Homeowners and Dwelling Policies Quiz

What is a key feature of the DP-2 policy?

• It excludes liability coverage

• It pays replacement cost for the dwelling

• It provides open-peril coverage for personal property

• It covers only fire and lightning

Answer explanation

The DP-2 policy is designed to pay the replacement cost for the dwelling, ensuring that homeowners can rebuild their property without a deduction for depreciation, unlike other policies that may have different coverage limits.

What type of coverage does HO-6 provide for condo owners?

• Open-peril coverage for the entire building

• Named-peril coverage for personal property and interior improvements

• Open-peril coverage for personal property only

• Liability coverage for the entire building

Answer explanation

HO-6 provides named-peril coverage specifically for personal property and interior improvements within a condo, protecting against specified risks rather than covering the entire building or offering open-peril coverage.

What does the HO-4 policy primarily cover?

• Mobile homes

• The entire condo unit

• A tenant's personal property

• The building structure

Answer explanation

The HO-4 policy, also known as renters insurance, primarily covers a tenant's personal property against risks like theft or damage, rather than the building structure or common areas.

Which policy form is designed for seasonal properties?

• HO-4

• DP-3

• DP-1

• HO-6

Answer explanation

The DP-1 policy form is specifically designed for seasonal properties, providing basic coverage for risks like fire and theft. Other options like HO-4 and HO-6 are for renters and condos, while DP-3 is for more comprehensive coverage.

Which policy form includes 'loss assessment' coverage for condo owners?

• HO-2

• HO-4

• HO-8

• HO-6

Answer explanation

The HO-6 policy form is specifically designed for condo owners and includes 'loss assessment' coverage, which protects against shared losses in the condo association. Other forms like HO-2, HO-4, and HO-8 do not provide this coverage.

What is a unique feature of the HO-7 policy?

• It is exclusively for renters

• It covers only named perils for the dwelling

• It provides open-peril coverage for mobile homes

• It is designed for older homes

Answer explanation

The HO-7 policy is specifically designed for mobile homes and provides open-peril coverage, meaning it covers all risks except those specifically excluded, making it unique compared to other policies.

Which policy is specifically designed for renters?

• HO-6

• HO-4

• HO-3

• HO-2

Answer explanation

The HO-4 policy, also known as renters insurance, is specifically designed for individuals renting a home or apartment. It covers personal property and liability, unlike HO-2, HO-3, and HO-6, which are for homeowners.

In an HO-5 policy, how are losses for personal property typically settled?

• Depreciated value

• Market value

• Replacement cost

• Actual cash value

Answer explanation

In an HO-5 policy, losses for personal property are settled at replacement cost, meaning the amount needed to replace the damaged property without depreciation, ensuring full coverage for the insured.

What type of policy is DP-1?

• Open-peril, actual cash value

• Open-peril, replacement cost

• Named-peril, replacement cost

• Named-peril, actual cash value

Answer explanation

DP-1 is a named-peril policy, meaning it covers only specific risks listed in the policy. It also pays claims based on actual cash value, which accounts for depreciation, making 'Named-peril, actual cash value' the correct choice.

Which dwelling policy form provides open-peril coverage for the structure?

• DP-1

• DP-2

• DP-3

• HO-8

Answer explanation

The DP-3 policy provides open-peril coverage for the structure, meaning it covers all risks except those specifically excluded. In contrast, DP-1 offers basic named perils, and DP-2 offers broader named perils.