3) The replacement cost of a home covered under the HO-3 policy is $100,000. Assume the home is insured for $50,000 and a $10,000 loss occurs (replacement cost). Also assume depreciation is set at 10 percent. Assume that there is no deductible. How much will the insured recover if repaired?

A) $9,000

B) $10,000

C) $8,000

D) $6,250

8) All of the following are rights extended to mortgagees (banks) under the mortgage clause in the HO contract except:

A) to sue under the policy in its own name

B) to foreclose on property if the insured homeowner tries to defraud the insurer

C) to receive payments from the insurer

D) to be economically protected

9) The replacement cost of a home covered under the HO-3 policy is $100,000. Assume the home is insured for $50,000 and a $10,000 loss occurs (replacement cost). Also assume depreciation is set at 10% and a $500 deductible applies. How much will the insured recover if the damage is repaired?

A) $9,000

B) $8,500

C) $5,937

D) $6,250

12) Which of the following is not an exclusion from the HO policy's Liability coverage?

A) Liability assumed under any unwritten contract

B) Property damage to property owned by the insured

C) Damage to property in the care, custody or control of the insured by all perils

D) Liability arising out of the ownership or maintenance of the residence premises

14) The value of a home is $50,000, and the homeowner policy covering it contains an 80%

coinsurance clause. Assume the home is insured for $30,000 and a $12,000 loss occurs. How much will the insured recover? (Ignore the ACV calculation and assume there is no fraud or other unusual circumstances surrounding the loss.)

A) $12,000

B) $9,000

C) $16,000

D) The answer cannot be determined by the facts given.

15) The named insured leaves a suitcase filled with clothing on the seat of his unattended, unlocked automobile. The loss is valued at $900 replacement cost and a depreciated value of $700. The HO-3 contract has a $200 deductible on Section I. How much will the HO-3 contract pay for this loss?

A) $0 (because the clothing was in an automobile)

B) $700

C) $500

D) $0 (because the automobile was unlocked)

16) Mr. Green's 24-year old son still lives at home while attending college part-time. The son also has an apartment near his college campus. His stereo is stolen from the apartment. The stereo has a $1,400 replacement cost, and an actual cash value of $900. If there is a $100 deductible on Section I, how much will the HO-3 contract pay for the stolen stereo?

A) $800

B) $900

C) $0, because the son is not covered by the contract

D) $1,400