Property and Casualty- EFX
What are the parties to a surety bond?
The principal (or obligor), the obligee (or insured), and the guarantor (or surety)
What is the broadest coverage in the commercial crime form?
Theft coverage
Which statement is an accurate description of life insurance policy dividends?
They are not taxable and are not guaranteed
What is the purpose of interline endorsements in commercial package policies (CPPs)?
They eliminate redundancy and minimize the number of other policy endorsements
What is an insured contract?
This contracts that are automatically covered under the exposure of premises coverage in a general liability insurance contract
The owner of a rental dwelling, insured under a DP-2, turns off the heat in the insured dwelling during the winter months because the dwelling is not occupied. The buildings water pipes freeze and break, causing damage. How will the policy react to this loss?
This loss is excluded from coverage
What is the purpose of the National Flood Insurance Program (NFIP)?
To fill the gap in flood coverage left by private insurers
What is the purpose of surety bonds?
To guarantee that specific duties and obligations of the principal will be fulfilled
What is the primary purpose of workers compensation insurance?
To pay benefits to employees for injuries arising out of employment
What is the purpose of a claims-made form?
To pay for bodily injuries or property damage reported during the policy period
The valued policy statute DOES NOT apply in which situation?
Two or more policies provide insurance for the same loss
What amount of coverage is provided on HO policies for watercraft?
Up to $1,500
What are the two types of Utility Services endorsements available in businessowners policies?
Utility Services- Direct damage, Utility Services- Time Element
The broad cause of loss form in the commercial property policy contains three perils in addition to the basic form perils. Which of the following is NOT one of those three perils?
Utility services
The insured's product under a commercial general liability policy does NOT include which of the following?
Vending machines rented to others (the renting of vending machines to others would be a contractual liability exposure)
When does the insurer's duty to defend a suit or claim end in a commercial general liability policy?
When loss payments equal the applicable limit of insurance
When can insurance be sold through a surplus lines insurer?
When the insurance cannot be obtained through and authorized carrier
Anthony has insured his dwelling under two fire policies. If Anthony suffers a fire loss, what provision in the policies will prevent Anthony from collecting more than the actual amount of the fire damage?
Apportionment clause
John had a disagreement with his insurer on the value of his damaged property. After making a written demand, both John and the insurer each selected an appraiser. The appraisers then agreed on a fair value without having to select an umpire. What condition did John use?
Appraisal
When do binders expire?
As soon as the policy is issued
When can an insured cancel a businessowners policy?
At any time by mailing a written notice of cancellation
What are some of the types of businesses that are excluded from coverage under a businessowners policy?
Auto sales and servicing, large banks, bars and grills, places of amusement, and manufacturers
A provision found in most claims-made liability policy forms that provides a specified period of time following the policy expiration, during which claims arising out of occurrences during the policy period may be made against the policy at no extra cost, is called
Basic extended reporting period
Commercial property coverage can be written with one of three causes of loss forms. What are they?
Basic, broad, and special
In a DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will
Be reduced by 10%
A person or business that requires coverage for all liability exposure should purchase what type of insurance?
Commercial general liability (CGL) and professional liability
What are the coverage parts that may be included in a commercial package policy (CPP)?
Commercial property, general liability, crime, equipment breakdown, auto, inland marine, and farm
In commercial inland marine policies, who transports the property of anyone who hired them?
Common carriers
An agent delivers a policy to an applicant, who pays the initial premium but refuses to submit a statement of good health. Which of the following terms best describes what the applicant has violated?
Consideration
Which of the following entities is eligible for a businessowners policy?
Convenience stores
The supplementary payments section of the commercial general liability policy would cover
Court costs assessed against the insured in a suit
What is the minimum amount of additional coverage provided by umbrella policies?
$1 million
What are the 3 liability coverages included in the commercial general liability (CGL) coverage form?
Coverage A- Bodily injury and property damage, coverage B- personal and advertising injury, and coverage C- medical payments
A businessowners policy is sold as a package, what does that mean?
Coverage includes both property and liability
All of the following are optional endorsements that may be added to the standard equipment breakdown coverage form, EXCEPT
Debris removal
What are the two coverage triggers in commercial crime policies?
Discovery form and loss sustained form
Professional liability coverage protects the insured against legal liability resulting from what?
Errors and omissions
What type of coverage do umbrella policies provide?
Excess coverage over the primary policy
An insured just purchased an auto policy for his new car. He wants to understand what perils are not insured against. Which section of his policy should the insured check?
Exclusions
Which of the following liability coverages in a general liability policy is NOT subject to the aggregate limit?
Fire legal liability
In commercial package policies (CPPs), who may cancel the policy in writing and make changes to the policy with the consent of the insurer?
First- named insured
Which homewowners form provides open peril coverage for dwelling (coverage A) and contents (Coverage C)?
Form 5
A homeowner has misplaced some of her insured personal property and has no idea what may have happened to it. Which HO policy form would cover such a loss?
HO-5 covers misplacing or losing (mysterious disappearance) as a theft loss
Under what circumstances will a worker be paid for the first 7 days of being unable to work?
If the worker misses more than 21 consecutive days
How are supplementary payments paid in liability insurance policies?
In addition to the limits of liability
What is the exclusive remedy doctrine?
Injured employees cannot seek damages outside workers compensation
What does Coverage A of the commercial general liability (CGL) form provide coverage for?
Injury or death suffered by a third party, or damage to the property of others
What are residual markets
Insurance markets designed to assume risks that are generally not insurable in the normal insurance market
What is the name for policy endorsements that may apply to more than one coverage part?
Interline endorsements
How does insurance distribute the financial consequences of individual losses?
It transfers the risk to all persons insured
What type of perils are covered by the advertising injury form?
Libel, slander, defamation, violation of privacy, infringement of copyright or titles
Which of the following describes an insurer's responsibility for payment under a policy, as stated in the common policy provisions?
Limits of liability
What is covered by the Utility Services- Time Element endorsement in businessowners policies?
Loss of business income or extra expense
In a commercial crime policy, what does 'employee theft' cover?
Losses resulting from theft by employees
What type of professional liability coverage will a medical doctor need?
Medical malpractice coverage
What are the 4 types of benefits provided by workers compensation insurance?
Medical payments, disability income, rehabilitation expenses, and death benefits
What types of expenses are covered by coverage C- Medical Payments in commercial general liability policies?
Medical, surgical, hospital, or funeral expenses for third parties injured because of the insured's business operations
Lost Treasures has a guard dog in a fenced lot to protect the salvage yard. The dog scared a passerby , who now claims that it was a traumatic experience and that he now suffers from recurring nightmares. A claim for personal injury of $5000 is filled against Lost Treasures. Why will the personal and advertising injury liability section (coverage B) of the CGL policy cover this claim?
Mental anguish is a covered injury
What type of policy consists of the declarations, conditions, endorsements, and other attachments applicable to a single line of insurance?
Monoline
An applicant for property insurance owns a building in which combustible materials are stored in the furnace room. From an underwriting standpoint, this risk would likely be considered a
Morale hazard
Which statement best describes agreement as it relates to insurance contracts?
One party accepts the exact terms of the other party's offer
Where can National Flood Insurance be issued?
Only in participating, flood-prone areas
Which coverage would a business owner need in a crime policy to cover money that may be stolen from a messenger?
Outside the premises
What sublimit in a liability policy sets the maximum amount that will be paid for all claims arising from a single accident?
Per occurence
What is the difference between a personal injury and an advertising injury?
Personal injury refers to individuals; advertising injury is incurred to a business. Both, however, are nonphysical injuries.
What components make up a commercial policy?
Policy cover; policy declarations; interlines endorsements; lines of insurance declaration pages; lines of insurance coverage forms; common policy conditions; lines of insurance conditions; causes of loss forms; and endorsements
The commercial general liability coverage part A- Bodily injury and property damage provides coverage for which of the following?
Premises, operations, products and completed operations coverage
What type of policy is a Businessowners policy?
Prepackaged, stand-alone policy
In surety bonds, who purchased the bond and promises to fulfill the obligation?
Principal or obligor
Medical malpractice, agents and brokers, errors and omissions, and directors and officers liability are examples of what type of liability insurance?
Professional liability
What is covered under the legal liability coverage form?
Property in the insured's care, custody or control
Which of the following actions does NOT constitute false advertising?
Requiring applicants more quickly than is reasonable
What is the date stipulated on the declaration page of a claims-made liability form as the earliest date on which an incident may occur and be covered by the policy?
Retroactive date
What is the name for the deductible in liability umbrella policies?
Self-insured retention (SIR)
What types of entities can be insured under a general liability policy?
Sole proprietors, partnerships and corporations
In contrasting stock insurers with mutual insurers, which statement is true?
Stock insurers are owned by the shareholders and issue nonparticipating policies
What is the name for nonadmitted insurers who are allowed to transact business in a state?
Surplus lines insurers
Homeland housing corps holds a mortgage on a property that John and Carol Thomas purchased. John and Carol have a homeowners policy with Home Protection Insurance which has a mortgagee clause naming Homeland as a lost payee. If John and Carol suffer a fire to their home
The Thomases and Homeland will be considered co-claimants and receive loss reimbursement from Home Protection Insurance
What type of property would be covered under the builders risk coverage form?
The building, temporary structures, foundations, fixtures, equipment and materials and supplies within 100 feet of the premises
Which of the following statements is correct regarding the business income under the businessowners policy (BOP)?
The business income is payable for 12 consecutive months following the occurrence.
An insured was having a new home built. While digging the footings for the foundation, the contractor struck a solid rock formation and found that it was necessary to blast the rock formation in order to remove the rocks. The force of the blast broke several windows and some chinaware in a neighbors home several blocks away. Who pays for this damage?
The contractor
What is the occurrence form trigger based on?
The date of the injury or damage
Which of the following statements is correct regarding the debris removal coverage under the BOP?
The insured's limit of liability is 25% of the sum of the direct loss payment plus the deductible amount
Under the common policy conditions of a policy, all of the following are TRUE about changes in a policy EXCEPT
The insurer must obtain permission from all named insureds to make a change (permission is not needed from all named insureds, only the first named insured may request a change).
Bob McKinn has an automobile policy with limits of 100/300/50 and a deductible of $1000. Bob is involved in an auto accident and runs into Steve Fowler's auto. Steve is awarded $125,000 for his injuries and $25,000 for the damage to his car. Bobs vehicle has damage in the amount of $1,200 as well. The total payment made under Bob's policy is
$125,200- (the amount of coverage for Steve's injuries is limited to $100,000. The damage to steves car, $25,000, is covered in full. The damage to Bobs car is covered minus the $1,000 deductible. Thus the payment is $125,200.)
An insured has $5000 of medical coverage under a personal auto policy at the time of a covered accident. The insured and 3 passengers are injured. The insured's medical expenses are $8000. The first passenger's total $4000, the second passenger's total $6500, and the third passenger's total $1200. How much will the policy pay under medical payment coverage?
$15,200- (the medical payment coverage is provided by a limit of liability per person. So the policy will pay maximum ($10,000) for the insured and passenger 2 because their medical expenses exceed the limit. All of passenger 1 and passenger 3's expenses would be paid ($5,200). Grand total $15,200.)
The personal property off-premises extension of dwelling forms provides limits of coverage up to
10% of coverage C anywhere in the world
If a policy is to be cancelled for any reason except nonpayment of premium, how many days notice must the insurer give the policyholder before canceling the policy?
30 days
All of the following will be considered the insured under Part B- medical payments of personal auto policy EXCEPT
A person using the insured's covered car without permission
For there to be negligent liability, all of the following must exist EXCEPT
A reasonable expectation that the act may cause injury or damage
When other insurance is written on the same basis as a commercial property policy, what is the insurer obligated to cover?
A share of the loss
What is a secondary injury fund?
A workers compensation program designed to pay for any additional benefits when an employee with a previous injury suffers a second injury
The obligation to compensate injured workers without regard to fault or negligence is known as
Absolute liability
Which of the following would be added for coverage under a property policy by an endorsement?
Additional insureds
What is the limit that the insurer will pay for all losses that occur during a policy period?
Aggregate limit
What would be considered a single accident in equipment breakdown coverage?
All accidents at a single location, at the same time, by the same cause
What is a commercial floater?
An inland marine policy designed to cover movable commercial property, wherever it may be located
Which of the following would NOT be covered as a loss under coverage D of a homeowners policy?
An insured leased a dwelling for 5 years. Two years later, the property owner died, and the new property owners wanted to make the property their principal residence, so the leased was canceled (a homeowners policy does not cover loss or expense due to cancellation of a lease or agreement).
A liability policy that covers all claims arising out of incidents occurring during the policy period, regardless of whether or not the policy is still in effect at the time of the claim, is known as
An occurrence policy
What type of property can be covered under the Inland Marine insurance?
Any type of property that is portable on land, as well as means of transportation and communication
