FHCE FINAL EXAM UPDATED
QUESTIONS AND CORRECT ANSWERS.
Property insurance - ANS What is coverage that protects real and personal property from
catastrophic losses?
liability insurance - ANS protects against the financial consequences from the insured's
responsibility for property losses or injuries to others
peril - ANS the cause of a loss; ex. tornado, fire, negligence
negligence - ANS failure to act in a reasonable amount of time or to take necessary steps to
protect others from harm
deductibles - ANS limit what a company must pay for small losses
replacement cost - ANS the amount necessary to repair, rebuild, or replace an asset at
today's prices
premiums - ANS the monthly payment you must pay for insurance coverage
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
,homeowners insurance policies - ANS cover multiple types of perils and are sold in six basic
versions
6 versions of homeowners insurance - ANS HO-1 Basic form
HO-2 Broad form
HO-3 special form
HO-4 renter's insurance
HO-6 Condo owner's insurance
HO-8 Modified coverage- older homes insurance
HO-1 Basic Form Homeowner's insurance - ANS provides the most limited coverage, $15,000
minimum coverage. covers- fire lightning tornados explosions riots vandalism theft and volcanic
eruptions
HO-2 Broad Form Homeowner's insurance - ANS covers only named perils (like weight of
snow, freezing, falling object) costs about 5-10% more than basic
HO-3 special form Homeowner's insurance - ANS covers all direct physical losses to your
home, exceptions include floods, wars, earthquakes and nuclear accidents. costs 10-15% more
than basic coverage
HO-4 renter's or tenants insurance - ANS coverage is equivalent to HO-2 perils. available only
to renters. covers personal property rather than dwelling. Provides liability coverage in case an
accident, causing damage, is your fault.
HO-6 condo owner's insurance - ANS similar to HO4 coverage, same perils as HO2. available
to co-op and condo owners. also covers improvements you have made to the dwelling unit
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, HO-8 Older homes homeowner's insurance - ANS similar to HO1 insurance or named perils.
Insures the dwelling for the repair cost or market value instead of the replacement value.
specifically for older homes
Section 1: Property Coverage : coverage A dwelling - ANS protects the dwelling and any
attachments, does not cover any damage to the land
Section I: Property Coverage B: Other Structures - ANS protects other unattached dwellings
on the property, covers landscaping and buildings, does not cover structures used for business
purposes
Section I: Property Coverage C: Personal Property - ANS covers all personal property owned
or used by the policy holder, covers personal property regardless of location, covers property of
guests in your home
Section I: Property Coverage D: Loss of Use - ANS covers losses incurred as a result of your
home being uninhabitable
Section II: Personal Liability Coverage - ANS protects the policyholder in case someone is
injured on their property, does not cover business or professional liability or negligence.
minimum level of coverage is $100,000. medical parents to others covers small medical
expenses up to $1,000 per person
auto liability insurance - ANS every state requires you to have what type of auto insurance?
comprehensive (full coverage) - ANS applies when your vehicle is encumbered by a loan, you
must insure against liability and for the value of the vehicle itself
Personal Automobile Policy Part A: Liability Coverage - ANS covers bodily injury losses and
property damage losses, can be a combined single limit or a split limit coverage, covers losses
due to a lawsuit, most states require a minimum coverage
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
QUESTIONS AND CORRECT ANSWERS.
Property insurance - ANS What is coverage that protects real and personal property from
catastrophic losses?
liability insurance - ANS protects against the financial consequences from the insured's
responsibility for property losses or injuries to others
peril - ANS the cause of a loss; ex. tornado, fire, negligence
negligence - ANS failure to act in a reasonable amount of time or to take necessary steps to
protect others from harm
deductibles - ANS limit what a company must pay for small losses
replacement cost - ANS the amount necessary to repair, rebuild, or replace an asset at
today's prices
premiums - ANS the monthly payment you must pay for insurance coverage
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
,homeowners insurance policies - ANS cover multiple types of perils and are sold in six basic
versions
6 versions of homeowners insurance - ANS HO-1 Basic form
HO-2 Broad form
HO-3 special form
HO-4 renter's insurance
HO-6 Condo owner's insurance
HO-8 Modified coverage- older homes insurance
HO-1 Basic Form Homeowner's insurance - ANS provides the most limited coverage, $15,000
minimum coverage. covers- fire lightning tornados explosions riots vandalism theft and volcanic
eruptions
HO-2 Broad Form Homeowner's insurance - ANS covers only named perils (like weight of
snow, freezing, falling object) costs about 5-10% more than basic
HO-3 special form Homeowner's insurance - ANS covers all direct physical losses to your
home, exceptions include floods, wars, earthquakes and nuclear accidents. costs 10-15% more
than basic coverage
HO-4 renter's or tenants insurance - ANS coverage is equivalent to HO-2 perils. available only
to renters. covers personal property rather than dwelling. Provides liability coverage in case an
accident, causing damage, is your fault.
HO-6 condo owner's insurance - ANS similar to HO4 coverage, same perils as HO2. available
to co-op and condo owners. also covers improvements you have made to the dwelling unit
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, HO-8 Older homes homeowner's insurance - ANS similar to HO1 insurance or named perils.
Insures the dwelling for the repair cost or market value instead of the replacement value.
specifically for older homes
Section 1: Property Coverage : coverage A dwelling - ANS protects the dwelling and any
attachments, does not cover any damage to the land
Section I: Property Coverage B: Other Structures - ANS protects other unattached dwellings
on the property, covers landscaping and buildings, does not cover structures used for business
purposes
Section I: Property Coverage C: Personal Property - ANS covers all personal property owned
or used by the policy holder, covers personal property regardless of location, covers property of
guests in your home
Section I: Property Coverage D: Loss of Use - ANS covers losses incurred as a result of your
home being uninhabitable
Section II: Personal Liability Coverage - ANS protects the policyholder in case someone is
injured on their property, does not cover business or professional liability or negligence.
minimum level of coverage is $100,000. medical parents to others covers small medical
expenses up to $1,000 per person
auto liability insurance - ANS every state requires you to have what type of auto insurance?
comprehensive (full coverage) - ANS applies when your vehicle is encumbered by a loan, you
must insure against liability and for the value of the vehicle itself
Personal Automobile Policy Part A: Liability Coverage - ANS covers bodily injury losses and
property damage losses, can be a combined single limit or a split limit coverage, covers losses
due to a lawsuit, most states require a minimum coverage
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
