Property Insurance Basics Flashcards
6 cards from real Property And Casualty Insurance License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Property Insurance Basics flashcards as text
What does a standard homeowners insurance policy (HO-3) cover regarding the dwelling?
Answer: Open perils (all-risk)
An HO-3 policy covers the dwelling on an open-perils basis, meaning all causes of loss are covered unless specifically excluded.
Which of the following is NOT covered by a standard homeowners policy?
Answer: Flood
Flood damage is excluded from standard homeowners policies and requires a separate policy, typically through the National Flood Insurance Program (NFIP).
What is the purpose of coinsurance in a property insurance policy?
Answer: To ensure the insured carries adequate coverage relative to property value
Coinsurance requires policyholders to insure their property to a specified percentage of its value (usually 80%) or face a penalty at the time of a loss.
Under a Dwelling Policy (DP-1), coverage is provided on which basis?
Answer: Named perils
The DP-1 (Basic Form) covers only the named perils specifically listed in the policy, such as fire, lightning, and internal explosion.
What is 'actual cash value' (ACV) in property insurance?
Answer: Replacement cost minus depreciation
Actual cash value is calculated by taking the replacement cost of the item and subtracting accumulated depreciation.
Which homeowners form provides the broadest coverage for both the dwelling and personal property?
Answer: HO-5
The HO-5 (Comprehensive Form) covers both the dwelling and personal property on an open-perils basis, making it the broadest standard homeowners form.