Property

An insured has a homeowners policy and is required to be a member of the homeowners association in her neighborhood. The association's community house has burned down, and the insured has been assessed $1200 for her share of the rebuilding cost. How much of the assessment will her homeowners policy pay?

$1,000 As an additional coverage, homeowners policies will pay up to $1,000 of a loss assessment.

The broad theft coverage endorsement on the dwelling form specifies all of the following limitations EXCEPT

$1,000 on silverware. The limit on silverware is $2,500.

What is the limit for the forgery or alteration coverage in the businessowners policy?

$2,500 Forgery or alteration coverage in the businessowners policy covers loss due to forgery or alteration of an insured's check or promissory note. However, the limit is covered only up to $2,500.

The War, Military Act, and Terrorism Exclusion will only apply to an incident of terrorism in which the total of insured damage to all types of property in the United States, its territories and possessions, Puerto Rico and Canada exceeds what amount?

$25,000,000 The War, Military Act, and Terrorism Exclusion will only apply to an incident of terrorism in which the total of insured damage to all types of property in the United States, its territories and possessions, Puerto Rico and Canada exceeds $25,000,000.

A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss?

$30,000 For the total amount of a partial loss to be paid, a house must be insured for at least 80% of its value on the date of loss. In this case, because the house is insured for only $60,000 (75% of the minimum requirement), the policy will pay only 75% of the loss, or $30,000.

An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?

$30,000 This insured only carried 75% of the amount of insurance he had agreed to carry ($120,000 of the agreed $160,000), so the insurer will pay only 75% of the loss, or $30,000. If the insured had carried the required amount of insurance, partial losses would be paid in full. In the event of a total loss, the face of the policy would be paid. If the full amount is not carried, divide the actual amount carried by the amount that should be carried (the coinsurance amount), and multiply it by the loss.

All of the following are special personal property limits under a homeowners policy EXCEPT

$500 for business personal property on the insured premises. HO forms place a $2,500 limit for business personal property that applies on premises only. A limit of $500 applies to loss of business personal property while away from the premises.

A broker, no matter where located, may act as a broker for a life insurance producer in Hawaii so long as the producer has been licensed to sell life insurance for at least

1 year. A person, wherever located, may act as a broker with an owner who is a Hawaii resident if the person is a life insurance producer who has been licensed to sell life insurance for at least 1 year in Hawaii or in the producer's home state.

If the Commissioner decides to hold a hearing about the rejection of a rate filing, how many days' notice must be given to the concerned parties?

10 days The insurance code requires the Commission to give 10 days' notice of a hearing.

The Earthquake and Volcanic Eruption Endorsement added to Commercial Property policies consider all earthquake shocks as one earthquake if they occur within what maximum time period?

168 hours All earthquake shocks or volcanic eruptions occurring within any 168-hour period (7 days) are considered one earthquake or explosion.

Under businessowners policy Section I, if an insurer wants to cancel a policy for any reason except nonpayment of premium, how many days before the effective cancellation date must the insurer notify the mortgage holder?

30 days If an insurer is cancelling a policy for any reason except nonpayment of funds, the insurer must give the mortgage holder at least 30 days' notice, following businessowners policy Section I.

For how long are licensees required to keep records of continuing education completion?

4 years All licensees must keep records for continuing education for 4 years after completion.

According to the loss payment condition in HO policies, losses must be paid within how many days of the insurer receiving proof of loss?

60 days All losses will be paid within 60 days of receiving the proof of loss.

Which of the following is eligible for a businessowners policy?

A 6-story office building with less than 100,000 square feet total area Maximum eligibility requirements for a businesowners policy (BOP) are 6 stories high, 25,000 square feet mercantile space in apartment building, 100,000 square feet for the office building, and $3 million gross sales.

A life insurance producer may share commissions with

A licensed life insurance producer for the sale of a life insurance policy. An insurance company or an insurance producer may only pay a commission, service fee, brokerage or other valuable consideration to a person for selling, soliciting or negotiating insurance in this state if that person is properly licensed. This means both parties must have a license in the line of authority as the type of insurance transaction.

When other insurance is written on the same basis as a commercial property policy, the obligation of the insurer is to cover

A share of the loss. The commercial property other insurance provision states that the insurer will be responsible for only a proportional share of an insured loss when the insured also has other insurance written according to the terms and conditions.

In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation?

Agreed value Agreed value is a property policy with a provision agreed upon by the insurer and insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written. When a loss occurs, the policy pays the agreed value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation.

Which of the following is an example of a protective safeguard in a businessowners policy?

Automatic sprinkler system The protective safeguards endorsement adds a policy condition requiring the insured to maintain protective safeguards (automatic sprinkler system, fire alarm, etc.) as a condition for coverage.

Who will transport the property of anyone who hires them?

Common carriers Common carriers transport the property of anyone who hires them.

An insured's business is damaged because of a fire, and he is forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this?

Consequential Consequential loss, also known as indirect loss, is a second financial loss caused by a covered direct loss.

Which of the following would provide coverage for loss of income when an insured rental dwelling is rendered uninhabitable because of a covered loss?

Coverage D Coverage D provides fair rental value coverage when insured rental dwellings suffer a loss covered by Coverage A, B, or C.

An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay?

Each policy will pay $25,000 of the loss. Each policy will pay its pro rata share of the loss, but not more than the amount of loss in total.

Tonton Marine Freight owns a dock on the river. Their transportation policy could cover all of the following perils EXCEPT

Fire. The perils of fire, tornado, sprinkler leakage, hail, explosion, earthquake, riot and civil commotion are not available for coverage under a transportation policy when the property to be covered is piers, wharves, docks, or slips.

The homeowners policy covers collapse caused by all of the following EXCEPT

Foundation cracks. Collapse must be caused by some sudden, unexpected reason. The foundation cracks would take years to cause collapse, meaning there would be plenty of time to find and repair them.

Property insurance is defined as

Insurance protecting real or personal property against loss or damage due to fire and other causes. Property insurance is defined as insurance protecting real or personal property against loss or damage due to fire and other causes. It may also provide coverage for consequential losses.

All of the following are considered unfair trade practices in the business of insurance EXCEPT

Sharing commissions. Sharing commissions is allowed as long as both producers are properly licensed. All other choices are unfair trade practices.

Besides the designated insurer, who is entitled to receive a copy of the Hawaii Property Insurance Association's inspection of a submitted risk?

The applicant if he or she requests it If the applicant requests, a copy of the report will be sent to him or her.

Which of the following would NOT be considered a source of insurability information by an insurer?

The applicant's marital status An insurer may inspect, with the applicant's written permission, the following: application form, motor vehicle records, interviews with neighbors, friends and employers, inspection of property, and inspection of insurance history.

An insured has a homeowners policy and is required to be a member of the homeowners association in her neighborhood. The association's community house has burned down, and the insured has been assessed $1200 for her share of the rebuilding cost. How much of the assessment will her homeowners policy pay?

The application given to a prospective insured Consideration is something of value that is transferred between the two parties to form a legal contract.

Which of the following is NOT the consideration in a policy?

The application given to a prospective insured Consideration is something of value that is transferred between the two parties to form a legal contract.

Under which of the following circumstances would an insurer be allowed to cancel a dwelling policy midterm?

The insured knowingly lied about the year the property was constructed. The only way an insurer can cancel a policy midterm is if there has been a misrepresentation of a material fact or if the risk has changed substantially from when it was first insured.

The most the insurer will pay for a loss under a businessowners policy is

The limit of insurance after the deductible is paid. For losses covered under a businessowners policy, the insured must pay a deductible, after which the insurer will pay up to the limit of insurance.

When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be

The proximate cause. The proximate cause of a chain of events resulting in injury is one that is sufficiently related to an injury that the courts determine it is in fact the cause of that injury.

All of the following statements are true regarding fire department service charge additional coverage under the business-owners policy EXCEPT

This coverage limit pays in place of the limit of insurance shown in the declarations. The fire department service charge covers charges up to $2,500 and is payable in addition to the limit of insurance shown in the declarations and is not subject to any deductible.