Home Self Study: Chapter 2 Capstone Exam

1. Which of the following phrasings is best for discovering issues with the physical condition of the home?

Please describe the quality of your home?

How would you define the condition of your home?

Are there any known issues with your home?

Section 2.4 – Identifying home quality issues

Most insureds aren't sure how to answer vague questions like "describe the quality of your home" and may be put on notice to lie by questions with strong negative phrasings like "are there any known issues with your home?"

The "put it up for sale" question encourages the insured to give a vivid and colorful picture of the home. This can unearth quality issues that may not have been discovered otherwise.

Explanation

Section 2.4 – Identifying home quality issues

Most insureds aren't sure how to answer vague questions like "describe the quality of your home" and may be put on notice to lie by questions with strong negative phrasings like "are there any known issues with your home?"

The "put it up for sale" question encourages the insured to give a vivid and colorful picture of the home. This can unearth quality issues that may not have been discovered otherwise.

2. Regarding vacant or abandoned homes:

Vacant or abandoned homes present a greater risk for liability losses than an occupied home

A property must be occupied for a minimum of 9 consecutive months to be insurable

Theft and fire risks are more likely in a vacant home

All listed answers are correct

Section 2.1 Property insurance basics

We do not insure vacant or abandoned homes because of the highly increased chances of both Section I and Section II losses. These properties are not insurable through our agency on neither a Dwelling or Homeowners series contract

Explanation

Section 2.1 Property insurance basics

We do not insure vacant or abandoned homes because of the highly increased chances of both Section I and Section II losses. These properties are not insurable through our agency on neither a Dwelling or Homeowners series contract

3. When required an appraisal or receipt proving valuation should be no older than:

1 year

5 years

7 years

10 years

Section 2.6 – Home insurance documentation

Proof of valuation must be no older than 5 years

Explanation

Section 2.6 – Home insurance documentation

Proof of valuation must be no older than 5 years

4. Which of the following answers from a customer regarding underwriting factors would not typically require further clarifying questions?

"My dog is a mutt, I'm not really sure what it is"

"I'm not sure how old my roof is but the house was built a year or two ago"

"I'm pretty sure the house is covered right now"

None of the listed responses require additional follow up questions

Section 2.1 Property insurance basics

Most vague answers regarding underwriting factors should be followed-up upon with deeper probing questions to clarify the eligibility of the risk. In the scenario above, it is ok that the insured does not know the age of the home's roof. Since the age of the home is very new, we can assume the roof is new as well.

Explanation

Section 2.1 Property insurance basics

Most vague answers regarding underwriting factors should be followed-up upon with deeper probing questions to clarify the eligibility of the risk. In the scenario above, it is ok that the insured does not know the age of the home's roof. Since the age of the home is very new, we can assume the roof is new as well.

5. Which of the following claim reconciliation examples is correct?

All listed options are correct

Section 2.3 – Special claim scenarios

The only appropriately handled situation above is the one involving the open claim. The agent acted appropriately in obtaining verification of the insured's account, submitting that proof to underwriting, and leaving notes to the underwriters referencing this. If the L.O.E. displayed different loss amounts than the C.L.U.E. report, the agent should adjust those on the application as well

Claims on properties previously owned by the insured DO still count on applications for new properties as they demonstrate a pattern of lost.

Claims on units connected to or in the same building as the insured for which the insured has no insurable interest do not count against the insured. The agent should ask if the insured knows anything about the loss and whether or not it affected the insured's section of the property and leave this information in the policy notes field for the underwriters.

Claims on the insured's property that occurred prior to the insured taking ownership of the property do not count against the insured. The agent should ask if the insured knows anything about the damage and whether or not any damage still persists and leave these notes to the underwriter

Explanation

Section 2.3 – Special claim scenarios

The only appropriately handled situation above is the one involving the open claim. The agent acted appropriately in obtaining verification of the insured's account, submitting that proof to underwriting, and leaving notes to the underwriters referencing this. If the L.O.E. displayed different loss amounts than the C.L.U.E. report, the agent should adjust those on the application as well

Claims on properties previously owned by the insured DO still count on applications for new properties as they demonstrate a pattern of lost.

Claims on units connected to or in the same building as the insured for which the insured has no insurable interest do not count against the insured. The agent should ask if the insured knows anything about the loss and whether or not it affected the insured's section of the property and leave this information in the policy notes field for the underwriters.

Claims on the insured's property that occurred prior to the insured taking ownership of the property do not count against the insured. The agent should ask if the insured knows anything about the damage and whether or not any damage still persists and leave these notes to the underwriter

6. Which of the following claims scenarios would not count against the insured for the purposes of underwriting or policy rating?

The insured was the recipient of a homeowners liability claim settlement

The insured's home had to be repaired after he accidentally drove his car through his garage door

Section 2.2 – Home claim basics

The only scenario above that would have no negative impact on the insured's homeowners rates & eligibility is when the insured is the recipient of a homeowners liability claim. Since homeowners liability claims pay out to THIRD parties, this indicates that someone else's policy had to pay to the insured. This loss does not indicate any heightened risk for our policy.

For the wildfire claim, this insured is extremely unlucky, but these claims still count for the purposes of rating and eligibility.
For the dog bite: dog bite claims still count even if the dog was given up or destroyed
For the car through the garage door: Homeowners insurance pays for vehicle damage to the insured's home If the insured had an HO-3 policy or better, this claim would be paid. Since the insured's policy did pay, this claim counts against the insured

Explanation

Section 2.2 – Home claim basics

The only scenario above that would have no negative impact on the insured's homeowners rates & eligibility is when the insured is the recipient of a homeowners liability claim. Since homeowners liability claims pay out to THIRD parties, this indicates that someone else's policy had to pay to the insured. This loss does not indicate any heightened risk for our policy.

For the wildfire claim, this insured is extremely unlucky, but these claims still count for the purposes of rating and eligibility.
For the dog bite: dog bite claims still count even if the dog was given up or destroyed
For the car through the garage door: Homeowners insurance pays for vehicle damage to the insured's home If the insured had an HO-3 policy or better, this claim would be paid. Since the insured's policy did pay, this claim counts against the insured

7. Which of the following situations is most likely to require the insured to provide proof of home updates to the insurer?

The insured's roof is new, but the insured's area had many recent claims filed due to a catastrophic hail storm

The insured's home is over 60 years of age in an area where aluminum wiring was common

The insured's roof is 20 years old and made of slate tiles

The insured's circuit breaker box is over 20 years old

None of the situations listed above would indicate a need for proof of updates

Section 2.6 – Home insurance documentation

Aluminum wiring is somewhat common in homes built over 50 years ago and it poses a substantial fire risk. Aging homes with this exposure will likely require proof that the aluminum wiring exposure has been updated and removed.

Just because something is old doesn't mean it neads to be updated. 20 year old slate roofing is not required to be updated if the roof is in sound, weather-tight condition. While our carriers do require that all electrical systems are upgraded to circuit breakers, there are very few instances where a circuit breaker system of any age will require proof of updates.

The insured is not required to update roofing or siding because other homes in the area experienced loss.

Explanation

Section 2.6 – Home insurance documentation

Aluminum wiring is somewhat common in homes built over 50 years ago and it poses a substantial fire risk. Aging homes with this exposure will likely require proof that the aluminum wiring exposure has been updated and removed.

Just because something is old doesn't mean it neads to be updated. 20 year old slate roofing is not required to be updated if the roof is in sound, weather-tight condition. While our carriers do require that all electrical systems are upgraded to circuit breakers, there are very few instances where a circuit breaker system of any age will require proof of updates.

The insured is not required to update roofing or siding because other homes in the area experienced loss.

8. Excluding extraordinary circumstances, which of the following can we insure through Goji?(Check all answers that apply)

A home with a large dog

A rented apartment occupied only by the tenant, the property owner does not live on site

A home in a wind-pool requiring a wind exclusion (X-wind policy)

A manufactured home

A property for which the auto was written through a different carrier than the home insurance

Section 2.1 – Qualifying a home

The dog is insurable - the BREED of dog matters, not the SIZE of the dog
We do not restrict our offerings of renters policies based on the occupancy of the LANDLORD
While it is preferable to sell the auto and home witht he same carrier, there are many circumstances which prevent this. In those circumstances, we would prefer to write the lines of business through separate carriers than to lose the account entierly

We do not write home, renters, condo, or dwelling policies which require a wind exclusion through any of our carriers
While MODULAR homes are typically acceptable, manufactured homes are not acceptable through any of our carriers

Explanation

Section 2.1 – Qualifying a home

The dog is insurable - the BREED of dog matters, not the SIZE of the dog
We do not restrict our offerings of renters policies based on the occupancy of the LANDLORD
While it is preferable to sell the auto and home witht he same carrier, there are many circumstances which prevent this. In those circumstances, we would prefer to write the lines of business through separate carriers than to lose the account entierly

We do not write home, renters, condo, or dwelling policies which require a wind exclusion through any of our carriers
While MODULAR homes are typically acceptable, manufactured homes are not acceptable through any of our carriers

Submit

9. Which of the following home quality issues are likely to require remediation before or immediately after binding in order to retain the policy?(Check all answers that apply)

A professionally installed pellet stove only used as a supplemental heat source

Multiple old cars in varying states of disrepair cars parked on the insureds premesis

A home lacking in any carbon monoxide alarms or smoke detectors

Missing panels of siding

A roof showing large patches of discoloration

Section 2.4 – Identifying home quality issues

Professionally installed wood/pellet stoves used only as a supplemental or secondary heating source are acceptable so long as the model of stove is UL approved and the chimneys cleaned at least annually

Homes with questionable ability to withstand weather (broken or leaking windows, missing or chipped siding, or warped, moldy, or discolored roofing) should not be written until the loss is remediated

Homes with yard trash are a liability exposure. Large numbers of "dead" cars on a property also bring up questions of foot traffic and business exposure. This is an infrequent but often unarguable reason for policy cancellation.

Home lacking in smoke detectors or carbon monoxide alarms indicate a heightened risk of loss, and are signs of generally low pride of ownership. In some areas, missing these items may also be illegal.

Explanation

Section 2.4 – Identifying home quality issues

Professionally installed wood/pellet stoves used only as a supplemental or secondary heating source are acceptable so long as the model of stove is UL approved and the chimneys cleaned at least annually

Homes with questionable ability to withstand weather (broken or leaking windows, missing or chipped siding, or warped, moldy, or discolored roofing) should not be written until the loss is remediated

Homes with yard trash are a liability exposure. Large numbers of "dead" cars on a property also bring up questions of foot traffic and business exposure. This is an infrequent but often unarguable reason for policy cancellation.

Home lacking in smoke detectors or carbon monoxide alarms indicate a heightened risk of loss, and are signs of generally low pride of ownership. In some areas, missing these items may also be illegal.

Submit

10. Which of the following would be a good reason to call contact an underwriter?(Check all answers that apply)

The insured has a business liability exposure that is not clearly defined by policy endorsements or exclusions

The customer requests an endorsement that is not offered by the carrier

Section 2.5 – Communicating with underwriters

Underwriters can be consulted on occasion to help you to determine the eligibility or proper way to write an unusual risk. Once you have checked all available company and carrier resources (training documents, product guides, underwriting manuals) feel free to call an underwriter.

Underwriters are not magicians. They cannot create coverage that the company does not offer, change rates for a single risk, or alter the reconstruction cost estimate of a home.

Underwriters can also remove some "system edits," meaning they can help to remove a blockage in the system that is preventing you from writing a risk that you are 100% is eligible to be written (the claims scenario above)

Explanation

Section 2.5 – Communicating with underwriters

Underwriters can be consulted on occasion to help you to determine the eligibility or proper way to write an unusual risk. Once you have checked all available company and carrier resources (training documents, product guides, underwriting manuals) feel free to call an underwriter.

Underwriters are not magicians. They cannot create coverage that the company does not offer, change rates for a single risk, or alter the reconstruction cost estimate of a home.

Underwriters can also remove some "system edits," meaning they can help to remove a blockage in the system that is preventing you from writing a risk that you are 100% is eligible to be written (the claims scenario above)

Submit