Homeowners Insurance Coverage Flashcards

A standard HO-3 policy provides 'open peril' coverage for the dwelling and 'named peril' coverage for personal property. Which of the following losses to personal property would typically be covered?

Answer: Theft of jewelry from the home while the insured is on vacation.

Theft is a specified 'named peril' in standard homeowners policies. Flood, power surge from an off-premises source, and intentional acts by the insured are all common exclusions.

An insured has a Homeowners policy with Coverage A (Dwelling) limit of $300,000. A severe storm causes a large tree to fall, destroying their detached garage. Typically, what is the maximum amount the policy will pay for the garage under Coverage B (Other Structures)?

Answer: $30,000

Coverage B (Other Structures) is typically limited to 10% of the Coverage A (Dwelling) limit. Therefore, 10% of $300,000 is $30,000.

A fire in a home makes it uninhabitable for two months while repairs are being made. The homeowner, who normally spends $1,500 per month on housing and food, has to rent an apartment for $1,200 per month and spends an additional $800 per month on meals. Under Coverage D (Loss of Use), how much will their policy reimburse them for each month?

Answer: $500

Coverage D, or Additional Living Expenses, covers the increase in living expenses necessary to maintain the normal standard of living. The total new monthly cost is $2,000 ($1,200 rent + $800 food). The policy pays the difference between the new cost and the normal cost: $2,000 - $1,500 = $500.

Which of the following situations would be covered under the Personal Liability section (Coverage E) of a standard homeowners insurance policy?

Answer: The insured's child accidentally breaks a neighbor's window with a baseball.

Coverage E (Personal Liability) protects the insured against claims for bodily injury or property damage they are legally responsible for. It covers unintentional acts of negligence, like accidentally breaking a neighbor's window. Liability arising from business activities, intentional acts, and injury to an insured person are typically excluded.

A standard homeowners policy includes special limits of liability for certain types of personal property. Which of the following categories of items is most likely subject to a special sub-limit for theft?

Answer: Jewelry and firearms

Homeowners policies place special, lower limits on the amount they will pay for the theft of certain high-value items that are easily stolen, such as jewelry, watches, furs, and firearms.

All of the following are common exclusions found in an unendorsed homeowners insurance policy EXCEPT:

Answer: Damage caused by a fire resulting from lightning

Fire and lightning are standard covered perils in homeowners insurance policies. Flood, earthquake (earth movement), and gradual wear and tear are all common exclusions that typically require separate policies or endorsements for coverage.