Question 1

In the United States,the first type of homeowner's insurance was fire insurance,offered in 1935 by a small company in Charleston,South Carolina.

Accepted Answer

The first type of homeowner's insurance in the United States was actually offered in 1950, and it was a package policy that included multiple types of coverage, such as fire, theft, and liability. This policy was introduced by the Insurance Company of North America (INA).

Question 2

Renter's insurance includes liability insurance.

Accepted Answer

False

Question 3

Your apartment building burned down while you were on vacation.Fortunately,you have renter's insurance.What will your policy cover?

Accepted Answer

Renter's insurance typically covers the policyholder's personal property and may cover additional living expenses, such as hotel stays, if the rental unit becomes uninhabitable due to a covered loss. It does not cover damages to the building structure or the personal property of others.

Question 4

John Meadow rents an apartment and wants tenant's insurance or an ________ policy.

Accepted Answer

HO-4 is the best choice for John Meadow as it covers his personal property and liability as a renter. This policy is specifically designed for tenants and is commonly known as renter's insurance. The other options (HO-1, HO-2, HO-3, and HO-6) are all homeowners policies, which would not be appropriate for someone who is renting an apartment.

Question 5

Which of the following is not a consideration in determining the amount of homeowner's insurance a person needs?

Accepted Answer

Matching the insurance coverage of similar homes in your neighborhood is not a consideration in determining the amount of homeowner's insurance a person needs. The other options listed are all important factors to consider when selecting homeowner's insurance coverage.

Question 6

An HO-3 policy is a special form of homeowner's insurance policy that offers open perils protection except for those perils specifically excluded.

Accepted Answer

An HO-3 policy is a form of homeowner's insurance policy that provides open perils coverage, which means that it protects against all perils except those that are specifically excluded. This is different from a named perils policy, which only covers perils that are specifically listed in the policy. An HO-3 policy is the most common type of homeowner's insurance in the United States.

Question 7

While you were walking your dog,she bit a child.Medical treatment for the child would fall under Coverage C: Personal Property.

Accepted Answer

Medical treatment for the child would actually fall under Coverage E: Personal Liability as it is related to bodily injury caused by your dog. Coverage C is for damage to personal property (such as if your dog destroyed someone's garden).

Question 8

Your backyard shed was damaged by a windstorm.Your coverage is based under Coverage D: Loss of Use.

Accepted Answer

Coverage D: Loss of Use typically covers additional living expenses when the main residence is uninhabitable due to a covered loss, not damage to other structures like a shed. Damage to a shed would more likely fall under Coverage B: Other Structures.

Question 9

Fire,theft,and windstorm damage are examples of

Accepted Answer

Fire, theft, and windstorm damage are all examples of perils. A peril is an event or cause of damage or loss, such as a fire, theft, or storm. Hazards refer to conditions that increase the likelihood of a peril occurring, miscellaneous mishaps are unpredictable accidents that may or may not be covered by insurance, and liabilities refer to legal obligations and responsibilities.

Question 10

The inflation guard endorsement on your homeowners insurance policy automatically decreases your policy premiums each year due to the inflation rate.

Accepted Answer

The inflation guard endorsement on your homeowners insurance policy actually increases your coverage limits each year to keep up with the inflation rate, but it may also increase your premiums.

Question 11

Personal liability insurance protects you from financial losses incurred if someone is injured on your property or as a result of your actions.

Accepted Answer

Personal liability insurance provides coverage for legal and medical expenses if someone is injured or their property is damaged due to your actions or negligence. It helps protect your personal assets from being used to pay for any damages if you are sued.

Question 12

Property insurance protects you from the financial risk associated with property losses.

Accepted Answer

Property insurance provides coverage for damages to your property and belongings caused by covered events such as fire, theft, or natural disasters. By obtaining property insurance, you can transfer the financial risk of potential losses to the insurance company, giving you peace of mind and financial protection.

Question 13

Brandi thought it quite funny to have a decorative outhouse put on her property as a conversation piece.This structure is covered under Coverage A: Dwelling on her home owners policy.

Accepted Answer

Coverage A: Dwelling typically covers the main structure where the homeowner resides and does not extend to separate, non-living structures like a decorative outhouse, which would more likely be covered under Coverage B: Other Structures.

Question 14

Generally,a personal umbrella policy is an expensive policy that provides excess liability insurance over basic underlying contracts.

Accepted Answer

A personal umbrella policy is typically an affordable way to provide excess liability insurance above the limits of the insured's homeowners, auto, and other primary insurance policies.

Question 15

Angela's home became overrun with termites.She had to stay in an apartment temporarily while her home was being fixed.The provision on her home owners policy that covers her expenses while she is not able to live in her home is known as: Coverage D: Loss of Use.

Accepted Answer

Coverage D in a homeowner's insurance policy provides coverage for additional living expenses incurred when the insured person's residence is uninhabitable due to a covered loss. In this scenario, Angela's temporary stay in an apartment would be covered under this provision.

Question 16

An HO-4 policy is a renter's insurance policy that protects the renter's personal property.

Accepted Answer

An HO-4 policy, also known as a tenant's or renter's insurance policy, is designed to protect the personal property of a renter or tenant. It typically covers belongings such as furniture, appliances, electronics, clothing, and other personal items. It may also provide liability coverage in case someone is injured while on the rental property.

Question 17

John Murphy experienced a freak storm that damaged his roof and allowed water to leak into the house.The agent and adjuster said the peril was not covered under his HO-2 policy.John wishes he had taken out an ________ policy.

Accepted Answer

The HO-3 policy offers broader coverage than the HO-2 policy, including coverage for most types of perils, except those specifically excluded. It would be the best policy for John to have in this situation.

Question 18

Your boyfriend is living in an apartment complex that has had a recent rash of robberies.He has $5,000 worth of rare coins.What should he do to protect himself in case of a robbery?

Accepted Answer

Taking a written and video tape inventory of his property (A) helps prove ownership and the condition of items before a loss, which is useful for insurance claims and police reports. Adding a personal articles floater to his policy (B) provides specific coverage for valuable items like rare coins, which might not be fully covered under standard renters or homeowners insurance policies. Taking out personal property replacement cost coverage (C) ensures that he can replace his belongings at current market prices without depreciation being factored in. Together, these steps provide comprehensive protection for his valuable coins in case of a robbery.

Question 19

An attached garage is covered under Coverage B: Other structures.

Accepted Answer

An attached garage is considered part of the main dwelling, so it is covered under Coverage A: Dwelling, not Coverage B: Other Structures, which typically covers structures not attached to the main dwelling.

Question 20

Flood protection insurance is generally administered and subsidized by the federal government through the Department of Housing and Urban Development.

Accepted Answer

Flood protection insurance is administered by the Federal Emergency Management Agency (FEMA), not the Department of Housing and Urban Development (HUD).

Quiz 10: Property and Liability Insurance