Dwelling Policy and Homeowners Policy Flashcard

Front

Scarlett owns a small residential property that does not qualify for a Homeowners policy. She is looking for insurance coverage for her property. What type of policy is primarily designed for this purpose?

Back

To insure residential properties that do not qualify for a Homeowners policy

Answer explanation

The primary purpose of Dwelling Policies (DP) is to insure residential properties that do not qualify for a Homeowners policy, providing coverage for risks that standard homeowners insurance may not cover.

Front

Which type of property is NOT eligible for a Dwelling Policy?

Back

Dwellings with farm exposure

Answer explanation

Dwellings with farm exposure are not eligible for a Dwelling Policy, as these policies typically cover residential properties without agricultural activities.

Front

Which property insurance coverage form specifically lists covered perils such as fire, lightning, and internal explosion?

Back

DP 1 Basic

Answer explanation

The DP 1 Basic form provides coverage for named perils, including fire, lightning, and internal explosion. This makes it the correct choice for the question, as the other options offer broader or different types of coverage.

Front

What additional peril is covered under DP 2 Broad but not DP 1 Basic?

Back

Burglary damage

Answer explanation

DP 2 Broad covers additional perils like burglary damage, which is not included in DP 1 Basic. Other options like fire, lightning, and internal explosion are covered in both policies.

Front

Which DP form provides open perils coverage for both the dwelling and other structures?

Back

DP 3 Special

Answer explanation

DP 3 Special provides open perils coverage, meaning it covers all risks except those specifically excluded. In contrast, DP 1 Basic and DP 2 Broad offer more limited coverage.

Front

What does Coverage A under a dwelling policy include?

Back

House and attached structures

Answer explanation

Coverage A under Dwelling Policies includes the house and any attached structures, providing protection for the main dwelling and its integral components.

Front

Kai owns a house insured under a homeowners policy. If Kai needs to claim Coverage D — Fair Rental Value, what percentage of his Coverage A limit would be allocated for this coverage?

Back

20%

Answer explanation

Coverage D — Fair Rental Value is typically allocated 20% of Coverage A. This means that if you have a total Coverage A amount, 20% of that will be set aside for Fair Rental Value.

Front

Which coverage is only available under DP 2 and DP 3 forms for a rental property?

Back

Coverage E — Additional Living Expense

Answer explanation

Coverage E — Additional Living Expense is specifically included in DP 2 and DP 3 forms, providing benefits for additional costs incurred when a property is uninhabitable due to a covered loss.

Front

Which type of damage is generally excluded from coverage under Dwelling Policies? Options: Weight of ice/snow, Fire damage, Wear and tear / deterioration, Burglary damage

Back

Wear and tear / deterioration

Answer explanation

In Dwelling Policies, general exclusions include damage from wear and tear or deterioration, as these are considered maintenance issues rather than insurable events. Other options like fire damage are typically covered.

Front

What is the purpose of 'general exclusions' in an insurance policy?

Back

To exclude uninsurable or intentional risks

Answer explanation

General exclusions in insurance policies serve to exclude uninsurable or intentional risks, ensuring that the insurer is not liable for claims arising from these situations.