Course 2: Module 2
provide open-peril coverage for personal property owned, used, or worn by the insured.
A homeowners insurance policy can be endorsed with an HO-15 to
personal liability umbrella policy (PLUP)
A policy designed to provide protection against a lawsuit or judgment in excess of the limits of basic liability insurance is
errors and omissions
All of the following are business property risks covered by packaged policies (a BOP or a CPP) except
colliding with a mailbox.
All of the following are covered under other-than-collision (comprehensive) coverage except
Jewelry
All of the following are exclusions from Coverage C: Personal Property of a Homeowners Policy except
volcanic eruption.
All of the following perils are excluded from coverage under most homeowners policies except
The HO-3 policy covers the entire $17,500 in expenses.
Augusto and Celena have an HO-3 homeowners policy on their home. The dwelling is insured for $150,000. As the result of a kitchen fire, their home suffers extensive structural and smoke damage and is made uninhabitable for nine months. They rent a hotel room while the damage is repaired, incurring expenses of $13,500. It also costs them $4,000 for meals during their hotel stay, for a total of $17,500. Which of the following statements regarding the couple's coverage under their HO-3 policy is CORRECT?
$1,000,000
Cherice has the standard amount of coverage for her personal liability umbrella policy (PLUP). Based on this information, how much additional liability protection does Cherice have on top of her other liability coverage?
II and III
Comprehensive personal liability coverage (CPL) can be acquired in which of the following ways? I. as an endorsement to a personal auto policy (PAP). II. as an individual CPL policy. IV. as part of a homeowners policy.
50% of the Coverage A limit
Coverage C in a homeowners policy refers to the personal belongings of the policyowner and any resident family members. Which of the following is the typical limit on this coverage?
$598,000
Dana owns a building that she purchased for $600,000. Its current replacement cost is $1.5 million. The building is covered up to $900,000 for fire-related perils by ZRP Insurance Company, with an 80% coinsurance provision and a $2,000 deductible. Last week, a fire broke out in the building, causing $800,000 in covered damage. What amount will ZRP Insurance Company pay for this loss?
against the deficient acts of a professional who handles money.
Errors and omissions (E&O) insurance provides protection
The named insured uses his car to regularly transport executives to the airport for a fee.
In which of the following situations would a personal automobile policy (PAP) NOT provide coverage under the liability section of the policy?
covers domestic goods in transit.
Inland marine insurance for business
I and III
John has been working for a large medical practice as a family practice physician and recently left to start his own practice. Which of the following should he purchase to protect himself from business-related liability risks? I. Malpractice insurance II. Errors and omissions insurance III. A businessowners policy (BOP) IV. A personal liability umbrella policy (PLUP)
Both medical payments and personal liability coverage may apply.
Kaari has a homeowners policy. Three streets away from her house, her dog bites a mailman. What are the consequence of this event?
$500,000
Kristen has a personal auto policy, and the liability coverage is displayed as 250/500/100. How much bodily injury liability coverage per accident does Kristen have?
Negligence
Liability insurance is primarily concerned with the financial consequences of
II and III
Marcel has been working for a large broker-dealer as a financial advisor and recently left to start his own practice. Which of the following should he purchase to protect himself from business-related liability risks? I. Malpractice insurance II. Errors and omissions insurance III. A businessowners policy (BOP) IV. A personal liability umbrella policy (PLUP)
I, II, III, and IV
Most automobile insurance companies use a classification system to determine premiums. Which of the following factors is traditionally used in a classification system? I. The location of the auto II. The age of the driver III. The sex of the driver IV. The driving record of the driver
I, II, III, and IV
Raul is in the process of purchasing homeowners insurance for his new residence. Which of the following factors may affect Raul's premium? I. The policy form and coverage provided II. The location of the property III. The amount of the deductible IV. The level of fire protection provided by the city or municipality
I, III, and IV
Rebecca owns a gift shop near her home, which she also owns. She takes the bus everywhere she goes. In her spare time, she occasionally engages in activities that could possibly result in bodily injury to innocent bystanders if anything accidentally went wrong. Which of the following forms of insurance should Rebecca consider to avoid risk exposures from potential tort liability? I. Homeowners policy II. Personal auto policy III. Umbrella liability policy IV. Commercial liability policy
Medical payments coverage is applicable, and liability coverage is applicable if Samantha is held legally liable.
Samantha has a homeowners policy. Her dog bites the mailman, and he incurs emergency room expenses of $600. What is the consequence of this event?
II and III
Steven has a dog that has been known to wander through the neighborhood. His home is covered by an HO-3 policy. If Steven's dog bites a mailman three blocks away from his home, which of the followings statements regarding Steven's homeowners insurance coverage is CORRECT? I. Steven will not have any coverage because the bite did not take place at his personal residence. II. Coverage E of Steven's policy may apply or provide coverage if he is found to be legally liable (dog bite lawsuit). III. Coverage F of Steven's policy may be applied to any medical bills, typically up to $1,000.
$82,333
Stewart owns a home with a replacement cost of $300,000. He purchased $200,000 of property insurance on the house with a $1,000 deductible for all losses. The house caught on fire and sustained $100,000 worth of damage. The actual cash value (ACV) of the damaged portion of the property was $80,000. How much will Stewart receive as reimbursement for the loss?
nonresidents operating the owned auto with permission
The personal auto policy (PAP) provides coverage under the liability section for
I, III, and IV
The personal liability umbrella policy (PLUP) is structured to provide a catastrophic layer of liability coverage, in addition to the current homeowners and automobile liability coverage. Which of the following are exclusions found in a PLUP? I. Any act committed with the intent to cause bodily injury to another II. Liability arising out of any personal activity III. Directors and officers liability IV. Workers' compensation obligations
the perils insured against in Section I.
The principal difference among the various homeowners forms is
actual cash value.
The replacement cost of personal property minus depreciation is the property's
Both I and II
The term uninsured motorist, under the uninsured motorist coverage of a personal auto policy (PAP), includes I. a hit-and-run driver. II. a car that is operated without liability insurance.
bumping into a steel post in a parking lot.
There are two types of automobile physical damage coverage: damage by collision and comprehensive. All of the following would be considered damage by comprehensive except
If an item such as watercraft is not covered by an underlying policy, it may not be covered under the umbrella for liability issues.
Umbrella policies cover liability and are generally in addition to homeowners and auto coverage. Which one of the following statements about umbrella policies is CORRECT?
$1,000,000
What is the standard amount of personal liability coverage provided by a personal liability umbrella policy?
I and II
What types of coverage are considered professional liability insurance?
HO-4
Which homeowners policy covers the tenant's personal property against loss or damage and also provides personal liability insurance?
HO-5
Which of the following HO policy forms provides the highest level of building and personal property coverage?
IV only
Which of the following about a businessowners policy (BOP) is true? I. A BOP includes liability coverage only. II. There are six parts to a BOP. III. BOPs are a specific, standard package of coverage. IV. BOPs can be customized to a specific business.
I, II, and IV
Which of the following are considered covered autos under the liability coverage of the personal auto policy (PAP)? I. Any vehicle listed in the policy II. Any trailer owned by the insured III. A company car provided by the insured's employer IV. Any private passenger auto that the insured acquired during the policy period, provided the insured requested coverage within 14 days (30 days in some states)
I, II, III, and IV
Which of the following are exclusions that apply to all of the standard homeowners forms? I. War or nuclear hazard II. Earthquake III. Flood IV. Power failure
I and II
Which of the following are the perils covered under basic coverage in a homeowners policy? I. Smoke II. Theft III. Falling objects IV. Earthquake
I, II, and IV
Which of the following are true for a businessowners policy (BOP)? I. A BOP includes property and liability coverage. II. There are four parts to a BOP. III. BOPs are a specific, standard package of coverage. IV. BOPs can be customized to a specific business.
I, II, III, and IV
Which of the following are types of automobile insurance coverage under a personal auto policy (PAP)? I. Uninsured motorists II. Liability insurance III. Medical payments IV. Property damage
II and IV
Which of the following characteristics of inland marine coverage are explained correctly? I. Personal property floater risks are not eligible for coverage under inland marine policies. II. Many of the same items may be covered under an inland marine policy or as an endorsement to a homeowners policy. III. If a fishing boat is too large to be covered under a homeowners policy, it can be covered under an inland marine form called a boatowners policy. IV. Silverware and golfing equipment may be covered under an inland marine policy.
Both I and II
Which of the following covered losses are included in a personal automobile policy? I. Injuries to the insured or family members II. Damage to the insured's vehicle
HO-3
Which of the following forms insures the dwelling and other structures on an open-perils basis?
I, II, and III
Which of the following homeowners coverage amounts are specified as a percentage of the Coverage A amount? I. Coverage B II. Coverage C III. Coverage D IV. Flood insurance rider
HO-6
Which of the following homeowners insurance forms is used for condominium owners?
The friends of the insured who are not in the care of the insured
Which of the following individuals are NOT insured under Section II of homeowners policies?
Auto
Which of the following is a common property coverage that can be included in a businessowners policy (BOP)?
Boiler and machinery
Which of the following is a common property coverage that can be included in a businessowners policy (BOP)?
Inland marine
Which of the following is a common property coverage that can be included in a businessowners policy (BOP)?
Boiler and machinery
Which of the following is a common property coverage that can be included in a commercial package policy?
Boiler and machinery insurance
Which of the following is a common property coverage that can be included in a commercial package policy?
Theft by customers
Which of the following is a common property coverage that can be included in a commercial package policy?
II only
Which of the following is covered under Coverage B: Other Structures of the HO-2, HO-3, and HO-8 homeowners forms? I. Structures attached to the dwelling II. Garages and other structures that are detached from the dwelling III. Land IV. Structures used for business purposes or those that are rented to anyone other than a tenant of the residence
The law of large numbers is necessary to make losses reasonably predictable, and there aren't that many homes of very high value.
Which of the following is the main reason there are only a few insurance companies that provide coverage for very high-value homes?
Open-perils forms cover all perils unless specifically excluded.
Which of the following is true about the various HO forms?
The CPP is designed for larger businesses and is offered at a discount from a collection of monoline forms.
Which of the following is true for property coverage in a commercial package policy (CPP)?
II, III, and IV
Which of the following is true for property coverage in a commercial package policy (CPP)? I. A CPP provides broader coverage but is a bit more expensive than a collection of monoline forms. II. Customization is allowed in order to modify the standard CPP. III. The standard CPP includes building, contents, and liability coverage. IV. The CPP is designed for larger businesses.
IV only
Which of the following is true for property coverage in a commercial package policy (CPP)? I. A CPP provides broader coverage but is a bit more expensive than a collection of monoline forms. II. No customization is allowed, as all potential risks are covered in the standard CPP. III. The standard CPP includes building, contents, and commercial automobile coverage. IV. The CPP is designed for larger businesses.
I and II
Which of the following is true for property coverage in a commercial package policy (CPP)? I. A CPP will be offered at a discount from a collection of monoline forms. II. Customization is allowed in order to modify the standard CPP. III. The standard CPP includes building, contents, and commercial automobile coverage. IV. The CPP is designed for smaller businesses.
None of these
Which of the following items are covered without a dollar limit under the personal property provision of a homeowners policy?
Lawyer
Which of the following occupations would likely need errors and omissions insurance?
I and II
Which of the following perils is ordinarily covered in an open-perils HO-3 policy? I. Ice damage II. Lightning III. Flood IV. Earthquake
The friends of the insured who are not in the care of the insured
Which of the following persons are NOT insured under Section II of homeowners policies?
Inland marine policies
Which of the following policies does NOT include liability coverage?
I, III, and IV
Which of the following policy sections do homeowners and auto policies share? I. Liability coverage II. Comprehensive coverage III. Medical payments coverage IV. Duties after a loss
An insurance agent
Which of the following professionals would likely need errors and omissions insurance?
Financial planner
Which of the following professionals would likely need errors and omissions insurance?
An oncologist
Which of the following professionals would likely need malpractice insurance?
Chiropractor
Which of the following professionals would likely need malpractice insurance?
Registered nurse
Which of the following professionals would likely need malpractice insurance?
The coverage is designed to protect against all perils except those specifically excluded from coverage.
Which of the following statements best defines open-perils coverage?
II and III
Which of the following statements concerning the difference between malpractice insurance and errors and omissions (E&O) insurance are CORRECT? I. Only malpractice insurance is considered a professional liability contract. II. Malpractice insurance is generally used when conduct may result in bodily harm. III. E&O insurance provides protection against the deficient acts of a professional who handles money. IV. The insurance company is not permitted to settle claims out of court on behalf of the professional with regard to malpractice insurance.
I and II
Which of the following statements regarding Coverage B of a homeowners policy is CORRECT? I. Coverage B provides coverage for small detached structures on the dwelling property. II. The limit on Coverage B is typically a percentage of the Coverage A limit. IV. Coverage B provides coverage for motorized land vehicles used off the premises.
II, III, and IV
Which of the following statements regarding Coverage C: Personal Property within a standard HO-3 homeowners insurance policy are CORRECT? I. The limit on Coverage C is 50% of the Coverage A limit, and items are covered at replacement cost value. II. Furs, stamp collections, jewelry, and coin collections are examples of types of personal property that have only limited coverage. III. Animals, birds, fish, credit cards, motorized land vehicles used off the premises, property of roomers or boarders not related to the insured, and articles specifically described and insured by other policies such as a boat are all excluded items. IV. The actual cash value is the depreciated value of personal property per an internal insurance company table and not the value of the property after depreciation for income tax purposes.
I and III
Which of the following statements regarding Coverage E and Coverage F within a standard homeowners insurance policy is CORRECT? Medical payments coverage (Coverage F: Medical Payments to Others) will automatically pay for bodily injuries, regardless of fault, typically up to $1,000 per occurrence on or off the premises. I. Personal liability coverage (Coverage E: Personal II. Liability) protects the insured homeowner and all resident family members against personal liability for bodily injury and property damage that may occur on or off the premises due to negligence, up to $300,000 per occurrence. III. Coverage E may cover the insured for injuries or property damage caused while playing golf.
It is used for protection of property that is in transit.
Which of the following statements regarding inland marine insurance is true?
I, II, III, and IV
Which of the following statements regarding malpractice and errors and omissions (E&O) insurance is CORRECT? I. Malpractice insurance is generally used where the deficient conduct of the insured may result in bodily harm (e.g., a physician, surgeon, or dentist). II. E&O insurance is coverage that provides protection against deficient acts of a professional who handles money. III. Malpractice insurance allows the insurance company to settle claims out of court on behalf of the professional. IV. Most financial services professionals, including financial planners, will have E&O insurance at either the individual or group level.
Only a limited number of companies issue professional liability insurance policies.
Which of the following statements regarding malpractice insurance is CORRECT?
Both I and II
Which of the following statements regarding personal auto policy (PAP) Part B Medical Payments coverage is CORRECT? I. Part B of the PAP provides payment for the reasonable and necessary medical expenses of an insured as a result of an automobile accident. II. The insureds under Part B include the named insured, spouse, and any family members while they are occupying a motor vehicle, or when, as a pedestrian, they are struck by a vehicle.
Both I and II
Which of the following statements regarding professional liability insurance is CORRECT? I. Professional liability insurance covers a wide variety of insurance policies for many occupations and protects against liability for failing to use the degree of skill expected of a person in a particular occupation. II. Professional liability insurance includes both medical malpractice insurance and errors and omissions insurance.
Farm-use vehicles generally have higher premiums.
Which of the following statements regarding the basis for policy premiums on a personal automobile policy (PAP) is NOT correct?
II and III
Which of the following statements regarding the replacement cost coverage of the standard homeowners form is CORRECT? I. The standard homeowners form will provide replacement cost coverage for a partial loss up to the policy limit, minus any deductible if the home is insured for at least 80% of the purchase price. II. The standard homeowners form will cover the cost of required repairs for a partial loss up to the policy limit, minus any deductible without any deduction for depreciation if the home is insured for at least 80% of the replacement cost of the dwelling. III. Financial planners need to recommend at least 100% of the replacement cost value of the home with regard to homeowners insurance coverage recommendations.
They commonly require a base policy with a minimum of $1 million of liability coverage.
Which of the following statements regarding typical umbrella liability policies is NOT true?
Workers' compensation insurance
Which of the following types of insurance provides benefits to employees who are injured on the job?
Personal property damaged in an auto accident
Which of the following types of loss is NOT covered in a standard personal auto policy (PAP)?
Actual cash value
With a standard personal auto policy (PAP), on which criteria are damages based?
Homeowners coverage on both homes, watercraft coverage, an inland marine policy, and a large umbrella policy, at a minimum
Your clients have a penthouse in New York where they spend several months per year, as well as a home in Virginia where they typically spend the winter. They regularly have their butler move their favorite art and collectibles between houses. In addition, they frequently travel for business overseas. Part of the business includes entertaining international guests and hosting formal events and yacht parties. The wife carries her expensive jewelry when they travel. While at hotels, they keep the jewelry in the hotel safe. Which combination of coverages should they consider that would best meet their needs?
HO-8
Your clients recently found the home they want to buy. It is 80 years old with beautiful hand-carved woodwork throughout, a marble fireplace, skillfully done plasterwork, and exceptional exterior brickwork. It is in an old part of the city, which is seeing a rebuilding and renovation surge. Because of the location, however, the house is a bargain. To build it now would cost more than twice what they will be paying for it. Which of the following forms of property insurance will your clients likely be purchasing to cover this home?
$50,000
Zhang has a personal auto policy, and the liability coverage is displayed as 100/300/50. How much property damage liability coverage does Zhang have?