please read the instructions carefully.

1. Joan 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. Joan 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.

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. Joan’s house is totally destroyed by a tornado. Her valuable Doberman pinscher dog is killed by the tornado.

The dwelling is covered for windstorm. Animals are excluded under personal property.

d. During a frost warning, smudge pots from a nearby orange grove emit dense smoke that settles on Joan’s freshly painted house.

Not covered. Smoke damage from agricultural smudging or industrial operations is excluded.

e. Joan is on vacation, and a thief breaks into her hotel room and steals a suitcase containing jewelry, money, clothes, and an airline ticket.

Covered. However, there is a $1500 limit on the theft of jewelry, $200 limit on cash and a $1500 limit on tickets.

f. Joan’s son is playing baseball in the yard. A line drive shatters the living room window.

Covered. Since the loss is not excluded, it is covered. Glass breakage is covered.

g. A garbage truck accidentally backs into the garage door and damages it.

Covered. Vehicle damage to the dwelling is covered.

h. Defective wiring causes a fire in the attic. Damage to the house is extensive. Joan is forced to move into a furnished apartment for three months while the house is being rebuilt.

Covered. The additional living expense is covered under Coverage D. The fire loss to the dwelling is covered under Coverage A.

i. Joan’s son, age 20, is attending college but is home for Christmas. A stereo set is stolen from his dormitory room during his absence.

Covered. As long as the son had been in the room any time during the 60-day period before the loss, the theft is covered

j. During the winter, heavy snow damages part of the front lawn, and the sod must be replaced.

Not covered. Trees, plants, shrubs, and lawns are covered only for a specified number of named perils. Snow damage to the lawn is not a covered peril.

k. During a windstorm, and elm tree in Joan’s yard is blown over.

The windstorm loss of the elm tree is not covered. Windstorm is not a listed peril with respect to trees, plants, and shrubs.

l. The home is badly damaged in a severe earthquake. As a result of the earthquake, the front lawn has a 3-foot crack and is now uneven.

Not covered. Earthquake damage is specifically excluded.

m. An icemaker in the refrigerator breaks and water seeps into the flooring and carpets, causing considerable damage to the dwelling.

Covered. Water seepage from an appliance is covered.

2. Marilyn owns a home with a replacement cost of $400,000 that is insured under a Homeowners 3 policy for $280,000. The roof was badly damaged in a severe windstorm, and it will cost $20,000 to repair the roof. The actual cash value of the loss is $10,000. Ignoring any deductible, how much will Marilyn collect from the insurer?

(280,000/(80%*400,000))*20,000=17,500

Marilyn will receive $17,500 for the loss.

3. Indicate whether the following losses are covered under Section II of the homeowners policy. Assume there are no special endorsements. Give reasons for your answers.

a. The named insured’s dog bites a neighbor’s child and also chews up the neighbor’s coat.

Covered. A suit or claim because of animals is covered.

b. A son living at home accidentally injures another player while playing softball.

Covered. The medical expenses of the injured player would be covered under Coverage F.

c. A guest slips on a waxed kitchen floor and breaks an arm.

Covered. Persons injured on the premises are covered. The medical expenses are covered under Coverage F, and if a lawsuit ensues, there is coverage under Coverage E.

d. A neighbor’s child falls off a swing in the named insured’s yard and breaks an arm.

Covered. The child’s medical expenses are covered under Coverage F.

e. The named insured accidentally falls on an icy sidewalk and breaks a leg.

Not covered. Medical expenses incurred by the named insured and resident household members (other than a residence employee) are not covered.

f. While driving to the supermarket, the named insured injures another motorist with the automobile.

Not covered. Liability arising out of the negligent operation of an automobile is excluded.

g. A ward of the court, age 10, in the care of an insured, deliberately breaks a neighbor’s window.

Covered. Property damage to others is covered up to $1000 without having to prove negligence. If the damage is deliberately caused by someone age 13 or older, the coverage does not apply.

h. The named insured paints houses for a living. A can of paint accidentally spills onto a customer’s roof and discolors it.

Not covered. Business activities are excluded.

i. The named insured falls asleep while smoking a cigarette in a rented hotel room, and the room is badly damaged by the fire.

Covered. This is covered under fire legal liability and is an exception to the care, custody, and control exclusion.

j. The named insured borrows a camera, and it is stolen from a motel room while the insured is on vacation.

Not covered under Section II. The theft, however, is covered under Section I.

k. Lois has a pet basset hound, Huey. Huey is a friendly, docile dog and loves people. One morning, Lois carelessly left the backyard gate open, and Huey escaped from the fenced yard. A neighbor tried to catch the dog, and Huey bit him on the hand and leg. The neighbor incurred medical bills of $800. Lois is later sued by the neighbor for $50,000 when the dog became infected and did not heal.

The loss is cove. under Section II homeowners’ policy. The insured and their family members are protected by the personal liability insurance against legal liability when a claim or suit for damages is raised because of bodily injury or properly damage caused by negligence.

Here, Lois pet injured the neighbor. The neighbor incurred medical bills of $800 and sued Lois for $50,000. The insurer protects the insured from the claim brought because of bodily injury caused by the pets at insured location. Hence, the Lois is covered under personal liability insurance of Section II homeowners' policy.

l. Jerry is playing golf with a friend who is riding in a golf cart that he is operating. The cart overturned when Jerry carelessly drove the cart off the fairway and hit a tree. Jerry’s friend is seriously injured and sues Jerry for $150,000.

The loss is covered under Medical payments to others section II homeowners policy.

Coverage F pays the medical expenses of another person who is accidentally injured at insured location or by the activities of an insured, resident employee or by the member residing in the insured home.

Here, Jerry Injured his friend while playing golf. Jerry was sued for S150,000. The insurer covers the liability arising out of personal acts by negligence. Therefore, Jerry is covered under section II homeowners' policy.