unit 6 insurance

What does a dwelling policy cover?

Property only.

What are dwelling policies also called?

Monoline policies.

What does Coverage A cover?

The dwelling, such as a house or rental property.

What does Coverage B cover?

Other structures, such as a shed. Typically 10% of Coverage A.

What does Coverage C cover?

Personal property. Coverage is typically limited to 10% under a dwelling policy.

What does DP-1 cover?

Basic form dwelling insurance.

What other coverages are automatically included in dwelling policies?

Certain additional coverages are included at no additional premium.

OTHER COVERAGES – DP-1

What additional coverages are included in DP-1?

Debris removal, property removal, and reasonable repairs.

What does debris removal cover?

The reasonable cost of removing debris after a covered loss.

What does property removal cover?

Property temporarily removed to protect it from damage.

What does reasonable repairs cover?

Reasonable expenses incurred to protect property from further damage.

What does WCSHAVVER stand for?

Windstorm, Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic eruption, Explosion, and Riot.

What does V&MM stand for?

Vandalism and malicious mischief.

OTHER COVERAGES – DP-2 AND DP-3

What additional coverages do DP-2 and DP-3 include?

All basic other coverages, trees, shrubs, plants, glass coverage, and ordinance or law coverage.

How much coverage is provided for trees, shrubs, and plants?

Maximum of $500 per item.

How much ordinance or law coverage is included?

10% of Coverage A.

How long is property covered after being removed from the insured location under DP-2 and DP-3?

30 days.

DP-2 – BROAD FORM

What type of coverage does DP-2 provide?

Broad named-peril coverage.

What perils are covered under DP-2?

All basic named perils, including WCSHAVVER, V&MM, and additional broad-form perils.

What does the BIG AFFECT mnemonic represent?

Broad-form perils covered under DP-2.

Does DP-2 cover damage caused by the weight of snow?

Yes.

What are two exclusions under DP-2 broad-form coverage?

Weight of ice and flood.

DP-3 – SPECIAL FORM

What type of coverage does DP-3 provide?

Special form coverage.

What type of coverage applies to the dwelling and other structures under DP-3?

Open-peril coverage, meaning all causes of loss are covered unless excluded.

What type of coverage applies to personal property under DP-3?

Broad named-peril coverage.

What are examples of excluded perils under DP-3?

Intentional damage, theft, and freezing of plumbing.

GENERAL DWELLING POLICY EXCLUSIONS

What are general exclusions under dwelling policies?

Ordinance or law, earthquake, flood, war, nuclear hazard, and intentional losses.

Is flood covered under a standard dwelling policy?

No, flood is excluded.

Is earthquake covered under a standard dwelling policy?

No, earthquake is excluded.

Is intentional loss covered under a dwelling policy?

No.

CLAIMS AND PAYMENT

How many days does an insurance company have to pay after reaching an agreement with the insured?

60 days.

COVERAGE M – MEDICAL PAYMENTS TO OTHERS

What does Coverage M provide?

Medical payments to others.

How long after an incident can medical expenses be covered under Coverage M?

Three years after the incident.

COVERAGE L – PERSONAL LIABILITY

What does Coverage L provide?

Personal liability protection.

What must generally happen for Coverage L to apply?

The insured must be legally liable for bodily injury or property damage to others.

What types of losses does Coverage L cover?

Bodily injury to others and property damage to others.

Does Coverage L apply on and off the insured premises?

Yes, subject to policy conditions and exclusions.

SUPPLEMENTARY PAYMENTS – BAILED

What does BAILED stand for?

Bonds, Aid (first aid), Interest, Loss of earnings, Expenses, and Defense costs.

Are supplementary payments included within or in addition to the policy limits?

In addition to policy limits.

What does B stand for in BAILED?

Bonds.

What does A stand for in BAILED?

Aid, including first aid expenses.

What does I stand for in BAILED?

Interest.

What does L stand for in BAILED?

Loss of earnings when the insured must attend court or assist with the defense.

What does E stand for in BAILED?

Expenses.

What does D stand for in BAILED?

Defense costs.

Why do insurance companies pay supplementary payments?

They use relatively small amounts of money to potentially prevent much larger financial losses.

EXCLUSIONS TO COVERAGE L AND M

What is excluded under Coverage L and M involving vehicles and watercraft?

Ownership, maintenance, use, loading, or unloading of most types of watercraft, aircraft, or vehicles.

DWELLING POLICY ENDORSEMENTS

What are special coverage limits?

Limits that apply to certain classes of personal property.

What does an automatic increase in insurance endorsement do?

Automatically increases dwelling and other structures coverage at renewal.

UNIT 6 RECAP

Under DP-3, what coverage reimburses someone for hotel, dining, and transportation expenses after a fire makes their home uninhabitable?

Coverage E – Additional Living Expense.

Which dwelling form pays losses to the dwelling and other structures on an actual cash value basis?

DP-1.