NC Personal Insurance Coverages

Which of the following homeowners forms is designed for individuals that own and reside in a condominium?

• HO-6

• HO-2

• HO-3

• HO-4

Answer explanation

HO-6 is designed specifically to cover the exposure of a condominium.

Under the additional living expenses coverage, if a civil authority prohibits the insured from using the dwelling because of direct damage to a neighboring location from a peril covered in the insured's policy, loss would be covered for up to

• 90 days.

• 1 week.

• 2 weeks.

• 1 month.

Answer explanation

A dwelling policy will pay loss of use due to civil authority for a maximum of two weeks.

An ocean marine loss that occurs through the voluntary sacrifice of a part of the vessel or cargo to save the ship, crew, or other cargo is known as

• Inchmaree clause.

• Protection and indemnity.

• General average.

• Particular average.

Answer explanation

General average is a clause found in ocean marine policies requiring that when there is a sacrifice of property to save the ship, crew, and other cargo, everyone who benefited from this sacrifice must share in the payment for the sacrificed property.

Which of the following regarding Flood Insurance is correct?

• Pre-FIRM rates are higher than Post-FIRM rates.

• Property located in a less hazardous zone will have higher rates.

• Pre-FIRM rates are used after the community's first FIRM was published.

• Post-FIRM rates are higher than Pre-FIRM rates.

Answer explanation

Post-FIRM rates are lower than Pre-FIRM rates. Property located in a more hazardous zone will have higher rates than property in a less hazardous zone. Pre-FIRM rates are used before the community's first FIRM was published, or for building constructions beginning on or before December 31, 1974, whichever is later.

In a dwelling policy, which of the following provides coverage for additional living expenses incurred by an owner-occupant in the event a covered peril makes the premises uninhabitable due to a covered loss?

• Coverage B

• Coverage C

• Coverage E

• Coverage A

Answer explanation

Coverage E of the dwelling policy pays additional living expenses incurred following a covered loss.

Which types of losses are covered by the standard fire policy?

• Direct losses only

• Indirect losses only

• Both direct and indirect losses

• Neither

Answer explanation

The ONLY type of loss covered by the Standard Fire Policy is direct losses caused by the named perils. Direct loss means actual physical damage to, or destruction of, the insured property.

Which of the following losses would NOT be covered by the dwelling policy if the dwelling is vacant for over 60 days?

• Windstorm

• Internal explosion

• Vandalism

• Fire

Answer explanation

Under a dwelling policy, vandalism and malicious mischief (VMM) coverage is suspended after 60 days.

What type of property would NOT be covered under the dwelling policy special form Coverage A – Dwelling?

• Land on which the dwelling is located

• Materials and supplies on the premises used to alter or repair the dwelling

• Outdoor equipment located on the premises and used to service the location

• Attached structures

Answer explanation

The insurer will not cover land, including land on which the dwelling described in the declarations is located.

Standard fire policies specify the time for the inception and expiration of coverage. Which of the following is the most common time?

• 12:01 AM

• Noon

• Midnight

• 12:01 PM

Answer explanation

The insuring agreement of the standard fire policy that the policy term begins and ends at 12:01 AM standard time at the location of the property involved.

Which of the following would be covered under the Broad Form (DP-2) policy’s falling object peril?

• Damage to the building's awnings

• Damage to outdoor television antennas if there is no interior damage

• Exterior pavement and patio damage

• Interior building damage if the exterior was damaged first

Answer explanation

In DP-1 and DP-2 policy forms, loss or damage resulting from falling objects is covered, except for damage to awnings, fences, outdoor equipment, outdoor radio and television antennas or aerials, masts, or towers. Damage to the interior of the building is covered only if the exterior has been damaged first.