Chapter 7 Miscellaneous Personal Lines Coverage

K has a 10-piece antique fountain pen set that is insured with a pair and sets clause and is valued at $10,000. Each pen alone is only worth $500. If one pen is destroyed in a covered loss, how much will the policy pay? A. $5,500 B. $4,500 C. $9,500 D. $10,000

A. $5,500 The remaining value of the 9 pens is $4,500 ($500 X 9). The loss of 1 pen has reduced the value of the set from $10,000 down to $4,500. Therefore, the policy will pay the difference of $5,500.

In order to be considered a single occurrence, the Earthquake endorsement covers all earth movement that occurs within what time period? A. 72 Hours B. 12 Hours C. 48 Hours D. 36 Hours

A. 72 Hours Earth movement includes earthquakes, land shock waves or tremors, landslides, mudslides, mudflows, sinkhole, and the rising, sinking, or shifting of the earth, and must occur within 72 hours.

Which of the following is correct about Difference in Conditions (DIC) Insurance? A. Flood is a peril that can be covered by this policy B. Fire and lightning are typical covered perils C. The Coinsurance Clause is included on all policies D. It is written on a standard form similar to the property form

A. Flood is a peril that can be covered by this policy This policy fills in insurance gaps and covers perils that are excluded under standard property policies (such as flood), and excludes perils that are covered under standard property policies.

Choose the statement that is false about the FAIR plan. A. It provides property coverage to both residential and farm dwellings B. It provides basic property coverage to those who have been rejected in the standard market C. FAIR means Fair Access to Insurance Requirements D. Agents cannot bind FAIR plan coverage

A. It provides property coverage to both residential and farm dwellings Farm property is not eligible for coverage under the FAIR plan.

The National Flood Policy would not cover which of the following losses? A. Leakage of underground water systems B. Unusual and rapid accumulation or runoff of surface water C. Mudslide caused by accumulation of water D. Overflow of inland or tidal waters

A. Leakage of underground water systems Underground leakage is not considered a flood.

Section I of the Boatowners policy provides what type of coverage for the hull? A. Open perils B. Replacement cost C. Stated value D. Actual cash value

A. Open perils The hull, motor, trailer, equipment, and marine accessories are covered on an open peril basis.

A personal umbrella policy will not provide coverage for which of the following? A. Property damage liability to property in the insured's care B. Personal Injury C. Bodily injury D. Automobile liability

A. Property damage liability to property in the insured's care Damage to property in the care, custody, or control of an insured is excluded under the personal umbrella policy.

Which of the following is true regarding the Difference in Conditions Policy? A. There is no coinsurance clause or pro rata clause and it may be written for a different amount from the policy it complements B. The DIC usually carries a very low deductible C. The minimum coinsurance allowed under the DIC form is 90% coinsurance D. The DIC policy provides excess amounts of insurance above the primary property policies

A. There is no coinsurance clause or pro rata clause and it may be written for a different amount from the policy it complements The DIC policy is not an excess layer of insurance. Rather, it provides coverage for perils not insured against under standard property policy forms.

A single-family dwelling may purchase up to what amount of flood insurance in the NFIP's Emergency program? A. $50,000 B. $35,000 C. $100,000 D. $250,000

B. $35,000 The Emergency NFIP program covers up to $35,000 on a single-family dwelling.

All earth movements within what period of time are considered a single occurrence of earth movement? A. 24 hours B. 72 hours C. 60 hours D. 48 hours

B. 72 hours All earth movements occurring within a 72-hour period are considered a single occurrence of earth movement.

When his client's homeowners policy application is rejected by an insurance company due to underwriting rules, an insurance agent may request coverage under which of the following? A. Assigned Risk Plan B. FAIR Plan C. Joint Underwriting Association D. Write Your Own Homeowners Program

B. FAIR Plan The Fair Access to Insurance Requirements program writes coverage for homeowners who cannot obtain coverage in the standard market or have been terminated in the voluntary market.

The Personal Articles Floater is used to do which of the following? A. Provide replacement cost coverage on personal property B. Insure individual personal property on a scheduled basis C. Insured personal property on a blanket basis D. Replace Coverage B of the Homeowners Policy

B. Insure individual personal property on a scheduled basis The Personal Articles Floater is used to insure personal property on a scheduled (or itemized) basis. Articles covered under this floater are no longer covered under Coverage C of the Homeowners Policy.

Which of the following types of property are covered by the Personal Effects Floater? A. Golfer's equipment B. Personal property carried by travelers C. Coin collections D. Paintings, etchings, and pictures

B. Personal property carried by travelers This floater covers a traveler's personal property on an open perils basis anywhere in the world EXCEPT at the insured's home. (The types of property listed in the other answer choices would require the Personal Articles floater.)

Which of the following may be insured on a replacement cost basis under the National Flood Insurance Program? A. Nonresidential or commercial buildings less than 3 stories high B. Nonresidential or commercial buildings valued at less than $250,000 C. 1- to 4-family residences and residential condominiums D. Money and securities

C. 1- to 4-family residences and residential condominiums Under the National Flood Insurance Program, property is insured on an actual cash value basis, except one- to four- family residences and residential condominiums may be insured on a replacement cost basis.

Which of the following statements about the Personal Jewelry Floater is correct? A. Coverage is written on a replacement cost basis B. The Pair and Sets Clause does not apply C. Automatic coverage for newly acquired items is only provided for 30 days D. An appraisal of the item is optional

C. Automatic coverage for newly acquired items is only provided for 30 days The Pair and Set Clause applies. Coverage is written on a valued or actual cash value basis and appraisal is required.

Umbrella policies provide coverage on which basis? A. Aggregate B. Primary C. Excess D. Open perils

C. Excess The umbrella acts as excess coverage over the limits of underlying primary policies.

Which of the following is not eligible for coverage under a Fair Access to Insurance Requirements program? A. Rental dwelling B. Uninsured dwelling property C. Farm property D. Homeowner

C. Farm property While farm property is not eligible, some incidental business use on the farm property is allowed.

Which of the following is true regarding the Yacht Policy? A. It is designed for boats that can be towed by automobiles B. It covers damage to the hull and fittings. Liability coverage may be attached by endorsement C. It has navigational limits that describe the area where the yacht is allowed to operate D. It is written on an Inland Marine form

C. It has navigational limits that describe the area where the yacht is allowed to operate The Yacht policy is designed for larger vessels such as yachts, excursion vessels, etc. It is written on an Ocean Marine Form and includes Hull, Protection and Indemnity, Medical Payments and Jones Act coverages.

The National Flood Insurance Program (NFIP) sells flood insurance in which of the following types of communities? A. Farm communities B. Communities with a population less than 300,000 C. Participating communities D. Communities that border a large body of water

C. Participating communities Communities in flood-prone areas must have an approved flood control program in order to benefit from the NFIP.

All of the following are true regarding the Personal Umbrella Policy, except: A. The policy requires underlying coverage for automobiles and homes B. The policy is written for higher liability limits C. The Umbrella acts as a contributory liability policy D. The Umbrella can provide broader coverage than the primary policy

C. The Umbrella acts as a contributory liability policy The Umbrella acts as an excess liability policy over the limits of the underlying policies.

If personal injury coverage is not provided by an insured's homeowners policy, but is provided by the insured's umbrella policy, and the insured is sued for slander, which of the following statements is correct? A. The insured must pay 5% of the total claim B. The homeowners policy will pay the entire claim C. The insured must pay the umbrella policy's self-insured retention D. The insured's homeowners policy will pay defense costs

C. The insured must pay the umbrella policy's self-insured retention The insured is required to pay the umbrella policy's self-insured retention when the umbrella policy responds to a claim on a primary basis because the underlying primary coverage does not apply.

The self-insured retention in the Umbrella policy is described as which of the following? A. Primary coverage B. Excess coverage C. An Endorsement D. A method of cost-sharing

D. A method of cost-sharing Like a deductible, the insured pays the self-insured retention unless there is a primary policy available to pay its limit of insurance.

The Personal Inland Marine Insurance covers which of the following? A. Watercraft B. Indirect losses such as loss of use C. Personal property normally found in a home or residence D. Moveable property against direct loss

D. Moveable property against direct loss Personal Inland Marine Insurance is designed to cover personal property that moves about such as clothing, jewelry, cameras, furs, sporting equipment, etc., as contrasted to personal furniture, appliances and items that remain in the home.

Which of the following is true regarding the Camera Floater? A. Blanket coverage is provided on cameras and lenses B. Automatic coverage is provided on newly acquired items for 90 days C. Automatic coverage is provided on newly acquired items for 60 days D. Newly acquired are covered up to 25% of the policy amount until reported

D. Newly acquired are covered up to 25% of the policy amount until reported Insured items are scheduled, with the exception that blanket coverage is provided on accessories. Automatic coverage is provided on newly acquired items for 30 days at a limit of insurance up to 25% of the limit designated on the schedule.

The Personal Articles Floater is written: A. Only on a replacement cost basis B. Only as an endorsement on the Dwelling policy C. Only on a named perils basis D. Only on moveable property

D. Only on moveable property The Personal Articles Floater is typically used to provide rare or high-value items higher levels of coverage than are offered by standard policies. As with all Personal Inland Marine coverage, the PAF can either be added as an endorsement to a Homeowner's or Dwelling policy or written as a stand-alone policy.

Which of the following perils is covered under the Personal Umbrella? A. Aircraft B. Intentional injury C. Bailee D. Personal injury

D. Personal injury Personal injury perils are covered under the Umbrella policy, and will drop down to cover from the first dollar if personal injury coverage is not covered on the primary policy.