Property Insurance Test

Which of the following losses would be covered by a flood policy? A) The insured's basement furniture is destroyed when a pipe bursts in the bathroom B) Heavy rains cause a lake to overflow and flood the basement and first floor of a house C) Water backs up through a sewer system and floods the insured's bathroom D) Water damage occurred in the insured's basement when the washing machine leaked

B) Heavy rains cause a leak to overflow and flood the basement and first floor of a house

All of the following are included under section I have the homeowners policy except... A) Personal property B) Medical bills C) dwelling D) Other structures

B) Medical bills

Which of the following is not covered by a dwelling policy? A) Rent an insured was unable to collect because rental property was damaged B) War C) Detached garage on the insureds promises D) Improvements, alterations, or additions made by an insured at her own expense

B) war

Which of the following is not covered in the inland marine sign coverage form? A) And attached neon sign B) A detached fluorescent sign C) A sign that breaks during installation D) A sign that is being stored on the insureds property

C) A sign that breaks during installation

If a building insured under the building and personal property coverage form was vacant for 90 days... A) A water damage or loss would be covered B) A glass breakage loss would be covered C) A vandalism loss would not be covered D) A theft or attempted theft would be covered

C) A vandalism loss would not be covered

An additional loss that results from a direct loss to property is called... A) A proximate loss B) A punitive loss C) An indirect/consequential loss D) A liability loss

C) An indirect/consequential loss

Of the four categories provided under section I have the homeowners policy, which one provides coverage against loss of use, an indirect loss? A) Coverage A B) Coverage B C) Coverage C D) Coverage D

D) Coverage D

A hardware store is insured under a business income coverage form with the basic causes of loss form. Which of the following perils would not be covered? A) Fungus, wet rot, and bacteria up to $15,000 B) Explosion C) Vandalism D) Damage from the weight of ice, sleet, or snow

D) Damage from the weight of ice, sleet, or snow

Which of the following describes an insurance company doing business in a state other than the one where it is incorporated? A) nonadmitted B) Domestic C) Alien D) Foreign

D) Foreign

Which of the following is not a type of inland marine coverage form? A) commercial articles coverage form B) Valuable papers and records coverage form C) Signs coverage form D) Personal items coverage form

D) Personal items coverage form

Which of the following broad perils is covered by the HO-2 and HO-3? A) Power interruption that occurs off the premises B) flood C) war D) Sudden and accidental rupture of a heating system

D) Sudden and accidental rapture of a heating system

Which one of the following is not one of the common policy conditions in a commercial package policy? A) The changes condition B) The premiums condition C) The cancellation condition D) The refund of premium condition

D) The refund of premium condition

Each of the following business occupancies would be permitted in a dwelling insured under a dwelling form except... A) A photographic studio B) A beauty shop run by the insured and her daughter C) A professional office providing services to clients D) a farm

D) a farm

The cause of loss is also called... A) an exposure B) a peril C) a risk D) a transfer

B) a peril

And insured has $20,000 insurance with company A and $40,000 with company B. Assume both policies contain another insurance clause specifying pro rata. What would company A pay if there was a $24,000 loss? A) $8,000 B) $0 C) $20,000 D) $12,000

A) $8,000

Most flood insurance coverage is provided by... A) A federal government program B) State run programs C) Private insurance companies D) Surplus lines insurers

A) A federal government program

Which of the elements of a legal contract does an insurance premium payment represent? A) Acceptance B) legal instrument C) consideration D) Offer

A) Acceptance

Widget Enterprises wants property insurance for a new warehouse it is building. Widget also wants the policies limit of insurance to gradually increase as the value of the building under construction increases. Which commercial property coverage form would best fit Widgets needs? A) Builders risk reporting form B) Business owners coverage form C) Business income coverage form D) Building and personal property coverage form

A) Builders risk reporting form

All of the following can be included In a commercial property policy (CPP) except... A) Health and disability insurance B) Commercial casualty coverage C) Commercial property coverage D) General liability

A) Health and disability insurance

The primary purpose of the business income coverage forms is to reimburse the insured for... A) Loss of income resulting from property damage at the insureds property B) Loss due to employees work related injuries C) Damage to accounts receivable records D) The costs of debris removal following loss from a covered peril

A) Loss of income resulting from property damage at the insureds property

The condition that provides a means to settle the amount of a loss when the insured and the insurance company cannot agree is... A) The appraisal condition B) The assignment condition C) The discovery period condition D) The subrogation condition

A) The appraisal condition

Which of the following would be covered under the building coverage of the building and personal property coverage form? A) fixtures B) lawns C) patios D) land

A) fixtures

The principle that states that an insured should be restored to approximately the same financial position after a loss as before is known as... A) indemnity B) insurability C) subrogation D) adhesion

A) indemnity

It will cost Gary $5,000 to put a new roof on his home to replace a roof destroyed in a windstorm. Assumed that the original roof, which Gary paid $3, 500 for 10 years ago, depreciated $300 per year. What was the actual cash value of the roof that was destroyed? A) $500 B) $2,000 C) $5,000 D) $3,500

B) $2,000

Which of the following personal property items is covered in coverage C of the dwelling policy? A) A 45 foot sailboat B) A 72 inch flatscreen TV C) A race car that was stored in the garage D) A pet parrot

B) A 72 inch flatscreen TV

The builders risk reporting form insures a building under construction for... A) It's completed value but at a reduced rate B) An amount that increases at intervals to correspond with the increase in value of the building C) 10% of its complain of value during the entire construction period D) It's completed value

B) An amount that increases at intervals to correspond with the increasing value of the building

Which of the following is an example of adverse selection? A) And individual with a new car purchases collision coverage B) An individual with a terminal illness purchases health insurance C) an individual, who has a new, healthy baby, purchases medical insurance D) An individual buys a new house and the mortgage company requires homeowners insurance

B) An individual with a terminal illness purchases health insurance

According to the nationwide definition, imports and exports are... A) Not eligible for marine insurance B) Eligible for ocean marine insurance C) Eligible for commercial inland marine insurance D) Eligible for personal inland marine insurance

B) Eligible for ocean marine insurance

Which one of the following is not one of the required elements of a legal contract? A) Offer and acceptance B) Equal risk for all parties C) Competent parties D) Legal purpose

B) Equal risk for all parties

Additional living expense coverage that is included under the broad and special dwelling forms protects the insured against... A) Loss of personal property in a fire B) Extra living costs incurred when the home becomes uninhabitable due to damage by a peril insured against C) Depreciation on the house D) Loss of rental income that occurs when rental property becomes uninhabitable because of damage caused by a peril insured against

B) Extra living costs incurred when the home becomes uninhabitable due to damaged by a peril insured against

Which type of insurance covers exposures that involve property and merchandise while in transit or "floating"? A) Ocean marine insurance B) Inland marine insurance C) Commercial floating insurance D) Property insurance

B) Inland marine insurance

The purpose of a binder is to... A) eliminate the need for the policy to be countersigned when it is issued B) Provide temporary protection for the insured between the time the application is made and the policy is issued or the binder expires C) Guarantee that an insurance policy will be issued provided the insured has made no misrepresentations on the application D) Provide the insurance company with the required information about the insured to decide whether or not to issue the policy

B) Provide temporary protection for the insured between the time the application is made and the policy is issued or the binder expires

Which of the following is an available coverage option under the equipment breakdown protection coverage form? A) Maintenance B) Utility interruption C) Debris removal D) Premises operations

B) Utility interruption

Each of the following kinds of property may be covered under a building and personal property coverage form except... A) and insured's tenants use interest in improvements and betterments B) Autos for sale C) Permanently install the fixtures and machinery D) Completed additions

B) autos for sale

Assume the following items were stolen from the insured's home. Which one of these losses would be fully covered under coverage C of the homeowners policy, assuming the loss was for the full value of the property described? A) A $2,000 Ruby and diamond ring B) A $3,000 fur coat C) A $2,000 laptop computer the insured uses for her In Home accounting business D) An antique gun valued at $5,000

C) A $2,000 laptop computer in the insured uses for her in-home accounting business

The type of insurance company in which the policyholder is considered an owner and also shares in the profits, is... A) A reciprocal company B) Lloyds association C) A mutual company D) A stock company

C) A mutual company

A moral hazard is... A) Arises from the condition, occupancy, or use of the property itself B) Is the tendency for people with a higher-than-average risk of loss to seek insurance coverage C) Arises through an individuals carelessness or irresponsible actions D) Is the tendency to create a loss on purpose to collect from the insurance company

C) Arises through and individuals carelessness or irresponsible actions

An individual who owns and lives in a condominium can obtain broad coverage for personal property in the condo under which homeowners form? A) HO-4 B) HO-3 C) HO-6 D) HO-2

C) HO-6

Which of the following is not eligible for commercial inland marine insurance? A) Domestic shipments B) Commercial floater risks C) Imports and exports D) Instrumentalities of communication

C) Imports and exports

Which commercial property coverage form covers damage to the property of others in the insureds care, custody, or control, but only if the insured is legally liable? A) Builders risk coverage form B) Extra expense coverage form C) Legal liability coverage form D) All commercial property coverage forms provide this type of coverage

C) Legal liability coverage form

What covers a carriers liability for loss or damage of cargo while it is being transported in a truck? A) Truckers coverage form B) Trip transit policy C) Motor truck cargo policy D) Motor carrier coverage form

C) Motor truck cargo policy

Coverage L Provides coverage for damages that the insured becomes a legally obligated to pay because an occurrence caused bodily injury or property damage. This coverage is also known as... A) Commercial liability B) professional liability C) Personal liability supplement D) Medical payments to others

C) Personal liability supplement

All of the following are perils covered under the basic section in farm coverage except... A) Earthquake or flood loss to livestock B) Explosion C) Attacks on covered livestock by wild animals D) Fire

C) Tax on covered livestock by wild animals

Furniture that is destroyed when a building burns down is an example of what kind of loss? A) residual B) Consequential C) Direct D) Indirect

C) direct

Under the commercial package policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer? A) last-named-insured B) any-named-insured C) first-named-insured D) any insured

C) first-named-insured

Special (open) peril coverage for both the dwelling and personal property is provided by... A) the HO-2 B) the HO-3 C) the HO-5 D) the HO-4

C) the HO-5

Statements made on an application that are guaranteed to be true are... A) representations B) Promises C) warranties D) Misrepresentations

C) warranties

The insured's home is covered by a DP-3. Two years ago, the insured bought the home for $88,000. Today, it's replacement value is $100,000. How much coverage A does the insured need to qualify for replacement cost coverage? A) $60,000 B) $40,000 C) $88,400 D) $80,000

D) $80,000

According to the cancellation condition in the common policy conditions form, if the insurance company is canceling a homeowners policy for any reason, the insurance company must give 10 days written notice to the insured during the first... A) 10 days of the policy term B) 15 days of the policy term C) 30 days of the policy term D) 60 days of the policy term

D) 60 days of the policy term

The homeowners form that provides special peril coverage on the dwelling and broad coverage on personal property is... A) the HO-2 B) the HO-4 C) the HO-6 D) the HO-3

D) the HO-3