Chapter 7. Dwelling Insurance

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Chapter 7. Dwelling Insurance - Quiz

A Dwelling policy provides protection for individuals and families against loss to their dwelling and personal property.


Questions and Answers
  • 1. 

    Which of the following could not be covered under a Dwelling policy?

    • A.

      A mobile home that is not permanently located

    • B.

      A single family home that is under construction

    • C.

      A three-unit townhouse

    • D.

      A home that is rented to another person

    Correct Answer
    A. A mobile home that is not permanently located
    Explanation
    A is correct. To be eligible, a mobile home must be permanently located.

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  • 2. 

    Which of the following coverage provisions would not be found in an unendorsed Dwelling policy form?

    • A.

      Dwelling

    • B.

      Other structures

    • C.

      Liability

    • D.

      Personal property

    Correct Answer
    C. Liability
    Explanation
    C is correct. A Dwelling policy automatically includes coverage provisions for the dwelling, other structures, personal property, and fair rental value. Liability and medical payments coverage may only be added by endorsement.

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  • 3. 

    Which of these items of personal property would be covered under a Dwelling policy when Coverage C is written?

    • A.

      A motorcycle

    • B.

      A pet poodle

    • C.

      A pool table

    • D.

      A sailboat

    Correct Answer
    C. A pool table
    Explanation
    C is correct. Animals, motor vehicles, and most types of boats are excluded under Coverage C.

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  • 4. 

    A Basic Dwelling policy form automatically provides coverage for losses caused by each of the following perils except which one?

    • A.

      Fire

    • B.

      Lightning

    • C.

      Internal explosion

    • D.

      Vandalism and malicious mischief

    Correct Answer
    D. Vandalism and malicious mischief
    Explanation
    D is correct. The only perils that are automatically covered under the Basic form are fire, lightning, and internal explosion.

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  • 5. 

    The Special Dwelling policy form provides which of the following?

    • A.

      Basic coverage for the dwelling and broad coverage for personal property

    • B.

      Broad coverage for the dwelling and basic coverage for personal property

    • C.

      Open peril coverage for the dwelling and broad coverage for personal property

    • D.

      Open peril coverage for both the dwelling and personal property

    Correct Answer
    C. Open peril coverage for the dwelling and broad coverage for personal property
    Explanation
    C is correct. The Special form provides Broad form named peril coverage for personal property and open peril coverage for the dwelling and other structures.

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  • 6. 

    Under which of the Dwelling policy forms may the insured be reimbursed for the replacement cost when the dwelling is destroyed?

    • A.

      All Dwelling forms

    • B.

      The Basic form only

    • C.

      The Broad and Special forms

    • D.

      The Special form only

    Correct Answer
    C. The Broad and Special forms
    Explanation
    C is correct. The Broad and Special forms will pay for losses to the dwelling and other structures on a replacement cost basis if the buildings are insured for at least 80% of their replacement value. Under the Basic form, losses are paid on an actual cash value basis.

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  • 7. 

    An insured has a DP-3 covering a home that has a replacement value of $100,000. The insured carries $60,000 of insurance. Following a loss, the determined is made that it would cost $12,000 to replace the damaged portion of the home. How much could the insured collect, assuming the ACV of the loss is $6,000?

    • A.

      $12,000

    • B.

      $9,000

    • C.

      $6,000

    • D.

      Nothing

    Correct Answer
    B. $9,000
    Explanation
    B is correct. To qualify for replacement cost coverage, the insured must carry insurance equal to 80% of the replacement cost of the building. Because the insured does not carry enough insurance, the loss will be paid at proportional replacement cost or ACV, whichever is larger. In this case, proportional replacement cost ($9,000) is larger than ACV ($6,000).

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  • 8. 

    Which of the following would not be covered under Coverage A or Coverage B of a Dwelling policy?

    • A.

      A storage shed 100 feet in back of the insured's dwelling where she keeps various yard tools

    • B.

      A detached garage that has been altered to house a manufacturing operation

    • C.

      A stack of lumber placed at the edge of the insured's property that will be used to construct a storage shed

    • D.

      A water heater located in the insured's attached garage

    Correct Answer
    B. A detached garage that has been altered to house a manufacturing operation
    Explanation
    B is correct. A detached garage that is used for commercial, manufacturing, or farming purposes is not covered under a Dwelling policy.

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  • 9. 

    The Johnsons' home is covered by a Special Dwelling policy. When a fire damages the home, the family is forced to stay at a motel for a month while repairs are made. What coverage might reimburse them for these expenses?

    • A.

      Dwelling coverage

    • B.

      Additional living expenses

    • C.

      Personal property coverage

    • D.

      Fair rental value coverage

    Correct Answer
    B. Additional living expenses
    Explanation
    B is correct. Both the Broad and Special forms make coverage available for Additional Living Expense. This coverage pays for additional living expenses the insured incurs after a covered loss, including reasonable motel, dining, laundry, and transportation expenses. These expenses are covered for the time needed to repair or replace the damaged property or become settled elsewhere in permanent quarters.

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  • 10. 

    Myrtle has a Dwelling policy with Broad Theft coverage applicable both on and off her premises. Which of the following theft losses would be covered?

    • A.

      A $400 handgun taken from a bureau in her home

    • B.

      Theft of personal property owned by a boarder who rents a room in Myrtle's home

    • C.

      Two credit cards taken from her desk in her home

    • D.

      A tape player removed from the dashboard of her car that was parked in her garage

    Correct Answer
    A. A $400 handgun taken from a bureau in her home
    Explanation
    A is correct. Credit cards, motor vehicles and their equipment, and property owned by boarders or roomers are all excluded under the Broad Theft Coverage endorsement. However, up to $2,000 of coverage is available to cover theft of firearms.

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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • May 15, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Feb 25, 2009
    Quiz Created by
    Fsspc
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