Principles of Risk Management and Insurance Exam Questions Answered Correctly Latest Update 2024 (Rated A+)

Principles of Risk Management and Insurance Exam Questions Answered Correctly Latest Update 2024 (Rated A+) HO-2 (Broad Form) - Answers Named Peril HO-3 (Special Form) - Answers All Risk HO-4 (Contents Broad Form) - Answers Renters' policy (Apartment) HO-5 (Comprehensive Form) - Answers HO-6 (Unit-Owners Form) - Answers Condominium owners HO-8 (Modified Coverage Form) - Answers Designed for older homes Who is Insured? - Answers - Named insured and spouse - Family members in the home - Other persons under the age of 21 who are in the care of an insured Ex: foster child or foreign exchange student - Full-time students away from home under the age of 24 Home Owners Section 1 Coverage A - Answers Dwelling & attachments - If the dwelling is in compliance with the coinsurance clause, the insurance company will pay the replacement cost (I.e. not the ACV) - land is specifically excluded Home Owners Section 1 Coverage B - Answers Other Structures - that are separated from the dwelling - 10% of the insurance on the dwelling applies to detached structures is covered - If the dwelling is in compliance with the coinsurance clause, the insurance company will pay the replacement cost (i.e. not the ACV) Excluded structures: - land - structures being rented - structures used to conduct business - structures used to store business property Home Owners Section 1 Coverage C - Answers Personal Property - property used or owned by the insured anywhere in the world & borrowed property - 50% of the insurance on the welling is provided - losses settled on an actual cash value basis coinsurance is not a factor for Coverage C Limits of LIability - certain types of property have maximum dollar limits on the amount paid for any loss - purpose: 1) limit oral hazard problems and 2) limit loss of adjustment problems - schedule Excluded - animals, birds, fish, motor vehicles, aircraft and hovercraft, property roomers, boarders and other tenants, business records, credit cards, electronic fund transfer cars, or access ddevices Home Owners Section 1 Coverage D - Answers Loss of Use - provides protection when the residence premises cannot be used because of a covered loss - 30% of coverage A is covered Benefits provided: - Additional living expense - Fair rental value - prohibited use Schedule - Answers A list of covered property with specific amounts of insurance Property value of pets excluded but the liability is __________ (included/not included) - Answers Included Section 1 Coverage A and B Perils are covered on ________________________ - Answers An Open Peril basis Section I Coverage A and B Exclusions - Answers Collapse Freezing (plumbing, heating, AC) Fences, pavement, patio, and similar structures (freezing, thawing, weight of water) Dwelling under construction Vandalism and malicious mischief (60 days) Mold, fungus, or dry rot Section 1 Coverage C Perils Insured against - Answers covered on a NAMED perils basis: fire or lightening - must be combustion or rapid oxidation that causes a flame, fire must be hostile or unfriendly, windstorm or hail, explosion , Riot of civil commotion A dwelling with a replacement cost of $150,000 was insured under a HO3 policy for $100,000 at the time the roof was destroyed by a windstorm. The ACV of the loss was $9000 but it will cost $12,000 to replace the roof. Assuming no deductible and an 80 percent coinsurance clause, what will the insurer pay to settle this loss? - Answers = did/ should = cost =100000/(80%*150,000))*12,000 =(100,000/120,000)* 12,000 = 10,000 - deductible General exclusions for Section 1 - Answers - water damage - neglect - nuclear hazard - governmental action , acts or decisions - power failure - war - intentional loss - weather conditions Section 1 additional coverages - Answers - debris removal: included in coverage and additional 5% of coverage, Trees - reasonable repairs - fire dept service charge - credit card, EFT card, forgery - loss assessments: up to $1k for loss assessments section 1 conditions - Answers 1. duties after a loss: giv enotice, protect the property, prepare inventory of damaged personal property, exhibit damaged property, file proof of loss within 30 days of request 2. suit against the insurer 3. appraisal clause: use when the insured and insurer agree that the loss is covered but amount of the loss is in dispuute 4. insurer's option: the right to repair or replace any part of the damaged property with like property 5. Abandonment of property (pay or repair) : not obligated to accept any property abandoned by the insured after as loss Section 2 coverage E - Answers Personal Liability - protects an insured when a claim or suit is brought because of property damage or bodily injury caused by an insured's negligence - $100,000 minimum per occurrence - insurer agrees to provide you legal defense, even if the suit is groundless, false or fraudulent Examples: - your dog bit a small child - you are shopping and careless break an expensive vase Section 2 coverage F - Answers Medical Payments to others - pays reasonable of another person who is accidentally injured 1) on the insured's location 2) by the activities of the insured, resident employee