Iowa Property & Casualty Insurance License Exam — All Questions
6 questions
Which Homeowners form covers both the dwelling and personal property on an open-perils basis?
- a.HO-2 (Broad form)
- b.HO-5 (Comprehensive form)✓
- c.HO-3 (Special 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.Older homes whose replacement cost far exceeds market value✓
- b.Luxury homes needing the widest coverage
- c.Renters who do not own the structure
- d.Condominium unit owners
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 C – Personal Property
- b.Coverage D – Loss of Use
- c.Coverage E – Personal Liability✓
- 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-3
- b.HO-6
- c.HO-8
- 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.Regardless of whether the insured was at fault✓
- c.Only for members of the insured's household
- d.Only after a lawsuit is filed
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.Special sublimits that cap the amount payable✓
- b.Unlimited coverage up to the Coverage C limit
- c.Automatic replacement cost with no cap
- d.No coverage of any kind
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.