Chapter 5
Which statement is true regarding the Accounts Receivable Coverage Form? A) It covers the insured's uncollectibles from customers due to a direct physical loss of records of accounts receivable. B) It covers only the cost of reproducing the insured's records of Accounts Receivable that are destroyed by an insured peril. C) It covers all accounting records of the insured that are destroyed by an insured peril. D) It covers exactly the same perils as the Causes of Loss-Broad Form.
Answer A is correct. Accounts Receivable insurance might be considered insurance on information. It insures the amounts lost whenever the insured cannot determine how much is owed because of the loss of records.
A Laundry business offers pick-up and delivery services to its customers. Which of the following Inland Marine endorsements would the Laundry business need to protect against the off-premises damage done to its customers clothing? A) Bailees liability. B) Annual transit form. C) Trip Transit form. D) Commercial Articles floater.
Answer A is correct. Bailees' Customers form provides coverage for liability to the damage to property of others in your care.
Which causes of loss are not covered under inland marine insurance? A) Inherent vice B) Collapse C) Flood D) Overturn of conveyance
Answer A is correct. Inherent Vice is not covered. Inherent Vice is a condition of property that causes it to damage or destroy itself.
The Nationwide Marine Definition does which of the following? A) Generally distinguishes Marine risks from Property risks. B) Generally distinguishes Commercial liability risks from Personal liability risks. C) Defines that Inland Marine insurance covers everything on water only. D) Defines that Ocean Marine insurance covers cargo transported on land only.
Answer A is correct. The Marine definition defines the types of risks that are marine risks and transportation risks as opposed to those that are considered to be a typical property or fire risk. Ocean Marine covers cargo on water, Inland Marine covers property on land.
Which one of the following covers a carrier for liability for loss to cargo while it is being transported in a truck? A) Motor Truck Cargo policy B) Annual Transit policy C) Garage keepers coverage form D) Shipper's form
Answer A is correct. The Motor Truck Cargo policy consists of three forms: Truckers Form which insures public truckers for liability for damage to cargo while in their possession, Shippers Form which provides coverage protecting the owner of the goods that have been shipped by an independent trucker in the event of the loss of goods and Owner's Form which provides coverage for a business that owns trucks with which it transports its own goods. Annual transit is a type of transit coverage form, Garagekeepers is part of Commercial Auto.
The Commercial Inland Marine transportation form used to insure a carrier's liability for damage to cargo it is transporting is the A) Motor Truck Cargo policy. B) Bill of Lading. C) Trip Transit form. D) Annual Transit form.
Answer A is correct. The Motor Truck Cargo policy/form consists of three forms: Trucker's Form which insures public truckers for liability for damage to cargo while in their possession, Shipper's Form which provides coverage for the owner of goods that have been shipped by a public trucker and Owner's form which provides coverage for a business that owns the trucks in which it transports its own goods. A Bill of Lading is a receipt of the goods being shipped. Annual transit and Trip transit are specific transportation forms for single shipments or all shipments on an annual basis.
Which one of the following is NOT a category of the Nationwide Definition? A) Personal auto B) Exports C) Instruments of transportation D) Commercial Property floater risks
Answer A is correct. The Nationwide Marine Definition defines risks that are eligible for Ocean or Inland Marine insurance. These categories are imports, exports, domestic shipments, instrumentalities of transportation or communication, personal property floater risks, and commercial property floater risks.
Which of the following adopted the Nationwide Marine Definition? A) The National Association of Insurance Commissioners (NAIC) B) Marine Office of America C) The National Association of Marine Underwriters D) The National Association of Insurance Agents
Answer A is correct. The Nationwide Marine Definition is a document that specifies the property that is eligible for Inland Marine Insurance. All other property must be written in the Commercial Property or Dwelling Programs.
Which statement is true regarding the Nationwide Marine Definition? A) It defines the types of property that may be covered by marine insurance. B) The purpose is to specify the types of insurers that write marine insurance. C) The purpose is to explain the difference between ocean marine and inland marine. D) It establishes that only import and export goods are insurable.
Answer A is correct. The Nationwide Marine Definition lists what may be insured under marine policies.
An insured suffers a covered loss involving one in a set of valuable book ends in his library. Under the Pair, Sets, or Parts loss condition of an Inland Marine policy, how would the loss be settled? A) When part of a set is damaged or destroyed, the insured would not be reimbursed for the value of the entire set. B) When part of a set is damaged or destroyed, the insured would be reimbursed for the value of the entire set. C) When the entire set is damaged or destroyed, the insured would be reimbursed for the value of each individual item at current replacement cost. D) When the entire set is damaged or destroyed, the insured would be reimbursed for the value of each individual item at its actual cash value.
Answer A is correct. This Pairs, Sets or Parts Clause states that when part of a set is damaged or destroyed, the insured will not be reimbursed for the value of the entire set. Various methods are used to determine the amount of reimbursement. Both (C) and (D) are describing a total loss and therefore does not apply to the Pairs, Sets or Parts Clause at all.
An insured who needs coverage for medical instruments while they are on and off premises could obtain it by purchasing the A) Physicians and Surgeons Equipment coverage form. B) Errors and Omissions Insurance. C) Professional Liability Insurance. D) Scheduled Personal Property Endorsement.
Answer A is correct. This is similar to a Personal Articles Floater EXCEPT: it is for Commercial Property. Commercial Inland Marine Equipment form provides coverage for medical instruments while on and/or off the premises. Errors and Omissions is a type of Professional Liability Insurance. Scheduled Personal Property Endorsements are available on a homeowners policy.
Under Marine Policies, the term controlled means: A) Those forms that are developed by individual insurers B) Those forms that are filed with the State Insurance Department by insurers C) Those forms that are controlled by the NAIC D) Inland Marine forms than cannot be altered by endorsement
Answer B is correct. Controlled Forms approved by the Division or Department of Insurance are usually developed by rating organizations and used by many insurers, rather than forms developed by the individual insurers.
Inland Marine policies are frequently used to cover all of the following, EXCEPT: A) Property held by a bailee. B) Structures C) Off premises business personal property. D) Off premises mobile equipment.
Answer B is correct. Inland Marine covers property off premises or the property of others. It is not used to cover buildings or structures.
Inland Marine Policies are generally written on what basis? A) Basic Causes of Loss Form B) Open Peril, but may be written as Named Peril C) Broad Causes of Loss Form D) Special Causes of Loss Form
Answer B is correct. Inland Marine policies provide Named Perils or Open Perils coverage that is adapted to the class of property insured. Coverage varies from class to class of property.
Which statement is false regarding inland marine policies? A) The Accounts Receivable Coverage Form is a controlled or standardized form. B) The Bailees' Customers Form covers the insured's property when he/she has property of others in his/her care, custody and control. C) The Contractor Equipment Floater Form is usually written on an open peril basis. D) The Installation Floater Policy provides coverage while the property is in transit and during installation.
Answer B is correct. The Bailees' Customers Form does not cover any property owned by the insured.
Which statement is false regarding inland marine insurance? A) Policies are written open peril, but may be written named peril. B) The method of valuation is always actual cash value. C) Policy forms came from fire, burglary and ocean marine policies. D) Controlled or uncontrolled forms are written.
Answer B is correct. The standard approach to valuation is typically agreed value, or stated amount.
Which of the following would be covered under a Jewelers Block Coverage Form? A) Property in showcases away from the premises. B) Property in a glass display in the store. C) Property being worn by a salesperson employed by the insured. D) All of the above.
Answer B is correct. This form covers the insured's stock on the premises of the insured, consisting of jewelry, precious stones, metals, and similar property of others in the care of the insured. This includes property in a display case on premises, but not off premises, nor would it cover property being worn by an employee.
All of the following are eligible for marine insurance, except: A) Imports, exports and domestic shipments. B) Bridges, tunnels, docks and transmission lines. C) Retail stores and office buildings. D) Personal property and commercial personal property.
Answer C is correct. Coverage is written on property that is mobile in nature.
The Nationwide Marine Definition specifies risks that may be written under Marine Insurance. All of the following may be insured under marine policies, except: A) Domestic Shipments B) Bridges or Tunnels C) Commercial Buildings D) Imports and Exports
Answer C is correct. Inland Marine insurance is designed for property that is portable, or that is being shipped from place to place. Generally, fixed property is not eligible.
The Contractors Equipment Floater requires that newly acquired equipment must be reported by the insured to the insurance company within A) 30 days. B) 45 days. C) 60 days. D) 90 days.
Answer C is correct. Most every newly acquired item already insured in this book is required to be reported within 30 days, EXCEPT: for fine arts which is 90 days, with one EXCEPTION: Contractors Equipment which is 60 days.
A contractor uses an Installation Floater to cover the risk of loss that may occur to equipment that is to be installed in the building. This coverage is provided during transportation, unloading, and installation of the equipment for how long? A) Until 1 year after the building is completed. B) Until 2 years after the building is completed. C) Until control of the equipment is given to the purchaser or owner of the building. D) Until control of the equipment is given to the contractor.
Answer C is correct. Once the owner of the building has taken possession of the equipment or building, the contractors liability ends and the owners liability begins.
According to the Nationwide Definition, imports and exports are A) eligible to be written under any part of the Commercial Package Policy. B) covered on a specific Import/Export Commercial Policy. C) eligible for Ocean Marine insurance. D) eligible for Inland Marine Policies only.
Answer C is correct. The Nationwide Marine Definition defines the types of risks that are marine risks and transportation risks as opposed to those that are fire risks. Import and exports are considered to be marine risks and therefore would be covered un an Ocean Marine Policy only.
Which of the following forms is designed to insure a single shipment of goods? A) Motor Truck Cargo Owners Form B) Transportation Floater C) Trip Transit Policy D) Bailees' Customers Policy
Answer C is correct. The Trip Transit Policy only covers a single shipment.
Under Marine Policies, the term uncontrolled means: A) Forms that are not approved by the National Association of Insurance Commissioners. B) Forms that are filed with the State Insurance Department by insurers. C) Forms that are not standardized by any rating bureau: consequently the forms will normally differ from insurer to insurer. D) Forms that must be tailored to the individual insured by endorsement.
Answer C is correct. The Uncontrolled forms are developed by individual companies to meet the needs of the company and its target market.
All of the following are examples of non-filed commercial property floaters, except: A) Installation Floater B) Bailees' Customers Policy C) Contractors Equipment Floater D) Jeweler's Block Coverage Form
Answer D is correct. A Jeweler's Block Policy is an example of a filed or controlled form.
All of the following may be covered under a Motor Truck Cargo policy, EXCEPT: A) Trucks you own B) Trucks you hire C) Cargo you own D) Pre-paid freight charges
Answer D is correct. A Motor Truck Cargo policy includes: Owners form, truckers form and Shippers form. It has nothing to do with Pre-Paid Freight Charges.
Which of the following is true regarding Transit Coverage Forms? A) Annual transit forms are used to protect all kinds of property being shipped to others or received from others during the year using a common carrier. B) Trip transit forms are used by those that do not make regular shipments all year long, but wish to insure a single shipment. C) Single shipment transit forms are used by those that do not make regular shipments all year long, but wish to insure one single shipment. D) Both A and B are correct.
Answer D is correct. Annual Transit forms insure shipments back and forth all year long, where trip transit insures on single shipment only. There is no such form as a Single shipment form.
Inland Marine Policies are primarily designed to insure: A) Overseas shipments. B) Exclusively for property being transported on inland waters. C) Buildings and contents used for manufacturing. D) Property that is mobile in nature and may be away from insured's premises.
Answer D is correct. Inland Marine insurance is designed for property that is portable, or that is being shipped from place to place. Generally, fixed property is not eligible.
What type of insurance covers cargo? A) Personal property policy B) Business personal property policy C) Business policy D) Marine policy
Answer D is correct. Marine policies are used to insure moving property such as cargo being shipped. Examples: Inland Marine and Ocean Marine are both considered Marine policies.
The Jewelers Block Policy covers all of the following, except: A) The insured's stock in trade. B) Stock that is sold but not yet delivered. C) Property of others that is in the care, custody and control of the insured. D) Insured's stock that is worn by a salesperson.
Answer D is correct. Property being worn by a salesperson of the insured or in a showcase away from premises is not covered.
The Nationwide Marine definition specifically includes all of the following, EXCEPT: A) Imports. B) Exports. C) Domestic shipments. D) Yachts and Cruise Ships
Answer D is correct. The Marine definition defines the types of risks that are marine risks and transportation risks as opposed to those that are considered to be fire risks. Imports, Exports and Domestic shipments are among the 6 classes of property defined under this contract. Yachts and Cruise ships would be covered by a Yacht policy which covers large vessels.
When someone owns his own truck and hauls his own goods, he should purchase: A) An Installation Floater Policy. B) A Bailee Policy. C) The Motor Truck Cargo Truckers Form Policy. D) The Motor Truck Cargo Owners Form.
Answer D is correct. The owner's form will cover loss to goods owned by the insured and shipped on the owner's trucks
When someone owns his own truck and hauls his own goods, he should purchase: A) An Installation Floater Policy. B) A Bailee Policy. C) The Motor Truck Cargo Truckers Form Policy. D) The Motor Truck Cargo Owners Form.
Answer D is correct. The owner's form will cover loss to goods owned by the insured and shipped on the owner's trucks.
What is the standard approach to valuing property that is written under Inland Marine Policies? A) Market Value B) Actual Cash Value C) Replacement Cost D) Agreed Value or Stated Amount
Answer D is correct. The standard approach to valuation is Agreed Value or Stated Amount. However, some Inland Marine policies are written for Actual Cash Value, and occasionally on a Replacement Cost basis
What is the standard approach to valuing property that is written under Inland Marine Policies? A) Market Value B) Actual Cash Value C) Replacement Cost D) Agreed Value or Stated Amount
Answer D is correct. The standard approach to valuation is Agreed Value or Stated Amount. However, some Inland Marine policies are written for Actual Cash Value, and occasionally on a Replacement Cost basis.