Question

Q1

a) Ariel, a homeowners client new to your agency, previously carried homeowners insurance with a company that does not use ISO forms. Ariel's home is located on a bluff above a lake, and he owns a boat. When discussing homeowners insurance with Ariel, you should be sure to point ou

• a. relevant differences in watercraft coverage between his old policy and the ISO form.
• b. the clear wording of watercraft coverage in the ISO policy.
• c. the limited amount of flood coverage in a homeowners policy.
• d. the watercraft deductible in ISO policies.

b)

• D and Miriam, who are insured by a homeowners policy, live in a private residential community for active adults that includes public roads on which a motorized golf cart can legally travel. D is still using the golf cart for transportation despite his impaired vision. While driving to a store within the community, D collides with a pedestrian. Should his homeowners policy cover the pedestrian's claim?
  
  • a. No, because D should not have been driving if he could not see where he was going
  • b. No, because D was not using the golf cart on a golf course
  • c. No, because D was operating the vehicle on a public road
  • d. Yes

c)

• Esteban, an insurance agent, asked Laura what coverage level she wanted on her homeowners policy and presented liability coverage options of $100,000, $300,000, and $500,000. Laura quickly selected the $500,000 level. What additional option should Esteban present at this point?
  
  • a. an HO 2 broad form
  • b. a lower deductible
  • c. a personal umbrella
  • d. reviewing the limits on her auto insurance policy

d)

• The fire that destroyed Jefferson's recliner, along with other personal property, was apparently caused by careless smoking. At the time of the loss, it would cost $700 to replace the recliner, but its current actual cash value was only $300. Jefferson's standard HO 3 homeowners policy has a replacement cost loss settlement endorsement. Ignoring applicable deductibles, how much is Jefferson's insurer obligated to pay for the recliner?
  
  • a. nothing
  • b. $300 minus depreciation
  • c. $300
  • d. $700

Answer 1

Q1

a) Ariel, a home-owners client new to your agency, previously carried home-owners insurance with a company that does not use ISO forms. Ariel's home is located on a bluff above a lake, and he owns a boat. When discussing home-owners insurance with Ariel, you should be sure to point out?

• a. relevant differences in watercraft coverage between his old policy and the ISO form.
• b. the clear wording of watercraft coverage in the ISO policy.
• c. the limited amount of flood coverage in a home-owners policy.
• d. the watercraft deductible in ISO policies.

Ans: While discussing home-owners insurance with Ariel, I should be sure to pint out the relevant differences in watercraft coverage between his old policy and the ISO form policies. It is very important to find out relevant differences and what are the differences between existing policy and new ISO policy. It is very important to identify what are the added advantages for selecting this policy over existing one.

Q2)

2. D and Miriam, who are insured by a home-owners policy, live in a private residential community for active adults that includes public roads on which a motorized golf cart can legally travel. D is still using the golf cart for transportation despite his impaired vision. While driving to a store within the community, D collides with a pedestrian. Should his home-owners policy cover the pedestrian's claim?
   • a. No, because D should not have been driving if he could not see where he was going
   • b. No, because D was not using the golf cart on a golf course
   • c. No, because D was operating the vehicle on a public road
   • d. Yes

Ans: I would say Yes until and unless it mentions impaired person will not be actively involved in home-owners insurance policy he is guided by another person who can see. If there is no particular clause in the policy, mentioning the same the home-owners policy should definitely cover the pedestrian’s claim as it is legal to travel by golf cart inside the community.

Q3)

3. Esteban, an insurance agent, asked Laura what coverage level she wanted on her homeowners policy and presented liability coverage options of $100,000, $300,000, and $500,000. Laura quickly selected the $500,000 level. What additional option should Esteban present at this point?
   1. a. an HO 2 broad form
   2. b. a lower deductible
   3. c. a personal umbrella
   4. d. reviewing the limits on her auto insurance policy

Ans: I would say Esteban should present an option of what are the limits on her auto insurance policy and what are included in her policy and if there are any limitations as she selected a policy with highest amount. Esteban had selected policy with higher amount, so she should review the limits on her auto insurance policy. She need to understand what are covered under her policy and if there are any limitations in the policy she had selected.

Q4)

d) The fire that destroyed Jefferson's recliner, along with other personal property, was apparently caused by careless smoking. At the time of the loss, it would cost $700 to replace the recliner, but its current actual cash value was only $300. Jefferson's standard HO 3 homeowners policy has a replacement cost loss settlement endorsement. Ignoring applicable deductibles, how much is Jefferson's insurer obligated to pay for the recliner?

• a. nothing
• b. $300 minus depreciation
• c. $300
• d. $700

Ans: As per the policy for Jefferson’s recliner, she had replacement cost loss settlement endorsement. Based on the policy of cost loss settlement endorsement, they need to be paid actual cash value minus any other depreciation involved. Therefore, Jefferson’s insurer is obligated to pay $300 minus depreciation based on the policy of replacement cost loss settlement endorsement policy.