Alaska Property & Casualty Insurance License Exam — All Questions

A homeowner rents her detached backyard cottage to a student who is not a tenant of the main house. Fire destroys the cottage. Other structures coverage pays:

• a.the loss, less the rent collected
• b.nothing; it is rented to another✓
• c.the loss, as another structure
• d.half, since it houses a tenant

Other structures coverage does not apply to a structure rented or held for rental to anyone who is not a tenant of the described dwelling, unless the structure is used only as a private garage. A cottage let to an unrelated student is exactly that excluded use, so the fire loss falls outside the coverage. Rent collected is not netted against a building loss.

A rented dwelling is unlivable for three months after a covered fire. The rent was $1,800 a month, and $200 a month of expenses stop while it is empty. Fair rental value pays:

• a.$4,500
• b.$4,800✓
• c.$6,000
• d.$5,400

Fair rental value pays the rent the dwelling would have earned less the expenses that do not continue while it stands empty: $1,800 minus $200 is $1,600 a month, and three months of that is $4,800. Paying the full $5,400 ignores the saved expenses and hands the owner more than the actual loss. The coverage runs for the time reasonably required to repair.

A family normally spends $2,400 a month on housing and food. Living elsewhere after a covered fire, they spend $3,900 a month. Additional living expense pays them:

• a.$6,300 a month
• b.$2,400 a month
• c.$3,900 a month
• d.$1,500 a month✓

Additional living expense pays the increase in living costs rather than the whole bill, so $3,900 less the $2,400 the family would have spent anyway leaves $1,500 a month. Paying the full $3,900 would leave them better off than before the fire, which indemnity does not allow. The coverage runs for the shortest time needed to repair or to settle elsewhere.

Fire damages a dwelling insured on a basic form. Rebuilding the damaged portion costs $60,000, depreciation on it is $18,000, and the deductible is $1,000. The insurer pays:

• a.$42,000
• b.$41,000✓
• c.$60,000
• d.$59,000

The basic form settles building losses at actual cash value, which is replacement cost minus depreciation: $60,000 less $18,000 is $42,000. The deductible then comes off that settlement, leaving a check for $41,000. Taking the deductible off replacement cost and ignoring depreciation would produce $59,000, which is not how the basic form settles a loss.

A dwelling costing $250,000 to replace is insured on a broad form for $150,000, under a loss settlement condition asking for 80%. A $40,000 building loss is settled at:

• a.$32,000
• b.$40,000
• c.$24,000
• d.$30,000✓

The condition asks for insurance of at least 80% of $250,000, which is $200,000. Only $150,000 was carried, so the replacement cost settlement is cut to the ratio of $150,000 to $200,000, or 75%, and 75% of the $40,000 loss is $30,000. The insured absorbs the difference for carrying less than the form asks, with actual cash value available as the alternative measure.

Unlike a homeowners policy, a dwelling policy lets the applicant:

• a.skip the deductible on building losses
• b.insure contents at their resale market value
• c.insure the building with no contents coverage✓
• d.collect for theft with no endorsement

Dwelling coverages are written separately, so an owner living elsewhere can buy dwelling coverage alone while a tenant buys personal property coverage alone; a homeowners policy packages the coverages and requires an amount on the dwelling. Contents are settled at actual cash value, not resale market value, and theft comes only by endorsement. Deductibles apply under either policy.

A dwelling policy owner wants protection against a claim brought by a visitor injured on her steps. She obtains it by:

• a.buying a vandalism endorsement
• b.attaching the extended coverage endorsement
• c.raising her Coverage E limit
• d.adding a personal liability endorsement✓

The dwelling forms are property forms with no liability section, so personal liability and medical payments to others must be endorsed onto the policy before a visitor's injury claim can be paid. Coverage E on a dwelling policy is additional living expense rather than liability, so raising it does nothing for this claim. Vandalism and extended coverage add property perils only.

A fire in a rented house destroys the tenant's furniture. The landlord's dwelling policy pays:

• a.half of it, as property of others
• b.for it, and recovers from the tenant
• c.for it under the landlord's contents limit
• d.nothing for it; the tenant insures it✓

A landlord's dwelling policy insures the landlord's building and the landlord's own personal property kept at the location, such as appliances and furnishings supplied with the house, while the tenant's belongings are the tenant's to insure. The contents limit on that policy belongs to the landlord. An insurer cannot create coverage by paying and then pursuing the tenant.

Which Homeowners form covers both the dwelling and personal property on an open-perils basis?

• a.HO-3 (Special form)
• b.HO-5 (Comprehensive form)✓
• c.HO-2 (Broad form)
• d.HO-8 (Modified form)

The HO-5 comprehensive form insures both the dwelling and personal property on an open-perils basis, the broadest coverage among standard forms. The HO-3 special form covers the dwelling on an open-perils basis but personal property only on a named-perils basis. HO-2 covers both on named-perils, and HO-8 is a modified form for older homes that pays on a repair-cost or actual cash value basis rather than full replacement.

The HO-8 modified form is specifically designed for:

• a.Condominium owners insuring interior building items
• b.Luxury homes needing the widest available coverage
• c.Older homes whose replacement cost exceeds market value✓
• d.Renters who insure contents but not the structure

The HO-8 modified form is intended for older or historic homes where the cost to replace with identical materials would greatly exceed the home's market value. It typically settles losses on a functional replacement or actual cash value basis rather than full replacement cost, keeping coverage affordable. HO-4 covers renters and HO-6 covers condominium unit owners, which are different needs.

Under a standard Homeowners policy, which coverage pays for injuries to a guest for which the insured is legally liable?

• a.Coverage E – Personal Liability✓
• b.Coverage D – Loss of Use
• c.Coverage C – Personal Property
• d.Coverage A – Dwelling

Coverage E (Personal Liability) responds when the insured is legally liable for bodily injury or property damage to others, providing a defense and paying damages up to the limit. Coverage F (Medical Payments to Others) is a related coverage that pays smaller medical bills regardless of fault. Coverages A through D address the insured's own property and loss of use, not liability to third parties.

A renter who wants to insure personal belongings and obtain personal liability coverage, but not the building, should buy:

• a.HO-6
• b.HO-8
• c.HO-3
• d.HO-4✓

The HO-4 form is the renters (tenants) policy. It covers the tenant's personal property and provides personal liability and loss-of-use coverage, but not the building structure, which is the landlord's responsibility. HO-6 is for condo owners, who own the interior and some structural elements; HO-3 and HO-8 are owner-occupied dwelling forms that include Coverage A on the structure.

Coverage F (Medical Payments to Others) on a Homeowners policy pays for medical expenses of a guest:

• a.Only if the insured is proven legally at fault
• b.Only after a lawsuit is filed
• c.Regardless of whether the insured was at fault✓
• d.Only for members of the insured's household

Medical Payments to Others (Coverage F) is a goodwill, no-fault coverage that pays reasonable medical expenses for a person injured on the insured premises or by the insured's activities, without regard to legal liability. It does not cover the insured or regular household residents. By paying small claims quickly and without a fault determination, it can help prevent larger liability lawsuits.

Under most Homeowners forms, certain categories of personal property such as jewelry, cash, and firearms are subject to:

• a.The full Coverage C limit with no internal cap
• b.Special sublimits that cap the amount payable✓
• c.No coverage at all unless they are scheduled
• d.Replacement cost settlement with no dollar cap

Homeowners policies apply special limits (sublimits) to certain high-theft or high-value property categories such as cash, jewelry, watches, furs, firearms, and silverware. These items are covered, but only up to a stated dollar cap that is lower than the overall Coverage C limit. Insureds who need more can schedule the items on a Personal Articles/Scheduled Property endorsement for broader, itemized coverage.

On a standard HO-3, the personal property of the insured is insured against:

• a.the named perils listed in the form✓
• b.any cause of loss that is not excluded
• c.the open perils basis used for the dwelling
• d.fire, lightning and smoke damage only

The special form splits its basis: the dwelling and other structures are open perils, while personal property is covered only for the list of named perils the form spells out. The choice that gives contents the same open-perils treatment as the dwelling describes the comprehensive HO-5 instead. Cutting contents down to fire, lightning and smoke describes a far narrower basic form.

An insured moving from an HO-3 to an HO-5 gains coverage because the HO-5:

• a.doubles the Coverage C limit to 100% of Coverage A
• b.removes the special limits on jewelry and firearms
• c.adds flood and earth movement to the perils covered
• d.insures personal property on an open-perils basis✓

Both forms insure the dwelling on an open-perils basis; the upgrade is that personal property becomes open perils too, so the insurer must point to an exclusion to deny a contents claim. The answer that adds flood and earth movement fails because those stay excluded on every homeowners form. The special limits on jewelry and firearms also survive the upgrade, and only scheduling lifts them.

A 90-year-old house has a market value of $150,000, while rebuilding it with its original plaster and millwork would cost $480,000. The suitable form is:

• a.an HO-3, written at full replacement cost
• b.an HO-5, bought for its open-perils breadth
• c.an HO-6, written for a unit interior
• d.an HO-8, settling losses on a repair-cost basis✓

The modified form exists for exactly this gap: replacing $480,000 of ornate construction on a house worth $150,000 would let the insured collect far more than the property is worth, so the form settles losses using common modern materials of like use. Writing the special form at full replacement cost would demand a $480,000 dwelling limit and the premium behind it. The unit-owners form covers a condominium interior, not a detached house.

The built-in Coverage A on a standard HO-6 is meant to insure:

• a.the unit-owner's furniture and clothing
• b.building items the unit-owner is responsible for✓
• c.the entire building the association owns
• d.the association's liability to unit owners

The unit-owners form carries a small built-in Coverage A limit, $5,000 on the standard form, for the building items the owner insures rather than the association: cabinets, flooring, fixtures and interior finishes added to the unit. Furniture and clothing belong to Coverage C, a limit the owner selects. The whole structure is insured by the association's master policy, not by this small limit.

A burglar takes a $3,000 coin collection from a home insured on an unendorsed HO-5 with $90,000 of Coverage C. The policy pays:

• a.$2,500, the firearms theft limit
• b.$200, the special limit for coins✓
• c.$1,500, the theft limit for valuables
• d.$3,000, since the form is open perils

Open perils widens the causes of loss the form will pay for, but it does not lift the special limits sitting inside Coverage C. Money, bank notes, bullion and coins share a $200 limit on the standard unendorsed form, so a $3,000 collection produces $200. The $1,500 figure belongs to theft of jewelry, watches and furs, and $2,500 is the firearms cap; paying the full $3,000 ignores the special limit.

Coverage A is $250,000. One fire destroys a detached garage costing $19,000 to rebuild and a shed costing $8,000. Coverage B on an unendorsed form pays:

• a.$27,000, the full cost of both structures
• b.$25,000, the most Coverage B allows✓
• c.$12,500, being 5% of Coverage A
• d.$19,000, the garage only, as the larger

Coverage B is capped at 10% of Coverage A, so 0.10 x $250,000 = $25,000 is the most available, and that single limit covers every other structure on the premises rather than one per building. The $27,000 answer pays the whole loss and ignores the cap. The garage-only answer wrongly treats the limit as applying to one structure at a time, and 5% is not the other-structures percentage.

When a homeowners policy pays a loss under Coverage B, the effect on Coverage A is that the dwelling limit:

• a.is restored only if more premium is paid
• b.drops by 10% for the rest of the policy term
• c.stays intact, as Coverage B is a separate limit✓
• d.is reduced by the amount paid on the structure

The 10% shown for other structures is its own limit of liability, so paying a detached garage claim leaves the full Coverage A available for the house. The answer that subtracts the payment from the dwelling limit describes how a sublimit carved out of a single limit would behave, which is not how this coverage is written. No extra premium is needed to keep the dwelling limit whole.

A weekend guest's suitcase and camera are destroyed by a fire at the insured's home. Under Coverage C, that property is:

• a.covered only if the guest carries no insurance
• b.covered anywhere the guest travels afterward
• c.outside the policy, being property of another
• d.covered at the insured's request, at the home✓

Coverage C can be applied, at the insured's request, to property owned by a guest or a residence employee while it is in a residence the insured occupies. That is why the flat statement that another person's goods sit outside the policy is wrong. The accommodation stops at the residence premises, so it does not follow the guest home or onto later travel, and it does not depend on what the guest insures.

A pedigree dog worth $2,500 dies in a fire that is otherwise a covered loss. Under Coverage C the policy pays:

• a.nothing; animals are property not covered✓
• b.$500, treating the dog as a single item
• c.$1,500, the special limit for live animals
• d.$2,500, the animal's provable market value

Coverage C lists classes of property it does not cover at all, and animals, birds and fish are on that list, so no amount is payable for the dog however the loss happened. The answers quoting $1,500 or $500 invent a sublimit for property the form simply excludes. Paying market value would need a specialty animal policy, not the homeowners contents coverage.

Two policies each carry $60,000 of Coverage C: one is a tenants HO-4 and the other a unit-owners HO-6. Their loss of use limits are:

• a.$30,000 for each, as both use 50% of C
• b.$18,000 for the tenant and $30,000 for the unit✓
• c.$60,000 for each, matching the C limit
• d.$18,000 for each, as both use 30% of C

Loss of use on a tenants form is 30% of Coverage C, giving 0.30 x $60,000 = $18,000, while the unit-owners form uses 50% of Coverage C, giving 0.50 x $60,000 = $30,000. The two answers that apply a single percentage to both forms miss that the forms differ on this point. Matching the full contents limit describes no standard loss of use provision.

A covered fire forces a family out of the home for eight months, and the policy expires four months into the repairs. Loss of use:

• a.continues, as expiry does not cut it off✓
• b.stops when the renewal policy takes over
• c.stops on the policy expiration date
• d.is halved once the policy term runs out

The loss of use limit is payable for the reasonable time needed to repair or replace the damage, and the form states that this period is not shortened by the end of the policy term. So the family keeps drawing additional living expense through the eighth month if the repairs genuinely take that long. Ending the payments at expiration, or shifting them to the renewal, would leave a loss that began during the term half paid.

A limb punches a hole in the roof and the rain that follows ruins a $1,800 rug. On a broad form, the rug is:

• a.covered, the roof being pierced first✓
• b.covered only under an open-perils form
• c.excluded, as rain is not a listed peril
• d.covered up to $500 as a falling object

The falling objects peril reaches property inside the building only when the object first damages the roof or an outside wall, and a limb that opens the roof meets that test, so the $1,800 rug is paid. Had the limb landed on the lawn and rain merely blown in, the interior damage would not qualify. The $500 figure belongs to other additional coverages, not to this named peril.

Ash and blast from a volcanic eruption damage an insured dwelling. Under a standard homeowners form the loss is:

• a.covered, as volcanic eruption is a peril✓
• b.covered only with an earthquake endorsement
• c.excluded unless a fire follows the ash
• d.excluded, as a form of earth movement

Volcanic eruption sits on the named perils list and pays for the blast, the airborne shock wave and the ash and dust it deposits. Earth movement, which takes in the land shock waves before and after an eruption as well as earthquake and landslide, stays excluded and needs a separate endorsement or policy. Treating the ash damage as earth movement is the trap these two topics create.

The compressor in a six-year-old air conditioner burns out on a home insured on an open-perils form. The repair is:

• a.covered once the insured proves no neglect
• b.covered up to the Coverage C special limit
• c.covered, as open perils has few exclusions
• d.excluded as wear, tear and breakdown✓

Open perils shifts the burden onto the insurer to name an exclusion, and wear and tear, deterioration and mechanical breakdown are among the exclusions the form keeps. A worn compressor is a maintenance cost rather than a fortuitous loss, so the claim fails on any homeowners form. Proving the absence of neglect does not help, because this exclusion does not turn on the insured's conduct.

A supply pipe bursts, causing $6,000 of water damage to floors, and the pipe itself costs $900 to replace. A broad form pays:

• a.$6,900, the full cost of the incident
• b.$900, limited to the failed component
• c.$6,000 for the damage the water caused✓
• d.nothing, as the pipe wore out over time

The accidental discharge peril pays for the damage the escaping water does, but the form does not cover the system or appliance the water escaped from, so the $900 pipe is the insured's cost while the $6,000 of floor damage is paid. Paying the whole $6,900 ignores that carve-out. Denying the claim outright confuses a sudden burst with the slow, repeated seepage the form genuinely excludes.

Wind-driven waves and rising tidal water push seawater through a home's ground floor. A standard homeowners form treats this as:

• a.sudden discharge of water, so it is paid
• b.windstorm, since wind drove the water
• c.water damage, covered after the deductible
• d.flood, which the form excludes✓

Surface water, waves, tidal water and overflow of a body of water fall inside the water damage exclusion whatever pushed them ashore, so the flooding is not a homeowners loss; cover comes from a separate flood policy, such as one written through the federal program. Calling it windstorm because wind drove the waves is the error the exclusion is worded to defeat. The accidental discharge peril reaches plumbing inside the home, not the sea.

A homeowner deliberately smashes the windows of his own house to collect on the policy. Section I:

• a.pays the loss but cancels the policy
• b.denies it as an intentional loss✓
• c.pays, since vandalism is a named peril
• d.pays the depreciated value of the glass

Insurance answers fortuitous loss, and Section I excludes loss arising out of an act an insured commits with the intent to cause that loss, so self-inflicted damage produces no payment. The vandalism answer fails because that named peril contemplates damage done by others, not by the insured himself. Paying and then cancelling would still hand over the money the exclusion is written to withhold.

An earthquake ruptures a gas line and the fire that follows destroys the house. On an unendorsed homeowners form:

• a.nothing is paid, as a quake began it
• b.the fire damage is paid as an ensuing loss✓
• c.the entire loss is paid, fire being a peril
• d.only the gas line repair is excluded

Earth movement is excluded, but the form gives back loss caused by a fire that ensues, so the shaking damage falls on the insured while the fire damage is paid. Denying everything because a quake started the chain reads the exclusion more broadly than it is written. Paying the entire loss ignores that cracked walls and foundation damage from the shaking itself stay excluded.

Lightning strikes the home's own service panel, the power dies and a $3,400 heat pump is ruined. The power failure exclusion:

• a.does not apply to an on-site failure✓
• b.bars it, the power having failed
• c.applies unless a fire follows the strike
• d.limits payment to the Coverage C sublimit

That exclusion is aimed at power interruptions beginning away from the residence premises, such as a downed line or a utility outage. A lightning strike on the home's own service equipment is an on-premises event and lightning is a named peril, so the $3,400 heat pump is a covered loss. The answer quoting a Coverage C sublimit borrows a cap that has nothing to do with this exclusion.

Water below the surface of the ground seeps through a basement wall over one winter and ruins the finished walls. The policy:

• a.excludes it as water damage✓
• b.pays it under the collapse coverage
• c.pays it as accidental water discharge
• d.pays after the Section I deductible

The water damage exclusion carries three ideas: flood and surface water, water backing up through sewers or drains, and water below the surface of the ground that seeps or leaks through a foundation, wall or floor. Basement seepage sits squarely in the third, so nothing is payable. Calling it accidental discharge misapplies a peril meant for plumbing and appliances inside the home, and nothing here has collapsed.

One burglary takes a $3,000 firearm collection, a $4,000 silver service and $2,000 of bearer securities. An unendorsed form pays:

• a.$5,000, using two limits of $2,500
• b.$6,500 under three special limits✓
• c.$4,000, one limit for the whole theft
• d.$9,000, the whole value taken

Each class carries its own special limit and they are applied separately: $2,500 for theft of firearms, $2,500 for theft of silverware and $1,500 for securities, which adds to $6,500. Paying the $9,000 taken ignores the limits entirely. Treating the burglary as one capped event misses that the caps attach to classes of property, not to a loss.

The special limits that apply to jewelry, firearms and silverware are best described as:

• a.internal caps on the Coverage C limit✓
• b.limits that apply to every cause of loss
• c.deductibles the insured pays on those items
• d.extra amounts added on top of Coverage C

A special limit is an internal cap: the property is insured under Coverage C, but the most payable for that class is the stated figure and the payment comes out of the Coverage C limit rather than being added to it. They are not deductibles, since the insured is not paying that first slice. Several of them, including the jewelry, firearms and silverware caps, bite only on theft.

A windstorm topples a $2,000 ornamental maple onto the lawn, damaging nothing else. The trees, shrubs and plants coverage:

• a.pays $500, the per-item limit
• b.pays $1,000 as a loss to the grounds
• c.pays $2,000, up to 5% of Coverage A
• d.pays nothing, wind not being a listed peril✓

The additional coverage for trees, shrubs and plants answers only a short list of perils, and windstorm is not on it: fire, lightning, explosion, riot, aircraft, vandalism, theft and a vehicle not owned by a resident are the causes it names. So a wind-felled tree that damages nothing else produces no payment. The 5% of Coverage A ceiling and the $500 per item cap matter only once a listed peril applies.

An insured's adult son, who lives at home, runs up $900 on his mother's credit card without asking. The credit card coverage:

• a.pays $500, the limit for card losses
• b.pays after the Section I deductible
• c.pays $900, since consent was absent
• d.does not apply to a resident's use✓

The credit card, fund transfer, forgery and counterfeit money coverage pays up to $500 with no deductible, but it does not answer use by a resident of the household or by anyone the insured entrusted with the card. A son living at home is that resident, so the misuse stays a family matter. The answers that pay ignore the exclusion, and this coverage carries no deductible in any case.

A dwelling would cost $400,000 to replace and carries Coverage A of $280,000. A covered loss costs $60,000 to repair and its actual cash value is $45,000. The settlement is:

• a.$48,000, at 80% of the repair cost
• b.$52,500, the proportion of the cost✓
• c.$60,000, the full repair cost
• d.$45,000, the actual cash value

Because the $280,000 carried is under 80% of the $400,000 replacement cost, the form pays the larger of actual cash value or the amount produced by the ratio of insurance carried to insurance required: $280,000 / $320,000 = 0.875, and 0.875 x $60,000 = $52,500. That beats the $45,000 depreciated figure, so $52,500 is owed. Multiplying the loss by 80% is not the formula the form uses.

A dwelling insured at $320,000 met the 80% test when written, but replacement cost has since risen to $450,000. At the next loss the form:

• a.applies the test only to a total loss
• b.compares the limit with current replacement cost✓
• c.uses the replacement cost figure set at issue
• d.waives the test after the first renewal

The 80% test looks at replacement cost at the time of the loss, not at the figure that satisfied it when the policy was written, so rising building costs can quietly push an insured under the threshold. Here $320,000 against $450,000 is about 71%, and a partial loss would settle by the proportion rather than at full replacement cost. An inflation guard endorsement exists to lift the limit through the term for this reason.

A ten-year-old television costs $1,000 to replace and has an actual cash value of $300. With a personal property replacement cost endorsement, the claim settles at:

• a.$1,000, with no deduction for age✓
• b.$1,000, but only after a $300 deductible
• c.$300, the depreciated value
• d.$650, splitting the difference in value

Contents settle at actual cash value on an unendorsed homeowners form, and the personal property replacement cost endorsement removes the depreciation deduction, so the set is replaced at the $1,000 it costs today. The $300 answer is what the policy pays without the endorsement. Splitting the difference describes no settlement provision, and this endorsement does not create a special deductible.

A policy carries a $1,000 Section I deductible. A visitor's $800 of medical bills is presented under Coverage F. The insurer pays:

• a.$800, as the deductible is property only✓
• b.nothing, the bill being under $1,000
• c.$400, splitting the bill with the insured
• d.$800, but only if the insured is liable

The Section I deductible attaches to property losses under Coverages A through D; the Section II liability coverages pay from the first dollar, so the whole $800 goes to the injured visitor. The answer that zeroes the claim applies a property deductible to a liability coverage. Requiring proof of liability confuses medical payments, which is paid without regard to fault, with personal liability.

An insured negligently starts a fire that burns down his own detached garage. Section II of the homeowners policy:

• a.pays half, the insured sharing the fault
• b.pays under damage to property of others
• c.does not respond to the insured's property✓
• d.pays the garage under personal liability

Personal liability covers damages the insured owes to somebody else; property owned by an insured sits outside it, however careless the insured was. The garage is a Section I matter, paid under the other structures limit subject to the property deductible. The additional coverage for damage to property of others is confined to property belonging to people other than an insured.

A $100,000 Coverage E limit is paid out in full to settle one suit while a second claim from the same occurrence is pending. The insurer's duty to defend:

• a.resumes when the policy renews next year
• b.continues until the term expires
• c.continues, defense being outside limits
• d.ends, the limit having been exhausted✓

Defense costs are paid in addition to the limit of liability, which is why a $100,000 judgment plus $30,000 of defense can cost an insurer $130,000, but the duty to defend stops once the limit has been used up by payment of judgments or settlements. Here the whole $100,000 is gone, so the insurer withdraws. Renewal opens a fresh limit for later occurrences, not for this one.

The insured's dog bites a jogger in a public park, and the jogger runs up $700 of medical bills. Coverage F:

• a.pays only if the insured is found at fault
• b.pays nothing off the residence premises
• c.pays $700 from the Coverage E limit
• d.pays $700, the animal being the insured's✓

Medical payments to others reaches a person injured away from the residence premises when the injury is caused by an animal owned by an insured or by an insured's own activities, so the jogger's $700 is payable. The answer that stops the coverage at the property line ignores that off-premises trigger. Fault is irrelevant here, and the money comes from the Coverage F limit rather than from personal liability.

Coverage F pays reasonable medical expenses for an injured person provided the expenses are:

• a.incurred within a set time of the accident✓
• b.billed before the policy period ends
• c.unpaid by the injured person's health plan
• d.approved by the insurer before treatment

Medical payments to others is built to close small claims quickly: it pays necessary medical, surgical, dental and funeral expenses for an injured person, provided those expenses are incurred or the injury is medically ascertained within the period stated in the form after the accident. Nothing requires the insurer to approve treatment first, and the coverage does not wait for the injured person's own health plan to be exhausted.

Who counts as an insured under Section II of a standard homeowners policy?

• a.a neighbor who borrows the insured's mower
• b.any friend who stays for a weekend visit
• c.an unrelated roommate sharing the rent
• d.a relative residing in the household✓

The definition of insured picks up the named insured, the spouse, relatives who reside in the household and other people under 21 in their care, so a resident relative is protected while an unrelated roommate is not, however long they share the rent. A weekend guest is somebody the policy may protect the insured against, not an insured. The form extends insured status to persons using an insured's animals or watercraft, not garden equipment.

A riding mower used to cut the insured's lawn rolls over a visitor's foot on the property. Section II:

• a.excludes it as a motor vehicle claim
• b.covers it, the mower servicing the home✓
• c.excludes it unless the mower is registered
• d.covers it only up to the Coverage F limit

The motor vehicle exclusion carves out vehicles that are not subject to motor vehicle registration and are used to service an insured's residence, so a lawn tractor mowing the yard stays inside Section II. Treating it as an excluded motor vehicle is the mistake the exception exists to prevent. Personal liability is available as well, so the response is not capped at the medical payments limit.

An insured's inboard-powered motorboat injures a swimmer while the insured is at the helm. Section II of the homeowners policy:

• a.covers it up to the Coverage E limit
• b.covers it, as the insured was operating
• c.covers it, boats being personal property
• d.excludes it, so a boat policy is needed✓

Section II excludes liability arising out of most watercraft an insured owns or operates, inboard-powered boats among them, so the swimmer's claim belongs on a boatowners or yacht policy. The answer resting on the insured being at the helm has it backwards: operating the excluded craft is the very situation described. That the boat is personal property under Section I says nothing about liability.

A resident son injures his sister at home and the parents present her $5,000 of bills to their own liability coverage. Section II:

• a.pays the $5,000 under Coverage E
• b.pays half, the children sharing fault
• c.excludes injury to a fellow insured✓
• d.pays the $5,000 under Coverage F

Both liability coverages step around family claims: personal liability excludes bodily injury to an insured, and medical payments excludes anyone who regularly resides on the premises, so a sister living in the household collects nothing from her parents' policy. Her bills are a health insurance matter. Splitting the payment for shared fault describes a tort defense, not anything written into the form.