Guarantee Exam Study Guide P&C

The Businessowners liability coverage form would respond to a claim arising from what? -Injury from sale of alcohol -Injury from wet floor -Injury to employee on job -Damages sought by 3rd party accounting error

-Injury from wet floor

Which of the following is NOT a classification of a hazard? -Speculative -Moral -Morale -Physical

-Speculative

HO-1 Basic Form

10 named perils: Fire or smoke Explosions Lightning Hail and windstorms Theft Vandalism Damage from vehicles Damage from aircraft Riots and civil commotion Volcanic eruption

What guarantees that the info explained in the insurance contract is true?

A warranty

Coverage D, additional living expenses is intended to

Allow the family to maintain their normal standard of living

DP-1 NAMED RISK, ACTUAL CASH VALUE

Common Perils: Fire & Lightning • Internal Explosion & External Explosion • Windstorm & Hail • Riot & Civil Commotion • Smoke • Aircraft • Vehicles • Volcanic Explosion • Vandalism & Malicious Mischief

An agent delivers policy, cust pays premium but not statement of good health, what has been violated? -Adhesion -Contract -Consideration -Representation

Consideration

Coverage D: Additional Living Expense

Covers additional living expenses when incurred. This means that the policy covers the necessary living expenses up to the stated limit, incurred by the insured to continue, as nearly as possible, the normal standard of living when the house cannot be occupied due to a covered loss.

Coverage B: Other Structures

Covers damage to other structures or buildings, such as a detached garage, work shed, or fencing.

Coverage A: Damage to House

Covers damage to the house. The face amount of the policy (for example $100,000) is the most you will receive if your house is totally destroyed.

Coverage C: Personal Property

Covers damage to, or loss of personal property. Personal property includes household contents and other personal belongings used, owned or worn by you and your family.

Coverage F: Medical Expense

Covers medical expenses. Coverage is limited to an amount per person and per accident for injuries occurring on your premises to persons other than an insured, or elsewhere, if caused by you, a member of your family, or your pets. An important feature of this coverage is that payment is made regardless of legal liability.

Coverage E: Comprehensive Personal Liability

Covers personal liability. This coverage protects you against claims arising from accidents to others on property that you own or rent. With a few exceptions, such as auto or boating accidents, it is an all purpose liability policy that follows you wherever you go.

DP-2 NAMED RISK, REPLACEMENT COST -Loss of Rents coverage -May not be covered if vacant

DP-1 + • Burglary Damage • Weight of Ice & Snow • Glass Breakage • Accidental Discharge or Overflow of Water or Steam • Falling Objects • Freezing of Pipes • Electrical Damage • Collapse • Tearing Apart, Cracking, Burning, Bulging

DP-3 Rental Home Insurance Policy, ALL RISK, REPLACEMENT COST Loss of Rents -Other Structures • Personal Property • Loss of Use • Liability • Medical Payments

EXCLUSIONS: • Ordinance or Law • Earth Movement • Water Damage (some may be included in the policy) • Power Failure • Neglect • War • Nuclear Hazard • Intentional Loss • Governmental Action • Mold (some may be included in the policy)

Which HO form provides open peril coverage for dweeling (Coverage A) and contents (coverage C)

FORM 5 -Form 2 is named peril (broad) coverage for dwelling and contents -Form 3 is open peril for dwelling and peril for contents -Form 5 open peril for both dwelling and contents Form 8 is named basic perils for both

HO-3 Special Form

HO-1 + HO-2 + Attached Structures + Open Perils

HO-2 Broad Form

HO-1 Perils + Falling objects Weight of ice, snow, or sleet Freezing of household systems like AC or heating Sudden and accidental tearing apart, cracking, burning, or bulging of pipes and other household systems Accidental discharge or overflow of water or steam Sudden and accidental damage from artificially generated electrical current The HO-2 typically covers not only your home's structure, but your belongings and sometimes even your personal liability as well.

HO-4 Tenant's Form (Renter's)

HO-2 perils

HO-7 Mobile Home

HO-3

HO-8 Older Homes

HO-3 + special adaptations

Which of the following injuries may be covered under Coverage C- Medical Payments of a CGL?

Injuries to a member of the general public that occurs on the premises

What best describes agreement as it relates to insurance contracts?

One party accepts the terms of the other party's offer

HO-5 Comprehensive

Open Perils except for: Earth movement (like an earthquake, landslide, or mudslide) Floods Water damage Damage from or infestation of birds, vermin, rodents, and insects Neglect, deterioration, and general wear-and-tear Settling, shrinking, bulging, or expanding of your home's foundation Your pets and other animals Mold, fungus, and rot Intentional loss War, government action, and nuclear hazard Ordinance or law Smog, rust, and corrosion

In reference to insurable interest, which of the following is NOT an element of insurable risk? -Business -Personal -Blood -Financial

Personal

What Injury is less than physical than those covered under bodily injury liability?

Personal Injury Liability

Policy Limits are the maximum amount an insured may collect, or for which an insured is protected under the terms of the

Policy

PRO RATA (PROPORTIONATE DISTRIBUTION) EXAMPLE: Suppose that a homeowner takes out $200,000 worth of fire insurance on his home. The home is actually valued at $300,000. A fire subsequently breaks out in the home, causing $60,000 worth of damage.

Since the insurance only covers two-thirds the value of the property ($200,000 / $300,000), the insured can only recover two-thirds the cost of damage - $40,000, in this case ($40,000 / $60,000).

The owner of a unoccupied rental dwelling with DP2 turns off heat for winter, pipes break. How will policy react to loss?

This loss is excluded from coverage -Because Freezing and pipe breaks aren't covered unless building is maintained

Which of the following terms best describes the home of an insured who goes on vacation for 3 months? -Unoccupied -Condemned -Temporary empty -Vacant

Unoccupied

HO-6 Condo

Walls, Floors, Ceilings protection for condo owners and belongings of personal liability

When does the Federal emergency flood insurance go into effect? -When flooding occurs -Annually for flood season -when mandated by POTUS -When a community applies for it

When a community applies for it

How To Read Coverage Example: 25/50/25

"25" up to $25,000 will be paid for 1 person "50" up to $50,000 FOR EVERYONE IN TOTAL "25" $25,000 will be paid for any property damage

COINSURANCE CLAUSE

if 80% coinsurance applies to your building, the limit of insurance must be at least 80% of the building's value. If the policy limit you have selected does not meet the specified percentage, your claim payment will be reduced in proportion to the deficiency. The coinsurance percentage typically is found on the declarations page.

LAW OF LARGE #'S

larger the number of exposure units independently exposed to loss, the greater the probability that actual loss experience will equal expected loss experience.