Common Homeowners Insurance Questions And Answers

1. A devise which is used to minimize small nuisance claims, keep insurance premiums down and may reduce morale hazards is called

Arbitration

Deductible

Coinsurance

Appraisal

Chapter 3

Explanation

Chapter 3

2. The failure to act or not as a reasonable person would under similar circumstance is known as

Accident

Negligence

Proximate Cause

Occurrence

Chapter 4

Explanation

Chapter 4

3. Changes or additions to a policy contract are referred to as:

Exclusions

Additional payments

Supplemental payments

Endorsements

Chapter 3

Explanation

Chapter 3

4. Installing an ADT alarm system is an example of which risk management technique?

Transfer

Share

Retain

Reduce

Chapter 2

Explanation

Chapter 2

5. Which one of the following is NOT an eligible vehicle for coverage under a Personal Auto Policy?

A sedan

An SUV

A van

A motorcycle

A motorcycle is not an eligible vehicle for coverage under a Personal Auto Policy because motorcycles are typically covered under a separate insurance policy called a Motorcycle Insurance Policy. Personal Auto Policies are designed to provide coverage for cars, sedans, SUVs, and vans, but not for motorcycles. Motorcycles have different risks and require specialized coverage, which is why they are excluded from Personal Auto Policies.

Explanation

A motorcycle is not an eligible vehicle for coverage under a Personal Auto Policy because motorcycles are typically covered under a separate insurance policy called a Motorcycle Insurance Policy. Personal Auto Policies are designed to provide coverage for cars, sedans, SUVs, and vans, but not for motorcycles. Motorcycles have different risks and require specialized coverage, which is why they are excluded from Personal Auto Policies.

6. Fire, lightning and hail are best used for which of the following terms?

Loss

Hazard

Risk

Peril

Chapter 2

Explanation

Chapter 2

7. Information about the premium and policy limits, the identity and address of the named insured, and the policy period is found in what part of an insurance policy?

Declarations

Insuring Agreement

Conditions

Exclusions

Chapter 3

Explanation

Chapter 3

8. Perils that are not covered by the policy contract are called

Open perils

Special perils

Inclusions

Exclusions

Chapter 4

Explanation

Chapter 4

9. Which loss valuation will provide a new item for an old item if damaged by a covered claim?

Fair Market Value

Repair Cost

Replacement Cost

Actual Cash Value

Chapter 4

Explanation

Chapter 4

10. Something that may increase the seriousness of a loss or the likelihood that a loss will occur is called a

Loss

Hazard

Peril

Risk

Chapter 2

Explanation

Chapter 2

11. Physical harm to a person is a definition of

Property Damage

Bodily Injury

Personal Injury

Physical Damage

Bodily injury refers to physical harm or damage caused to a person's body. It includes injuries such as cuts, bruises, fractures, or any other harm that affects a person's physical well-being. This term is commonly used in legal and insurance contexts to describe the physical harm suffered by an individual as a result of an accident or intentional act.

Explanation

Bodily injury refers to physical harm or damage caused to a person's body. It includes injuries such as cuts, bruises, fractures, or any other harm that affects a person's physical well-being. This term is commonly used in legal and insurance contexts to describe the physical harm suffered by an individual as a result of an accident or intentional act.

12. If the Commissioner finds the person has violated insurance laws, it may issue a _______ requiring the offending party to stop the illegal activity

Suspension

Cease and Desist Order

Warrant for arrest

Complaint with their employer

Chapter 1

Explanation

Chapter 1

13. In order to collect on an insurance claim

I must have an insurable interest when I purchase the policy

I need no insurable interest to collect

I needed to have an insurable interest at one time

I must have insurable interest at the time of loss

Chapter 2

Explanation

Chapter 2

14. Returning an insured back to the same financial condition prior to the loss is

Insurable interest

Indemnity

Exposure

Subrogation

Chapter 2

Explanation

Chapter 2

15. When can the Commissioner examine an insurer's records?

Every Year

At least once every three years

At any time

At least once every four years

Chapter 1

Explanation

Chapter 1

16. If the insurance company cancels the policy, how will the unearned premium be returned to the policyholder?

Short Rate

Pro-Rata

Flat Rate

Cancellation Rate

Chapter 3

Explanation

Chapter 3

17. Additional living expenses would be paid by which homeowner policy coverage?

Coverage A

Coverage B

Coverage C

Coverage D

Chapter 6

Explanation

Chapter 6

18. Which one of the following would NOT be considered an insured on a policy contract?

14 year old son living with the Named Insured

10 year old son of the neighbor living next to the Named Insured

20 year old foster child living with the Named Insured

Named Insured's 22 year old daughter away at school full time

Chapter 2

Explanation

Chapter 2

19. Which one of the following locations will NOT be covered on a personal auto policy?

Puerto Rico

Canada

United States

Mexico

Chapter 5

Explanation

Chapter 5

20. Which policy would be used to insure a condo?

HO-4

HO-6

HO-5

HO-3

Chapter 6

Explanation

Chapter 6

21. Which term best describes the insurance company's assumption of the insured's legal rights to sue the at-fault party?

Right to Salvage Clause

Liberalization Clause

Subrogation Clause

Recovered Property Clause

Chapter 3

Explanation

Chapter 3

22. An insured responding to a question to the best of their knowledge would be

Material Fact

Concealment

Representation

Misrepresentation

Chapter 3

Explanation

Chapter 3

23. Giving someone sporting tickets in exchange for purchasing a policy is called

Rebating

Defamation

Twisting

Misrepresentation

Chapter 1

Explanation

Chapter 1

24. Damage to fishing equipment would be claimed under which homeowner policy coverage?

Coverage A

Coverage B

Coverage C

Coverage D

Chapter 6

Explanation

Chapter 6

25. An insured's indifference to a loss or attitude about safety can create a

Physical Hazard

Moral Hazard

Morale Hazard

Legal Hazard

Chapter 2

Explanation

Chapter 2

26. In some states if the injured party can be proven even partially responsible for the accident, they are barred from recovery, this is called

Comparative Negligence

Assumption of Risk

Intervening Cause

Contributory Negligence

Chapter 4

Explanation

Chapter 4

27. What are open perils?

Perils listed in the insuring agreement

Perils that are selected by the insured

All perils are covered with no exlusions

All perils are covered except those listed in the policy exclusions

Chapter 4

Explanation

Chapter 4

28. Non-renewal refers to a termination of coverage anytime during the middle of the policy period

True

Sometimes true

False

Sometimes false

Chapter 3

Explanation

Chapter 3

29. How long will personal property be covered at a new location?

10 days

30 days

60 days

90 days

Chapter 6

Explanation

Chapter 6

30. How will your homeowner policy cover the insured when their pet bites someone?

It is excluded

They are covered under Coverage C

They are covered under Coverage E and Coverage F

They are covered under both Section I and Section II

Chapter 6

Explanation

Chapter 6

31. Personal automobile medical payments cover

The insured as an occupant of a car only

An occupant of the insured vehicle only

The insured as a pedestrian only

Chapter 5

Explanation

Chapter 5

32. Making a false statement intended to injure an insurer's reputation is an illegal practice known as:

Coercion

Misrepresentation

Defamation

Twisting

Chapter 1

Explanation

Chapter 1

33. What is the limit called when you have more than one property at more than one location covered by one single limit on the policy?

Combined Single Limit

Blanket Limit

Specific Limit

Sub-Limit

Chapter 4

Explanation

Chapter 4

34. Coverage D on an Homeowner's policy will NOT cover for which of the following claims>

Loss of rental income following a covered loss

The cost to stay at a hotel after the insured's home was damaged in a forest fire

The cost of living in a camper on the insured's property due to a covered loss

The cost of buying new cloths after the home caught on fire

Chapter 6

Explanation

Chapter 6

35. Coverage D will cover which type of loss?

Indirect

Direct

Sequential

Optional

Chapter 6

Explanation

Chapter 6

36. The fire department service charge is how much?

$100

$500

$1000

$2500

Chapter 6

Explanation

Chapter 6

37. The Insurance Commissioner is empowered to:

Pass state laws relating to insurance

Set rates for all insurance companies

Write policy forms for mandatory insurance coverage

Enforce state laws relating to insurance

Chapter 1

Explanation

Chapter 1

38. Unequal transfer of value between the insurer and Named Insured is

Consideration

Adhesion

Indemnity

Aleatory

Chapter 3

Explanation

Chapter 3

39. What coverage do the numbers 100/3000 represent in a 100/300/50 split limit?

Bodily Injury

Property Damage

Personal Injury

Loss of Use

Chapter 4

Explanation

Chapter 4

40. Which one of the following is guaranty that all the information provided is correct?

Representation

Warranty

Material Representation

Response

Chapter 3

Explanation

Chapter 3

41. All of the following are resident producer requirements EXCEPT:

Submit an application to the Commission and have it evaluated

Be over 21

Be honest and trustworthy

Pass the state licensing exam

Chapter 1

Explanation

Chapter 1

42. What type of financial loss occurs as a consequence of direct loss?

Predictable loss

Occurrence

Indirect loss

Accident

Chapter 2

Explanation

Chapter 2

43. Which of the following damages will punish the responsible party?

Special Damages

Compensatory Damages

General Damages

Punitive Damages

Chapter 4

Explanation

Chapter 4

44. Which of the following is NOT considered unfair discrimination

Charging a higher rate because of their geographical location due to a regulatory mandate

Charging a higher rate becuase of color, creed, or religion

Charging a higher rate because their house is 80 years old but still meets current building codes

Charging a higher rate because the customer is blind

Chapter 3

Explanation

Chapter 3

45. All of the following are elements necessary for a contract to be valid, EXCEPT:

Legal Competent Parties

Signature

Consideration

Agreement

Chapter 3

Explanation

Chapter 3

46. All of the following will be listed on a written binder, EXCEPT:

Insurer's name

Policy limits

Premium

Effective dates

Chapter 3

Explanation

Chapter 3

47. Which clause found in the policy contract states that the Named Insured may not transfer policy ownership without the insurers consent?

Inherent Vice

Subrogation Clause

Assignment Clause

Salvage Clause

Chapter 3

Explanation

Chapter 3

48. Coverage E on a homeowner policy covers which of the following?

$100,000 per person

$1,000 per person

$100,000 per occurrence

$1,000 per occurrence

Chapter 6

Explanation

Chapter 6

49. Which of the following is NOT considered an insured location on a homeowner policy?

Land used for farming and owned by the named insured

The Named Insured's vacation home they are renting for 2 weeks in Florida

The Named Insured's 17 year old daughter's dorm room at VCU

The Named Insured's hotel room where they are staying until their brand new home is completed

Chapter 6

Explanation

Chapter 6

50. A building that does NOT contain enough personal property to be used for that purpose and no one was home at the time of the loss best describes which of the following terms?

Uninsurable

Unoccupied

Empty

Vacant

Chapter 6

Explanation

Chapter 6

51. It is illegal for an agent to pay, allow, give, offer, or promise to a prospective insurance buyer any return of premiums, any special favor or advantage, or anything of value not specified in the insurance contract, as an inducement to buy insurance because this practice is known as

Defamation

Coercion

Rebating

Twisting

Chapter 1

Explanation

Chapter 1

52. What are payments that are automatically included and do not affect the limit of liability?

Special payments

Supplementary Payments

Medical Payments

General Payments

Chapter 4

Explanation

Chapter 4

53. What is NOT covered by supplementary payments under Section II of a homeowner policy?

Court Cost

Damage to property of others

Funeral Expenses

First Aid

Chapter 66

Explanation

Chapter 66

54. An unendorsed homeowner policy will settle personal property for which valuation method?

Replacement Cost

Actual Cash Value

Agreed Value

Salvage Value

Chapter 6

Explanation

Chapter 6

55. Underinsured motorist coverage provides protection to an insured after an accident in which of the following situation

The other driver has insufficient insurance and is negligent

The other driver has no insurance and is negligent

The insured driver has insufficient limits and is negligent

The other driver has no insurance but is not negligent

Chapter 5

Explanation

Chapter 5

56. What is proximate cause?

A reasonable explanation of an event

A peril which resulted in an accident

An uninterrupted chain of events from negligent act to accident

A hazard that exacerbated the situation

Chapter 4

Explanation

Chapter 4

57. Each of the following must be present to establish negligent liability, EXCEPT

An intervening cause

A legal duty to act

A breach of duty

Resulting injury or damage

Chapter 4

Explanation

Chapter 4

58. Which one of the following homeowner forms does NOT provide Coverage A?

HO6

HO3

HO5

HO4

Chapter 6

Explanation

Chapter 6

59. How is the premium returned when the Named Insured cancels the policy?

Flat Rate

Pro-Rata

Short Rate

The Named Insured cannot cancel the policy because they are bound by the contract

Chapter 3

Explanation

Chapter 3

60. What will happen to your policy premium if you decrease your deductible?

Option 1

Option 2

Option 3

Option 4

If you decrease your deductible, it means that you will have to pay less out of pocket before your insurance coverage kicks in. This will result in a lower policy premium because the insurance company will have to cover a larger portion of the costs in the event of a claim.

Explanation

If you decrease your deductible, it means that you will have to pay less out of pocket before your insurance coverage kicks in. This will result in a lower policy premium because the insurance company will have to cover a larger portion of the costs in the event of a claim.

61. Where will the perils insured against be found in the policy contract?

Insuring Agreement

Declarations Page

Conditions

Exclusions

Chapter 3

Explanation

Chapter 3

62. For an investigative consumer report the customer has to be advised in writing within

3 days

5 days

15 days

30 days

Chapter 1

Explanation

Chapter 1

63. This covers the insured up to $1,000 in the event property owned by the homeowner's association suffers a loss that would be a covered loss under the insured's policy.

Fair Share Coverage

Homeowner's Association Insurance

Loss Assessment

Assessment Insurance

Chapter 6

Explanation

Chapter 6

64. What is awarded for pain and suffering following an accident?

General Damages

Special Damages

Punitive Damages

Exemplary Damages

General Damages are awarded for pain and suffering following an accident. These damages are meant to compensate the injured party for the physical and emotional pain, as well as any loss of enjoyment of life, that they have experienced as a result of the accident. General Damages are different from Special Damages, which are awarded to cover specific financial losses such as medical expenses and lost wages. Punitive Damages and Exemplary Damages, on the other hand, are awarded in cases where the defendant's conduct was particularly egregious or malicious, and are meant to punish the defendant rather than compensate the plaintiff.

Explanation

General Damages are awarded for pain and suffering following an accident. These damages are meant to compensate the injured party for the physical and emotional pain, as well as any loss of enjoyment of life, that they have experienced as a result of the accident. General Damages are different from Special Damages, which are awarded to cover specific financial losses such as medical expenses and lost wages. Punitive Damages and Exemplary Damages, on the other hand, are awarded in cases where the defendant's conduct was particularly egregious or malicious, and are meant to punish the defendant rather than compensate the plaintiff.

65. Which one of the following policies will cover real and personal property for special perils?

Renters/Tenant

Special

Comprehensive

Condo

Chapter 6

Explanation

Chapter 6

66. Where in a policy would you find the exception for whether intentional acts are covered?

Declarations page

Insuring agreement

Conditions

Exclusions

Chapter 3

Explanation

Chapter 3

67. Which one of the following is an additional coverage on all homeowner policies?

Fire department service fee

Earthquake

Mobile home

Special personal property

Chapter 6

Explanation

Chapter 6

68. Section II, Liability in a homeowner policy would NOT cover all of the following EXCEPT?

A lawsuit arising out of the insured's malpractice

Damage the insured caused by their own vehicle

The Named Insured starting a fight with the neighbor and punching them in the face

A boating accident the insured caused while operating their 20ft sailboat

Chapter 6

Explanation

Chapter 6

69. Which one of the following would only be covered under special perils?

Water damage caused by the washing machine that overflowed

Hail

The groundhog that dug under the home's foundation causing it to collapse

Volcanic Eruption

Chapter 6

Explanation

Chapter 6

70. What coverage on a homeowners policy will pay out regardless of fault

Coverage E and Coverage F

Coverage D

Coverage E

Coverage F

Chapter 6

Explanation

Chapter 6