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1) Personal Lines Final Exam 1 Questions and Answers Latest Updated
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1) Personal Lines Final Exam 1
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1) Personal Lines Final Exam 1All are true about Medical coverage on a HO ('00) policy EXCEPT it:
A. Covers expenses incurred within 3 years of the date of accident
B. Covers resident employees
C. Covers regular residents of your household
D. Is shown as Coverage "F" on the Declaration page - answerC. Covers regular
residents of your household
Medical coverage on a HO policy is to others, not residents of your own household. It is
a no fault 'goodwill' type coverage designed to prevent lawsuits.
Coverage "F" on a HO ('00) policy is:
A. Personal Liability
B. Personal Property
C. Medical to others
D. Theft - answerC. Medical to others
On a HO policy, Coverages A, B, C & D are Section I property coverages, Part II of the
policy provides Coverage E - Personal Liability and Coverage F - Medical
A DP-3 ('02) Special Form dwelling policy covers which of the following:
A. Wear and tear
B. Theft of built in appliances
C. Liability to others
D. Mechanical breakdown - answerB. Theft of built in appliances
Since the DP-3 is all-risk on the dwelling and outbuildings, theft of built-in appliances
would be covered. However, even all-risk policies have exclusions, such as wear and
tear and mechanical breakdown. Further, no unendorsed DP policy covers theft of
contents or personal liability. The ('02) merely refers to the ISO form edition date.
Section I of a HO ('00) policy covers all EXCEPT:
A. Dwelling
B. Loss of use
C. Other Structures
D. Medical to others - answerD. Medical to others
,Section I of a HO policy provides the property coverages, while Section II provides
coverage for Personal Liability and Medical to Others.
On an HO-6 ('00), coverage for personal property is:
A. Basic form named perils
B. Broad form named perils
C. Special form all risk
D. Replacement cost - answerB. Broad form named perils
An H0-6 is designed to cover owners of condominiums or townhouses. The policy will
cover the interior wall and floor coverings as well as built-in appliances. Contents
coverage is the same broad form named peril coverage provided by an HO-3. Only an
HO-5 provides all-risk coverage for contents and contents coverage is always actual
cash value, unless replacement cost coverage is added by endorsement.
On a scheduled Personal Articles Floater (PAF), which of the following is an insured
peril:
A. Inherent vice
B. Wear and tear
C. Fire
D. Latent defect - answerC. Fire
A PAF is a type of all-risk inland marine floater that may be added to a HO by
endorsement. However, even all-risk policies contain exclusions, such as wear and tear,
inherent vice and latent defect
On a HO ('00) policy, coverage for personal property applies:
A. On premises only
B. Within the U.S. only
C. In North America only
D. Anywhere in the world - answerD. Anywhere in the world
Coverage C on all HO provides contents coverage anywhere in the world, including
coverage for theft of personal property. The standard deductible is $250 per occurrence.
However, coverage for contents away from home is limited to 10% of Coverage C.
What type of construction utilizes wood in the interior walls and roof:
A. Fire resistant steel
B. Masonry
C. Frame
D. Block - answerC. Frame
,The more fireproof a structure is, the lower the rates. Frame (or wood) construction
would cost more to insure than would buildings constructed of block, masonry or fire-
resistant materials (steel).
On a Property policy, the exclusion on earth movement excludes all EXCEPT:
A. Earthquake
B. Explosion
C. Landslide
D. Mud flow - answerB. Explosion
Even the Basic DP-1 provides coverage for explosion (remember WHARVES).
On a HO-3 ('00), rain damage to contents is covered:
A. Never, since contents coverage is named peril
B. Always, since rain damage is a covered peril
C. Always, since the HO-3 is all risk
D. If the wind damages the dwelling allowing the rain to enter - answerD. If the wind
damages the dwelling allowing the rain to enter
Contents coverage on an all-risk HO-3 is still named peril, and rain is not one of the
perils specified. However, if wind damaged the roof, the subsequent rain damage to
contents would be covered. In other words, wind was the 'proximate' cause of the loss.
The liability exposure that a HO policy covers is:
A. Business
B. Professional
C. Premises
D. Auto - answerC. Premises
All HO policies provide coverage for the insured's legal liability to others as a result of
premises liability. Further, coverage is extended to include premises where the insured
is temporarily residing, and the insured's off-premises activities such as operating golf
carts on a golf course and operating certain watercraft. However, liability relating to
automobiles, professional and business activities is excluded.
All are true about an HO-4 (200) policy EXCEPT:
A. It is often sold to those who rent apartments
B. It is also known as "contents broad form" coverage
C. It does not cover theft of personal property
D. It covers both personal property and personal liability - answerC. It does not cover
theft of personal property
, All HO policies cover theft of personal property, although there are special limits that
apply to jewelry, guns, watercraft, etc. Theft is defined as any act of stealing.
A DP (dwelling fire policy) is usually written on an owner occupied dwelling when:
A. It is used for commercial purposes
B. It is part of a farm
C. It cannot qualify for an HO policy
D. It is a duplex and only one side is owner occupied - answerC. It cannot qualify for an
HO policy
Underwriting is also known as risk "classification". Underwriters may offer DP coverage
to an owner of a home that does not qualify for a HO due to underwriting reasons, such
as its location in a brush fire area.
An insured with a HO-3 ('00) policy covering his dwelling for $100,000 rents out his
garage to a friend for his woodworking business. In the event the garage burns down,
what is the most the policy will pay:
A. Zero
B. $10,000
C. $10,000 plus loss of rental income
D. $10,000 plus the value of the friend's woodworking equipment - answerA. Zero
HO policies will not provide coverage for dwelling (or outbuildings) used commercially
On a DP policy, which provision applies to a loss when two or more policies are in force:
A. Co-insurance
B. Other insurance
C. Liberalization
D. Subrogation - answerB. Other insurance
The Other Insurance clause, also known as the pro-rata liability or pro-rata distribution
clause, reinforces the Principle of Indemnity by requiring the various insurers to share
claims proportionately when more than one fire policy is in force.
On a DP-2 Broad form, coverage for trees, shrubs and plants is:
A. 10% of Coverage A
B. Not included
C. A maximum of $500 each
D. All risk - answerC. A maximum of $500 each
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