Property Insurance Questions

Naples Pizza is eligible for a BOP based on its operations and the square footage of its 4 locations. For which of the following reasons is Naples Pizza not eligible for coverage on a BOP? A. Its gross sales are too high B. Its gross sales are too low C. It has too many employees D. It has too few employees

A. Its gross sales are too high

The Permitted Incidental Occupancies endorsement provides coverage for what types of businesses on the homeowners policy? A. Offices and studios B. Car dealerships C. Manufacturing plants D. Banks

A. Offices and studios

Of the three dwelling policies, which would cover loss by falling objects, weight of ice, snow or sleet, and accidental discharge from a plumbing system? A. DP 1 B. DP 2 and DP 3 C. DP 1 and DP 3 D. All three DP forms

B. DP 2 and DP 3

Which of the following is not a class of legal wrong? A. Crime B. Breach of contract C. Tort D. Punitive damages

D. Punitive damages

When selecting a limit of insurance in a dwelling policy, it is important to know how the value of property is determined after a loss. The provision that addresses the value of property is found in A. An endorsement B. The declarations C. Policy conditions D. The valuation provision of the policy

D. The valuation provision of the policy

The amount of Molly's outstanding mortgage was $100,000 at the time her house was destroyed in an explosion. Molly's claim for damages under Coverage A of her policy was $200,000 and her claim for damages under Coverage C was $150,000. How much did Molly's insurance company pay to the mortgagee? A. $100,000 B. $150,000 C. $200,000 D. $350,000

A. $100,000

An ISO standard commercial property policy is comprised of all of the following EXCEPT: A. Commercial general liability form B. Declaration page(s) C. Common policy conditions form D. Commercial property conditions form

A. Commercial general liability form

The Peterson family owns a farm that they insure on a farm policy. Which section of their policy insures their poultry (other than turkeys), hay, and grain? A. Coverage E ' Scheduled Farm Personal Property B. Coverage C ' Household Personal Property C. Coverage F ' Unscheduled Farm Personal Property D. Coverage G ' Barns and Other Structures

A. Coverage E ' Scheduled Farm Personal Property

Jason bought a sporting goods business 'as is,' which included the building, its contents, and some old mechanical equipment which required considerable maintenance to keep it operational. Jason purchased an equipment breakdown policy and tells you of his surprise after his claim for the extra maintenance expenses were denied. You tell Jason A. Extra maintenance expenses to keep equipment running are excluded B. He should resubmit the claim because the denial must have been a mistake C. He should seek legal counsel and sue the insurer D. He should file a claim to replace the old mechanical equipment

A. Extra maintenance expenses to keep equipment running are excluded

The manager at Don's Diner shut off the fire and burglar alarm after arriving at work because it developed a short and kept beeping. When the manager left for the night, he forgot to put the alarm back on. How did the Protective Safeguards endorsement on Don's Diner's BOP respond when the building was destroyed by a fire that night? A. It excluded coverage for the fire loss B. It required a loss penalty when the claim was paid C. It limited coverage to $50,000 D. It doesn't apply to fire losses

A. It excluded coverage for the fire loss

Holly's personal property is covered on an actual cash value basis in her DP 3 form. If she had either a DP 1 or DP 2 form, how would her personal property be covered? A. It would be covered on an actual cash value basis. B. It would be covered on an actual cash value basis minus depreciation. C. It would be covered on a replacement cost basis. D. An appraisal would be required to determine the loss value.

A. It would be covered on an actual cash value basis.

Jeremy owns and manages a small two-story motel on a main street in the city. After the local college football team wins a game, celebrating fans break the motel's front plate glass window and glass in the front door. The additional coverage for glass under Jeremy's business owners policy (BOP) will cover all of the following expenses EXCEPT: A. Loss of income to the motel while repair work is underway B. Expense of putting up temporary plates C. Expense of boarding up openings D. Expense of replacing the glass in the door

A. Loss of income to the motel while repair work is underway

Which of the following is not a condition under Section II ' Liability of the homeowners policy? A. Loss to a Pair or Set B. Concealment or Fraud C. Duties of an Injured Person D. Duties after an Occurrence

A. Loss to a Pair or Set

In order to be eligible for coverage on an inland marine policy, property must bear some relationship to transportation or communications. Which of the following defines the type of property eligible for inland marine coverage? A. Nationwide Inland Marine Definition B. NAIC Marine Definition C. Insurance Inland Marine Definition D. Marine Definition

A. Nationwide Inland Marine Definition

Mr. Davis, of Davis Dairy, is considering the purchase of a commercial property policy. You explain the different causes of loss forms to Mr. Davis and tell him he must select one of them. Which of the following is not one of the causes of loss forms available on the commercial property policy? A. Open causes of loss form B. Basic causes of loss form C. Broad causes of loss form D. Special causes of loss form

A. Open causes of loss form

Mrs. Oates doesn't want depreciation applied to any claims she might submit under her homeowners policy for loss or damage to her belongings. What endorsement do you recommend? A. Personal Property Replacement Cost Loss Settlement B. Scheduled Personal Property Endorsement C. Identity Fraud Expense Coverage D. Earthquake

A. Personal Property Replacement Cost Loss Settlement

What Other Coverages are provided in all three unendorsed DP forms? A. Reasonable repairs B. Trees, shrubs, and other plants C. Collapse D. Glass or safety glazing material

A. Reasonable repairs

Mr. and Mrs. Gahagian are each sued and submit claims under their homeowners policy. What liability condition states that coverage applies separately to each of them as insureds? A. Severability of Insurance B. Duties after an Occurrence C. Limit of Liability D. Liberalization

A. Severability of Insurance

Daniela's Deli loses its electricity for two weeks after a severe storm. During that time, Daniela cannot conduct business and loses income. What endorsement does she need that will cover her loss of income? A. Utility services ' time element coverage B. Perishable food endorsement C. Power outage endorsement D. Protective safeguards endorsement

A. Utility services ' time element coverage

Ted is a carpentry contractor who builds decks, porches and room additions. Ted's business is eligible for a businessowners policy as long as A. annual payroll is $300,000 or less and he does no work at heights greater than three stories B. the company is a partnership and not a limited liability company C. he has at least three years of experience as a contractor D. he is a member of the Better Business Bureau

A. annual payroll is $300,000 or less and he does no work at heights greater than three stories

During a deposition in a law office, a witness loses her temper and throws several objects at the attorneys and the court reporter present. One of the attorneys wrestles the witness to the floor and subdues her. The witness later brings suit against the firm and the attorney, claiming that he used excessive force to restrain her and thus injured her. The firm's business owners policy (BOP) will probably A. cover the loss as it arose from the reasonable use of force to protect people or property B. exclude the loss as it is not related to professional liability C. exclude the loss as it is not related to property damage D. cover the loss as it is related to personal and advertising injury

A. cover the loss as it arose from the reasonable use of force to protect people or property

You are reviewing the eligibility guidelines for your insurer's Business Owners Policy (BOP). Which of the following businesses is not eligible for coverage on the BOP? A. A retail store in a building with an area of 5,000 square feet B. A manufacturer leasing 10,000 square feet of spaces C. A six-unit apartment building D. A self-storage facility

B. A manufacturer leasing 10,000 square feet of spaces

Jonah witnessed some unidentified persons setting fire to his neighbor's business. The business owner filed an insurance claim stating that his property was destroyed in an accidental fire. Jonah should report what he witnessed to A. The Colorado Division of Insurance C. The Federal Bureau of Investigation D. The governor

B. An authorized agency or a secondary agency

Which of the following is not considered Type II insurance? A. Fire insurance B. Assigned risk motor vehicle insurance C. Property and casualty insurance D. Inland marine insurance

B. Assigned risk motor vehicle insurance

Which of the following perils is included on the commercial property Broad Causes of Loss Form but not on the Basic Causes of Loss Form? A. Fire B. Collapse C. Smoke D. Vehicles

B. Collapse

Campbell Construction Company builds foundations for a variety of building structures. It uses heavy equipment to move earth and mix and transport cement. Aside from commercial auto insurance, what type of inland marine coverage would Campbell's agent recommend to cover the equipment? A. Equipment dealers floater B. Contractors equipment floater C. Installation floater D. Commercial articles floater

B. Contractors equipment floater

Cody should expect to find all of the following on the declarations page of his commercial property insurance policy EXCEPT: A. Name of the insured B. Coverage provisions C. Addresses of covered premises D. Limits of insurance

B. Coverage provisions

If the Davis brothers are farming for others at a farm that is not an insured location, and the farming operations are directed by the owner of the outside farm, they are engaged in A. Agricultural enterprises B. Custom farming C. Controlled business D. Professional services

B. Custom farming

Hector receives a summons and promptly sends it to his homeowners insurance carrier. Which liability condition is he complying with? A. Severability of Insurance B. Duties after an Occurrence C. Liberalization D. Suit against Insurer

B. Duties after an Occurrence

As a condition of policy renewal, insurers may require a property owner to take reasonable steps to reduce the risk of fire to the property. Reasonable actions would include all of the following EXCEPT: A. Adding or enhancing fire suppression systems B. Installing an automatic sprinkler system throughout the property's interior C. Requiring the property owner to provide a defensible space around the structure D. Removing debris from beneath decks and porches

B. Installing an automatic sprinkler system throughout the property's interior

The additional BOP coverage for loss from fungi, wet or dry rot, or bacteria that results from one of the specified causes of loss, applies to all of the following EXCEPT: A. Direct physical loss B. Loss from fungi resulting from fire and lightning C. Cost of tearing out and replacing property to gain access to the fungi, wet or dry rot, or bacteria D. Cost of testing performed after restoration of the damaged property, if there is a reason to believe that fungi, wet or dry rot, or bacteria are present

B. Loss from fungi resulting from fire and lightning

While a guest in Tanya's home, Mary contracts an infectious disease from Tanya's daughter. Mary files a claim against Tanya for medical expenses and medications. Will Tanya's homeowners policy cover the claim? A. Yes. The communicable disease exclusion applies only to sexually transmitted diseases. B. No. The communicable disease exclusion applies to any contagious disease. C. No. The expected and intended injury exclusion applies. !. The homeowners policy excludes any type of bodily injury or property damage that arises out of the transmission of a communicable disease by an insured. This excludes sexually transmittable diseases, such as AIDS, herpes, gonorrhea, and syphilis, as well as contagious diseases such as measles. D. Possibly, as Tanya must decide whether to invoke the liability or medical payments coverage to pay for the claim.

B. No. The communicable disease exclusion applies to any contagious disease.

Which of the following does not appear in the common conditions section of a commercial property policy? A. Cancellation B. Policy period C. Changes D. Inspections and surveys

B. Policy period

What endorsements allows an insured to purchase coverage in excess of the special limits of liability contained in the homeowners policy for certain items of personal property'such as jewelry, fine arts, and musical instruments'and also broadens coverage? A. Personal Property Replacement Cost Loss Settlement B. Scheduled Personal Property Endorsement C. Agreed Value Endorsement D. Stated Amount endorsement

B. Scheduled Personal Property Endorsement

Under Coverage B -- Other Structures of the homeowners policy, which of the following structures are covered? A. Structures rented to someone who is not a tenant of the dwelling B. Structures rented to someone who is not a tenant for use only as a private garage C. Structures from which a business is operated D. Structures used to store business property (unless the property is owned by an insured or a tenant of the dwelling)

B. Structures rented to someone who is not a tenant for use only as a private garage

Open perils property insurance policies typically specify a number of maintenance exclusions. These exclusions deal with expected losses that are not generally insurable. Which of the following are among these of maintenance exclusions? A. Leakage or seepage B. Wear and tear C. Artificially generated electrical current D. Ordinance or law

B. Wear and tear

Under the DP 1 form, coverage applies for loss by certain extended coverage perils, but only if a premium charge is shown in the declarations for these perils. Which of the following is not one of these extended perils? A. Aircraft B. Volcanic eruption C. Accidental discharge from a plumbing system D. Riot or civil commotion

C. Accidental discharge from a plumbing system

Mr. and Mrs. Nguyen submitted a claim under their unendorsed homeowners policy for damage to their swimming pool. On what basis was the loss settled? A. Replacement value B. Functional replacement value C. Actual cash value D. Agreed value

C. Actual cash value

Donovan's Supply Company is constructing an additional building to house its equipment and supplies. While the building is being constructed, Mr. Donovan wants assurances from his agent that the building, building materials and supplies, and temporary structures used to erect the building, are all covered. What type of insurance should he consider? A. Business income and extra expense coverage B. Businessowners coverage C. Builders risk coverage D. Property off premises coverage

C. Builders risk coverage

Rusty notes that a CP 00 90 form is attached to her ISO policy and asks her agent about the meaning of 'CP.' The agent tells her that CP refers to A. Claims procedure B. Common policy C. Commercial property D. Compliance policy

C. Commercial property

Ivy fails to comply with a number of the Duties after an Occurrence listed in the conditions section of her homeowners insurance policy. If Ivy's failure impedes the insurer's processing of a claim, what may the insurer do? A. Have Ivy arrested B. Cancel Ivy's policy C. Deny Ivy's claim D. Charge Ivy a failure to comply fee

C. Deny Ivy's claim

What is the major cause of loss, or peril, on a crop insurance policy? A. Fire B. Wind C. Hail D. Lightning

C. Hail

What is the act of knowingly transferring or using, without legal authority, the identification of an insured with the intent to commit illegal activity? A. Fraud B. Forgery C. Identity fraud D. Theft

C. Identity fraud

Joe and Sandy have a homeowners policy. Their agent tells them that the liability section of the policy provides broad coverage if someone files a claim or lawsuit against them. However, which of the following situations would not be covered? A. Sandy accidentally hits another golfer with an errant golf ball. B. Bill, a guest at their home, slips on the floor and breaks his elbow. C. Joe gets into a fist fight with their neighbor Tom, who is injured. D. Their dog bites a guest visiting them.

C. Joe gets into a fist fight with their neighbor Tom, who is injured.

Who is not an insured under the liability section of a business owners policy (BOP) with respect to the conduct of the business? A. Daphne, the wife of Frank, who is the named insured in the declarations B. Harold, the president of HIJ, Inc. (a corporation) C. Linda, a partner in HIJ (a joint venture), who is not named in the declarations D. John, a designated trustee, but only with respect to his trust-related duties

C. Linda, a partner in HIJ (a joint venture), who is not named in the declarations

Which of the following is not an element of negligence? A. Duty of care B. Breach of the duty of care C. Malice D. Damages

C. Malice

Which of the following is not be considered an authorized agency? A. Fire department B. Law enforcement agency that conducts criminal investigations C. Nonprofit organization that collects information on insurance fraud D. Professional licensing board or regulatory agency

C. Nonprofit organization that collects information on insurance fraud

Lisa lost one of her emerald earrings. The pair of earrings cost $15,000 and was recently valued at $20,000. Her jeweler will reproduce the lost earring for $10,000. The following options are available to the insurer EXCEPT: A. Replace the one earring so the value of the set is the same as it was prior to the loss B. Pay the difference between the actual cash value of the earrings before and after the loss C. Pay the total cash value of the pair of earrings prior to the loss divided by two D. Pay the total cash value of the pair of earrings prior to the loss

C. Pay the total cash value of the pair of earrings prior to the loss divided by two

Willie lives in a coastal area where storms often cause a great deal of property damage. When he is selecting a dwelling policy form under which to insure his home, it is most important for him to know the A. Policy premium B. Policy conditions C. Perils insured against D. Policy exclusions

C. Perils insured against

Jake signs a lease for space in which he'll operate his business. In the lease, he assumes responsibility for injury or damage that takes place on the leased premises unless it's caused solely by the negligence of his landlord. Jake's customer is injured on the leased premises and wins a judgment of $25,000 against the landlord. Whose insurance policy will pay the judgment? A. Landlord B. Landlord's insurance C. Tenant D. Both the landlord and the tenant

C. Tenant

The valuation condition of the ISO commercial inland marine policy states property will be valued at the smallest of three amounts. Which of the following is not one of those amounts? A. The actual cash value of covered property at the time of loss B. The reasonable cost to repair covered property C. The market value of covered property D. The cost to replace covered property with similar property

C. The market value of covered property

Michael and Tricia have spent much time and money to landscape their property. They are concerned about the extent of homeowners coverage for loss to the trees, shrubs, plants, or lawns on the premises. Damage to these items is not covered if caused by A. Fire or lightning B. Explosion C. Windstorm, hail D. Vehicles not owned or operated by a resident of the insured premises

C. Windstorm, hail

Josie's Juice Joint loses electricity due to a blackout that results after lightning strikes the electric company's power source. Much of Josie's refrigerated inventory spoils and must be replaced. Will her businessowners policy pay for the damages? A. No. Losses due to blackouts are excluded. B. Yes, if she carried utility services ' time element coverage. C. Yes, if she carried the utility services ' direct damage endorsement. D. No. Lightning is not a covered peril.

C. Yes, if she carried the utility services ' direct damage endorsement.

Tara lost a bred heifer when it was struck by lightning. Although the cow's actual cash value was $2,050, the animal was not specifically declared on the declarations. Therefore, she expects that the maximum amount payable for the loss will be A. $2,050, the actual cash value of the cow B. $2,460, or 120% of the cow's actual cash value C. Whatever the limit would be had she scheduled the cow on the declarations D. $2,000

D. $2,000

The earthquake endorsement is attached to Paulina's homeowners policy. When two earthquakes occur within a 24-hour period, how does her policy consider the two earthquakes? A. As two separate earthquakes and two separate losses B. As two separate earthquakes and the second one isn't covered C. As one earthquake and the second one isn't covered D. As one earthquake and one loss

D. As one earthquake and one loss

Any bodily injury or property damage due to the use, sale, manufacture, delivery, transfer, or possession by any person of cocaine, marijuana, or a narcotic is excluded in a homeowners policy by the A. Narcotics Exclusion B. Personal Liability Exclusion C. Loss Assessment Exclusion D. Controlled Substance Exclusion

D. Controlled Substance Exclusion

The DP 2 and DP 3 forms are alike in that both A. Have the same valuation provision B. Cover personal property on an open perils basis C. Cover the same named perils D. Cover personal property on a named perils basis

D. Cover personal property on a named perils basis

Felicia's homeowners policy contains a limit of liability on the Declarations page that reads '$5,000 per person.' To which of the following coverages does it apply? A. Coverage A ' Dwelling B. Coverage C ' Loss of Use C. Coverage E ' Personal Liability D. Coverage F ' Medical Payments to Others

D. Coverage F ' Medical Payments to Others

An exempt commercial policyholder is any person who employs or retains a risk manager to obtain Type II insurance, excluding a purchaser of title insurance, and who meets any one of the following criteria EXCEPT: A. Purchased type II insurance with aggregate premiums of at least $50,000 during the most recent calendar year B. Has a net worth of at least $10 million C. Has annual net revenues or net sales of at least $10 million D. Has an annual operating budget of at least $2.5 million

D. Has an annual operating budget of at least $2.5 million

Hart Food Supply was forced to shut down for two days when the electrical service to its building was disrupted due to a motor vehicle accident that took place on the other side of town. How will the Special Causes of Loss Form on Hart's commercial property policy respond to its claim for spoiled inventory? A. It will pay the claim after application of the deductible B. It will pay the claim; no deductible applies to coverage for Power Failure C. It will deny the claim under the Loss of Market exclusion D. It will deny the claim under the Off-Premises Utility Service Interruption exclusion

D. It will deny the claim under the Off-Premises Utility Service Interruption exclusion

An insurer may refuse to issue a fire insurance policy for a property located in an area federally designated as a disaster area due to wildfire if the refusal is based on the property's A. Zip code B. County location C. Distance from a wildfire D. Location within an immediately threatened area

D. Location within an immediately threatened area

Jay is taking a course on Insurance Basics. One of the items on an exam asks him to provide the correct response to the following statement: Business personal property coverage typically does not apply to _____. How does Jay respond? A. Inventory owned and used by the insured in the business B. Business equipment rented by the insured for use in the business C. Tenant's improvements and betterments D. Money and securities

D. Money and securities

In the National Flood Insurance Program, the dwelling form provides building and contents coverage for each of the following eligible properties EXCEPT: A. Dwelling units in residential condominium buildings. B. Single-family, non-condominium residences with incidental occupancy of less than 50% of the total floor area C. Residential townhouses and rowhouses D. Personal contents in a commercial building

D. Personal contents in a commercial building

Natalie offers to rent a room in her home to a local college student. Izzy agrees to rent the room but is concerned about the valuable electronic equipment he owns. Are Izzy's personal belongings, including his electronic equipment, insured under Natalie's homeowners policy? A. All personal property in the insured residence is covered by the policy. B. All personal property in the insured residence, or on the residence premises, is covered. C. Personal property of roomers or boarders is covered up to $1,500. D. Personal property of roomers or boarders is excluded under the homeowners policy.

D. Personal property of roomers or boarders is excluded under the homeowners policy.

Vanessa has a DP 1 policy, which she knows covers her computer equipment. Members of her computer club will be staying with her this weekend and she is not sure if their computers are also covered under her policy. As her agent, you explain that Coverage C'Personal Property in a dwelling policy covers A. Personal property of any guests staying with her B. Personal property of any visitors C. Personal property of hers only D. Personal property of the named insured (Vanessa) and resident family members

D. Personal property of the named insured (Vanessa) and resident family members

To qualify as property under the Nationwide Inland Marine Definition, all but which of the following is true? A. Property must be moveable B. Property must be in transit C. Property must have some relationship to transportation or communication D. Property must be manufactured goods'

D. Property must be manufactured goods'

Toby's Aunt Bertha trips on a throw rug while visiting his home. She breaks an arm in several places and requires surgery. Toby knows Aunt Bertha's medical expenses will be high and wonders if his homeowners policy will cover her expenses. Where will he find this information? A. The amount listed on his policy's declaration page for loss of use B. The amount listed in his policy's insuring agreement C. The amount listed in his policy's conditions provision D. The amount listed on his policy's declarations page for medical payments

D. The amount listed on his policy's declarations page for medical payments

All of the following are eligibility requirements for the Home Business Insurance Coverage endorsement that can be added to a homeowners policy EXCEPT: A. The business must be owned by the named insured B. The business must be operated from the residence premises C. The business may have up to 3 employees D. The business must manufacture personal care products

D. The business must manufacture personal care products

Which of the following statements BEST describes the homeowners endorsements that are used to provide coverage for fungi, wet or dry rot, and bacteria? A. They provide coverage at the Coverage A limit B. They provide coverage at the Coverage C limit C. They provide coverage on an open perils basis D. They provide limited coverage

D. They provide limited coverage

What is the maximum penalty for a violation of the Fraudulent Claims and Arson Information Reporting Act? A. Three months imprisonment or a fine of $250 B. Three months imprisonment and a fine of $250 C. Twelve months imprisonment or a fine of $1,000 D. Twelve months imprisonment and a fine of $1,000

D. Twelve months imprisonment and a fine of $1,000

Which of the following entities is not eligible for the businessowners policy? A. Botany Place Residential Condominium Association B. Crepe Suzette's Caf' C. Happy Family Grocery Mart D. Valley Bank & Trust

D. Valley Bank & Trust