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Educational objective 1Key words and phrasesFirst partyThird partyBodily injury (BI) (as used in HO policies)Property damage (PD) (as used in HO policies)Review Questions1-1.Who are included as insureds under Coverage E of sectio n Ⅱ-liability?1-2.If a dog bites a teenager who has entered an insured’s fenced yard and mistreated the animal, will be insured be liable? Explain.1-3.Who is eligible to receive medical payments to others coverage as the result of an injury?Application Question1-4 Jim is insured under a homeowners policy. For each of the following situations, explain whether Jim’s homeowners policy will provide coverage.a. While Jim was on vacation, his friend Larry walked Jim’s dog everyday. During one of the walks, the dog bit a neighbor. The neighbor sued Larry and was awarded damages.b. Jim’s brother-in-law, Bill, has lived at Jim’s house for the past year. Bill was injured when he tripped over a toy left in the driveway by one of Jim’s children. Bill incurred medical express of $450 as a result of the accident.Educational Objective 2Key words and phrasesMedical payments to othersResidence employeeEmployeeOccurrenceReview Questions2-1 Summarize each of the two principal coverages provided by section Ⅱof all ISO homeowners policies.2-2 Under Section Ⅱof a homeowners policy, who qualifies as an insured for liability coverage?2-3 To trigger liability coverage under a homeowners policy,a What must happen?b When must it happen?2-4 Why is the defense costs coverage of the homeowners policy important?2-5 What are the key differences between medical payments coverage of a personal auto policy and the medical payments to others coverage of a homeowners policy?2-6 Give three examples, other than the residence premises, that would be considered part of the “insured location” as defined in the HO-3?2-7 What motor vehicle liability loss exposures are covered under Section Ⅱof the ISO homeowners policy?2-8 What watercraft liability loss exposures are covered under Section Ⅱof the ISO homeowners policy?2-9 What business and professional activities are excluded under section Ⅱof the ISO homeowners policy?2-10 Give an example of a loss that would be excluded by each of the following exclusions that apply to both Coverage E-liability and coverage F-medical Payments to Others in the ISO homeowners policy.a. Expected or intended injury or damageb. Locations that are not insured locationsc. Communicable diseased. Sexual molestation and physical or mental abusee. Controlled substance2-11.Give an example of a loss that would be excluded by each of the following exclusions that apply to only Coverage E in the ISO homeowners policy.a. Damage to the insured’s propertyb. Property in the insured’s carec. Bodily injury to persons eligible for workers compensation benefitsd. Bodily injury to an insured2-12 Explain each of the following exclusions that apply to the medical payments to others coverage of the ISO homeowners policy.a. Residence employee off premisesb. Injury to residents2-13.What claim expense are covered under Section Ⅱof the ISO homeowners policy?2-14 Give an example of a loss would be covered by the damage to property of others coverage of an ISO homeowners policy. Application Question2-15 For each of the following loss situations, indicate whetherSection Ⅱof an unendorsed homeowners HO-3 policy would provide full coverage for the loss, assuming the insured has adequate limit of liability. If full coverage would not be provided, explain why.a. Peg is the insured, During a visit to a friend’s home, Peg accidentally dropped and broke a porcelain figurine that she had picked up to admire. The figurine had a value of $450,and the friend is seeking payment from Peg for its replacement.b. Don, the insured, is an architect. The roof of an addition Don designed for a client’s home collapsed, and the client claims the collapse was the result of Don’s faulty design. The cost to rebuild the addition is $40,000, and the client has asked Don to pay her that amount.c. Linda, the insured, takes care of her brother’s two children in her home. Linda does not charge her brother a fee for taking care of the children. One of the children was injured while in Linda’s care and was treated in the emergency room of the local hospital. Linda’s brother has submitted a claim to Linda’s insurer for payment of the hospital bill.d. Andy, the insured, is a member of the Meadowcraft Residents’Association. The association and its elected officers were sued by a person who was injured at a block partysponsored by the association. The court awarded damages, and all association members must pay a loss assessment of $2500.Educational Objective 3Review Questions3-1 Based on Homeowners case study, for each of the following losses that resulted from the fire, that dollar amount, if any, will the Fryers’insurer pay? For each of your answer, indicate what specific section or sections of the HO-3 and the Fryer’s declarations page you analyzed to find your answers. You should list all applicable sections. Remember to check not only the insuring agreement but also the policy definitions, exclusions, and other provisions to determine whether coverage applies or whether any conditions would affect the coverage provided or the amount paid.a. The cost to repair the damaged portion of the house would using wiring and materials similar to the original ones would have been $70,000. However, using the wiring and materials required by Plaintown’s new city code, the repairs cost $100,000.b. The Fryers’detached garage was destroyed by the same fire, and the cost to replace it was $30,000.The new city codedid not require any additional cost to replace the garage.c. The cost to replace the furniture and other personal belongings that were damaged beyond repair by the fire is $40,000. However, the Fryers’insurer has determined that the actual value of these belongings, after deducting depreciation, is $22,000.d. Eric’s coin collection was completely ruined by the fire. The coin collection was appraised at $5,000.e. The Fryers paid $1,200 per month for three month in rent for the apartment while their home was being repaired. In addition, they still had to make their normal mortgage payment of $1,900 per month. During the first few days after the fire, the Fryers had to eat their meals in restaurants, which cost $400 more than their normal grocery allowance.f. The Fryers paid the $500 to the fire department for its services.g. The Fryers’ dog, Peppy, was injured during the fire. The veterinarian’s bill for his treatment was $200.h. The fire spread to the Fryers’s yard and destroyed a pine tree and three large shrubs. The tree will cost $1,000 and the shrubs will cost $600 each to replace.i. Dotty suffered minor burns during the fire. Her emergencyroom bill amounted to $800.3-2. Would an insured’s homeowners policy pay the cost of replacing a cracked pavement outside her house, on the basis that the repairs prevent a potential liability claim for someone who might trip and fall on the crack? Explain.3-3 An insured rents a friend’s speedboat for the day and accidentally hits the side of another boat, causing extensive damage to both vessels. Would Coverage E pay for the repairs to the friend’s speedboat? Explain.Application Questions3-4 Sally and Sam Quinton are insured under an HO-3 policy that has a $100,000 limit of liability under Section E. What dollar amount, if any, will their homeowners insurer pay for the following losses? If a loss is not covered, or not fully covered, explain why.a. Sam accidentally shot a friend while on a hunting trip. A court ordered Sam to pay the friend $75,000 in damages.b. The Quintons’ten-year-old son become angry at a neighbor’ child and threw a rock through the neighbor’s sliding glass door. The cost to repair the glass door was $175.c. Sally entertained the members of a local garden club inher home, serving them a buffet luncheon. Two of the guests became seriously ill after the luncheon and sued Sally, alleging that she had served them contaminated food. A court awarded each of the two guests $60,000 in damages.3-5. The policy period of Nancy’s homeowners policy was from June 1.2001 to June 1,2002. A visitor slipped on Nancy’s front porch on May 1,2002, but did not make a claim until August 1,2002.Will the claim be covered by Nancy’s homeowners policy? Explain.Education Objective 4Key Words and PhrasesSeverability of insurancePro rata refundReview Questions4-1. What duties dose an insured have after a loss that is or might be covered by section Ⅱ of an ISO homeowners policy? 4-2. Carefully explain how liability coverage is affected when any insured under a homeowners policy conceals or misrepresents material information or commits fraud, either before or after a loss occurs.4-3. Under what circumstances might an insurer exercise its subrogation rights under a homeowners policy?Application Question4-4. Gail has insured her home under a homeowners HO-3 policy. A visitor, who was injured when she slipped on a patch of ice on Gail’s driveway, has submitted a claim for payment of her medical expense.a. With regard to this claim, what duties may be imposed on Gail under the sectio n Ⅱconditions of her HO-3 policy?b. What duties are imposed on the injured visitor under the sectio n Ⅱconditions of Gail’s HO-3 policy?。