Sample Practice Exercises Answer Key

Transcription

1 Sample Practice Exercises Answer Key (1) True or False? The steps in applying the deductible are as follows: 1. Deductible is applied to the covered loss. 2. Coverage or special limits are applied to the covered loss. 3. The amount payable is the lesser of the amounts arrived in Steps 1 and 2 True These are the steps in applying the deductible. (2) Of the following people, who would not be considered an insured: 1. A 10 year old foster child in the care of the insured. 2. The insured s spouse. 3. A relative of the insured, who resides in the household. 4. The insured s spouse, who resides in the household. #2 The insured s spouse. Please refer to the first paragraph under the definitions section of the policy, where it states, Your spouse is included if a resident of your household. It must be specified if the spouse is a resident of the household. (3) Is the item described below a Coverage A item? Assume Brandon has a 7955 policy in force. He is a general contractor and through the course of time, he has gathered 10 bundles of leftover shingles and has the shingles stored in his garage. He has no plans to use the use the shingles. No. See Coverage A - Dwelling (1)b. Where it states, materials and supplies located on or adjacent to the residence premises for use in the construction, alteration or repair of the dwelling or other structures on the residence premises; In this example, Brandon has no plans to use the shingles, therefore coverage under Coverage A Dwelling would not apply. (4) Which of the following items would not be a Coverage A Item? 1. A built-in range, brand new, still in the box, that the insured is planning on installing at his beach house. 2. An automatic garage door opener. 3. Materials stored in the garage that the insured is planning on using to building new kitchen cabinets. 4. A detached garage, rented to the neighbor to store the neighbor s Corvette. #1 Similar to the above question, See Coverage A - Dwelling (1). b. Where it states, materials and supplies located on or adjacent to the residence premises for use in the construction, alteration or repair of the dwelling or other structures on the residence premises; In this example, the insured is planning on installing the range at his beach house and not on the residence premises, therefore coverage under Coverage A Dwelling would not apply. (5) Would this patio cover be a Coverage A Item? Meredith has a 7955 policy in force. She builds a patio cover next to her detached pool house. She attaches the patio cover roof to the side of the pool house and supports the other side with posts. The patio cover does not have a concrete foundation. Yes, the patio cover is permanently attached to the realty, as she attached the patio roof to the side of her pool house and supported the other side with posts, therefore Cov. A applies. (6) Which of the following would be covered under Coverage A Dwelling Extension? 1. A detached garage rented to the neighbor to store the neighbor s furniture. 2. A detached garage rented to the neighbor to store the neighbor s classic Corvette. 3. A detached shop that the insured uses to operate his cabinet making business.

2 #2 is the correct answer. See Coverage A- Dwelling Extension 2 (b) and (c). A garage rented to your neighbor must be used for garage purposes only and can only store a car or a boat. #1 would be incorrect as you cannot rent your garage to a person not a tenant of the dwelling, unless used solely as a private garage. In this example, the detached garage is being rented to the neighbor to store his furniture. #3 would be incorrect as it is being used in whole or in part for business purposes. Coverage for Dwelling Extensions does not apply to anyone using the garage for business purposes. (7) Are the building materials a Coverage A item? Dylan has a 7955 policy in force. He purchases a new piece of beach front property, where he is planning on building a new home and moving to in the future. In the meantime, Dylan starts constructing a workshop on the new property. He is storing materials for the workshop in his garage at the insured premises. The residence premises burns down, destroying the building materials that are stored there. No. See Coverage A - Dwelling (1)b. Where it states, materials and supplies located on or adjacent to the residence premises for use in the construction, alteration or repair of the dwelling or other structures on the residence premises; In this example, Dylan s materials for his workshop are not being used in the construction, alteration or repair of the dwelling on his residence premises, rather for his new beach front property, therefore coverage under Coverage A Dwelling would not apply. (8) Select the correct statement. The insured has a pool house that is attached to a foundation. It is destroyed by a tornado. 1. The pool house is a Coverage B item. 2. The pool house is not a Coverage A item. 3. The pool house is a Coverage A Dwelling Extension item, subject to the limit. #3 The pool house is attached to or otherwise forming a part of the realty and would be considered Cov. A - Dwelling Extension. See Coverage A, Number 2, Paragraph A. (9) Of the following Additional Coverages, which one has a deductible applied? 1. Fire Department Service Charge 2. Locks 3. Debris Removal 4. Credit Card, Bank Fund Transfer Card, Forgery and Counterfeit Money #3 - The deductible is always applied to debris removal. The ONLY three things the deductible does not apply to are, Fire Department Service Charge, Locks, and Credit Card, Bank Fund Transfer Card, Forgery and Counterfeit Money. (10) Leah s refrigerator goes out due to mechanical failure and all of her food spoils. She has a 7955 policy in force. Can you pay for the spoiled food? 1. Yes 2. No Yes. See Page 6, Section I - Additional Coverages, #8, Refrigerated Products. Coverage B is extended to cover the contents of her refrigerator due to the mechanical failure. (11) Please select the correct statement in regards to the Additional Coverage, Temporary Repairs. 1. Temporary repairs are additional insurance and increases the limit of liability.

3 2. Temporary repairs are for reasonable and necessary costs incurred to protect covered property from additional damage. 3. The deductible applies to Temporary Repairs. 4. Both 2. and 3. are correct. #4 Both 2 and 3 are correct. See Additional Coverages, Number 2. (12) Please select the incorrect statement in regards to the Option Policy Provisions, Option JF Jewelry and Furs. 1. The first limit listed on the dec page is for one article; the second limit is the aggregate amount. 2. Option JF coverage applies for the named perils listed for Coverage B. 3. Option JF coverage applies for accidental direct physical loss or damage, unless otherwise indicated. 4. Option JF limit is listed on the dec page. #2 See page 23, Option JF Jewelry and Furs. The policy states that Jewelry, watches, fur are insured for accidental direct physical loss or damage. The policy goes on to say in the next paragraph that, The limits for this option are shown in the Declarations. The first amount is the limit for any one article; the second amount is the aggregate limit for each loss. Therefore, option number 2 is an incorrect statement. (13) How much do you owe David and Brenda? David and Brenda have a 7955 Policy in force. They have a $500 deductible. Their 6 high wood privacy fence that was destroyed during a tornado. The cost to replace the fence is $2, The actual cash value of the fence is $1, $1, $1, $2, $2, #2 Wood Fences are ALWAYS settled at Actual Cash Value. $1, $ deductible = $1, See Page 11, Loss Settlement A1, paragraph letter B where it addresses the loss settlement for Wood Fences. (14) Based on the scenario below, which statement is not accurate? Jenn has a home at 1234 Pine Springs Dr. and she has it insured under a 7955 Policy. She owns a cabin on Beaver Lake, which is not listed on this policy. Jenn stayed at the cabin for 10 days and remodeled the kitchen. Jenn brought with her the paint, wallpaper, and other supplies needed to remodel the kitchen. She also brought fishing equipment and clothing. The cabin is normally furnished with furniture and appliances. While she was there, a tornado went through the area and damaged the cabin and Jenn s personal property. 1. The supplies used for the kitchen remodel are Coverage B. 2. The furniture and appliances are subject to the 10% of Coverage B limit. 3. The fishing equipment and clothing are covered up to the Coverage B limit. 4. The fishing equipment and clothes are covered for theft up to 10% of Coverage B while Jenn is staying at the cabin. #4 This statement is not accurate. Review Coverage B, Number 1, indicates that personal property is covered anywhere in the world. Going on, Paragraph 2 states, We cover personal property usually situated at an insured s residence, other than the residence premises, for up to $1,000 or 10% of the Coverage B Limit, whichever is greater. In this example, the fishing equipment and clothing are not

4 usually kept at the cabin on Beaver Lake, therefore the items are covered, subject only to the Coverage B limit. (15) Based on the scenario above, in (14), which statement is accurate? 1. The furniture and appliances are subject to the 10% of Coverage B limit. 2. The furniture and appliances are not covered because the lake cabin is not listed on the dec page. 3. The furniture and appliances are covered subject to the Coverage B limit. #1 Review Coverage B, Number 1, Paragraph 2, where it states, We cover personal property usually situated at an insured s residence, other than the residence premises, for up to $1,000 or 10% of the Coverage B Limit, whichever is greater. Since the furniture and appliances are usually kept at the cabin on Beaver Lake, this limit will apply. (16) Based on the scenario above, in (14), and the information below, how much is owed for the furniture and appliances? The furniture and appliances that were damaged have been replaced. The Coverage B limit of liability is $55,000 and the policy deductible is $1,000 and Loss Settlement provision B1. The actual cash value of the damaged appliances and damaged furniture was $4, and the replacement cost was $9, $3, $4, $5, $8, #3 For this example, you will need to use the 3 steps in applying the deductible. 1. Deductible is applied to the covered loss. 2. Coverage or special limits are applied to the covered loss. 3. The amount payable is the lesser of the amounts arrived in Steps 1 and 2 Step 1: Since the furniture and appliances have been replaced, and she has Loss Settlement Provision B1, (see Section I Loss Settlement, Coverage B Personal Property, (1). B1. (page 12)) This Loss Settlement Provision states that we will pay the replacement cost value for the personal property items once they have been replaced. Since the items have already been replaced in this scenario, we will use the replacement cost value of $ $ $1,000 deductible = $ Step 2: Since the furniture and appliances are subject to a limit of $1,000 or 10% of the coverage B limit, whichever is greater, we can pay no more than $5,500. (Coverage B limit is $55, % of $55,000 - $5,500.) In this step, you only apply the coverage or special limits, and do not apply the deductible, therefore the total is $5,500. Step 3: Pay the lesser of the amounts arrived in Step 1 and 2. Amount 1 = $ Amount 2: $5,500. This is our answer. (17) Based on the scenario below, what will you need to determine in order to decide coverage? Brandon has a collection of rare cigars that he has to keep at a certain temperature. If they get above a certain temperature, the cigars will be ruined. Brandon was visiting friends in Colorado, and his power at his house in Texas was off for several days without him knowing it and the cigars were ruined because it got too hot in his house. Brandon submitted a claim for $4,000 for the ruined cigars. 1. A loss insured caused the power interruption. 2. The power interruption took place on the residence premises. 3. The neighbors power lines remained energized. 4. All of the Above

5 #4 See Additional Coverages, Paragraph 7, Power Interruption. You must have a loss insured that caused the power interruption, that took place on the residence premises, and the neighboring lines remained energized before coverage will apply. (18) Based on the scenario below, how much would you owe Molly? Molly has a 7955 policy in force. She lives in Galveston County. Due to an approaching hurricane, the Galveston sheriff s department ordered an evacuation. Molly was not allowed to return home for two weeks. Molly s neighbors homes were damaged by the storm, but Molly s house was not damaged. Molly paid $ per week to stay at a hotel for the two weeks. Her policy has a $500 deductible 2. $ $ $ #3 See Coverage C, Loss of Use, Paragraph 3 Prohibited Use. You will also need to use the steps in applying a deductible. 1. Deductible is applied to the covered loss. 2. Coverage or special limits are applied to the covered loss. 3. The amount payable is the lesser of the amounts arrived in Steps 1 and 2 Step 1: $ $ = $1,600 - $500 = $1,100 Step 2: $ $ $1,600. (No limits are exceeded here as Molly was within the two week time line.) Step 3: The lesser of the two amounts is $1,100. (19) Is the following statement true or false? Coverage C consists of three coverages: Additional Living Expense, Fair Rental Value, and Temporary Repairs. 1. True 2. False False Coverage C consists of: Additional Living Expenses, Fair Rental Value, and Prohibited Use. (20) Which item is a Coverage B item? 1. Automatic garage door opener 2. Free standing electric range 3. Built-in dishwasher 4. Hot water heater #2 All other items are permanently attached to or otherwise forming a part of the realty. The free standing electric range would be considered Coverage B Personal Property. (21) Not considering the deductible, how much is owed for the money listed on the contents inventory? David and Brenda have a 7955 policy in force with a $1000 deductible. Their house and contents sustained damage due to a covered fire loss. David is an insurance adjuster and has his adjusting equipment stored at the house. Brenda operates a beauty salon out of their detached garage and works part-time as waitress. 3 hand guns $4, Cash in David s wallet $ Cash in Brenda s purse $ David s tools used in his adjusting business $ Brenda s waitress uniforms $ Brenda s scissors used in her business $ $200.00

6 3. $ #2 Page 3 Special Limits of Liability, Paragraph A, where it states that there is a $200 limit on money. Although, David and Brenda have listed $ of cash loss, the policy will not pay more than $200 as there is a special limit on cash. (22) Not considering the deductible, how much can be paid for the guns listed on the inventory? David and Brenda have a 7955 policy in force with a $1000 deductible. Their house and contents sustained damage due to a covered fire loss. David is an insurance adjuster and has his adjusting equipment stored at the house. Brenda operates a beauty salon out of their detached garage and works part-time as waitress. 3 hand guns $4, Cash in David s wallet $ Cash in Brenda s purse $ David s tools used in his adjusting business $ Brenda s waitress uniforms $ Brenda s scissors used in her business $ $ $ #3- There is no special limit of liability on guns for a loss by fire, only a loss by theft. This would be covered subject only to Coverage B policy limits, therefore we could pay them the full amount for their guns. (23) How much of the policy s deductible is absorbed in this example? David and Brenda have a 7955 policy in force with a $1000 deductible. Their house and contents sustained damage due to a covered fire loss. David is an insurance adjuster and has his adjusting equipment stored at the house. Brenda operates a beauty salon out of their detached garage and works part-time as waitress. 3 hand guns $4, Cash in David s wallet $ Cash in Brenda s purse $ David s tools used in his adjusting business $ Brenda s waitress uniforms $ Brenda s scissors used in her business $ $ $ #2 $ Guns Paid in full $4,000 Cash Special limits of liability, Section A $200 Limit. $175 + $250 = $425 - $200 = $225 in excess of limit. Used for Business Special limits of liability, Section B $1,000 Limit. $1,200 (tools) + $100 (Scissors) = $1,300 = $300 in excess of limit. Waitress Uniforms No special limit paid in full $ Total of Amounts in Excess = $ this is the amount absorbed. (24) True / False: Option AI (Additional Insured) provides coverage for Coverage A but does not provide coverage for Coverage B and Coverage C. 1. True 2. False True See page 20, Optional Policy Provisions. Option AI -Additional Insured, Number 1. Coverage is with respect to; Section I- Coverage A. (25) In regards to the deductible, which of the following statements are not correct: 1. The deductible may be absorbed, partially or completely. 2. The deductible may be absorbed because the covered loss exceeded the policy limit. 3. The deductible applies to Fire Department Service Charges.

7 #3 The deductible is not applied to three things, one of which is Fire Department Service Charges. The ONLY three things the deductible does not apply to are, Fire Department Service Charge, Locks, and Credit Card, Bank Fund Transfer Card, Forgery and Counterfeit Money. Refer to the policy under each of the three coverages. The policy is very specific if the deductible is not to be applied. (26) Option ID (Increased Dwelling) applies to: 1. The dwelling 2. The dwelling and other building structures 3. The dwelling and all other structures #2 See Page 22, Option ID Increased Dwelling Limit. Refer to paragraph number 2, where it states that, repair or replace building structures covered under Coverage A-Dwelling, Dwelling Extension. Option ID only covers building structures. For example: tennis courts and swimming pools are not covered under Option ID as they are not considered building structures. (27) Based on the scenario below, how much is owed? Bentley has a 7955 policy in force on his home. He has a Coverage A limit of $200,000; a Coverage B limit of $150,000; and has a $1,500 deductible. During a hurricane, winds blew down 5 trees on the property. One tree fell on the wood privacy fence, damaging 10 feet of the fence. Another tree fell on a patio table and umbrella set, destroying it. The other three trees were down in the front yard, but did not hit anything. Remove the tree from the wood fence. $95.00 Subject to Coverage A Limits 95 Repair the fence. $ Subject to Coverage A Limits 160 Remove the tree debris from the yard (the tree $ Add. Coverages. Section1, that hit the fence). Paragraph 3. $500 Limit 100 Remove the tree from the patio table and umbrella $70.00 Did not hit Coverage A X set. property. No coverage. 0 Remove the tree debris from the yard (the tree $ Did not hit Coverage A X that hit the furniture) property. No coverage. 0 Replace the patio table and umbrella set. $ Subject to Coverage B Limits. 290 Remove the other three trees from the yard. $ Did not hit Coverage A X property. No coverage. 0 Replace the 5 trees that were destroyed by the $ Wind is not a covered peril for wind ($300 each) X trees - Add. Coverages, Paragraph $ $ Total of the covered column: $645 $1,500 deductible = $0.00 owed. #1 See Additional Coverages, Paragraph 1, Debris Removal and Paragraph 3, Trees, Shrubs and Other Plants. (28) Based on the scenario below, how much is owed for the loss? Taylor has a 7955 policy in force. During a thunderstorm, Taylor had heavy rains at her house. Water pooled up on her concrete patio slab and seeped under her sliding glass door. The water damaged her vinyl floor covering, her drywall, and her kitchen table. Taylor s Coverage A limit is $300,000; her Coverage B limit is $225,000; and her policy deductible is $250.

8 Replace the vinyl floor covering. $ Repair the water damaged drywall. $ Replace the water damaged kitchen table. $ $ $ #1 Surface water is not covered. See Section, Losses Not Insured, Water Damage, Meaning: (1)... (29) Based on the scenario below, which of these expenses would not be covered? Dylan has a 7955 policy in force. During a thunderstorm, lightning struck a large oak tree in Dylan s yard. The lightning knocked part of the tree onto Dylan s deck and the lightning killed the tree. 1. $ to remove the tree from the deck. 2. $ to cut up the tree and haul it off. 3. $ to repair the deck. 4. $ to replace the tree. 5. All are covered. #5 All are covered. See Page 5. Paragraph 1 and 3. Par. 3 - Lightning is a peril listed under Trees Shrubs and Other plants, therefore replacement of the tree is covered (subject to the limit). (30) Based on the scenario below, which items would be covered? Leah has a 7955 policy in force. During a hurricane, heavy rain caused the river across from Leah s house to rise and the water entered her home. Damages were sustained to the downstairs of her home, including her personal belongings. While Leah was away from her house due to the flood, someone broke into the home and stole her television. 1. Coverage A items damaged by the flood. 2. Coverage B items damaged by the flood. 3. Coverage B items that were stolen. 4. Nothing flood is excluded. #3 Flood is not covered. See page 10, Losses Not Insured, Paragraph 2.C. (3).Nothing damaged by flood is covered, however the items that were stolen are covered as theft is a covered peril for Coverage B. (31) Based on the scenario below, how much is the insured owed? The Galveston County sheriff s department ordered Brandon to evacuate the residence premise due to an approaching hurricane in the Gulf of Mexico. To protect his expensive leather sofa, Brandon moved the sofa to a storage building further inland. Brandon was not allowed to return to his home for 4 weeks. Brandon s neighbors all sustained damages to their homes, but Brandon s home was not damaged. Brandon has a 7955 policy in force with a $250 deductible. U-Haul rental to move the sofa. $ Wages that Brandon paid to Taylor to help him move the sofa. $30.00 Storage building rental for 4 weeks. $50.00 X U-Haul rental to move the sofa back to the house. $ Wages that Brandon paid to Taylor to help him move the sofa back. $30.00 Hotel invoice for 4 weeks ($770 per week) $ Only 2 weeks 1. $ $ $ $

9 #3 Refer to Page 6, Paragraph 5 Property Removed. You will need to use the 3 steps in applying the deductible. Step 1 in applying the deductible: U-Haul Both Ways = $200 Wages Both Way = $60 Total covered under Property Removed: $260 Storage Rental is NOT covered. Prohibited Use = $ (Note: We do not apply the limits in this step.) Total Covered Loss: $3340 -$250 deductible = $ Step 2 in applying the deductible: U-Haul Both Ways = $200 Wages Both Way = $60 Total covered under Property Removed: $260 Storage Rental is NOT covered. TWO Weeks Prohibited Use = $1540 Total Covered Loss: $ $260 = $1800 (deductible is absorbed by the extra 2 weeks of hotel expenses.) Step 3: Pay the lesser of the two totals: $1,800 (32) Which statement is correct in regards to Coverage B? Your insured has a 7955 policy in force with no Optional Policy Provisions. 1. Coverage for contents items applies for the perils listed under Section 1 Losses Insured, Coverage B Personal Property and Section 1 Additional Coverages. 2. The limit of liability for guns that are destroyed by fire is $2, The limit of liability for theft of jewelry is $2, Coverage B only covers the items owned by the insured. #1 See Page 3, Coverage B- Personal Property, Page 5 - Additional Coverages, and Page 7 Losses Insured. #2 is incorrect as the special limit of liability for guns is for a loss by theft, not a loss caused by fire. #3 is incorrect as there is no special limit of liability for jewelry. #4 is incorrect. If you refer to page 3, Coverage B- Personal Property, Paragraph 1, sentence 3. At your request we will cover personal property owned by others while the property is on the part of the residence premise, occupied exclusively by an insured. (33) Which statement is correct regarding coverage for the chest of drawers? A vase falls off of a shelf and lands on the chest of drawers that is located below the shelf. When the vase hit, it scratched the chest of drawers, damaging the finish. 1. The chest of drawers is not covered there is not an insured peril. 2. The chest of drawers is covered falling object peril. 3. The chest of drawers is covered collapse peril. 4. The chest of drawers should have been insured under another policy. #1 The vase falling is not an insured peril as it doesn t meet the qualifications of a Falling Object as stated. See Page 8 Losses Insured, Paragraph 10. (34) Can you pay for Brandon s furniture? Due to the threat of a hurricane, Brandon moves his expensive leather furniture inland to a storage building. He moved the furniture on June 1st and on July 8 th, the storage building flooded and the furniture was damaged by the flood. 1. Yes

10 2. No No. See page 5, Property Removed. Although, under the Property Removed clause, flood would be a covered loss as it states that it covers for ANY accidental direct physical loss, however ONLY for THIRTY days. Since the building flooded after 30 days, there is no coverage. (35) Which statement is accurate? Jenn has her house on Pine Springs Drive insured on a 7955 policy. She bought a new house on August 1st and started moving her property to the new house. On August 19th, the new house burned down and destroyed her personal property. Her 7955 policy was still in force on Pine Springs Drive but she had not yet purchased a policy for the new home. 1. She has coverage at the new location for up to the Coverage B limit. 2. She has coverage at the original location for up to the Coverage B limit. 3. None of the above are correct. 4. Both choice 1 and choice 2 are correct. #4 See page 3, Coverage B (1), the 2 nd sentence in the 2 nd paragraph states, This limitation does not apply to personal property in a newly acquired principal residence for the first 30 days after you start moving the property there. The 10% limit does not apply to a new residence for 30 days, therefore coverage applies to both locations in this example. (36) Which statement is accurate regarding the Additional Coverage, Debris Removal? 1. We will pay the reasonable expenses you incur in the removal of debris of covered property damaged by a Loss Insured. This expense is included in the limit applying to the damaged property. 2. When the amount payable for the property damage plus the debris removal exceeds the limit for the damaged property, an additional 5% of that limit is available for debris removal expense. 3. We will also pay up to $500 in the aggregate for each loss to cover the reasonable expenses you incur in the removal of tree debris from the residence premises when the tree has caused a Loss Insured to Coverage A property. 4. All of the Above #4 See Additional Coverages Page 5, Number 1, Debris Removal. (37) Without considering the deductible, how much is owed for ALE? Brandon has a 7955 policy in force. His home is damaged by a tornado. He cannot live in the house for 3 weeks. His utility services remained on at the house. He submits these receipts. Amount Paid Amount Normally Spent Difference - Mortgage Payment $ $ Water $45.00 $65.00 Electricity $ $ Telephone $0.00 $88.00 Television $0.00 $60.00 Auto / Travel $70.00 $15.00 Laundry $ $20.00 Meals in Restaurants $ $ Groceries / Food at Home $0.00 $ Hotel Invoices $ $0.00 Total: $ $ Difference: $ $ $ $

11 #3 This is calculated by the Difference in the amount that is Normally Spent and what was Actually Spent. ALE discussed on Page 4 Loss of Use. (38) Which of the following losses would be covered? 1. A landslide caused a large boulder to crash into the insured s home causing severe damage. 2. An earthquake damages the home s foundation. 3. The insured s basement sustained damage as a result of the Mississippi river flooding. 4. The insured had to abandon their house because the yard is subsiding of the edge of the shoreline. 5. All of the above are covered. 6. None of the above are covered. #6 - See Losses Not Insured 2 (b) and (c). (39) Which of the following costs would not be covered? Meredith has a 7955 policy in force. During a thunderstorm, wind blows an apple tree over in her yard. A portion of the tree falls on and damages the detached garage roof. 1. The cost to remove the tree off of the detached garage roof. 2. The cost to remove the tree from the yard and haul it to the dump. 3. The cost to repair the detached garage roof. 4. The cost to replace the wind damaged tree. #4 See Page 5 - Additional Coverages Paragraph 3, Trees, Shrubs, and Other Plants. Wind is not a peril listed under the additional coverage. (40) Based on the scenario below, how much is owed? All repairs have been made. Taylor has a 7955 policy in force. She has Coverage A Limit of $100,000; Coverage B Limit of $75,000; and a $1000 deductible. During a wind storm, a living room window is broken by a tree limb. Wind blows rain into the home through the broken window. Replace the damaged carpet. $ Repair the drywall and paint the room. $ Replace the blinds. $ Replace the water damaged sofa. $ $ $ $ #3 See Page 7, Section I Losses Insured Coverage B (2). Coverage A - Dwelling is covered unless it is excluded in the policy and Coverage B Personal Property is covered only if it is one of the 16 named perils. Wind caused the window to be broken by the tree limb, therefore the Coverage B items are covered. Total the damage: $2,200 - $1,000 deductible = $1,200. (41) Based on the scenario below, how much is owed? All repairs have been made. Taylor has a 7955 policy in force. Her Coverage A and Coverage B limits are adequate. She has $1000 deductible. During a thunderstorm, Taylor leaves a bedroom window open. Rain blows in through the open window and damages the bedroom carpet and a chair located in the bedroom. The force of the wind blew a mirror off the wall and broke the mirror. Replace the water damaged carpet. $

12 Replace the water damaged chair. $ Replace the wind damaged mirror $ $ $ $ #4 - See Page 7, Section I Losses Insured Coverage B (2). Coverage A - Dwelling is covered unless it is excluded in the policy and Coverage B Personal Property is covered only if it is one of the 16 named perils. Coverage applies to Coverage A, carpet as there is no excluded peril. The wind damaged mirror will be covered under Coverage B as wind is a covered peril. Coverage will not apply to the water damaged chair as water damage is not a named peril. (42) During an ice storm, a tree is blown over and takes out a main power line 2 miles from the insured s home. Power is knocked out in the entire area. It is 5 degrees outside and the insured has electric heat. Could coverage for ALE be paid? 1. Yes 2. No No. See Coverage C (1) A power outage that occurred two miles away from the insureds home is not a loss insured, on premise that caused the home to be untenantable.. (43) What is the maximum amount you can pay for the tennis court, including replacement and debris removal? Brandon has a 7955 policy in force. His Coverage Limit is $300,000 and his Option ID limit is $40,000. He has a tennis court on the residence premises that was destroyed by a loss insured. 1. $30, $31, $70,000 #2 No Option ID available as a tennis court is NOT a building structure. Insured will receive 10% of Coverage A policy limit for Dwelling Extensions:10% of 300,000 = 30,000 Now see page 5, Paragraph 1, Debris Removal. Insured will receive an additional 5% for debris removal. This coverage may increase the limit. 5% of $30,000 = $1,500. (44) Jenn has a 7955 Policy in force with Loss Settlement Provisions A1 and B1. Jenn made all repairs to Coverage A and replaced the Coverage B items. How will her claim be paid? 1. Salvage Value 2. Replacement Cost 3. Original Purchase Price #2 See Loss Settlement Page 11 and 12. A1 and B1 are settled at Replacement Cost once the repairs have been made. (45) Who is not an insured? Taylor Jones is the named insured. The following people are residents of Taylor s household: 1. Bentley, Taylor s 30 year old son 2. Liz, Bentley s wife 3. David, her 20 year old foster son 4. Brandon, a 27 year old friend of Bentley s who doesn t have a job

13 #4 Brandon does not meet the definition if an insured. See page 1, Definitions (4). (46) Which statement is incorrect in regards to ALE? 1. ALE payments will not exceed 20% of the Coverage A limit. 2. ALE is for the shortest time needed to repair or replace the property, not to exceed 24 months. 3. ALE can run beyond the policy expiration. #1 There is no dollar amount on ALE, only a time limit. See Coverage C- Loss of Use Additional Living Expenses. (47) Please select the correct statement in regards to the Optional Policy Provisions, Option JF Jewelry and Furs. 1. The jewelry items must be scheduled on the dec page. 2. The limit for jewelry and furs is $2000 for the peril of theft. 3. Option JF provides coverage for accidental direct physical loss unless otherwise excluded. 3# - Refer to Page 23, Option JF. (48) ALE and Fair Rental Value is covered for up to two weeks if a civil authority prohibits the use of the property because of direct damage to a neighboring premises caused by a loss insured. 1. Yes 2. No Yes, refer to Coverage C Loss of Use, Paragraph 3, Prohibited Use. (49) Is Taylor s detached garage covered? Taylor has a 7955 policy in force. Taylor works for Brandon s Bicycle Shop. On the weekends, Taylor uses her detached garage to repair bicycles part time for Brandon s Bicycle Shop. She only uses the detached garage part-time. 1. Yes 2. No No, refer to page 3, Coverage A (2) b. Dwelling Extension CANNOT be used for whole or in part for business purposes or coverage does not apply. (50) How much can you pay Brian? Brian has a 7955 policy in force with a Coverage Limit of $200,000 and a $500 deductible. Brian s house is totally destroyed by a fire. The cost to rebuild his house is $240,000 plus another $17,500 for debris removal. All repairs have been made. 1. $200, $209, $210, $257,500 #3 Policy limits are $200,000. The insured will also receive an additional 5% for debris removal. This coverage may increase the limit. 5% of $200,000 = $10,000 (See page 5, Paragraph 1, Debris Removal where it discusses the additional 5% of that limit for debris removal if the total exceeds the policy limits.) Total: $210,000