Questions I Got Wrong on Property Practice Exam

What coverages are found in Section I of a homeowners policy?

Property coverage; perils insured against; exclusions; conditions

The endorsement that can be attached to a Boiler and Machinery policy to provide coverage for perishable property for spoilage or damage caused by contact with refrigerant is called

Refrigeration interruption coverage

What type of information would be found in a policy's insuring agreement? A) Policy limits B) Insurer's address C) Renewal date D) Location of premises

Renewal date. Insuring Agreement establishes the obligation of the insurance company to provide the insurance coverages as stated in the policy. The insuring agreement lists the parties to the contract, the effective and renewal dates, the description of coverage provided, and perils.

An insured has a homeowners policy and is required to be a member of the homeowners association in her neighborhood. The association's community house has burned down, and the insured has been assessed $1200 for her share of the rebuilding cost. How much of the assessment will her homeowners policy pay?

$1000; As an additional charge, homeowners policies will pay up to $1000 of a loss assessment.

Before the Commissioner will issue a broker's license, the licensee must obtain a bond for at least $______.

$15,000

If the commissioner is scheduling a hearing for a potential violation of the Insurance Code, the aggrieved party must receive a notice of hearing at least how many days in advance?

10 days

If the ownership of an insured vessel changes involuntarily, within how many days of ownership transfer will the hull policy terminate?

15 days

The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period?

3 years

After appointing an agent, how long does an insurer have to file with the Commissioner the form detailing the agent's details?

30 days

The initial binding period for a new workers compensation coverage issued by the NC Rate Bureau is how many days?

30 days

The initial binding period for new workers compensation coverage issued by the NC Rate Bureau is...

30 days

The removal coverage included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long?

30 days

An agent has completed a total of 30 hours of continuing education (CE) during a license renewal period. How many of these hours may the agent apply toward the next CE compliance period?

6

Assuming the insurer and the insured agree to the amount payable for a loss covered under a dwelling policy, how soon after the insurer has received proof of loss must it make payment?

60 days

If an insured ship has been stranded, what will the insurer pay for?

To sight the bottom even if no damage is found

What is a material misrepresentation?

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

What type of coverage is the fire department service charge on the builders risk form?

Additional coverage

During the first 30 days after a community enters the emergency or normal programs, coverage on a flood policy begins when?

At 12:01 a.m. the day after application and premium payment have been mailed

Which of the following is an additional coverage that is covered by the broad causes of loss form? A) Lightning B) Ordinance or law C) Settling D) Collapse

Collapse

With regards to a homeowners policy, which coverage provides for indirect or consequential losses?

Coverage D; loss of use, which is indirect loss

Which types of losses are covered by the standard fire policy? Direct, indirect, both, or neither?

Direct losses only

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT: A) An offer to share in commissions generated by the sale B) Dividends from a mutual insurer C) An offer of employment D) Stocks, securities, or bonds

Dividends from a mutual insurer

In addition to the common policy conditions, all of the following conditions apply to liability coverage EXCEPT: A) Bankruptcy B) Employers liability C) Separation of insured D) Legal action against insurer

Employers liability; it is an exclusion.

All of the following are exclusions that apply in all three types of DP EXCEPT: A) Earth movement B) Fire or lightning C) Government action D) Water damage

Fire or lightning

When an insurer requires a written proof of loss after notice of such loss has been given by the insured or beneficiary, the company must provide what?

Furnish a blank form to be used for that purpose

A Mobile Homeowners policy is structured the same as what type of policy?

Homeowners policy

All of the following are conditions commonly found in the insurance policy EXCEPT: A) Insuring agreement B) Cancellation and nonrenewal C) Subrogation D) Appraisal

Insuring agreement. This just provides info on the policy's coverages. Conditions state the legal obligations and duties of the parties to the contract.

A basic dwelling policy automatically provides coverage against fire, lightning, and...

Internal explosion

How does the mobilehome endorsement affect the other coverage of law or ordinance in a homeowners policy?

It removes the coverage

The Business Pursuits endorsement under Section II of a homeowners policy will cover all of the following EXCEPT: A) Insured's activities B) Bodily injury to the insured C) All business pursuits D) Business liability

It will not cover business liability.

What type of perils are covered under a standard fire policy?

Named perils

At what point is an agent required to provide the client a "notice of information practices"?

No later than at the time of the delivery of the insurance policy or certificate when personal information is collected only from the applicant of from public records

The need for essential property insurance for the beach and coastal areas of NC resulted in the creation of the...

North Carolina Insurance Underwriting Association

When an insurer and insured enter into a contract, both parties must be of legal age and mentally competent. If it can be proven that an applicant was incapable of making a buying decision during the application process, the policy could be ________.

Voided

What endorsement may be added to a homeowners policy to protect against property damage caused by the overflow of a sump pump?

Water back up and sump discharge or overflow

When is a producer allowed to charge a service fee in addition to the premium for the processing of an application for insurance?

When consented to in writing by the applicant.

Business income will pay beyond the expiration date of the policy. When will it stop paying?

When the business is restored or the limits of coverage are exhausted, whichever comes first.

Personal business property out in the open is covered under commercial property policy only while...

Within 100 feet of the described premises

A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT: A) General liability coverage B) Workers compensation coverage C) Crime coverage D) Boiler and machinery coverage

They cannot select workers compensation coverage

What are Flood Hazard Boundary Maps (FHBM?)

They indicate which areas in a community are subject to severe flooding and are the basis used for requiring a community to join the NFIP

An insured is a member of the neighborhood association, and has become liable for damage to a third party. Each member of the association has been assessed a portion of the loss equal to $2000. How much will the Loss Assessment additional coverage of the insured's HO liability policy pay?

Up to $1000; The policy will pay up to $1000 per occurrence for the insured's share of loss assessment charged against them as owner or tenant of the residence premises during the policy period by a corporation or association of property owners.

All of the following are essential elements of a commercial package policy EXCEPT: A) Valuations and/or settlement provisions B) Interline endorsements C) Declarations page D) Policy conditions

Valuations and/or settlement provisions

An agent or limited representative may from time to time act as an adjuster and investigate and report upon claims, when requested by an insurer. He/she may do so...

Without being licensed as an adjuster

What is the standard deductible on a dwelling policy?

$250

If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to $____.

$500

A commercial property special form covers property in transit up to...

$5000

Which method of loss valuation is contrary to the basic concept of indemnity?

Replacement cost; because following a loss, it may provide the insured with a settlement in excess of the property's actual cash value

How long is the waiting period after the application has been accepted before flood coverage goes into effect?

30 days

All of the following are true regarding the exceptions to the notice requirements EXCEPT: A) When an agent discloses a policyholders medical information to an insurer B) An insurance institution is not required to provide the notice if the address is deemed invalid C) An insurance institution may provide a single notice if a policy is jointly owned D) Any policyholder whose policy is lapsed and the insurer has not communicated with the policyholder for a period of 12 consecutive months

A) When an agent discloses a policyholders medical information to an insurer

Under the HO-4 and HO-6 homeowners policy forms, property is insured against what type of perils?

Broad form perils

An agent receives a cash premium payment from one of his clients. He deposits the cash into his own personal business account and subsequently drafts a premium check from the business account and forwards that on to the insurer. The agent is guilty of...

Commingling

Which of the following examples of losses paid under an HO-3 also would be covered under an HO-2 homeowners policy? A) Damage to the dwelling caused by ash or dust from a volcanic eruption B) Damage to the dwelling caused by the insured when moving furniture C) Accidental scorching caused when a hot iron is placed upon a build-in counter top D) Interior damage caused by water seeping under the shingles on the roof

Damage to the dwelling caused by ash or dust from a volcanic eruption

Elaborate homes and those with detailed designs or decorative architecture with replacement costs greater than ACV or market value are insured on what type of policy?

HO-8

Provided that a loss did not result from negligence by the insured, the owners, or the managers of a vessel, additional perils are covered under the....

Inchmaree clause

Whenever a Bureau rate is held to be unfairly discriminatory or excessive and no longer effective by the Commissioner, the members of the Bureau shall have the option to continue to use such rate for the interim period pending judicial review of such order. What should each member do with the premium collected during such interim period?

Place it in escrow account

Which rates are higher, Pre-FIRM or Post-FIRM?

Pre-FIRM rates are higher than Post-FIRM

All property losses under the basic form are settled on what basis?

Replacement cost