Property and Casualty Insurance Test Question Notes
If an insured was injured in an auto accident during a work-related injury, how much can they claim on their own personal auto policy?
$0
How much are signs attached to the building covered for in a BOP policy?
$1,000
Damage to property of others is an additional coverage that pays up to how much for property damaged or destroyed by the insured?
$1,000 per occurence
What is the special limit of watercraft under a homeowners policy, if not large enough to be excluded?
$1,500
What is the standard liability limit for coverage E in Part II of a standard homeowners policy?
$100,000 per occurence
What is the standard deductible under the emergency program of the National Flood insurance program?
$2,000
How much coverage is available under the emergency program for flood insurance?
$35,000 dwelling coverage $15,000 contents coverage $2,000 deductible
What is the minimum fire legal liability?
$50,000
What is the state legal minimum for fire liability?
$50,000
What is the standard deductible for a Business Owners Policy when dealing with building and personal property?
$500
How much will DP-2 and DP-3 cover for trees, shrubs, and other plants?
$500 for any one tree/shrub/plant
What are the three parts to Employers Liability?
- Policy limit per accident - Policy limit for all bodily injury claims by disease - Policy limit per employee for bodily injury by disease
How long does the insured have to report expenses of medical payments under a Commercial General Liability policy?
1 year of the date of the accident
BOP building coverage includes materials, equipment, supplies, and temporary structures that are on or within how may feet of the premises?
100 feet
Business personal property is covered while it is in within how many feet of the main premises?
100 feet
What is the period of time that insurance considers a volcanic eruption or earthquake as one event?
168 hours (7 days)
For Dwelling insurance, how long will the insured cover medical payments to others after the policy expires?
3 years after the accident
In an extra expense coverage form, what amount of days are meant if the coverage states: 40%/80%/100%
30 days or less will pay 40% 31-60 days will pay 80% 61+ days will pay 100%
In Tennessee, how many employees can an insured have before Workers Compensation becomes mandatory?
5 employees
What is the largest office building risk that may be eligible for a Business Owners Policy?
6 stories and 100,000 sqft
When does coverage stop for vandalism in a vacant building under a property policy?
60 days
What are the three CGL coverage letters and meanings?
A - Bodily Injury (caused by an occurence) B - Liable and Slander C - Medical Payments
What are the five property coverages and associated lettering?
A - Dwelling B - Other structured (detached, appurtenant) C - Insured's personal property (off-premises covered up to 10% of C) D - Fair Rental Value E - Additional Living Expense
If a fire causes damage to a building, what is the fire considered?
A Peril
What is a peril?
A Peril is a cause of loss
What is a tort?
A civil wrong that causes someone else to suffer a loss
What is subrogation?
A legal right that allows one party to make payment that is actually owed by another party, and then collect the money from the party that owes the debt after the fact
What is a fiduciary?
A person in a position of financial trust
What is a bailee?
A person or organization that has temporary possession of someone else's personal property
How are losses to personal property paid under all homeowners forms (except HO-5)?
Actual Cash Value
What does the extra expense additional coverage allow?
Allows reimbursement for additional costs an insured incurs to avoid or minimize suspending business operations after a covered loss
What is an interline endorsement?
An endorsement that may be used with more than one line of insurance
What is the method called when the insured and insurance company cannot agree on a settlement?
Appraisal method
When does mobile home coverage take effect?
As soon as the mobile home is set on a permanent foundation
What is it meant by "Express Authority"?
Authorities are written in agent contract
What are the elements of an insurable risk?
CANHAM Calculable, Affordable, Non-Catastrophic, Homogeneous, Accidental, Measurable
What type of policy is designed to provide coverage for catastrophic liability coverage for business risks?
Commercial umbrella liability
Which of the coverage forms on a CGL policy covers liability arising out of libel, slander or advertisements?
Coverage B
In commercial general liability coverage, what coverage letter refers to medical payments? How long does someone have to report a loss?
Coverage C; 1 year
Which dwelling form covers collapse?
DP-2 and DP-3
What part of the insurance policy shows the premium payment?
Declarations page
What are the parts to an insurance contract?
Declarations, Conditions, Insuring Agreements, and Exclusions
What is the difference between a direct loss and an indirect loss?
Direct - immediate damage caused by peril Indirect - loss over time as a result of the direct loss
If an insurance company is housed in Tennessee, what type of insurer are they considered?
Domestic
What is the purpose of a retroactive date?
Excludes claims made before the policy effective date
How long does an Extended Reporting Period cover claims made after the expiration date of the policy?
Extended, 60 days Covered up to 5 years with basic tail extension
What are three coverages that equipment breakdown covers?
Failure of pressure or vacuum equipment, electrical failure, mechanical failure
What is the FCRA?
Fair Credit Reporting Act - If the insurer uses credit, must inform insured
Who would be excluded or exempt from Workers Compensation?
Farm workers/employees and domestic household servants
What is a term that is typically used to describe an Insurance Agent?
Fiduciary - a person in a position of financial trust
What are the three basic perils?
Fire, Lightning, and Internal Explosion
An insurance company incorporated in Wisconsin and conducting business in Minnesota is know as what type of insurer?
Foreign
What claim is not covered under Workers Compensation?
Gross misconduct
Which HO form is best for MAXIMUM coverage for home and personal property?
HO-5
Which HO form limits theft coverage to $1,000?
HO-8
What is a contract or device for transferring risk from a persons, business, or organization to an insurance company?
Insurance
What are some characteristics that allow a business to be eligible for a BOP policy?
Less than 100 employees Revenue of $300 million or less Business occupying up to 25,000 sqft Less than six stories Majority of work is on premises
What is Vicarious Liability?
Liability for the actions of another
What form is used to prove truckers liability and proof of financial responsibility?
MCS-90 endorsement
What are four examples of Professional Liability insurance?
Medical malpractice Errors and omissions Directors and officers Fiduciary liability
What territory is typically not part of the definition of the coverage territories?
Mexico
What is the difference between a Moral hazard and a Morale Hazard?
Moral Hazard - dishonesty, against the law Morale Hazard - carelessness
Theft excludes what type of coverage?
Mysterious Disapearance
What is another name for unauthorized insurers?
Nonadmitted insurers
What are the duties of the insured after a loss?
Notice to insurer, protect property from further damage, Proof of loss, property available for inspection, examination under oath if needed, cooperate with insurer
Property coverage B provides coverage for what?
Other structures; 10% of A
What is something that would NOT be covered under Workers Compensation laws?
Pain and suffering
What part of workers Compensation covers premium?
Part five
Which inland marine form provides open peril coverage for the same categories of property covered under the homeowners scheduled personal property endorsement?
Personal articles form
What is it meant by a contract of adhesion?
Policy written by the insurer with the insured having no input
Regarding bonds, who has the obligation to complete a contract?
Principle, or Obligor
What type of coverages can be included in a Commercial Package Policy?
Property, CGL, Auto, Inland Marine
How is ACV calculated?
Replacement Cost - depreciation =
What is the coinsurance clause and what is the percentage required by the insurer?
Requires the insured to carry the standard coinsurance amount of the insurance policy; 80%
What is the method of handling risk that involves a deductible?
Retention (loss or portion of loss)
Which section of the Homeowners policy does not contain a deductible?
Section II - Liability
When an insured decides to cancel an insurance policy before the expiration date, how is the unearned premium returned?
Short-Rate basis
What act specifies a theft as a burglary?
Signs of forced entry/exit
What is a Custodian?
Someone who has care and custody of property while it is INSIDE the premises
What is a Messenger?
Someone who has care and custody of property while it is OUTSIDE the premises
What is a hazard?
Something that increases the chance of a loss
What is one exception of of the products-completed operations exposure?
Spoiled food
Which business auto coverage form symbol is the "any auto" symbol used only to designate liability coverage?
Symbol 1
Which auto coverage symbol covers a customer's auto left with the insured for service?
Symbol 30
What is the most restrictive business auto coverage form symbol?
Symbol 7
How many parties are typically involved in a bond?
Three parties
What type of coverage covers a mobile home in transit?
Trip-Transit coverage
What is the amount of reimbursement that an insured can receive for loss of earning due to the time spent in court if an insurance company requests the insured to testify in court?
Up to $200 a day
For a homeowners policy, how much is covered for the fire department service charge?
Up to $500, no deductible
What are the three perils covered in a basic form for homeowners?
WCSHAVVER
What are the extended coverage perils?
WCSHAVVER and V&MM -Wind, Civil commotion, Smoke, Hail, Aircraft, Vehicles, Volcanic Eruption, Explosion, Riot, Vandalism and malicious mischef
What is Barrity?
When a ship's crew commits criminal acts
What is Reinsurance?
When insurance companies purchase insurance to cover their own exposures to loss
What is Jettison?
When the crew of a ship tosses cargo over the side of the ship
What does a builders risk policy expire?
When the project is completed, occupied, or abandoned