EXAMFX Homeowners Insurance Coverage 2 — Questions and Answers
Question 1: Under a standard homeowners policy, which of the following losses to personal property would be covered under Coverage C?
- Earthquake damage to a laptop inside the home
- Theft of jewelry from the insured's vehicle (Correct answer)
- Flooding of the insured's basement
- Wear and tear on furniture over time
Correct answer: Theft of jewelry from the insured's vehicle
Coverage C (personal property) covers theft of personal property including items stolen from a vehicle, subject to special limits for certain categories.
Question 2: A homeowner's detached garage is destroyed by a covered peril. Under which coverage would this loss be paid?
- Coverage A – Dwelling
- Coverage B – Other Structures (Correct answer)
- Coverage C – Personal Property
- Coverage D – Loss of Use
Correct answer: Coverage B – Other Structures
Coverage B (Other Structures) covers structures on the residence premises that are separated from the dwelling, such as detached garages, fences, and sheds.
Question 3: Which homeowners form provides the BROADEST coverage for personal property?
- HO-1 (Basic Form)
- HO-2 (Broad Form)
- HO-3 (Special Form)
- HO-5 (Comprehensive Form) (Correct answer)
Correct answer: HO-5 (Comprehensive Form)
The HO-5 (Comprehensive Form) covers both the dwelling and personal property on an open-perils basis, making it the broadest homeowners form available.
Question 4: An insured rents out a portion of their home to a tenant. How does this affect Coverage B (Other Structures)?
- Coverage B limits double automatically
- Coverage B does not apply to any structures used for rental
- Structures rented to others are excluded from Coverage B (Correct answer)
- Coverage B is unaffected regardless of rental use
Correct answer: Structures rented to others are excluded from Coverage B
Coverage B excludes structures rented or held for rental to any person who is not a tenant of the dwelling; if the garage is rented out to a non-tenant, it is excluded.
Question 5: Under the HO-3 policy, Coverage A (Dwelling) is written on what basis?
- Named perils only
- Open perils (all-risk) (Correct answer)
- Actual cash value
- Replacement cost minus depreciation
Correct answer: Open perils (all-risk)
Under the HO-3, Coverage A covers the dwelling on an open-perils (all-risk) basis, meaning all causes of loss are covered except those specifically excluded.
Question 6: What is the standard Coverage B limit expressed as a percentage of Coverage A in a homeowners policy?
- 5%
- 10% (Correct answer)
- 20%
- 50%
Correct answer: 10%
Coverage B (Other Structures) is automatically set at 10% of the Coverage A (Dwelling) limit under standard homeowners policy forms.
Question 7: Which of the following is an example of an Additional Coverage included in a standard homeowners policy at no extra charge?
- Earthquake coverage
- Flood coverage
- Debris removal following a covered loss (Correct answer)
- Scheduled personal property coverage
Correct answer: Debris removal following a covered loss
Debris removal is an Additional Coverage automatically included in standard homeowners policies to cover the cost of removing debris after a covered loss.
EXAMFX Homeowners Insurance Coverage 2
Under a standard homeowners policy, which of the following losses to personal property would be covered under Coverage C?