*FROM THE BOOK FIN 151- Risk Management and Insurance (Pearson Custom Business R
ID: 2700471 • Letter: #
Question
*FROM THE BOOK FIN 151- Risk Management and Insurance (Pearson Custom Business Resources)*
Homeowners I
Application 4:
Megan has her home and personal property insured under an unendorsed Homeowners 3 (special form) policy. Indicate whether each of the following losses is covered. If the loss is not covered, explain why it is not covered.
a. Megan carelessly spills a can of paint while painting a bedroom. A wall-to-wall carpet that is part of the bedroom is badly damaged and must be replaced.
b. Water backs up from a clogged drainpipe, floods the basement, and damages some books stored in a box.
c. Megan%u2019s house is totally destroyed in a tornado. Her valuable Doberman Pinscher dog is killed in the tornado.
d. During a frost warning, smudge pots from a nearby orange grove emit dense smoke that settles on Megan%u2019s freshly painted house.
e. Megan is on vacation, and a thief breaks into her hotel and steals a suitcase containing jewelry, money, clothes, and an airline ticket.
f. Megan%u2019s son is playing baseball in the yard. A line drive shatters the living room window.
g. A garbage truck accidentally backs into the garage door and shatters it.
h. Defective wiring causes a fire in the attic. Damage to the house is extensive. Megan is forced to move into a furnished apartment for three months while the house is being rebuilt.
i. Megan%u2019s son, age 20, is attending college but is home for Christmas. A stereo is stolen from his dormitory room during his absence.
j. During the winter, heavy snow damages part of the front lawn, and the sod must be replaced.
k. During a windstorm, an elm tree in Megan%u2019s yard is blown over.
l. Carpeting is damaged from the overflow of water from a bathtub because Megan left the water running while answering the telephone.
m. The home is badly damaged in a severe earthquake. As a result of the earthquake, the front lawn has a three-foot crack and is now uneven.
n. An icemaker in the refrigerator breaks and water seeps into the flooring and carpets, causing considerable damage to the dwelling.
Explanation / Answer
A wall-to-wall carpet that is part of the bedroom is badly damaged
and must be replaced.
Covered. Wall-to-wall carpeting is part of the dwelling.
Since the loss is not excluded, it is covered.
b) Water backs up from a clogged drainpipe, floods the basement,
and damages some books stored in a box.
Not covered. Damage from water that backs up through
sewers or drains is excluded.
c) Megan%u2019s house is totally destroyed in a tornado. Her valuable
Doberman pinscher dog is killed in the storm.
The dwelling is covered for windstorm. Animals are excluded
under personal property.
) Smoke from a nearby industrial plant damages Megan%u2019s freshly
painted house.
Not covered. Smoke damage from agricultural smudging
or industrial operations is excluded.
steals a suitcase containing jewelry, money, clothes, and an
airline ticket.
Covered. However, there is a $1,500 limit on the theft of
jewelry, $200 on money, and $1,500 on tickets.
the living room window.
Covered, since it is not excluded. Glass breakage is covered.
g) A garbage truck accidentally backs into the garage door and
shatters it.
Covered. Vehicle damage to the dwelling is covered.
) Defective wiring causes a fire in the attic. Damage to
the house is extensive. Megan is forced to move into a
furnished apartment for three months while the house is being
rebuilt.
Covered. Additional living expense is covered under
Coverage D. Fire loss is under Coverage A.
Christmas. A stereo set is stolen from his dormitory room
during his absence.
Covered. As long as the son has been in the room any
time during the 60-day period before the loss, the theft
is covered.
and the sod must be replaced.
Not covered. Trees, plants, shrubs, and lawns are covered
only for specified named perils. Snow damage is not a covered peril.
The windstorm loss of the elm tree is not covered. Windstorm
is not a listed peril with respect to trees, plants, and shrubs.
l) Carpeting is damaged from the overflow of water from a bathtub
because Megan left the water running while answering the
telephone.
Covered.
m) The home is badly damaged in a severe earthquake. As a result
of the earthquake, the front lawn has a three-foot crack and is
now uneven.
Not covered. Earthquake damage is specifically excluded.
n) An icemaker in the refrigerator breaks and water seeps into
the flooring and carpets, causing considerable damage.
Covered. Water seepage from an appliance is covered.
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