Basics
What does HO-3 policy cover in a homeowner's insurance plan?
A) Structure and personal property
B) Only personal property
C) Only the structure
D) Neither structure nor personal property
A) Structure and personal property
What does an HO-5 policy provide that an HO-3 policy does not?
A) Only liability coverage
B) Only personal property coverage
C) Broader coverage for personal belongings
D) Coverage for the structure only
C) Broader coverage for personal belongings
What is the purpose of a "coverage limit" in a homeowner's insurance policy?
A) To limit the types of covered losses
B) To limit the total amount the insurer will pay for a covered loss
C) To limit the policyholder's liability for guest injuries
D) To limit the duration of the policy
B) To limit the total amount the insurer will pay for a covered loss
What is the first step a policyholder should take after experiencing a loss covered by their homeowner's insurance policy?
A) File a claim with the insurer
B) Repair the damage
C) Consult with an attorney
D) Negotiate with the insurer
A) File a claim with the insurer
Which Texas department regulates the insurance industry within the state?
A) Texas Department of Insurance (TDI)
B) Texas Department of Public Safety (DPS)
C) Texas Insurance Regulatory Authority (TIRA)
D) Texas Insurance Board (TIB)
A) Texas Department of Insurance (TDI)
Which of the following is NOT covered by a standard homeowner's insurance policy?
A) Fire damage
B) Earthquake damage
C) Theft
D) Windstorm damage
B) Earthquake Damage
Which of the following is an example of an endorsement in a homeowner's insurance policy?
A) Adding coverage for valuable jewelry
B) Reducing the coverage for personal property
C) Eliminating liability coverage
D) Decreasing the coverage for the structure
A) Adding coverage for valuable jewelry
Which of the following is typically excluded from coverage in a standard homeowner's insurance policy?
A) Fire damage
B) Theft
C) Flood damage
D) Windstorm damage
C) Flood damage
What does the "proof of loss" refer to in the context of a homeowner's insurance claim?
A) Documentation provided by the insured to support the value of the claim
B) Documentation provided by the insurer to dispute the claim
C) An agreement between the insured and the insurer regarding claim value
D) An estimate provided by a third-party appraiser
A) Documentation provided by the insured to support the value of the claim
What is the role of the Texas Windstorm Insurance Association (TWIA)?
A) To provide coverage for losses caused by wind and hail in certain coastal areas
B) To regulate all insurance companies operating in Texas
C) To provide coverage for losses caused by floods throughout the state
D) To oversee the licensing of insurance agents in Texas
A) To provide coverage for losses caused by wind and hail in certain coastal areas
What does the "deductible" refer to in a homeowners insurance policy?
A) The maximum amount the insurer will pay for a claim
B) The minimum amount the insurer will pay for a claim
C) The amount the insured has to pay out of pocket before the insurer covers the remaining amount
D) The amount the insurer pays in case of total loss
C) The amount the insured has to pay out of pocket before the insurer covers the remaining amount
What does "loss of use" coverage in a homeowner's insurance policy refer to?
A) Coverage for damage caused by a fire
B) Coverage for temporary living expenses if the insured property is uninhabitable due to a covered loss
C) Coverage for theft of personal property
D) Coverage for medical expenses for guests
B) Coverage for temporary living expenses if the insured property is uninhabitable due to a covered loss
What is the purpose of an "exclusion" in a homeowner's insurance policy?
A) To list the covered perils
B) To limit the total payout by the insurer
C) To specify the types of losses that are not covered by the policy
D) To specify the types of losses that are covered by the policy
C) To specify the types of losses that are not covered by the policy
What is the purpose of the "loss adjuster" in the homeowner's insurance claim process?
A) To evaluate the extent of the damage and determine the appropriate payout
B) To deny all claims
C) To advocate for the insured's best interest
D) To negotiate a lower payout with the insured
A) To evaluate the extent of the damage and determine the appropriate payout
Which of the following is a requirement for an insurance agent to sell homeowner's insurance in Texas?
A) Passing the Texas Homeowners Insurance Exam
B) Obtaining a general insurance license
C) Completing a background check
D) Obtaining an appointment from an insurer
D) Obtaining an appointment from an insurer
Which coverage in a homeowner's policy would help cover medical expenses if a guest is injured on the property?
A) Coverage A
B) Coverage B
C) Coverage C
D) Coverage D
C) Coverage C
Which of the following endorsements could cover damage caused by a flood in a homeowner's insurance policy?
A) Inflation guard endorsement
B) Personal property replacement cost endorsement
C) Flood insurance endorsement
D) Scheduled personal property endorsement
C) Flood insurance endorsement
What type of coverage may need to be purchased separately to cover damage caused by floods in a homeowner's insurance policy?
A) HO-1 policy
B) HO-2 policy
C) HO-3 policy
D) Flood insurance policy
D) Flood insurance policy
What is the "subrogation" process in a homeowner's insurance claim?
A) The process of the insurer investigating the cause of the loss
B) The process of the insured filing a lawsuit against the insurer
C) The process of the insurer seeking reimbursement from a third party responsible for the loss
D) The process of the insured paying the deductible
C) The process of the insurer seeking reimbursement from a third party responsible for the loss
What does the "Texas FAIR Plan" provide for homeowners in Texas?
A) Coverage for flood-related losses
B) Coverage for losses caused by fire, lightning, and internal explosion
C) Coverage for losses caused by hurricanes and tornadoes
D) Coverage for losses caused by earthquakes and sinkholes
B) Coverage for losses caused by fire, lightning, and internal explosion
What does the "actual cash value" refer to in a homeowner's insurance policy?
A) The current value of the insured property without depreciation
B) The original purchase price of the insured property
C) The replacement cost of the insured property
D) The market value of the insured property
A) The current value of the insured property without depreciation
What does the "guaranteed replacement cost" endorsement provide in a homeowner's insurance policy?
A) Coverage for the current market value of the insured property
B) Coverage for the original purchase price of the insured property
C) Coverage for the cost to repair or replace the property, regardless of the limits of the policy
D) Coverage for damage caused by natural disasters
C) Coverage for the cost to repair or replace the property, regardless of the limits of the policy
Which of the following perils is typically excluded from a standard homeowner's insurance policy?
A) Fire
B) Vandalism
C) Theft
D) Earthquake
D) Earthquake
What is the purpose of the "reservation of rights" letter in the homeowner's insurance claim process?
A) To inform the insured that the claim has been denied
B) To reserve the insurer's right to deny coverage based on new information
C) To offer an immediate settlement to the insured
D) To expedite the claims process for the insured
B) To reserve the insurer's right to deny coverage based on new information
What is the purpose of the Texas Consumer Bill of Rights for Homeowners and Tenants?
A) To provide additional rights to landlords
B) To outline the rights and responsibilities of homeowners and tenants regarding insurance
C) To limit the rights of insurance companies in Texas
D) To regulate the rental market in Texas
B) To outline the rights and responsibilities of homeowners and tenants regarding insurance