (tree that fell on fence) from residence premises $ Remove tree from picnic table (three cuts with chainsaw) $ Replace picnic table (Lowe's - treated pine - assembled) $ Remove tree debris (tree that fell on table) from residence premises $ Remove remaining four trees from residence premises ($375 each) $1, Replace six trees destroyed by high winds ($250 each) $1, What is payable on this loss? Select the single best answer: A. $ B. $ C. $ D. $ 2, E. $ 4,315 ✔✔ 0 The insured has a storage shed on a foundation in his backyard. It is damaged by a windstorm and has not been repaired or replaced. Which one of the following statements is correct under the HO-3?
Select the single best answer: A. The shed is not a Coverage A item B. The shed is a Coverage A-Dwelling Extension, subject to the dwelling extension limit C. The shed is a Coverage B item, damaged by a named Peril D. Both B and C E. None of the above ✔✔The shed is a Coverage A-Dwelling Extension, subject to the dwelling extension limit Sue Kojack is the named insured. Other residents in the household are: Sue's 21 year old son, Louis Tammy, Louis's wife Matt, a 16 year foster child Mildred, a 38 year old friend who lost her job Who would qualify as insureds under a HO- 3 policy? Select the single best answer: A. Sue B. Sue, Louis, Tammy, and Matt C. Sue and Louis D. Sue, Louis, and Tammy E. Sue, Louis, Tammy, Matt, and Mildred ✔✔E. Sue, Louis, Tammy, Matt, and Mildred
