Week Two: Individual Property & Casualty Insurance

Practice questions covering auto insurance, homeowners policies, recreational vehicle coverage, and personal umbrella insurance based on the Week Two lecture notes.

On what specific basis is personal auto insurance written?

It is written on a specified basis, including the make, model, and serial number of the vehicle.

What are the physical and usage requirements for a pickup or van to qualify for a personal auto policy?

The vehicle must have no fewer than 4 wheels, weigh under $10,000$ pounds, and not be used for the transportation or delivery of goods and materials.

Who is considered an insured under a personal auto policy?

The named insured, a spouse who resides in the same household, family members related by blood, marriage, or adoption, and wards or foster children.

What are the two specific supplemental payments mentioned for auto liability coverage and their limits?

Up to $250$ for bail bonds and up to $200$ per day for loss of earnings due to attendance at a trial or hearing.

How is underinsured motorist coverage defined and when does the insurer pay?

It applies to a vehicle where the bodily injury liability limits are less than the limit for this coverage; the insurer pays only after the other driver's liability limits have been exhausted.

What is the time limit for medical payments coverage claims following an accident?

Claims must be paid within $3$ years of the accident.

What is the primary difference between Collision and Other Than Collision (Comprehensive) coverage?

Collision covers the upset or impact with another vehicle or object, while Other Than Collision covers losses on an open perils basis, including fire, theft, falling objects, and contact with animals.

How does a homeowners policy typically handle liability and physical damage for snowmobiles or ATVs?

It provides limited liability for use but provides no physical damage coverage at all.

Which homeowners policy forms are primarily used for renters and condominiums respectively?

HO-4 is used for renters, and HO-6 is used for condominiums.

What are the four main Section I coverages in a homeowners policy?

Coverage A (Dwelling), Coverage B (Other Structures), Coverage C (Personal Property), and Coverage D (Loss of Use).

Where is Personal Property (Coverage C) covered under a homeowners policy?

It covers property anywhere in the world owned or used by an insured.

What is the difference between Named Perils and Special Perils coverage?

Named perils coverage (HO-2, HO-4, HO-6) covers only specifically listed causes of loss, while Special perils coverage (HO-3, HO-5) covers all losses unless a specific exclusion applies.

Which common perils are generally excluded from homeowners policies?

Losses caused by flood, war, and earthquake are excluded.

How are contents losses typically settled in a homeowners policy unless an endorsement is purchased?

They are settled on an actual cash value (ACV) basis, which is replacement cost less depreciation.

What is Personal Umbrella Insurance?

It is excess liability coverage that provides worldwide protection over and above underlying policies and includes dropdown liability coverage for broader protection.

What does the 'retained limit' represent in a personal umbrella policy?

The deductible, which is the part of the loss the insured is expected to assume.

According to the notes, what type of policy should be used to insure rental property separately from a homeowners policy?

A Dwelling Fire Policy.

Why might a homeowners policy not cover an injury that occurs while the insured is conducting business at home?

Section II of the homeowners policy contains an exclusion for business engaged in by the insured.