CPCU 553 - chapter 7 Exam Questions with 100% Correct Answers

CPCU 553 - chapter 7 Exam Questions with 100% Correct Answers Under what circumstances would an applicant purchase a dwelling policy rather than a homeowners policy to insure a residence. - Answer ️️ -If the residence is not eligible for HO coverage because it is not owner-occupied, the dwelling is below minimum limits for a HO policy, or the residence does not otherwise meet an insurer's UW guidelines. Also, some insurers do not want or need the full range of HO coverages, and a HO policy might cost more than the insured is willing to pay. What is the most important difference between an unendorsed dwelling property - special form (DP-3) policy and a HO policy? - Answer ️️ -Unlike most HO policies, an unendorsed DP-3 does not provide any theft coverage for personal property or any liability coverages. Identify the structures (5) that are eligible for dwelling policies. - Answer ️️ -1. Owner- occupied or tenant-occupied 1-4 family dwellings 2. A dwelling in the course of construction 3. Mobile homes at a permanent location 4. Houseboats, in some states 5. Certain incidental business occupancies, if the businesses are operated by the owner-insured or by a tenant of the insured location. List the coverages (5) which a dwelling form can include. - Answer ️️ -1. Coverage A - dwelling 2. Coverage B - other structures 3. Coverage C - personal property 4. Coverage D - fair rental value 5. Coverage E - additional living expense How does the availability of property coverages under the dwelling policy differ from the availability of property coverages under the HO policy? - Answer ️️ -The same property coverages can apply under the dwelling policy that are included under the HO policy; however, under the dwelling policy, each desired coverage must be listed with a limit on the dec page for the coverage to apply. Coverage D and E, however, are automatically included in the DP-3. In contrast, under the HO policy, all of these coverages apply automatically. How does coverage A - dwelling coverage under the DP-3 differ from that coverage under the HO-3? - Answer ️️ -The DP-3 refers to the dwelling on the insured location. In contrast HO-3 refers to the dwelling including attached structures. The DP-3 also states that coverage is provided for building and outdoor equipment used for the service of the premises and located on the described location, unless it is covered elsewhere in the policy. Under the HO-3 this property is covered under coverage C. How are gravemarkers and mausoleums treated differently under the DP-3 coverage B compared with treatment of such property under the HO-3? - Answer ️️ -Under the DP-3 coverage B, gravemarkers and mausoleums are specifically excluded. In contrast, the HO-3 additional coverages provides up to $5,000 for gravemarkers. Under the DP-3, when coverage C is selected and specified with a limit on the dec, how does the coverage differ from property covered under special limits of liability in coverage C of the HO- 3? - Answer ️️ -The HO-3 coverage C specifies special limits that apply to specific types of personal property. Because the perils and some coverages differ under the DP-3 policy, these limits are not necessary; therefore, no specified limits apply for specific types of property. How does coverage D and E under the DP-3 compare to comparable coverages under the HO-3? - Answer ️️ -Coverage D and E in the DP-3 form correspond roughly to coverage D in the HO- 3 form (which essentially provides coverage for both). Coverage D covers the fair rental value of a property rented to others when it becomes unfit for normal use because of a covered loss. Coverage E covers the increase in living expenses when the described property becomes unfit for normal use because of a covered loss. Explain how the coverage "Other Structures" as describe in the Other Coverage section under the DP-3 differ from any comparable coverages under the HO-3: - Answer ️️ -The DP-3 firm provides up to 10% of the coverage A limit for coverage B. This additional insurance amount does not reduce the coverage A limit for the same loss. HO-3 provides essentially the same coverage (exception gravemarkers and mausoleums are excluded under the DP-3). Explain how the coverage "Improvements, Alterations, and Additions" as describe in the Other Coverage section under the DP-3 differ from any comparable coverages under the HO-3: - Answer ️️ -The DP-3 form provides 10% of the coverage C limit as additional insurance to cover a tenant's improvements, alterations, and additions for a covered loss. The HO-3 has no comparable coverage. Explain how the coverage "Worldwide Coverage" as describe in the Other Coverage section under the DP-3 differ from any comparable coverages under the HO-3: - Answer ️️ -The DP-3 form provides up to 10 % of the coverage C limit for loss to the coverage C property anywhere in the world (as does the HO-3 coverage C), except that the DP-3 coverage C excludes rowboats and canoes. Additionally, the HO-3 coverage C limits the coverage for property that is usually located at a secondary residence of the insured to 10%. Explain how the coverage "Fair rental value and additional living expenses" as describe in the Other Coverage section under the DP-3 differ from any comparable coverages under the HO-3: - Answer ️️ -The DP-3 form provides up to 20% of the coverage A limit for losses under both coverages D and E. In contrast, under the HO-3 form, the c