Insurance Test
The minimum liability amount per occurrence that is available on the BOP is:
$300,000. Explanation: $300,000 of liability per occurrence are automatically included on the BOP. Higher limits are available at the discretion of the company.
What is the limit of coverage provided under a mobile home policy for detached structures?
10% of the coverage A limit or $2,000 whichever is greater is correct. Explanation: The limit is $2,000 or 10% of the coverage A (dwelling limit), whichever is greater.
What is the percentage that the insured can apply to coverage A of the DP-2 and DP-3 dwelling forms for ordinance or law coverage?
10%. Explanation: This change adds coverage to all the dwelling forms except the DP-1. The percentage is 10% of coverage A, dwelling.
What is a Reporting Form policy?
A policy that requires the insured to report the value of the property insured at certain time intervals is correct. Explanation: A "Reporting Form" policy is one in which the policyholder is required to report the values of insured property to the company at certain intervals. A provisional (deposit) premium is charged initially and the final premium is determined by applying the rate to the average of the values reported. The insured is required to insure the property 100% to value. The insured is also required to report 100% of the value of the insured property.
Medical Payments coverage under a homeowner policy are available for expenses resulting from an injury to:
A residence employee while they are working. Explanation: This could be someone who mows the lawn. However, if a residence employee is covered under Workers Compensation Coverage then the Medical Payments Coverage would not apply. Coverage does not apply to the insured or members of the household. Roomers, boarders and tenants are not covered as well.
On a Homeowner Policy, Coverage A would include all of the following, EXCEPT:
A storage shed connected to the dwelling by a utility line. Explanation: Structures connected by a fence or utility line are considered to be Other Structures (Coverage B) under Homeowners forms. Coverage A is Dwelling Coverage.
In the insurance industry, which of the following terms refers to continuous or repeated exposure to conditions that may result in bodily injury or damage neither expected nor intended?
An occurrence. Explanation: The definition of "occurrence" includes "accident" which is bodily injury and/or property damage that is sudden and fortuitous
Which of the following can be covered under a commercial inland marine policy?
Bridges is correct. Explanation: Bridges and tunnels can be covered under a commercial inland marine policy. This is defined under the nationwide definition of coverage.
Mr. Smith carries a total limit of $20,000 on his home. He has two policies. One policy is with Company A with a limit of $12,000 and another with Company B in the amount of $8,000. In case of a $10,000 covered loss, which of the following is true regarding the payment of the claim?
Company A will pay $6,000 and Company B will pay $4,000 Explanation: The total amount of coverage is $20,000. Company A has 60% of the coverage and Company B has 40% of the coverage. Company A has 60% of the loss and would pay $6,000. Company B has 40% of the loss so they would pay $4,000 of the loss.
Dwelling forms may be used to insure residential structures which:
Contain no more than 4 occupancy units. is correct. Explanation: This will vary to some extent by state. The industry standard is no more than 4 occupancy units
XYZ Company was forced to shut down because a major fire put one of its main suppliers out of business. Under a special type of Business Income coverage, how is a supplier of materials referred to?
Contributing location Explanation: Businesses that rely on a main supplier for goods or services can purchase this optional coverage. The coverage is called contingent business income coverage.
All of the following perils are covered under a building and personal property coverage form with a basic cause of loss form, EXCEPT:
Earth movement. . Explanation: The earthquake endorsement would be required.
Under California law, the degree of care owed to a trespasser by a property owner is not which of the following?
Guarantee safe passage on and off the premises Explanation: Guaranteeing safe passage is not required.
What is a definition of a surety bond?
Guarantees the Performance of a Duty is correct. Explanation: The surety guarantees the performance of a duty by the principal.
The insured in a property loss is not obligated by the terms of the policy to:
Hire a public adjuster to assist the insured in the claim Explanation: The insured is not obligated to employ a "public adjuster" to assist in the claim against the insurance company. It is an option on the part of the insured.
Which of the following may be included in the Commercial Package Policy? I. Commercial Auto. II. Commercial Inland Marine. III. Equipment Breakdown coverage. IV. Aviation.
I, II, and III only. Explanation: Aviation and Ocean Marine are not included in the broad range of coverages that are available under the CPP.
Which term is the closest to "incidental authority" under the law of agency?
Implied authority is correct. Explanation: Implied Authority, also known as incidental authority, is the authority that the agent reasonably believes he or she has, based upon the actions (or inaction) of the principal.
In the required bonding of adjusters, which of the following is the surety?
Insurance company. Explanation: The surety is the insurance company that issues the bond.
Medical payments coverage under a BOP applies to expenses incurred by non-insureds for bodily injury and reported to the insurer within:
One year after the accident date. is correct. Explanation: One year is the limitation in the BOP. Other policies (Personal Auto and Homeowners) provides for a 3 year limitation
In which way is the HO-2, HO-4 and HO-6 similar?
Peril coverage for contents. Explanation: The covered perils for contents coverage are the same for these forms.
A monetary award to a plaintiff in a tort action in excess of the cash value of the economic loss as a punishment to the wrongdoer and as a deterrent to similar conduct by others is called:
Punitive Damages Explanation: The question is providing the definition of "punitive" damages.
Which of the following dwelling forms provides coverage for loss of rental income?
The Basic, Broad and Special Form. Explanation: All of the forms provide for rental value coverage. In the DP-2 and DP-3, it is 20% of the coverage A limit and it is additional coverage, but on the DP-1, the 20% available coverage reduces the available coverage A amount on the dwelling. Note: in North Carolina the percentage is 10%.
A mobile home endorsement may be used to allow a mobile home to be insured under a Homeowners Policy. However, mobile homes may be insured only under which homeowner form or forms?
The HO-2 and HO-3 . Explanation: To be eligible a mobile home typically must be designed for year-round living and be at least 10 feet wide and 40 feet long. Some insurance carriers require that the wheels be removed. If the insurer will write the mobile home on a homeowners form they will use the HO-2 or HO-3.
Under the dwelling basic form (DP-1), what is the maximum that would be paid for Fair Rental Value if Coverage A was $60,000 and the rent is $500.00 per month?
The fair rental value. Explanation: Payment under fair rental value will be for the time required to repair or replace the damage, whichever occurs first. Any payment is based on a fair rental value which is a reasonable amount for similar rental property in a comparable or local rental market. Naturally, any payment is net of discontinued expenses
The insured is covered under an HO-3 form. If the insured hits his own house and also damages the garage and the attached fence with his vehicle, what coverage would apply?
The house, garage and the fence. Explanation: All of the items are covered under the HO-3 if the insured damages his own property with his vehicle. This is also true of the HO-5 form. These two forms provide open peril coverage and do not exclude this kind of loss.
The burden of proof in determining the value of property and the cause of loss lies with:
The insured. Explanation: The burden of proof initially lies with the insured. The insured is also obligated to produce estimates of loss.
Following the payment of a claim, the salvaged property becomes the property of:
The insurer. Explanation: Unless other arrangements are made and agreed upon, after the claim has been paid, the property will belong to the insurer.
What is the appropriate manner in which to sign a release of all claims?
Use of full legal name. A signature is not deemed valid unless it is the individual's full legal name.
As a general rule, husbands and wives are not permitted to bring suit against one another for personal injury. The best description of an exception to this rule is:
When the injury is the result of an intentional tort. Explanation: The exception is when either is injured as a result of an intentional tort.
The BOP liability limits are $500,000 per occurrence and $1,000,000 aggregate. The losses for the policy term are $100,000, $750,000 and $400,000. What is the correct amount the insurance company pays for all three losses?
$1,000,000 Explanation: The aggregate limit is the most the policy can pay per policy period. In this case a maximum of $1,000,000. The $100,000 can be paid; $500,000 of the $750,000 claim can be paid since that is the most that is available in any one occurrence. The $400,000 claim can be paid. After paying these three claims, the 1,000,000 aggregate limits have been reached and no future claims will be paid as well as the $250,000 not paid on the second loss.
Bob is purchasing a commercial property policy to cover contents of a building valued at $100,000. The policy includes an 80 percent coinsurance clause. To avoid a coinsurance penalty in the event of a partial loss, Bob should purchase a policy with minimum limits of at least:
$80,000 is correct. Explanation: The value of the covered property is ($100,000) times 80% = $80,000.
The definition of collapse under the Homeowners program includes:
An abrupt falling down or caving in of the structure or a part of the structure. Explanation: The definition defines collapse as an "abrupt falling down or caving in of the structure or a part of the structure."
Which of the following causes of damage is not covered under the HO policy?
An earthquake. Explanation: Earthquake coverage must be separately purchased and is not covered under the HO policy.
"Proximate cause" requires that:
An uninterrupted chain of events resulting from negligence results in injury or damage.. Explanation: An uninterrupted chain of events that leads to injury or damage is called "proximate cause."
In the event of a dispute between the insurer and insured concerning the value of a property settlement, which of the following homeowner conditions would apply?
Appraisal is correct. Explanation: In case of a dispute regarding the value of the insured property in case of a loss the problem can often be resolved by the appraisal clause. Each party gets an appraiser. If they can't agree then an umpire is selected to make the decision. Each party pays their share of the umpire's fee.
All of the following are excluded under the theft, disappearance and destruction coverage form, except:
Dishonest acts of customers. Explanation: Fire, vandalism, and accounting errors are specifically excluded in this form. Criminal activities of customers and others is what property and casualty insurance is designed to cover.
Under the Commercial Property Policy, the Pro-rata Liability Clause means?
Each insurer pays in accordance to the percentage of its coverage bears to the total amount of insurance. Explanation: The insurer shall not be liable for a greater proportion of a loss than the amount insured shall bear to the whole insurance covering the property against the peril involved, whether collectible or not. This is often referred to as the "Other Insurance" clause.
Which of the following is not a dwelling policy form?
Extended. Explanation: The three dwelling policy forms are basic (DP-1); broad (DP-2); and special (DP-3).
Which of the following perils is NOT covered by the commercial property causes of loss basic form?
Falling objects. Explanation: Only the broad and special forms provide falling object coverage.
Which of the following losses would be covered under the HO-3 form? I. The husband's shotgun is stolen from a hotel room while he is traveling to a skeet shoot. II. The wife's money roll is lost at an unknown location. III. An individual demands a reward for returning the insured's lost dog. IV. The family's lawn mower is destroyed in a garage fire.
I and IV only Explanation: The HO-3 covers theft of and fire to personal property while it is anywhere in the world. Property merely lost (where there is no evidence of theft or attempted theft) does not constitute theft. Rewards paid for the return of covered property are not covered under HO-3 form. Dogs are excluded property under the HO-3 form.
The commercial inland marine coverage form known as valuable papers and records includes coverage for: I. Money and securities. II. Deeds, drawings and maps. III. Books, files and mortgages.
II and III only. Explanation: Money and securities are covered under a crime insurance form and not covered in the valuable papers and records form.
An insured has fabricated a claim that would appear to be legitimate. What kind of hazard would this act represent?
Moral hazard. Explanation: This is the type of hazard that exposes the morals of the individual because of the fraudulent act.
A major difference between surety bonds and insurance contracts is:
No transfer of risk occurs when a surety bond is issued. Explanation: Premiums on bonds are actually service fees - modest charges made for use of the surety's backing to establish financial responsibility.
A home is insured under an HO-3 policy. One of the "other structures" on the same property is used by the insured for his business. The building burns in a fire. It would:
Not be covered because it is excluded because it is used for business Explanation: The HO-3 policy states: Section I - Property Coverages "We do not cover other structures: (a) used in whole or in part for business purposes."
No licensee shall conduct a business under a fictitious or other business name unless:
Obtain authorization from the Commissioner Explanation: He or she must obtain written authorization from the Commissioner to do so.
Which of the following types of property may be insured under a furriers block policy?
Stocks of furs owned by the insured furrier. Explanation: The furriers block policy is used to cover stocks of furs owned by the insured furrier and held for sale.
What type of liability is specifically addressed by statute?
Strict Liability. Explanation: Strict liability is specifically addressed by statute. Basically there is little if any defense on the part of the negligent party. Products liability is often the subject of strict liability claims.
Which of the following dwelling forms provides replacement cost coverage for dwellings and "other structures"?
The Broad and Special Forms only. Explanation: If the insured carries a limit of at least 80% of the replacement cost value on the dwelling and the other structures, the broad and special dwelling forms provide replacement cost settlement on the dwelling and other structures. The basic dwelling form provides actual cash value only.
Under the commercial property condominium association form, coverage is based on:
The association agreement and bylaws. Explanation: The coverage provided by the form will be based on the condominium association agreement and by laws.
Which of the following statements is not true regarding a released bill of lading?
The carrier agrees to over-insure the cargo so that the shipper will be compensated for all losses.. Explanation: The definition of a released bill of lading is "A bill of lading on which no stated value has been indicated, thereby limiting the carrier's liability to statutory amounts or to the specified rate per pound of merchandise shipped."
Under a Commercial Package Policy, how many days does one have to notify the insurance company of a claim?
The number of days is not specified Explanation: The policy language states that all claims will be promptly reported to the insurer.
The insured is covered under a BOP and sustains a direct loss to his building and contents. What is the period of time the policy provides coverage for the loss of income?
The policy pays for up to twelve months after the loss.. Explanation: The BOP automatically includes loss of income on an actual loss sustained basis for up to twelve months after the loss even if the policy was set to expire in the meantime.
Which of the following is most likely to be uninsurable?
The purchaser of a new home wants to protect herself from a possible drop in housing prices. Explanation: This represents speculative risk. The other choices are pure risks. Speculative risks are generally uninsurable while many pure risks are insurable.
If your insurance company cancels your commercial insurance, whom must they notify?
They must notify the first named insured listed on the policy. Explanation: Only the first named insured listed on the policy is to receive any notices.
An accident re-constructionist is an expert used by insurance companies and plaintiff lawyers to:
Thoroughly examine the accident scene and conduct the appropriate tests to reach a reasonable conclusion as to causative factors. is correct. Explanation: The correct answer is self explanatory.
The purpose of asking the court to make a declaratory judgment is:
To make a binding decision as to the relationship between the parties and their rights with respect to the matter before the court. Explanation: A binding judgment issued by the court that defines the legal relationship between the parties and their rights with respect to the matter before the court. A declaratory judgment does not provide for the enforcement of the judgment, however.
What does the term "bailment" mean?
Transfer of possession is correct. Explanation: A bailment occurs when property is voluntarily delivered by the owner to another party, to be held by that other party (to repair, store, clean, etc) and returned to the owner in the same or better condition. Bailment is the act of placing property in the custody and control of another, usually by agreement in which the holder (bailee) is responsible for the safekeeping and return of the property. Possession changes temporarily from the bailor to the bailee, but title does not change.
Which of the following characterizes the fact that only the insurance company is the only party legally bound to perform its duties under the policy?
Unilateral. Explanation: An insurance policy is one-sided or unilateral because only the insurance company is legally bound to perform its part of the agreement. If an insured pays a premium and a loss occurs, the insurer is legally bound to pay for the loss under the terms of the policy. However, insureds are not legally obligated to pay premiums. If an insured stop paying premiums, the insurance company can cancel the contract but it cannot sue the insured for breaking the contract. On the other hand, if an insured fails to comply with conditions and duties specified in the contract, the insurance company may deny an insured's claim.
On the basic dwelling policy all of the following perils are excluded EXCEPT:
Volcano. Explanation: The question is about the DP-1 Basic form. War, earthquake and landslide are not named perils and are therefore excluded
When can adjuster use a fictitious name in their business?
When authorized by the Commissioner to do so Explanation: No licensee shall conduct a business under a fictitious or other business name unless and until he or she has obtained the written authorization of the Commissioner to do so.
Personal article floaters provide coverage on what basis?
Your answer: All Risk is correct. Explanation: Personal article floaters are written on an "all risk" basis. However, there are the usual property exclusions such as flood, war, marring, wear and tear, deterioration, etc.
What is the basic personal liability limit provided under a homeowner policy?
$100,000 is correct Explanation: The unendorsed homeowner policy provides a limit of $100,000 for personal liability coverage.
An insured's loss payment is reduced by depreciation. Which of the following best describes this situation?
Actual Cash Value is correct. Explanation: Actual cash value is the current replacement cost less depreciation.
Which of the following would be covered under the Commercial Property Builders Risk Coverage Form?
All of the responses are correct Explanation: All of the responses are correct as regards the builders risk coverage
States have adopted statutes regarding claims adjusting. To avoid unfair treatment to a claimant the adjuster must not:
Deny the claim until a fair and prompt investigation has commenced Explanation: It is an unfair claim practice if the adjuster denies a claim prior to a prompt and comprehensive investigation has been completed.
A person purchasing the basic dwelling form DP-1 causes damage to the fence on his property amounting to $200 while driving his own auto. The policy will:
Deny the claim. Explanation: The basic DP-1 dwelling form does not provide coverage to the insured's property done by his own vehicle.
Property insurance covers:
Direct and indirect losses is correct. Explanation: Property insurance, whether it is commercial or personal, is designed to protect against direct (i.e. physical) losses as well as indirect (i.e. loss of use of property that has sustained direct damage) losses. For example, Homeowners covers dwellings and also includes Loss of Use coverage, and commercial property insurance can cover buildings (for direct losses) as well as business income (an indirect) loss coverage).
Under the HO-3 policy which of the following would not be covered?
Earthquake. Explanation: Earthquake can be added by endorsement and is not automatically included in the unendorsed HO-3.
John and Jim have caused bodily injury to a third party. In law they would be considered:
Joint tort feasors. Explanation: Since both were negligent of a tort, a wrongful negligent act, they would be considered "joint tort feasors."
Which of the following policies would be used to cover imports and exports?
Ocean marine is correct. Explanation: Ocean marine pertains to import and export risk, including the cargo being shipped as well as the vessel transporting goods or people.
Which type of damages is not intended to indemnify the plaintiff?
Punitive damages Explanation: Punitive damages are awarded in cases of gross negligence, for the purpose of punishing the defendant. Special and general damages are types of compensatory damages, which are intended to indemnify the plaintiff.
The insured's house and its contents are damaged by a fire. Under the Conditions section of a homeowner policy, the insured must take all of the following actions in order to collect from his or her insurance company, EXCEPT:
Replace the damaged property within 60 days after the loss. is correct. Explanation: The policy does not contain a provision that the property must be replaced within 60 days after a loss.
In California, which of the following is an untrue statement regarding the adjustment of a "total" auto physical damage loss?
Your answer: A cash settlement does not include sales taxes. Explanation: The cash settlement does include applicable sales taxes and applies whether or not a replacement automobile is purchased.
What do you call evidence, presented in court, which can be seen and felt?
Your answer: Demonstrative evidence is correct. Explanation: Demonstrative evidence includes actual objects, pictures, models and other devices which are intended to clarify the facts for the judge and jury: how an accident occurred, actual damages, medical problems, or methods used in committing an alleged crime.
An insured is reimbursed by his insurance company for the cost of a new chair after a 10-year chair is destroyed by fire. Which of the following best describes this situation?
Your answer: Replacement Cost is correct. Explanation: Replacement cost pays for new to replace old.
An insured, covered under a Businessowners Policy, has sustained a fire loss to his building. Due to changes in the building codes its going to cost $20,000 more to make the repairs. How much, if any, will the BOP pay for these extra costs?
$10,000. Explanation: There is a limited amount ($10,000, increased from $5,000 in the earlier forms) for ordinance or law coverage —increased cost of construction. However, this coverage applies only to buildings insured on a replacement cost basis. Further, it cannot be used to pay any costs after a loss for an ordinance or law that the insured was required to comply with before the loss, but failed to. It is important to note that the ordinance or law exclusion is still in place, although the provision states that this additional coverage is not subject to the terms of the exclusion to the extent that the exclusion conflicts with the additional coverage.
When an insurer cancels a Commercial Package Policy (CPP) for non-payment of premium it must give notice to the first named insured at least:
10 days in advance. Explanation: 10 days notice of cancellation for non-payment of premium is standard in the insurance industry unless modified by state statue.
If, during a legal proceeding, the court determines that the facts brought forth, together with the applicable law, fail to make a prima facie case, the court may, without consideration by the jury, administer:
A directed verdict. Explanation: Lacking establishment of a prima facie case, the court may enter a directed verdict for either the plaintiff or the defendant.
Extended Business Income covers the first 60 days after the loss for reimbursement of earnings for the insured business
After the repairs have been made to the insured property. Explanation: Extended Business Income pays for any additional loss of business after the property is actually repaired and operations are resumed, with reasonable speed, until the operation generates the business income amount that would have existed had no loss occurred. This coverage is usually limited to 60 days (previously 30). An endorsement can be used to extend the period of time and an additional premium is charged.
A drug store has an ice cream counter and someone drops some of the ice cream on the floor. Both the employee and the store manager are aware of the situation. The store can be held legally liable because of?
All of the Responses are Correct. Explanation: All of the responses are correct. The store has a legal duty to protect invitees from sustaining injuries if possible.
The insured is transporting his yacht on its trailer and pulling it with his truck. The trailer separates from the truck hitch and the boat strikes another vehicle. There is property damage and bodily injury to a third party. The yacht and trailer are a total loss. What coverage would apply under the yacht policy?
Only the damage to the yacht and trailer. Explanation: The damage to the yacht and trailer would be covered. The bodily injury and property damage to a third party would be covered under an auto policy.
CA insurance regulations require that an insurer must notify a first-party claimant if it intends to pursue subrogation of the claim. Which of the following is the most correct?
Only when the insurer has paid the claim is correct. Explanation: The insurer must advise the insured a first party claimant of subrogation. This occurs after the claim has been paid.
The principle of indemnity is designed to avoid:
Overpayment of a claim. Explanation: The principle of indemnity is to restore the insured to the same position, if possible, prior to the loss. Overpayment of a claim violates this principle.
Which of the following would be covered by flood insurance?
Reasonable expenses to protect the property when endangered by flood Explanation: Flood insurance written through the National Flood Insurance Program covers direct damage caused by "flood" as defined in the policy. Coverage extends to certain costs an insured incurs to protect the property, when flood is imminent. Mudflow is covered and mudslides are not.
A claimant advises you that he is no longer represented by counsel. As an adjuster you should:
Request a drop letter from the attorney Explanation: Discontinued attorney representation of a claimant should always be verified by the attorney via a "drop letter."
All of the following are basic types of construction, except:
Retro Sided is correct. Explanation: Retro sided is a non sense term, the other three are all types of construction types and affect the insurance rates charged for property insurance.
Forcible removal of property from a messenger through the threat of violence is called:
Robbery Explanation: Robbery must involve a threat of violence or injury. This would include a holdup with a gun or some other form of weapon or other form of violence.
The manager of a grocery store has checked out the cash register and places the checks and money in a night depository bank bag. He places the bag on the desk and goes to the rear of the store to check the back door. When he returns the money bag is missing. This is an example of:
Theft. is correct. Explanation: This is an example of the presumption of theft. Property is missing from a known place where the property should be. This would be the case because theft has the broadest definition of criminal activity.
A Commercial Property Policy includes a protective safeguard endorsement indicating there are protective safeguards installed in the risk such as a sprinkler system. Should the system become inoperative, how long does the insured have to report this fact to the insurer?
48 hours Explanation: If repairs cannot be completed within 48 hours, the insurer must be notified in order to comply with the conditions of the form.
If Commercial Property Insurance is written on the Building and Personal Property Coverage Form and a loss occurs, the insured must furnish a signed statement of loss within:
60 days after the request of the insurer. Explanation: The form requires that the insured provide a signed proof of loss within 60-days after the request of the insurer. This is standard in the insurance industry.
Which of the following would require bailee coverage?
A TV repair shop is correct. Explanation: A TV repair shop is acting as a bailee when they have property of others in their care, custody, and control. They could be held legally liable should the property be damaged while in their custody.
The word "person" under fair claims settlement regulations includes:
All of the responses are correct is correct. Explanation: All of the responses are correct. A "person" is defined in the code as "any individual, association, organization, partnership, business, trust, corporation or other entity."
Insured John Doe is driving his vehicle on a two lane highway. Suddenly his vehicle veers into opposing lane and strikes an oncoming vehicle. The insured's best defense for this accident would be:
He suffered a first and totally unanticipated heart attack. Explanation: The best defense for this type of accident is a sudden, unexpected, medical emergency such as a stroke or heart attack. There can be no prior history of this type of medical problem in order for this defense to be effective
Information about the premium and policy limits, the identity and address of the named insured, and the policy period is found in which part of an insurance policy?
Insuring Agreement is incorrect. The correct answer is: Declarations. Explanation: The declarations page is usually the first page in an insurance policy and contains the items mentioned in this question. The conditions clause spells out the duties of the insured and insurer in case of a claim. The insuring agreement contains the promises of the insurer. Exclusions are things not covered in the policy.
All the following acts by an insured are covered under Section II of the homeowners policies, EXCEPT:
Spreading a rumor that a neighbor has been convicted of a felony Explanation: Spreading a rumor about a neighbor is not covered under the basic coverages provided by Section II, liability coverage in the policy.
Mary intentionally trips her neighbor while the neighbor is trespassing on the insured's property. Although the neighbor is not injured, Mary gives the neighbor $500 in cash to settle any potential liability claim. How will Mary's insurance company most likely respond in this situation?
The insurer will deny liability coverage because Mary's action was intentional. Explanation: Intentional acts are excluded and the company will deny the claim. The only exception to this exclusion is when the insured is attempting to use reasonable force to protect themselves or their property.
The insured is covered under a watercraft policy and asks the agent about a "lay-up" period credit to get a reduction in the premium. The dates of the lay-up period are specified in the policy. There is an emergency and the insured must use his boat in a life saving event. The boat is damaged and sinks. Under what circumstances would coverage apply?
The loss would not be covered because the insured operated the boat during the "Lay-Up" period is incorrect. The correct answer is: Only if the insurance company is notified within 10-days of the emergency use. Explanation: The company must be given notice within 10-days of the emergency to justify the need to violate the terms of the provision.
