Types of Property Policies

What is the deductible amount that applies to all coverages?

$250.00

An insured owns a large dog. The first day he has to leave the dog home alone to go to work, the insured comes back to find his $400 couch torn apart, his $100 coffee table chewed up, his $50 window curtain shredded, and a $200 window pane shattered where his dog jumped through. The insured has personal property coverage under a special form dwelling policy. How much of this loss will the policy cover? A) $0 B) $200 C) $250 D) $750

A) $0 Damage that results from domestic animals is excluded under the special form dwelling policy.

An insured has a special form dwelling policy written for $100,000 on a dwelling. The dwelling's replacement cost is $115,000. Fire causes $75,000 in damage to the dwelling, $15,000 damage to a separate garage, and kills 10 trees valued at $600 each. How much will the policy pay for the trees? A) $5,000 B) $10,000 C) $60,000 D) $75,000

A) $5,000 In the broad and special form, Coverage B (Other Structures) is an additional amount of insurance, limited to 10% of Coverage A (in this example, $10,000). Trees, shrubs, and plants are covered, limited to not more the $500 for any one tree or plant, and not to exceed 5% of Coverage A in total (in this example, $5,000).

Which of the following other coverages is NOT included in the basic form dwelling policy? A) Breakage of glass B) Removal coverage C) Personal property temporarily away from the insured premises D) Tenant's improvements, alterations, and additions

A) Breakage of glass Breakage of glass is included in the DP-2 and DP-3 only.

Which of the following dwelling policy forms primarily insures a structure on an actual cash value basis? A) DP-1 B) DP-2 C) DP-3 D) All DP Forms

A) DP-1 DP-1 Insures structure on actual cash value basis. DP-2 and DP-3 insure structure on a replacement cost basis.

How does the mobilehome endorsement affect the other coverage of law or ordinance in a homeowners policy? A) It removes the coverage. B) It broadens the coverage. C) It limits the coverage. D) It has no effect on this coverage.

A) It removes the coverage. The mobilehome endorsement makes the other coverage of law or ordinance inapplicable to the policy.

In a watercraft policy, which coverage part will respond to a claim for damages for bodily injury or property damage for which the insured becomes legally liable because of a watercraft accident? A) Part A B) Part B C) Part D D) Part E

A) Part A Part A is Liability Coverage and will pay for damages for bodily injury or property damage for which any insured becomes legally liable because of a watercraft accident.

To be eligible for coverage under the National Flood Insurance Program, an insured must live in which of the following communities? A) That has met the minimum floodplain management guidelines B) That is surrounded by water C) That has met the minimum population requirements D) That gets flooded at least annually

A) That has met the minimum floodplain management guidelines To be eligible for the flood program an insured must live in a community that has met the minimum floodplain management guidelines.

Which of the following would NOT be considered part of the insured location under the liability section of a homeowners policy? A) Vacant farmland owned by the insured B) A residence where an insured is temporarily residing C) A family cemetery plot D) A lakeside cabin rented by the insured for vacation

A) Vacant farmland owned by the insured Farm property specifically is excluded from coverage.

A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT A) Workers compensation coverage B) Crime coverage C) Boiler and machinery coverage D) General liability coverage

A) Workers compensation coverage Workers compensation is not available through the commercial package policy (CPP).

How long is the waiting period after the application has been accepted before flood coverage goes into effect? A) 5 days B) 30 days C) 6 months D) 12:01 am the next day

B) 30 days The waiting period is 30 days as required by the National Flood Insurance Program.

Which of the following property coverages would provide protection to contents damaged by fire? A) Coverage B B) Coverage C C) Coverage D D) Coverage A

B) Coverage C Coverage C - Personal Property provides coverage for the contents of an insured dwelling.

A house insured under a dwelling policy has been vacant for 70 consecutive days. Which of the following statements is true? A) Loss by theft is covered. B) Loss by vandalism and malicious mischief is excluded. C) Glass breakage as a result of vandalism is covered. D) Damage to glass building blocks is not covered.

B) Loss by vandalism and malicious mischief is excluded. After vacancy for more than 60 consecutive days, vandalism and malicious mischief (VMM) coverage is excluded under a dwelling policy.

All of the following people would be considered insureds under the liability section of a homeowners policy EXCEPT A) The legal representative of a deceased insured. B) The 22-year-old niece of the insured who is visiting. C) A 15-year-old foster child residing in the premises. D) The mother of the insured who is residing in the household.

B) The 22-year-old niece of the insured who is visiting. Relatives of the insured of any age are considered insureds only if they are residents of the household.

DP 1 Option 1 (additional charge)

Basic Perils + Extended Perils Windstorm Explosion Smoke Aircraft Vehicles Riot or Civil Commotion Volcanic Eruption

B.B. BICE-GOLF

Bursting of heating systems; Burglary damage; Breaking of water heaters; Ice, snow, or sleet weight; Collapse of building or part of a building; Electrical damage (artificially generated); Glass breakage; Objects falling from outside; Leakage of water or steam damage; Freezing of plumbing.

The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to A) $150,000. B) $200,000. C) $250,000. D) $100,000.

C) $250,000. It is written for the value of the dwelling up to $250,000 on a replacement cost basis.

The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period? A) 90 days B) 120 days C) 1 year D) 3 years

C) 1 year Medical payments coverage of a businessowners policy (BOP) will pay medical, dental, hospital, and funeral services incurred within one year from the date of an accident to a person who suffers bodily injury by accident on or next to the insured's premises, or because of the insured's operations.

How long is the policy period for NFIP flood insurance? A) 6 months B) 10 months C) 1 year D) 2 years

C) 1 year NFIP flood insurance has a policy term of 1 year.

A businessowner has a building and personal property policy that covers a shed in which he stores extra parts. If he buys a second shed for the same purposes, this will be automatically covered for how long? A) 15 days B) 20 days C) 30 days D) 45 days

C) 30 days Coverage is for 30 days for newly acquired buildings and personal property that are similar in use to the property insured. Review Content Next Question

In which of the following situations would the jewelers block extension cover a loss? A) A jeweler agrees to exhibit a necklace and earrings set in a showcase away from the premises. The case is broken into, and the set is stolen. B) An employee of a jewelry store is wearing a cameo brooch and ring set to display to customers. During the day, she discovered the brooch has fallen off, and she can't find it. C) A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged. D) A jewelry store is robbed while displaying bracelets and necklaces at a public exhibition.

C) A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged. Property in transit by registered mail is covered under the jewelers block extension.

A unique feature in a bailee form is that it covers A) All loss and has no exclusions. B) The building occupied by the insured whether it is owned or leased. C) Customers' property whether or not the insured has been negligent. D) Fire and theft losses to the insured's stock held for sale without any deductibles.

C) Customers' property whether or not the insured has been negligent. The bailee/customers form is liability coverage for the customers' property the bailee has accepted into his care. Negligence on the part of the bailee is not required for a loss to be covered.

Which of the following terms best describes a trembling or shaking of the earth that is volcanic or seismic in origin? A) Tsunami B) Geotectonic inversion C) Earthquake D) Tectonic shifting

C) Earthquake Earthquakes are excluded by most standard property forms, but coverage may be added by endorsement to most property policies. Coverage may also be written in a Difference in Conditions policy.

The major portion of the premium for an equipment breakdown policy pays A) For coverage for bodily injury and property damage of others. B) For replacement parts. C) For inspections and examinations. D) For repairs after a loss.

C) For inspections and examinations. Inspecting the machinery to be insured is critical to the underwriting of equipment breakdown coverage. Finding flaws that could lead to losses and requiring corrective action is the purpose.

Chapter: Types of Property Policies Question 12 of 15 Which of the following would NOT be covered by HO liability insurance? A) First aid expenses B) Property damage C) Intentional tort D) Bodily injury

C) Intentional tort Insurance will not cover losses caused by intentional acts of the insured.

A basic dwelling policy automatically provides coverage against fire, lightning, and A) Riot. B) Windstorm. C) Internal explosion. D) Smoke.

C) Internal explosion. The other three perils are part of the extended coverages that may be added to the basic form for an additional premium

An insured covered under a Mobile Homeowners Policy wants to move the location of the covered mobile home. Which of the following must the insured obtain from the insurer? A) Loss of Use Coverage B) Additional Coverage Property Removed Endorsement C) Transportation/Permission to Move Endorsement D) Housing and Transportation Coverage

C) Transportation/Permission to Move Endorsement If the insured wishes to move the mobile home in a situation in which it is not threatened by an insured peril, they must obtain from the insurer a Transportation/Permission to Move Endorsement.

Which of the following losses would NOT be covered by the dwelling policy if the dwelling is vacant for over 60 days? A) Windstorm B) Internal explosion C) Vandalism D) Fire

C) Vandalism Under a dwelling policy, vandalism and malicious mischief (VMM) coverage is suspended after 60 days.

Personal business property out in the open is covered under commercial property policy only while A) Specifically described on the declarations. B) Within 150 feet of the described premises. C) Within 100 feet of the described premises. D) Located on the described premises.

C) Within 100 feet of the described premises. Business personal property is defined in the policy as property located in the insured structure or within 100 feet of that structure.

Johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. When would her coverage be effective? A) 30 days after the application has been accepted B) 12:01 pm on the 5th day after the endorsement request has been mailed C) 5 days after the application and premium payment are mailed D) 12:01 am the day after the application and premium payment are mailed

D) 12:01 am the day after the application and premium payment are mailed During the first 30 days after a community enters the emergency or normal programs, coverage on a flood policy begins at 12:01 a.m. the day after application and premium payment have been maile

How long is the waiting period after the application has been accepted before flood coverage goes into effect? A) 6 months B) 12:01 am the next day C) 5 days D) 30 days

D) 30 days The waiting period is 30 days as required by the National Flood Insurance Program.

Under the dwelling policy form, what is the maximum time limit during which multiple volcanic activities would be considered part of one occurrence? A) 24 hours B) 36 hours C) 48 hours D) 72 hours

D) 72 hours All volcanic eruptions will be considered one occurrence if they occur within one 72-hour period.

What is the coinsurance requirement for a theatrical property floater under an Inland Marine policy? A) 100% B) 50% C) 75% D) 80%

D) 80% Theatrical property intended for a specific theatrical production can be insured using this Inland Marine Coverage Form. Coverage is written with an 80% coinsurance requirement.

A businessowners policy is A) A special policy designed for large retail operations. B) Part of a commercial package policy. C) A monoline policy. D) A self-contained prepackaged policy.

D) A self-contained prepackaged policy. A businessowners policy is similar in structure to the personal lines homeowners policy except it covers a business exposure for both property and liability losses.

Which of the following may be covered by electronic data processing coverage form under an inland marine policy? A) Computer hardware that is specifically scheduled. B) Extra expense the insured incurs to continue the business following a loss. C) Data processing media, including magnetic tapes or paper tapes, punch cards and discs D) All of these are covered.

D) All of these are covered. All of these are covered items under electronic data processing coverage.

The inspections and surveys condition in a businessowners policy A) Validates that the insured is in compliance with state and federal guidelines. B) Obligates the insurer to make annual safety inspections. C) Guarantees that all working conditions are safe and healthful. D) Allows the insurer the right to inspect the insured's premises.

D) Allows the insurer the right to inspect the insured's premises. The inspections and surveys condition gives the insurance company the right to inspect the insured's premises and operations at any reasonable time during the policy period. Inspections and surveys are not required. This condition does not make safety inspections, nor does it guarantee that the conditions are safe, healthful, or meet safety regulations.

Which of the following is NOT covered under accounts receivable coverage form? A) Interest on loans required to offset uncollectible amounts pending payment of the insurance proceeds B) Sums due the insured that are uncollectible due to a covered loss C) Expenses to reestablish the records, if possible, and collection expenses that are in excess of normal costs D) Any loans required to offset uncollectible amounts

D) Any loans required to offset uncollectible amounts Loan principal amounts are not covered under the form. However, other expenses, such as interest on necessary loans, are covered.

In equipment breakdown coverage, all accidents would be considered a single accident if they occur A) At all insured locations at the same time and from the same cause B) At the same location within a 24-hour period C) At the same location within a 48-hour period D) At a single location at the same time and from the same cause

D) At a single location at the same time and from the same cause If an accident causes other accidents, all related accidents will be treated as one accident. All accidents occurring at a single location at the same time having the same cause will be considered one accident.

Which inland marine form would provide the best protection for a dry cleaning company against loss or damage to their customer's property while in the care, custody, and control of the dry cleaners? A) Furriers block policy B) Personal property coverage part C) Vendor's single interest policy D) Bailee's customer policy

D) Bailee's customer policy A bailee's policy does not cover property of the insured, but does cover their customer's property while in the care of the insured.

Which of the following is defined as a covered cause of loss in businessowners property coverage? A) Rain B) Smoke from agricultural smudging C) Pollution D) Leakage from fire-extinguishing equipment

D) Leakage from fire-extinguishing equipment Only leakage for fire-extinguishing equipment is defined as a covered loss. The other causes are specifically excluded from coverage.

The HO-3 homeowners policy provides A) Open peril coverage on the dwelling and basic form coverage on personal property. B) Basic coverage for the dwelling and broad form coverage for personal property. C) All-risk coverage for both the dwelling and personal property. D) Open peril coverage on the dwelling and broad form coverage on personal property.

D) Open peril coverage on the dwelling and broad form coverage on personal property. The open peril coverage applies to property insured under Coverages A and B only

In which of the following situations would a common carrier be legally liable for damage to property being transported? A) Property is confiscated by law enforcement. B) Property is perishable and begins to spoil during transportation. C) Property is destroyed due to faulty packaging. D) Property is stolen as a result of a driver leaving a vehicle unlocked.

D) Property is stolen as a result of a driver leaving a vehicle unlocked. Common carriers are legally liable for any damage to property during transportation, except if caused by acts of God, war, exercise of public authority, faulty or negligent packaging, or inherent vice (perishable goods).

All of the following are additional causes of loss included in the broad form of a commercial property policy EXCEPT A) Falling objects. B) Weight of ice, snow, or sleet. C) Water damage. D) Replacement cost.

D) Replacement cost. Broad form causes of loss adds falling objects; weight of ice, snow, or sleet; water damage; collapse; and breakage of glass to those perils covered under the basic causes of loss.

When a regular bill of lading is issued, who will be responsible for the invoice cost of any damaged property? A) The person to whom the goods are being shipped B) The shipper C) The driver of the truck D) The carrier

D) The carrier When a regular bill of lading is issued, the carrier will be responsible for the invoice cost of any damaged property, and the shipper does not have to specifically declare a value.

How does DP-3 differ from DP-1 and DP-2?

DP-3 is an open peril form.

HO Coverage A

Dwelling Actual building, walls, foundation

What is included in DP-1 Base Form?

Fire Internal Explosion Lightning FIEL

HO Coverage D

Loss of use Move out due to fire, pays for hotel or if you need to rent somewhere.

Condominium (HO-6)

Named Peril Condominium Owner Occupied Same perils as HO-2

Broad (HO-2)

Named Peril Owner occupied W.C. SHAVER Sudden & Accidental tearing, cracking, burning Damage from artificial electric (power surge)

Renters of Tenants (HO-4)

Named Peril Tenet Occupied Same Perils as HO-2 Contents only

Modified Form (HO-8)

Older Homes/Historic Homes Owner Occupied Named Peril W.C. SHAVER

Comprehensive Form (HO-5)

Open Peril Owner occupied Building and Contents open peril

Special (HO-3)

Open or Named Peril Owner occupied Everything from HO-2 + Building - open peril Contents (same perils as HO-2)

HO Coverage B

Other structures that are detached Detached garage, Shed, Fences

W.C. Shaver

Windstorm Civil Commotion Smoke Hail Aircraft Vehicle/Volcano Explosion Riots

WHARVES

Windstorm Hail Aircraft/Vehicles Riot/Civil Commotion Volcanic Eruption Explosion Smoke

DP 3 Option 2 (Additional Charge)

basic perils + Extended Perils + Vandalism of malicious Mischief (must be purchased)

HO Coverage C

personal property Anything you would pack up when you move, furniture, clothes, etc.