Elements of Typical Homeowners' Insurance Policies - Part4: Practice Questions and Solutions

This area of test problems as well as remedies is actually a a component of The Particular Actuary'sfree study guide pertaining to Exam 5, authored by Mr. Stolyarov. This could be Section 108 in theResearch Guide. Notice an index of all sections simply by subsequent the hyperlink on thisparagraph. This area of the research guide is intended to supply practice problems and solutions tobe able to accompany all pages regarding Private Insurance, cited below. Students are generallyinspired to study these pages before attempting the particular problems. This particular researchmanual can be totally a completely independent effort by Mr. Stolyarov and it is not affiliated usingany kind of organization(s) in order to whose textbooks it refers, nor can it represent suchorganization(s). A Range Of with the concerns here request for brief created answers based aroundthe reading. This is designed to supply the student practice throughout answering questions in theformat that will appear on Exam 5. Students are inspired to type their own answers first then tocompare these answers using the solutions offered here. Please note that the solutions providedhere are not necessarily the sole feasible ones. Source: Nyce, Charles, ed. Private Insurance.(Second Edition). 2008. Chapter 5, pp. 5.24-5.39. Original Difficulties and also solutions via TheActual Actuary's Totally Free Research Guidebook Issue S5-108-1. Identify ten named perils whichare typically covered below Coverage C: personal Property regarding an HO-3 homeowner'sinsurance policy. Remedy S5-108-1. This question is based about the dialogue inside PrivateInsurance, pp. 5.25-5.27. The following named perils are usually typically covered beneath CoverageC: 1. Fire or perhaps lightning; 2. Windstorm or even hail; 3. Explosion; 4. Riot or perhaps civilcommotion; 5. Aircraft; 6. Vehicles; 7. Smoke; 8. Vandalism or malicious mischief; 9. Theft; 10.Falling objects; 11. Excess Weight associated with ice, snow, or perhaps sleet; 12. "Accidentaldischarge or overflow involving water as well as steam"; 13. "Sudden as well as accidental tearingapart, cracking, burning, as well as bulging"; 14. Freezing - "if the actual insured has broughtreasonable precautions to take good treatment of the heat as well as provides sut off and alsodrained the actual system or perhaps appliances"; 15. "Sudden and also accidental discharge fromartificially generated electrical current"; 16. Volcanic eruption. Any Kind Of ten associated with theaforementioned suffice as an answer. Issue S5-108-2. (a) list the actual nine exclusions that wouldaffect all coverages below Section I of the typical HO-3 homeowner's insurance policy. (b) Checklistthe particular 3 exclusions that will specifically connect with Coverage A: Dwelling as well asCoverage B: Private Property of the typical HO-3 homeowner's insurance policy. solution S5-108-2.This specific real question is based on the discussion throughout Private Insurance, pp. 5.27-5.34.(a) The next nine exclusions would apply to most coverages under Section I of the typical HO-3homeowner's insurance policy: 1. Ordinance or Law; 2. Earth Movement; 3. Drinking Water Damage;4. Energy Failure; 5. Neglect; 6. War; 7. Nuclear Hazard; 8. Intentional Loss; 9. GovernmentalAction. (b) The following three exclusions would specifically connect with Coverage A: Dwelling andalso Coverage B: Private Property of the typical HO-3 homeowner's insurance policy: 1. Weatherconditions; 2. "Acts or choices involving just about any person, group, organization, or governmentalbody"; 3. Faulty workmanship. Difficulty S5-108-3. (a) What exactly are the two purposes with theInsurable Fascination and limit associated with Liability condition in Section I of a typical HO-3homeowner's insurance policy? (b) Identify 5 obligations that an insured could get pursuant for theYour Current duties Right After Loss condition in Section I of the typical HO-3 homeowner'sinsurance policy. Remedy S5-108-3. This particular real issue is based on the discussion insidepersonal Insurance, pp. 5.35-5.36. (a) The subsequent are usually the 2 purposes with the InsurableFascination and also Restrict regarding Liability condition inside Section I of your typical HO-3homeowner's insurance policy: 1. To be Able To restrict the most payments for practically any singleloss for the relevant limitations demonstrated on the declaration page. 2. to limit "loss payment in

order to just about any insured to the extent of that insured's insurable fascination within theproperty in the time of the loss". (b) The subsequent would always be the duties an insured mighthave pursuant to the Your Current Obligations Right After Loss situation inside Section I of yourtypical HO-3 homeowner's insurance policy: 1. giving prompt recognize involving loss towards theinsurer; 2. Notifying your policy when the loss is as simple as theft; 3. Notifying the particularcharge card company, electronic fund transfer (EFT) company, or access device company, if the lossinvolves a new credit score card, EFT device, or access device; 4. Protecting the property comingfrom further damage; 5. Cooperating using the insurer; 6. Preparing an stock regarding damagedpersonal property; 7. Verifying the particular loss - including permitting an insurer to createreplicates regarding documents and to submit to examination under oath, if requested to accomplishso; 8. Signing the sworn proof of loss; Virtually Any 5 regarding the over mentioned suffice as thepossible answer. Issue S5-108-4. (a) under the Loss Settlement situation inside Section I of yourtypical HO-3 homeowner's insurance policy, losses to private property under Coverage C tend to besettled on the time frame in the lesser involving that of 2 amounts? (b) Mr. �£'s chair has beendestroyed in a fire and also is actually a covered loss below Coverage C associated with hishomeowner's insurance policy. no deductible applies towards the loss. It would expense $200 to buyan identical chair with the current market price. 12 many years ago, the actual chair price $500 andalso has been depreciated making use of the particular straight-line method, let's assume that theactual helpful existence in the chair can be 18 years. How a lot will Mr. �£ become reimbursed forthat chair? Answer S5-108-4. This question is based about the dialogue throughout IndividualInsurance, p. 5.37. (a) Below your Loss Settlement condition within Section I of the typical HO-3homeowner's insurance policy, losses to non-public property under Coverage C are settled on thetime frame with the lesser associated with 1. actual cash value (ACV) in the damaged objects in theduration of the actual loss as well as 2. The Particular price to repair or substitute the actualdamaged items. (b) It emerges that the replacement price in the chair is $200. Since the particularchair can be depreciated in the straight-line fashion, it incurs the identical dollar quantity ofdepreciation for each year. The Particular annual depreciation is actually $500/(18 years) =27.8888888. Right After 12 a extended time have got passed, you will find six a long time left forthat chair to depreciate, therefore the real money value of your chair prior to its destruction hadbeen 27.8888888*6 = 166.66666667 = $166.67 < 200, and consequently the insurer will pay Mr.�£ $166.67 - your ACV with the chair. Difficulty S5-108-5. Mrs. �© owns any pair of 3statuettes made through the exact same sculptor. the statuettes are more valuable with each andevery other compared to always be able to what they are generally individually. the statuettes areusually insured through Mrs. �© beneath Coverage C: Private Property associated with an HO-3homeowner's insurance policy. The following information is known: The single statuette throughoutMrs. �©'s possession would have an actual money value (ACV) regarding $500. Virtually Any apair of statuettes throughout Mrs. �©'s possession would use a combined ACV of $1500. all threestatuettes inside Mrs. �©'s possession would use a combined ACV associated with $5000. Yoursculptor with the statuettes is ready to produce exact reproductions of each statuette, and alsoachieving this would always expense $3000 for each statuette. (a) Just what would your insurer do ifseventy one statuettes had been lost due in order to a covered loss? (b) Just what would the actualinsurer do if a couple of of the three statuettes were lost because of a covered loss? (c) Preciselywhat would the actual insurer do if one of your statuettes had been lost as any outcome of coveredloss? Answer S5-108-5. This real issue is based on the discussion in Individual Insurance, pp. 5.37,5.39. Your policy conditions that would apply here would be Loss Settlement, too as Loss to a Pair orSet. (a) Within this case, the particular Loss Settlement issue applies, as when the pair of statuetteswere a single unit. The Particular insurer would pay the lesser involving ACV and replacement cost.Here, the particular ACV in the statuettes is $5000, whereas the replacement expense regarding allthree is 3000*3 = $9000, therefore the insurer would pay $5000 to always be able to Mrs. �©. (b)Here, your Loss to a Pair or perhaps Set condition applies, and furthermore the insurer would holdthe choice involving both replacing the actual lacking statuettes (at a cost of 2*3000 = $6000) or

even having to pay Mrs. �© the main difference involving the ACV in the entire set and also theACV in the remaining statuette (at an expense involving 5000 - 500 = $4500). Since 4500 < 6000,the insurer would spend $4500 to become able to Mrs. �©. (c) Here, the actual Loss to some Pairor even Set issue applies, as well as the insurer would possess the selection regarding possiblyreplacing the missing statuette (at a cost associated with $3000) as well as having in order to payMrs. �© the real difference between the ACV of the entire set and also the ACV with theremaining 2 statuettes (at an expense of 5000 - 1500 = $3500). Since 3000 < 3500, the insurerwould replace Mrs. �©'s lacking statuette. The Particular information given suggests that theparticular insurer would employ the particular original sculptor as well as spend the actual cash forsculptor $3000. Discover various other sections involving The Particular Actuary's Totally Free studyManual with regard to Exam 5.