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Homeowners Endorsements

Practice questions on homeowners endorsements for the property exam, each with an answer and explanation.

Study questions and answers

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1. An insured wants coverage for a $12,000 engagement ring on an open perils basis with a stated amount. Which endorsement should be added?

  1. Scheduled personal property endorsement
  2. Inflation guard endorsement
  3. Personal property replacement cost endorsement
  4. Home business endorsement
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A. Scheduled personal property endorsement
Scheduling lists each item and its amount, removes the special theft limit, and covers the item on an open perils basis.

2. Which endorsement changes the settlement of Coverage C losses from actual cash value to replacement cost?

  1. Scheduled personal property endorsement
  2. Personal property replacement cost endorsement
  3. Inflation guard endorsement
  4. Ordinance or law increased amount endorsement
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B. Personal property replacement cost endorsement
This endorsement pays the cost to replace personal property without deduction for depreciation.

3. Which endorsement automatically raises the dwelling limit by a set percentage over the policy year to keep up with rising construction costs?

  1. Scheduled personal property
  2. Water back-up and sump discharge
  3. Inflation guard
  4. Identity fraud expense
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C. Inflation guard
Inflation guard increases Coverage A and related limits gradually during the policy term so the home does not become underinsured.

4. Water backs up through a floor drain because the city sewer line is overloaded. To have coverage for this loss, the homeowner should have added:

  1. An earthquake endorsement
  2. An inflation guard endorsement
  3. A scheduled personal property endorsement
  4. Water back-up and sump discharge or overflow coverage
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D. Water back-up and sump discharge or overflow coverage
Water that backs up through sewers or drains or overflows from a sump is excluded in the base form and can be added by endorsement.

5. A homeowner runs a small bookkeeping business from her home office and has client visits. Which endorsement adds coverage for business property and business liability?

  1. Personal injury endorsement
  2. Home business coverage endorsement
  3. Inflation guard endorsement
  4. Loss assessment endorsement
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B. Home business coverage endorsement
The home business endorsement extends property and liability coverage to an eligible business run from the residence.

6. The personal injury endorsement to a homeowners policy adds liability coverage for which of the following?

  1. Damage to the insured's own car
  2. Injury to the insured's own employees in a business
  3. Libel, slander and false arrest
  4. Intentional bodily injury
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C. Libel, slander and false arrest
Personal injury coverage adds offenses such as libel, slander, false arrest, malicious prosecution and invasion of privacy.

7. A homeowner's town requires that a partly damaged home be rebuilt to the current building code, which costs more than the policy's basic allowance. Which endorsement increases this coverage?

  1. Ordinance or law increased amount of coverage
  2. Scheduled personal property
  3. Inflation guard
  4. Personal property replacement cost
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A. Ordinance or law increased amount of coverage
Basic ordinance or law coverage is a percentage of Coverage A. The endorsement raises that amount for the added cost of meeting building codes.

8. An insured recovers costs such as notary fees, lost wages and phone calls to clear his name after his identity is stolen. Which endorsement covers these expenses?

  1. Personal injury coverage
  2. Credit card and forgery additional coverage
  3. Loss assessment coverage
  4. Identity fraud expense coverage
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D. Identity fraud expense coverage
Identity fraud expense coverage pays reasonable costs the insured incurs to restore his identity and credit records.

9. Which of the following is generally a feature of items listed on a scheduled personal property endorsement?

  1. They are covered only for named perils
  2. They are settled at actual cash value only
  3. They are covered on an open perils basis, usually without a deductible
  4. They remain subject to the Coverage C special limits
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C. They are covered on an open perils basis, usually without a deductible
Scheduled items are insured for specific amounts on an open perils basis and are commonly not subject to the policy deductible.

10. Which endorsement adds coverage for a business-type occupancy in the home, such as a small tutoring office, along with liability for that activity?

  1. Permitted incidental occupancies endorsement
  2. Inflation guard endorsement
  3. Earthquake endorsement
  4. Water back-up endorsement
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A. Permitted incidental occupancies endorsement
The permitted incidental occupancies endorsement extends coverage to limited business uses such as an office, studio or school in the residence.
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