FL P&C Fire and Allied Lines Quiz

The Jones family spends $500 every month on groceries. A fire leaves their kitchen unusable, so they eat their meals in restaurants while the kitchen is being repaired. They spend $2,000 in one month. Their dwelling policy includes coverage for additional living expenses. How much of their expenses will the insurer pay? $1,500 $500 $2,000 nothing

$1,500

Regina rents a car while her car is undergoing repairs. Unless an endorsement changes the limits, Regina's personal auto policy (PAP) will cover her auto rental expenses up to: $50 per day with a $500 maximum $75 per day with a $600 maximum $20 per day with a $600 maximum $20 per day with a $500 maximum

$20 per day with a $600 maximum Transportation expenses are covered up to $20 per day, up to a maximum of $600. An endorsement can be added to provide higher limits.

Earl's businessowners policy has a liability and medical expenses limit of $300,000. Five customers are injured in an explosion. Each is awarded $150,000 in damages. How much will Earl's insurer pay in response to this claim? $1,500,000 $750,000 $150,000 $300,000

$300,000 The liability and medical expenses limit applies per occurrence, so the insurer's maximum obligation for injuries arising from this explosion is $300,000.

Before buying a motorcycle, Luciano has the miscellaneous type vehicle endorsement added to his personal auto policy (PAP), but he excludes the passenger hazard. How does this affect his coverage? There is no coverage for other's property on the motorcycle. Bodily injury to a passenger is excluded. Bodily injury to a passenger is covered to meet state requirements. Bodily injury to a passenger is excluded only when the passenger is in a sidecar.

Bodily injury to a passenger is excluded. When the passenger hazard is excluded from the PAP, the policy does not cover liability for bodily injury to a passenger riding on the described vehicle.

Dalton rents an unfurnished house. Dalton's dwelling policy is most likely to have Coverage C-Personal Property and: Coverage C-Personal Property Coverage B-Other Structures Coverage E-Additional Living Expense Coverage D-Fair Rental Value

Coverage E-Additional Living Expense Coverage E covers the additional living expenses-less normal expenses-that Dalton might incur to maintain his normal standard of living while he is unable to live in the house because of damage by a covered peril.

An equipment breakdown policy typically would NOT cover which of these incidents? Failure of a punch press due to a broken ram. Failure of a conveyer belt due to extended use. Failure of a hydraulic lift due to a vacuum leak. Failure of a die cutter due to an electrical short. .

Failure of a conveyer belt due to extended use. An equipment breakdown policy defines breakdown to include pressure or vacuum equipment failure, mechanical failure, and electrical failure. It excludes coverage for equipment parts that are normally subject to periodic replacement or routine maintenance.

Which is NOT a component of a typical, stand-alone business auto policy? Common policy conditions form Nuclear energy liability exclusion endorsement Garage coverage form Business auto declarations

Garage coverage form A typical stand-alone BAP includes business auto declarations, the business auto coverage form, the common policy conditions form, and the nuclear energy liability exclusion endorsement. The garage coverage form is designed for auto dealers and provides auto liability and general liability coverage. The auto dealers form, introduced in 2013, is intended to replace the garage coverage form.

Ernie wants appropriate insurance coverage on his used car business. He only sells used cars and is not committed to a particular brand. Which statement is correct? He is ineligible for garage coverage and must buy a business auto policy instead. He is ineligible for garage coverage because he is a franchised dealer. He is eligible for garage coverage because he is a disenfranchised dealer. He is eligible for garage coverage because he is a nonfranchised dealer.

He is eligible for garage coverage because he is a nonfranchised dealer. The garage policy may be used for nonfranchised auto dealers, a category that includes used car dealers like Ernie.

Which statement is correct about the businessowners policy coverage for personal and advertising injury? It covers a claim for tort liability. It covers damage to a business fixture. It covers accidental damage to a customer's property. It covers all bodily injuries.

It covers a claim for tort liability. Personal and advertising injury includes torts such as false arrest, detention, or false imprisonment.

Nathan's car has a flat tire. His personal auto policy (PAP) has towing and labor costs coverage with a $50 limit. The towing company charges $40 to change the tire in Nathan's driveway. What will Nathan's insurer do? Reimburse Nathan $40 for the charge. Deny coverage because the car was not towed. Pay Nathan $50. Deny coverage because the service was rendered at Nathan's home.

Reimburse Nathan $40 for the charge. The insurer will pay up to the policy limit for towing and labor performed at the place of disablement.

Gretchen's travel agency invites recent customers to a presentation to promote sales of times-share vacation homes. She serves cocktails and snacks to the guests. A guest has an auto accident on the way home and sues Gretchen for his intoxication. How will the liability coverage of Gretchen's BOP respond? The BOP excludes coverage for host liquor liability. The BOP will cover the claim. The BOP excludes liability for injuries caused by intoxication. The BOP covers liquor liability only if the insured manufactures the liquor.

The BOP will cover the claim. The BOP's liquor liability exclusion applies only if the insured is in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages. Otherwise, it provides host liquor liability coverage for events like this.

Keri's business is protected by an unendorsed businessowners policy. A computer system controls access to the premises. The control system malfunctions, and burglars enter the building. How does the BOP respond? The power surges exclusion precludes coverage. The computers and data exclusion precludes coverage. The utility services exclusion precludes coverage. The loss is covered by the computers and data coverage extension.

The computers and data exclusion precludes coverage. If electronic locks fail to prevent burglars from entering the premises, the loss from theft is not covered due to the computers and data exclusion. Theft is not a specified cause of loss in the BOP.

Adrian leaves his workbench to help a customer. When he returns, he discovers that his soldering iron has fallen into a wastebasket and started a fire. Adrian rents his shop and has a businessowners policy with only business personal property and liability coverage. Why will his BOP cover the landlord's claim for damage to the building? The fire damage was caused by Adrian's negligence. The lease agreement makes Adrian responsible for fire damage to the building. The BOP always covers property damage from fire. The landlord's policy excludes fire damage caused by a tenant.

The fire damage was caused by Adrian's negligence. The BOP's property damage liability coverage covers the insured's tort liability for damage to leased premises from fire or explosion. This is fire legal liability coverage.

Glenn was painting trim over the entry to the apartment building he owns when his scaffold collapsed. Several people were injured. Who can recover medical expenses under Glenn's businessowners policy? a guest who was entering the building a tenant who was walking under the scaffold when it collapsed Glenn an employee who was working under the scaffold

a guest who was entering the building an employee who was working under the scaffold The BOP's medical expenses coverage does not apply to the bodily injury of an insured, a tenant, or persons hired to do work for the insured.

A hot-air balloon counters the force of gravity by using: tire pressure a rotary wings a dynamic lift a static lift

a static lift Hot-air balloons and blimps use static lift to counter the force of gravity.

What does an ISO commercial articles coverage form insure? perishable goods in transit scripts for television commercials camera equipment and musical instruments mobile equipment used in construction

camera equipment and musical instruments The commercial articles coverage form is used to insure either camera equipment or musical instruments used commercially or by nonprofit organizations.

Josefa sells her house. She wants to end her homeowners insurance policy nine months before the end of the policy term and get a refund of the unused premium. What must she do to end coverage? subrogate cancel nonrenew Abrogate

cancel Cancellation terminates a policy before its normal expiration date.

What type of business is ineligible for a BOP regardless of its size? wholesaler motel parking garage restaurant

parking garage Parking lots or garages are ineligible for a BOP regardless of their size.

Earl's businessowners policy has a liability and medical expenses limit of $300,000. Five customers are injured in an explosion. Each is awarded $150,000 in damages. How much will Earl's insurer pay in response to this claim? $750,000 $150,000 $1,500,000 $300,000

$300,000 The liability and medical expenses limit applies per occurrence, so the insurer's maximum obligation for injuries arising from this explosion is $300,000.

Which person would NOT be insured by a company's BOP liability coverage? Melanie, wife of the named insured Pat, domestic servant for the named insured Toni, board president for the insured business Michael, business partner of the named insured

Pat, domestic servant for the named insured If the named insured is an individual, the named insured and the insured's spouse are covered, but only with respect to the conduct of the business. If the insured is a partnership or joint venture, its members and partners and their spouses are covered, but only with respect to the conduct of the business.

Elizabeth buys a 1999 pickup truck for occasional removal of household trash and yard debris. In light of the vehicle's age and intended use, how will Elizabeth likely decide to insure the truck? She will forgo collision coverage on the truck. She will forgo other-than-collision coverage on the truck. She will add nonowned auto physical damage coverage. She will add temporary substitute auto physical damage coverage.

She will forgo collision coverage on the truck. People typically do not buy collision coverage on older vehicles with diminished value, or when there is no lienholder to require physical damage coverage.

Gretchen's travel agency invites recent customers to a presentation to promote sales of times-share vacation homes. She serves cocktails and snacks to the guests. A guest has an auto accident on the way home and sues Gretchen for his intoxication. How will the liability coverage of Gretchen's BOP respond? The BOP will cover the claim. The BOP covers liquor liability only if the insured manufactures the liquor. The BOP excludes liability for injuries caused by intoxication. The BOP excludes coverage for host liquor liability.

The BOP will cover the claim. The BOP's liquor liability exclusion applies only if the insured is in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages. Otherwise, it provide host liquor liability coverage for events like this.

Approximately what percentage of flood losses occurs in moderate- to low-risk flood zones? about 10 percent about 20 percent less than 5 percent about 50 percent

about 20 percent More than 20 percent of flood losses occur in moderate- to low-risk flood zones.

Which pollution-related liability claim would an ISO businessowners policy cover? carbon-monoxide fumes from a defective furnace that make motel guests ill fumes from a manufacturing plant that make nearby residents ill dry-cleaning chemicals that leaked from a tank that contaminate a neighboring property fuel oil that leaked from an underground tank that pollutes a neighboring property

carbon-monoxide fumes from a defective furnace that make motel guests ill Despite the breadth of the BOP's pollution exclusion, it covers bodily injury from fumes emitted by a building's heating equipment.

A wide variety of products owned by various shippers are transported aboard the Alejandra, an oceangoing vessel. In the language of ocean marine insurance, what are these goods aboard the Alejandra collectively referred to as? payload cargo consignments loading

cargo The goods carried on a ship are referred to as cargo.

In a trailer interchange agreement, a motor carrier agrees to: avoid using another carrier's trucks exchange trailers with another carrier avoid using another carrier's trailers exchange trucks with another carrier

exchange trailers with another carrier A trailer interchange agreement is a contract under which a motor carrier agrees to exchange trailers with another carrier and to indemnify the other carrier for any losses.

A paint booth explosion halts production at Wilfred's manufacturing plant. Wilfred paid some employees overtime to repair the damage and return the plant to operation as soon as possible. The overtime pay costs less than the income he would have lost without the overtime work. Wilfred's business income insurance will cover the overtime pay if he has: either the business income and extra expense coverage form or the business income coverage form without extra expense extra expense limits high enough to meet coinsurance requirements the business income and extra expense coverage form alone the business income coverage form without extra expense alone

the business income and extra expense coverage form alone Both business income forms cover extra expenses to the extent they reduce the business income loss.

Which homeowners insurance form that can be used to insure a single-family home provides named perils coverage on both the dwelling and personal property? HO 4 HO 2 HO 5 HO 3

HO 2 The Homeowners Policy Broad Form 2 (HO 2) insures the dwelling, other structures, and personal property on a named perils basis.

Ernie wants appropriate insurance coverage on his used car business. He only sells used cars and is not committed to a particular brand. Which statement is correct? He is ineligible for garage coverage and must buy a business auto policy instead. He is ineligible for garage coverage because he is a franchised dealer. He is eligible for garage coverage because he is a disenfranchised dealer. He is eligible for garage coverage because he is a nonfranchised dealer.

He is eligible for garage coverage because he is a nonfranchised dealer. The garage policy may be used for nonfranchised auto dealers, a category that includes used car dealers like Ernie.

Josephine's novelty store has a businessowners policy that covers the building and business personal property. When will the personal and advertising injury liability coverage address a claim? A window display falls and breaks the plate glass window. A clerk accidentally spills paint on a customer's coat. A customer falls in the store and breaks an ankle. Josephine detains a suspected shoplifter who turns out to be innocent.

Josephine detains a suspected shoplifter who turns out to be innocent. Personal and advertising injury includes the offenses of false arrest, detention, or false imprisonment.

Lightning ignites a fire at the Smith Motors garage which damages seven automobiles owned by customers. Smith's garagekeepers coverage has a $1 million limit and a $1,000 deductible. How much of the deductible will be applied to this loss? $70,000 None $1,000 $7,000

None While the limit of insurance for garagekeepers coverage is set for each insured location and not per auto, the deductible applies to each covered auto. The deductible does not apply for losses caused by fire, lightning, explosion, or other peril covered as a comprehensive loss.

Which person would NOT be insured by a company's BOP liability coverage? Michael, business partner of the named insured Melanie, wife of the named insured Pat, domestic servant for the named insured Toni, board president for the insured business

Pat, domestic servant for the named insured If the named insured is an individual, the named insured and the insured's spouse are covered, but only with respect to the conduct of the business. If the insured is a partnership or joint venture, its members and partners and their spouses are covered, but only with respect to the conduct of the business.

The businessowners policy is designed to cover risks for what size of business? Large Medium and large Small Small and medium

Small and medium The businessowners policy is a package policy that covers property and general liability risks for small and medium-sized businesses. Eligibility for coverage is based on physical size and annual revenue.

Adrian leaves his workbench to help a customer. When he returns, he discovers that his soldering iron has fallen into a wastebasket and started a fire. Adrian rents his shop and has a businessowners policy with only business personal property and liability coverage. Why will his BOP cover the landlord's claim for damage to the building? The landlord's policy excludes fire damage caused by a tenant. The lease agreement makes Adrian responsible for fire damage to the building. The BOP always covers property damage from fire. The fire damage was caused by Adrian's negligence.

The fire damage was caused by Adrian's negligence. The BOP's property damage liability coverage covers the insured's tort liability for damage to leased premises from fire or explosion. This is fire legal liability coverage.

Clare, a convenience store owner, accepts a $100 bill from a customer who buys a pack of cigarettes. Her bank tells her the bill is counterfeit. Does her businessowners policy cover this loss? No, because the policy excludes coverage for illegal goods. No, because the policy excludes coverage for any type of monetary loss. Yes, because the policy provides up to $1,000 coverage for loss due to the insured having accepted counterfeit money. Yes, because the policy provides limited coverage for loss due to the insured's good faith acceptance of illegal goods.

Yes, because the policy provides up to $1,000 coverage for loss due to the insured having accepted counterfeit money. The money orders and counterfeit money additional coverage provides $1,000 coverage for loss due to the insured having accepted counterfeit money.

Although the National Flood Insurance Policy (NFIP) is a single-peril policy that covers only flood, the peril as defined includes flooding of the insured's property and at least one other property from all the following causes EXCEPT: a broken water main rapid runoff of surface waters mudflow an overflowing river

a broken water main The NFIP's definition of flood does not include inundation resulting from a broken water main.

Therese signs many contracts in her business. Which is an insured contract as defined by her businessowners policy? a contract to offer her product at a certain price a release of claims under an insurance settlement an agreement to provide services to a customer a lease on the space for her business

a lease on the space for her business A lease of premises agreement is an insured contract.

Twenty percent of Aubrey's cargo was damaged when the ship transporting it encountered a violent storm in the Bermuda triangle. In terms of ocean marine insurance, what is this partial loss to Aubrey's cargo called? a particular average a salvage a general average an adventure

a particular average In the archaic language of ocean marine insurance, a partial loss to one party's property is a particular average.

The collapse additional coverage in a homeowners policy applies only when: all or part of the building falls or caves in a structural building component weakens earth movement damages a building a flood causes the collapse

all or part of the building falls or caves in For collapse coverage to apply, all or part of the building must fall or cave in.

Annette is beginning to sell some of her handmade furniture online. She wants an insurance policy that will cover her interest in any property that she ships during the coming year. Given these facts, what does Annette need? an annual transit policy a trip transit policy an installation floater a motor truck cargo policy

an annual transit policy An annual transit policy, which generally covers an owner's shipments of its own property, covers all good shipped during a one-year period.

Whose insurance needs are businessowners policies specifically designed to meet? businesses that are too large for a commercial package policy small to medium-sized businesses with typical exposures home-based businesses businesses that are too small for a homeowners policy with a HOBIZ endorsement

businesses that are too large for a commercial

All of the following are one of the standard flood insurance policies available from the National Flood Insurance Program EXCEPT: businessowners form residential condominium building association policy form dwelling form general property form

businessowners form There is no businessowners flood form. Depending on the nature of the business, a business would qualify for coverage under one of the other forms.

A fire damages Millard's house. Because Coverage A of his homeowners policy covers dwelling property at replacement cost, Millard wants all of the damaged property to be treated as part of the dwelling. Which one of the following damaged items is considered part of the dwelling? Oriental rug in Millard's family room unattached tool shed power lawn mower central air-conditioning system

central air-conditioning system Coverage A covers items permanently attached to the dwelling, such as a central-air conditioning system.

Which of the following forms is NOT an essential part of a complete ISO commercial property policy? commercial general liability coverage form common policy conditions form declarations causes of loss form

commercial general liability coverage form A complete property policy would not include a general liability coverage form. However, a commercial package policy would likely have both property and liability coverage forms.

An equipment breakdown policy does NOT cover which of the following? damage due to spoilage damage to data and media damage from smoke damage due to interruption of utilities

damage from smoke An equipment breakdown policy excludes coverage for damage of equipment due to smoke. Damage to media and data is covered, though it is subject to sublimits.

Which is NOT one of the businessowners policy's three categories of liability coverage? business liability coverage damage to the property of others supplementary payments medical expenses

damage to the property of others The three categories of coverage under the BOP are business liability coverage, supplementary payments, and medical expenses.

In buying aircraft insurance, Joanne finds that she must select among several types of hull coverage. Which one of these provides the broadest coverage? ground dead storage not in flight ground and flight not in motion

ground and flight Ground and flight coverage is the broadest aircraft hull coverage option.

Arnold's Auto Repair Shop's garage policy does NOT cover it for loss sustained by a vehicle that it: is selling to a customer hires is painting for a customer owns

is painting for a customer The physical damage coverage of the garage policy applies to vehicles that the insured owns, hires, or holds for sale. By adding garagekeepers coverage to its garage policy, an insured can also protect customers' vehicles in its care, custody, or control.

The average terms of the ocean marine insurance policy covering Cary's cargo provide "total loss only" coverage. This means that an insurance recovery is: limited when cargo is a partial loss limited to situations in which cargo is a total loss because of a covered peril unavailable when cargo is a total loss available when cargo is a total loss regardless of the peril involved

limited to situations in which cargo is a total loss because of a covered peril When the average terms of a marine policy provide total loss only coverage, insurance recovery is limited to situations in which cargo is a total loss as a result of a covered peril.

Everette's ski shop does most of its business in the winter. He replenishes his stock during the fall, when he is often underinsured, and keeps a minimal inventory during the spring and summer, when he is actually overinsured. What property endorsement would suit his needs for coverage? weather guard inflation guard foliage peak season

peak season The peak season endorsement could establish a higher limit for a specified period of time-such as the winter ski season in this case-and a lower limit of coverage for the rest of the year.

Under the Personal Auto Policy, a nonowned auto is one that the insured uses but does not own the insured neither owns nor uses a member of the insured's family owns or uses the insured owns but does not use

the insured neither owns nor uses The PAP recognizes two types of nonowned autos: vehicles not owned by or not regularly available to the named insured or a family member; and an auto or trailer the insured does not own but uses as a temporary substitute for a covered auto.

Which of the following correctly compares benefits and premiums of a flood insurance policy purchased directly from the National Flood Insurance Program (NFIP) and one purchased through a private insurer? Coverage and premiums are the same from either source. Premiums are lower if purchased directly from the NFIP, but benefits are the same. Because competition is greater, premiums are lower through a private insurer but the benefits are the same. Private insurers can provide better coverage at lower rates.

Coverage and premiums are the same from either source. Whether the NFIP or a write-your-own (WYO) insurer issues the policy, the coverage and premium are identical.

Oscar rents a car for a business trip and strikes a pedestrian. His businessowners policy includes a hired auto and nonowned auto liability endorsement. However, the endorsement's schedule only indicates coverage for hired autos. How will the policy respond to the pedestrian's claim for medical expenses? It will provide collision coverage on the hired auto but will not cover the claim. It will cover the claim because the endorsement applies to a hired auto. It will not cover the claim because it involved a nonowned auto. It will cover the claim even without the endorsement.

It will cover the claim because the endorsement applies to a hired auto. The BOP's hired auto liability coverage will cover the claim for bodily injury arising out of the use of the rented auto.

Joe's personal auto policy (PAP) has a $100 deductible for collision coverage on his sedan but no physical damage coverage on his old truck. When the truck is being repaired, Joe borrows Robin's new sports car and crashes it. Robin's collision coverage has a $1,000 deductible. Who will pay for the sports car's repairs? Joe has no applicable collision coverage and must pay for all repairs. Robin's policy will pay all but $1,000 and Joe will pay $1,000. Joe's policy will pay all but $100, and Joe will pay $100. Robin's policy will pay all but $1,000, Joe's policy will pay $900, and Joe will pay $100.

Robin's policy will pay all but $1,000, Joe's policy will pay $900, and Joe will pay $100. Because the sports car was a temporary substitute for an owned auto, Joe's policy considers it a nonowned auto, and Joe gets the broadest physical damage coverage available on any of his autos. However, because insurance follows the car, Robin's policy provides primary coverage.

Which statement is correct about businessowners policy coverage for loss of income from a business interruption? The BOP covers neither business income nor extra expense coverage. The BOP provides extra expense coverage but not business income coverage. The BOP covers business income and extra expense coverage when the business premises are inaccessible. The BOP covers business income and extra expense coverage only when the business suffers critical damage.

The BOP covers business income and extra expense coverage when the business premises are inaccessible. The BOP covers losses due to a business interruption when the business premises are inaccessible. It also covers the expenses incurred in making the business accessible again.

The errors and omissions coverage in an equipment breakdown policy is most likely to apply in which of the following situations? The agent who sold the policy overstated its coverage. The insurance company mistakenly issued the wrong policy form to the insured. The insurance agency manager mistakenly credited the policy sale to a different agent than the one who sold the policy. The insured made a mistake in describing the property location on the application.

The insured made a mistake in describing the property location on the application. Errors and omissions coverage insures a loss when the form would not otherwise provide coverage due to an unintentional error by the applicant/insured such as incorrectly describing the property owner or the location where coverage was intended to apply.

What is the purpose of the symbols listed in a business auto policy (BAP)? They identify the insurance company that provides the coverage. They refer to other parts of the policy. They indicate the coverages that apply to the insured vehicle(s). They indicate the solvency rating of the insurer.

They indicate the coverages that apply to the insured vehicle(s). The BAP uses numerical symbols to indicate which autos are protected by each coverage listed in Item Two of the declarations.

Tia and her sister Kara pool their summer earnings to buy a car and pay for a personal auto policy (PAP). How can the policy cover both sisters? They must add the joint ownership coverage endorsement. They must register the car's title in both names. They must live in the same state. They must be named in the declarations.

They must add the joint ownership coverage endorsement. An unendorsed PAP does not recognize joint ownership except for a married couple. However, the joint ownership coverage endorsement provides coverage for a vehicle that is owned by two or more resident relatives.

Susanna's DP 1 policy covers losses from vandalism if: a premium for the group of extended coverage perils is listed in her policy's declarations the vandalism and malicious mischief exclusion has been deleted from her policy the vandalism and malicious mischief are intentionally committed a premium for vandalism and malicious mischief is listed in the policy's declarations

a premium for vandalism and malicious mischief is listed in the policy's declarations Vandalism and malicious mischief are covered perils if a premium is listed in the declarations for these perils.

Which of the following incidents would be covered by the equipment insurance breakdown policy? basement flooding causes a company's heating system to malfunction worn-out bearings cause a machine to stop functioning a surge in electricity damages a company's mainframe computer a boiler's tubes are pitted with scale and must be replaced.

a surge in electricity damages a company's mainframe computer A covered breakdown includes a failure in pressure or vacuum equipment or a mechanical or electrical failure (including surges). Coverage is excluded for portions of equipment normally subject to periodic replacement, routine maintenance, or general wear-and-tear.

Darnell manufactures building components at a constant rate. When sales are slow, the finished-goods inventory increases, and vice versa. Sales depend on the current construction market. Therefore, the policy covering Darnell's fluctuating inventory should include: a building laws endorsement a peak season limit of insurance endorsement an inflation guard a value reporting form

a value reporting form The reporting form coverage available with the value reporting form can be useful to a business with unpredictable, fluctuating property values at risk.

In the equipment breakdown policy, which of the following losses is subject to a sublimit regardless of the policy's coverage limits? spoilage losses data and media losses business income losses property losses

data and media losses Regardless of the coverage limit shown in the declarations page, the equipment breakdown form includes $25,000 sublimits for certain losses including data and media losses.

Kathleen's Victorian house is not eligible for coverage under a homeowners insurance policy. Which policy might provide comparable property coverage? dwelling policy standard fire policy umbrella policy Floater

dwelling policy A dwelling policy is often used for residences that fail to meet eligibility requirements for homeowners insurance.

Which of the following causes of a mechanical breakdown of equipment would be covered? freezing caused by record-breaking frigid weather flood electrical arcing explosion of unconsumed fuel

electrical arcing Breakdowns due to power surges, including those caused by electrical arcing, are a covered peril under the equipment breakdown form. The other causes of loss in this question are not covered perils.

A benefit of the extra expense additional coverage in a businessowners policy is that it: applies when property is damaged by any cause is not subject to the limits of insurance applies no matter how long repairs take requires a minor coinsurance payment

is not subject to the limits of insurance Extra expense coverage is not subject to the limits of insurance but is provided in addition to those limits.

Which of the following does NOT qualify as covered equipment under the equipment breakdown coverage form? computers vacuum tank electric motors laboratory beakers

laboratory beakers Though used in the course of a lab's business, glassware does not constitute equipment under the equipment breakdown form. Beakers may break, but they do not break down.

Although it addresses common terms that apply to all commercial policy forms, the commercial policy conditions form does NOT include: cancellation provisions no benefit to bailee conditions transfer of rights and duties under the policy premium payment terms

no benefit to bailee conditions Because the no benefit to bailee condition relates to situations in which someone else has custody of the insured's property, that condition applies only to property insurance.

Dora hires Shaun to clean the terra-cotta tiles in her home's foyer. Shaun's work is poor, so Dora sues him to recover the cost of the tiles he ruined. Shaun's businessowners policy will: deny coverage for any loss not cover the damage to the ruined tiles cover the cost to replace the ruined tiles and reimburse Dora's labor costs reimburse Dora's labor costs

not cover the damage to the ruined tiles The BOP excludes coverage for property damage to a part of real property on which the insured is performing work if the damage is caused by the work.

Gabriela learns that her wholesale firm sells a toy that contains lead. She asks all retailers who bought the toy to return the unsold units from their inventory. She offers a refund on all returns. Gabriela's businessowners policy will: cover the expenses of the product recall to the extent necessary to prevent bodily injury not cover the expenses of the product recall cover the expenses of the product recall if she proceeded with the insurer's approval cover the expense of the product recall to the extent necessary to prevent property damage

not cover the expenses of the product recall The BOP does not cover expenses associated with a product recall because of a known or suspected defect in the insured's product.

Arnulfo takes his computer to Patti's shop for repairs. Patti accidentally erases the hard drive, so Arnulfo sues her for the loss of the data. Patti's ISO businessowners policy will: cover the loss because it involves personal injury not cover the loss because it arose from a professional service not cover the loss of the electronic data cover the damage to the hard drive and its data

not cover the loss of the electronic data The BOP does not cover damages arising out of the loss of electronic data.

Marjorie has a mail-order business and insures her building and its contents under a building and personal property coverage form. The special causes of loss form applies to all covered property. While taking inventory, Marjorie discovers that several cases of stock are missing, so she submits a theft claim. Her claim is: not covered because the cause of the missing inventory is not known not covered because the loss is only covered by a crime policy covered because covered property is missing not covered because the special causes of loss form does not cover theft

not covered because the cause of the missing An exclusion precludes coverage for missing property when the only evidence of loss is an inventory shortage. Marjorie's problem could simply be the result of a mistake in inventory records.

The liability coverage of an aviation insurance policy may show separate bodily injury limits for: domestic and international flights persons outside the aircraft and passengers passengers and crew persons outside the aircraft, passengers, and crew

persons outside the aircraft and passengers The limits of bodily injury liability may be split between bodily injury for persons outside the aircraft and bodily injury for passengers.

Equipment breakdown coverage typically insures damaged equipment at what value? actual value replacement value market value cash value

replacement value The equipment breakdown coverage typically insures damaged equipment at its replacement value. However, older equipment may be insured for its actual cash value through a special endorsement.

Which of the following is a coverage option that is available in a standard equipment breakdown policy? internal dry rot spoilage damage corrosion smoke damage

spoilage damage As long as the insured is legally responsible for the damaged property, spoilage damage is a covered peril. Dry rot, corrosion, and smoke damage are not coverage options.

The liability section of the ISO businessowners policy has an aggregate limit for: property damage personal injury products and completed operations fire legal liability

products and completed operations A products-completed operations aggregate limit applies per policy period to all injury or damage from the products-completed operations hazard.

Randolph has bought grain and packaged it for sale in pet stores for the past four years. In the third year, customers claimed that the grain sickened their pets. He then discovered that he was using grain treated with a pesticide. Randolph had BOPs for each of these four years. Which BOP will cover his liability? the first three BOPs, which were in effect from the time the damage began until the time he discovered it the first BOP, which was in effect when he began using the grain the fourth year's BOP, which is still in effect the third year's BOP, which was in effect when he became aware of the injury or damage

the first three BOPs, which were in effect from the time the damage began until the time he discovered it Coverage for continuous injury is assigned to the policies in effect from the time the injury or damage first occurred until the insured became aware of the injury or damage.

After paying a vandalism claim under Sam's commercial inland marine policy, the insurer exercised its rights under the policy and attempted to recover all or part of its loss from the person who caused the covered damage and was apprehended by police. What condition in the inland marine common conditions form gives the insurer these rights? control of property concealment, misrepresentation, or fraud transfer of rights of recovery against others to the insurer loss payment

transfer of rights of recovery against others to the insurer The insurer's subrogation rights are described under the transfer of rights of recovery against others to the insurer provision.

Which coverage cannot be combined with other coverage forms under a single businessowners policy? liability crime workers compensation inland marine

workers compensation A single BOP combines coverages that might otherwise be written on separate property, liability, crime, and inland marine forms. It does not combine workers compensation coverage.

Colleen's business does not own an auto. An endorsement to her businessowners policy provides nonowned auto liability coverage. Employees use their cars to go to the post office every day to ship packages from the business. While driving to the post office, Bernice, an employee, has an accident. The injured party sues Bernice and Colleen. How will the BOP address this claim? It will cover both Colleen and Bernice. It will cover Bernice but not Colleen. It will not cover this claim because the employee's car is a hired auto, not a nonowned auto. It will cover Colleen but not Bernice.

It will cover Colleen but not Bernice. The nonowned auto coverage of the BOP's hired auto and nonowned auto liability endorsement protects the insured business for claims involving the use of an employee's auto, but it does not cover the employee who owns the auto. The employee must rely on his or her own personal auto insurance for protection.

Adeline purchased a personal articles floater that covers her ring because her homeowners policy, form HO 3, has a sublimit on theft of jewelry. Why should Adeline also cover her expensive camera under the personal articles floater? The floater has a higher deductible than her homeowners policy. The floater includes coverage for theft, which her homeowners policy would not cover. If Adeline covers her camera with a floater, she can reduce the personal property limit on her homeowners policy. The floater includes coverage for breakage, which her homeowners policy would not cover.

The floater includes coverage for breakage, which her homeowners policy would not cover. The named perils coverage of a HO 3, like most other homeowners policies, does not apply to breakage or other common causes of loss to photographic equipment.

Nola's hardware store is insured by a businessowners policy that covers her building and business personal property. Her liability coverage will NOT cover a claim that arises when: a clerk accidentally spills paint on a customer's coat a window display falls and breaks the plate-glass window Nola detains a suspected shoplifter who turns out to be innocent a customer falls in the store and breaks an ankle

a window display falls and breaks the plate-glass window The BOP covers liability for bodily injury and property damage and for personal injury, which includes false arrest, detention, or imprisonment. The broken window would be covered under Section I of Nola's BOP, which addresses property damage.

A complete commercial property policy would NOT include: commercial general liability coverage form causes of loss form(s) commercial property conditions form declarations

commercial general liability coverage form A complete property policy would not include a general liability coverage form. However, a commercial package policy would likely include both property and liability coverage forms.

Gerald's ISO commercial property policy would likely NOT include which causes of loss form? basic causes of loss form comprehensive causes of loss form special causes of loss form broad causes of loss form

comprehensive causes of loss form The three ISO causes of loss forms are basic, broad, and special; there is no comprehensive causes of loss form.

Which of the following is NOT a covered peril in an equipment breakdown policy? mechanical failure vacuum failure corrosion boiler explosion

corrosion Equipment breakdown insurance is intended to pay for unexpected breakdowns of equipment. It is not intended to pay routine expenses that are necessary to keep the equipment running properly.

Merrill's insurance agency has an ISO businessowners policy. A customer claims that Merrill failed to recommend the necessary insurance policies for his firm. What will Merrill's insurer do? pay only for advertising injury pay only for personal injury pay only for property damage deny coverage

deny coverage The BOP excludes coverage for liability arising from the insured's providing or failing to provide professional service.

Water-based paint in Vincent's hardware store would be destroyed if he loses electrical power during freezing weather. He adds the utility services-direct damage endorsement to his businessowners policy and schedules overhead transmission lines. If Vincent's store loses power because a windstorm downs power lines, what, if anything, will the policy cover? direct damage and lost business income lost business income alone direct damage alone nothing, because windstorm is not a covered peril

direct damage alone The utility services-direct damage endorsement covers loss to business property. Coverage for lost business income or extra expense requires the utility services-time element endorsement.

An interruption of electrical power could ruin the meat stored at Tyrone's Steak House. The business personal property coverage of his businessowners policy provides open perils coverage that: covers damage resulting from an interruption of utilities for more than 48 hours excludes loss of electrical power that originates away from the insured premises applies to a loss of electrical power because it is not specifically excluded covers property damage resulting from an interruption in a listed utility service

excludes loss of electrical power that originates away from the insured premises The BOP excludes coverage for a loss resulting from an interruption of power or other utility services that originates away from the insured's premises.

What kind of insurance is the coverage in an ocean marine insurance policy that protects a shipowner against a covered loss to the vessel but not to its cargo? hull insurance collision insurance physical damage insurance protection and indemnity insurance

hull insurance Hull insurance is similar to collision insurance on an auto-it protects a shipowner against a covered loss to the vessel itself (not its cargo).

Which of the following situations involving "self-inflicted injury" would be covered under an aviation insurance policy? injury incurred by a passenger fighting with a smoking passenger injury incurred by a crew member to prevent a hijacking injury incurred by a pilot who cuts his hand to obtain time off injury incurred in a domestic dispute fight between two crew members

injury incurred by a crew member to prevent a hijacking Although liability arising from intentionally inflicted injury is excluded, aviation policies cover liability for intentionally inflicted injury used to prevent a hijacking or interference with safe operations.

For BOP business liability coverage to apply to a loss, the loss need NOT arise from the insured's legal liability occur within the coverage territory. arise within the policy period. occur within a single policy period.

occur within a single policy period. Business liability coverage covers sums the insured is legally obligated to pay for bodily injury, property damage, and personal and advertising injury. It covers losses arising within the policy period and within the coverage territory. It also covers continuous injury that occurs during more than one policy period.

The declarations page of Julius's equipment breakdown policy lists a number of coverages, such as property damage, expediting expenses, business income and extra expense, and utility interruption. The word "INCLUDED" is shown next to "property damage," but it does not appear elsewhere in the declarations, nor are there any dollar limits listed on the page. Julius's policy provides coverage for: property damage, expediting expenses, business income and extra expense, and utility interruption property damage only expediting expenses, business income and extra expense, and utility interruption only every listed coverage other than property damage

property damage only For any coverage option to apply, a dollar limit or the word "INCLUDED" must be shown on the policy for that coverage. Since the word is shown only for property damage, Julius has coverage for property damage only.

The business auto policy (BAP) provides the broadest possible liability coverage when what symbol is used for liability? symbol 2 symbol 7 symbol 1 symbol 10

symbol 1 When symbol 1 is selected, any auto-whether owned, nonowned, hired, or otherwise-is protected by that coverage.

Mollie's business auto policy (BAP) must provide liability coverage for all owned, nonowned, and hired autos and physical damage comprehensive coverage for all owned private passenger autos. The declarations of her business auto policy should have: symbol 1 for liability coverage and symbol 3 for comprehensive coverage symbol 3 for liability coverage and symbol 1 for comprehensive coverage symbol 1 for liability coverage and symbol 4 for comprehensive coverage symbols 2, 8, and 9 for liability coverage and symbol 4 for comprehensive coverage

symbol 1 for liability coverage and symbol 3 for comprehensive coverage Symbol 1 shows coverage for any auto, and symbol 3 shows coverage for owned private passenger autos.

Vicky's business is located in a state that requires uninsured motorists coverage. What symbol will indicate this coverage in her business auto policy (BAP)? symbol 6 symbol 3 symbol 1 symbol 5

symbol 6 Symbol 6 denotes mandatory uninsured motorists coverage. It cannot be waived.

When business income coverage was to be added to Callie's equipment breakdown policy, the insurer required her to complete an annual report of values form. Among other things, what is this form used to determine? the value of covered equipment Callie's loss experience as regards past equipment breakdowns the amount to be paid to Callie in the event an equipment breakdown causes a loss of income whether Callie qualifies for business income coverage

the amount to be paid to Callie in the event an equipment breakdown causes a loss of income The form is used in determining the amount of the insurer's payment to the insured in case a loss involves loss of income.

Maryann's car is being towed from its parking space on the street in front of her home. The other-than-collision coverage of her personal auto policy will cover her loss if the: car was being repossessed by the lender that financed its purchase tow truck operator was unlawfully removing the car car was being towed because it was parked illegally police had a warrant to seize the car as evidence in a criminal investigation

tow truck operator was unlawfully removing the car Theft is a covered cause of loss, but confiscation by a government authority is specifically excluded from coverage.