Chapter 1 - intro to insurance practice test, Chapter 2 practice exam - Insurance Contracts, Chapter 3, 5, 6, 8,9,12,13,15, Property Certification exam, Illinois Property & Casualty Insurance Day 2 - Commercial Lines, Casualty Certification Exam, Ill...

Which of the following types of property IS covered under Section I of the BOP? A. Completed additions B. Money and securities C. Land, including land on which the property is located D. Automobiles and motor trucks

A. Completed additions

Coverage B: Other structures Insurance limit is up to ______ of coverage A

10%

Under the Jewelers Block Floater, which of the following losses can be covered by a Coverage Option when indicated in the Declarations?

Theft of jewels stored in an on-premises show window that was smashed by burglars

Under Section II of the BOP, the Duties in the Event of Occurrence, Offense, Claim, or Suit condition states that insureds must do all of the following, except:

Voluntarily incur expenses or make payments

K makes a statement on the insurance application guaranteeing that they have a fire alarm system. Having the alarm system is required by the insurer in order for the policy to be issued. K's statement is considered a(n):

Warranty

Under what coverage does the HO-6 Unit-Owners form, provide other structures coverage: A. Coverage A - Dwelling B. Coverage C - Personal Property C. Coverage D - Loss of Use D. Coverage E - Personal Liability

A. Coverage A - Dweilling

**Which of the following forms provides open perils coverage for Coverages A, B, and C? A HO-5 B HO-8 C HO-6 D HO-3

A. HO-5

Which of the following forms provides named perils coverage to the owner of a condominium or cooperative unit? A HO-6 B HO-4 C HO-8 D HO-5

A. HO-6

How is debris removal categorized in the Businessowners Coverage Form?

Additional Coverage

Under the Mortgage clause of a property policy, a mortgagee is given the right to do all of the following, except:

Assign the policy to another person with the insurer's permission

Which of the following is not eligible for coverage under a Businessowners policy? A Beauty parlors B Shoe repair shops C Barber shops D Auto dealerships

Auto dealerships

If an insurer issues a policy for which the insured pays a deposit premium, the insurer will:

Conduct a premium audit at the end of the policy period to determine the final premium

Which of the following is not covered under the Installation Floater?

Construction equipment

An insurance contract is prepared by the insurer and submitted to the applicant on a take-it-or-leave-it basis, without negotiations. This describes which type of contract?

Contract of adhesion

Which is true of Coverage C of the Dwelling Policy?

Coverage C provides coverage for the personal property of a guest

Which part of the insurance contract specifies the risks the policy will not cover? A Conditions B Insuring Agreement C Declarations D Exclusions

D. Exclusions

Physical damage coverage in the Business Auto Coverage Form includes which of the following perils? A. Wear and tear B. Blowout of tires C. Mechanical breakdown D. Flood

D. Flood

Which of the following is NOT an "insured location?" A. Individual and family cemetery plots B. Land owned by an insured where a residence is being built for the insured C. A non-owned premises where the insured is residing temporarily D. Forty acres of vacant farmland owned or rented by the insured

D. Forty acres of vacant farmland owned or rented by the insured

After a fire loss to a commercial building, an insured incurs expenses when they move business operations to a temporary replacement location while the building is repaired. Under the Extra Expenses Coverage Form, coverage for these expenses begins:

Immediately

All of the following are true of a Personal Umbrella Liability policy, except: A Specific minimum limits for underlying coverage are required B Coverage is excess over the underlying policy C Liability losses relating to the insured's business are covered D Coverage applies worldwide

Liability losses relating to the insured's business are covered personal Umbrella Liability policies will exclude losses arising out of business pursuits or the insured's professional liability.

Which of the following coverages is not provided by the Personal Liability Supplement?

Medical payments to a regular resident of the dwelling who sustains an injury

Comparative Negligence

Damages are reduced in proportion to the claimant's degree of negligence

An HO-3 policy will pay how much for a tree damaged in a windstorm?

$0 The most paid for a covered tree is $500, but coverage is not provided for windstorm or hail losses.

Under the Building and Personal Property Coverage Form, what limit of insurance applies when coverage is extended to cover business personal property temporarily away from the premises?

$10,000 The Property Off Premises Coverage Extension provides up to $10,000 for property that is temporarily at a location the insured does not own, lease, or operate, including while the property is at a fair, trade show, or exhibition.

After a storm, ABC Bakery suffers the following losses: $500 in damage to a free-standing sign, $500 in damage to a fence, and $1,500 in damage to a decorative Japanese maple tree. How much will ABC Bakery's BOP pay for these losses if the policy includes the Outdoor Property Coverage Extension?

$2,000 The BOP's Outdoor Property Coverage Extension will pay the full cost of the non-attached sign and the fence. The tree would only be covered up to $1,000.

S has a sailboat covered under a Boatowners Policy with a deductible of $300. The hull suffers collision damage totaling $500, and later, the motor suffers a $300 fire loss. S submits two claims to the insurer. How much would the insurer cover for the losses?

$200 The deductible for any watercraft policy applies per occurrence, meaning S would be responsible for the first $300 of both claims. The insurer would then pay the remaining cost, which would be $200 on the collision claim

C's home has a replacement value of $125,000, and C insures the home for $75,000. A fire causes $40,000 in damages to C's home. If C's insurance policy requires C to insure the home for at least 80% of its replacement value, how much will the insurer pay for the loss?

$30,000 would need to insure the home for $100,000 to meet the policy's coinsurance requirement. Because C carries only 75% of the insurance required by the coinsurance clause, the policy will pay for 75% of the loss

All of the following are duties of the insured following a property loss, except: A Submit a formal proof of loss B Protect property from additional damage C Immediately notify the department of insurance in case of loss D Inventory lost property

** CHeck** C. Immediately notify the department of insurance in case of loss

**All of the following perils are automatically covered under the DP-3, except: A Hail B Theft of contents C Damage by burglars D Smoke damage

**Check** B. Theft of contents

Loss conditions

- Appraisal for Physical Damage Loss - Duties in the Event of Accident, Claim, Suit or Loss - Legal Action Against the Insurer - Loss Payment — Physical Damage Coverages - Transfer of Rights of Recovery

General Conditions

- Bankruptcy - Concealment, Misrepresentation, or Fraud - Liberalization - No Benefit to Bailee — Physical Damage Coverages

Duties in the Event of a Loss Obligations of the insured in the event of the loss:

- Provide prompt, written notice of loss - Notify police in case of loss by theft - Protect property from further damage - Cooperate with claims investigation - Prepare an inventory of damaged property - Allow inspection of damaged property, books, and records - Submit proof of loss, including time and cause of loss, other insurance, and receipts and evidence to support the loss

Under a Dwelling Policy, an insured tenant may use up to what percentage of the Coverage C limit of insurance for a covered loss to improvements, alterations, and additions made at the insured's expense to that part of the described location occupied by the named insured?

10%

How many days after an employee's termination by an insured would a crime loss committed by the former employee be covered under a Commercial Crime policy?

30

Under the terms of a Commercial Crime policy, an individual is considered to be an employee until:

30 days after the individual is terminated

Under the Commercial Building and Personal Property Coverage Form, the commercial building owned by the insured is considered vacant unless at least what percentage of the square footage is rented or is used to conduct operations?

31% A completed building is considered vacant unless at least 31% or more of the total square footage is rented or is used to conduct operations.

All of the following events could end coverage provided by the Builders Risk Coverage Form, except: A 90 days after construction is complete B The property has been accepted by a purchaser C The insured does not intend to complete construction D 45 days after the covered building is put to its intended use

45 days after the covered building is put to its intended use The Builders Risk Coverage Form offers a number of circumstances that could trigger coverage termination. If the covered building is partially or fully occupied, or if it is put to its intended use, the insured has 60 days before that circumstance would terminate coverage.

Dwelling policies consider one volcanic eruption to be all eruptions that occur within what time period?

72 hours

All of the following are eligible for coverage under the Dwelling Program, except:

A beauty shop with a small bedroom attached

All of the following may be listed as an insured on a property policy, except:

A business with temporary custody of the insured property

Certificate of Insurance

A document indicating insurance was in effect on a particular date: - Effective Date - Name of Insurer - Name of Insured - Limits of Liability - Type(s) of Insurance

Additional Insured

A person or organization not normally an insured on the policy but for whom insured status is arranged by endorsement to the policy

Bailee

A person or organization taking into its possession the property of another - usually for servicing repair or storage

All of the following are common examples of exempt workers not required to be covered under Workers' Compensation, except: A Union plumber B Sole proprietors C Domestic employee D Ranch laborer

A union plumper

P has an auto policy with liability limits of $30,000/$60,000/$10,000. P negligently runs off the road and causes $70,000 damage to an apartment building. How much will the policy pay? A $10,000 B $60,000 C $70,000 D $30,000

A. $10,000

Which of the following is NOT an insured on an unendorsed homeowners policy? A. A 75-year-old grandparent residing in an adult care facility B. An 89-year-old uncle residing in the household C. An 18-year-old foster child residing with the insured D. A 20-year-old son enrolled as a full-time student in an out-of-state college

A. A 75-year-old grandparent residing in an adult care facility

Which of the following statements is NOT true about Part A - Liability Coverage? A. A vehicle used on a race track is covered B. The amount shown in the declarations is the maximum amount the insurer will pay for any one accident C. Coverage for non-owned vehicles is provided on an excess basis D. Supplementary Payments are paid in addition to the limits of liability

A. A vehicle used on a race track is covered

**Which term describes the cost to replace property with a deduction for depreciation? A Actual cash value B Stated value C Replacement cost D Fair market value

A. Actual Cash value

Which of the following persons is NOT an insured in a CGL policy? A. An employee on his lunch break B. An employee when making a bank deposit for the company C. A company stockholder D. A leased worker

A. An employee on his lunch break

"Personal and advertising injury" includes all of the following, EXCEPT? A. Bodily injury B. False arrest C. Libel and slander D. Malicious prosecution

A. Bodily Injury

Which of the following types of property may be covered under a Building and Personal Property Coverage Form? A. Hay and grain inside a building B. Personal property while waterborne C. Personal property that is covered elsewhere D. Vehicles licensed for road use

A. Hay and grain inside a building

The insuring agreement includes which of the following? A. Insurer's promise of payment B. Exclusions C. The obligations the insured and insurer agree to follow D. Loss payable clause

A. Insurer's promise of payment

All of the following are time element coverage forms, except: A Legal Liability Coverage Form B Business Income Without Extra Expense Coverage Form C Business Income and Extra Expense Coverage Form D Extra Expense Coverage Form

A. Legal Liability Coverage Form

Which of the following is excluded under Liability Coverage of the Business Auto Coverage Form? A. Moving property from a covered auto with a forklift B. Moving property from a covered auto with a hand car C. Liability assumed in an insured contract D. Unintentional injury

A. Moving Property from a covered auto with a forklift

Which of the following perils insured against are contained in the HO-3 Special Form? A. Open perils B. Standard perils C. Named perils D. Excess perils

A. Open Perils

All of the following are Additional Coverages in the Building and Personal Property Coverage Form EXCEPT? A. Peak Season Coverage B. Fire Department Service Charge C. Preservation of Property D. Debris Removal

A. Peak season coverage

Coverage C - Personal Property includes all of the following in the Dwelling forms EXCEPT? A. Personal property of a tenant B. Personal property of a guest C. Personal property of the named insured D. Personal property of resident relatives

A. Personal Property of a tenant

Which of the following documents verifies how and when a loss or claim occurred and includes the amount of damages? A. Proof of loss B. Notice of claim C. Occurrence notice D. Certificate of insurance

A. Proof of loss

Which of the following is NOT a duty after an accident or a loss? A. Repair damage immediately after loss B. Protect damaged property from further damage C. Promptly notify police if vehicle is stolen D. Cooperate with the investigation and settlement of any claim

A. Repair damage immediately after loss

**Which condition provides the insurer the right to collect against a responsible third party? A Subrogation B No Benefit to Bailee C Liberalization D Restoration

A. Subrogation

The basis of WC rate classification codes is ____________________ of employees. A. The job duties B. The salary C. The length of employment D. The job title

A. The Job Duties

Who guarantees loss payments made by the NFIP? A. The federal government B. All insurers doing business in the state C. The state government D. The reinsurance company

A. The federal government

Which of the following is not unique to the Claims-made Form? A. The inception date B. The retroactive date C. Basic extended reporting period D. Supplemental extended reporting period

A. The inception date

All of the following perils are automatically covered under the DP-3, except: A Theft of contents B Smoke damage C Damage by burglars D Hail

A. Theft of contents

The Business Auto Coverage Form provides coverage for all of the following, except: A Vehicles that are sold, stored, or repaired for others B Hired autos rented or borrowed by the insured C Non-owned vehicles while being used in the business D Any auto if used in the insured business

A. Vehicles that are sold, stored, or repaired for others

Which of the following is required for a burglary to be covered? A. Visible signs of forced entry/exit B. Theft C. Threat of force D. Bodily injury

A. Visible signs of forced entry/exit

Which of the following statements regarding medical payments coverage is not correct? A Payments are considered an admission of guilt B Coverage is typically for bodily injury of a third party as a result of the insured's activities C Expenses as the result of the injury must be incurred within 1 year of the date of the accident D The coverage provides payment for necessary medical, surgical, and hospital expenses

A. payments are considered an admission of guilt

Under the Building and Personal Property Coverage Form, when may the insured abandon property to the insurer?

Abandonment is never allowed

An unintended and unforeseen event from which a loss results is called which of the following?

Accident

What is it called when insureds with less desirable risks seek insurance coverage to a greater extent than insureds with average risks?

Adverse selection the tendency of risks more prone to loss to seek greater than average coverage. The Law of Large Numbers states that a larger number of homogeneous exposure units will improve an insurer's ability to predict losses.

Under the Building and Personal Property Coverage Form, which statement concerning the Agreed Value Optional Coverage is correct?

Agreed value coverage suspends the coinsurance requirement Under the Agreed Value Option Coverage, the insured and insurer agree on the value of certain property, and that value becomes the limit of liability, which makes a coinsurance requirement unnecessary. The Agreed Value Optional Coverage is often used when insuring rare or unusual property, the value of which is difficult or impossible to determine.

All of the following are considered an insured under the Hired Auto and Non-owned Auto Liability Endorsement on a Businessowners policy, except: A The named insured using a non-owned auto B An executive officer using a non-owned auto that is owned by an employee C An employee using an auto they own D An employee using a hired auto with the named insured's permission

An employee using an auto they own

In property and casualty insurance, when a form is attached to alter or add to policy provisions or conditions, it is known as:

An endorsement

Under the Duties in the Event of Los condition, if a fire burns the home and property of an insured, what must the insured provide?

An inventory of the damaged property

K gets a horrible rash after using wrinkle-prevention cream for 2 months. This is considered:

An occurrence

Theft

Any act of stealing. Burglary and robbery are examples of theft.

Temporary Substitute

Any auto not owned by the insured while used as a _______ __________ for any "your covered auto" out of normal use due to: ○ Breakdown ○ Repair ○ Servicing ○ Loss ○ Destruction Is NOT a "your covered auto" In part D - coverage for damage to your auto

Misrepresentation

False Statement on the application that renders the contract void if material to acceptance of the risk

Which increment amount is generally used when writing Umbrella Liability policies? A $2 million B $1 million C $100,000 D $500,000

B. 1 million

The definition of "insured" in Part A - Liability Coverage includes all of the following, EXCEPT? A. Any person using insured auto with permission B. A mechanic test driving insured auto C. The named insured D. Any family member

B. A mechanic test driving insured auto

Which of the following is not a covered injury under Workers' Compensation? A An injury arising from a risk reasonably related to employment B A self-inflicted injury that results from an intoxicated employee after hours C An injury that occurs while the employee is performing the duties they were employed to do D An injury that occurs while the employee is at work

B. A self-inflicted injury that results from an intoxicated employee after hours

**When is insurable interest required to exist on a property policy? A At policy delivery B At the time of loss C At the time of application D When the first premium is paid

B. At the time of loss

**By what other name is the Dwelling form DP-2 known? A Blanket Form B Broad Form C Basic Form D Special Form

B. Broad Form

The ____________________ form provides the broadest coverage of all the homeowners forms. A. Broad B. Comprehensive C. Special D. Modified Coverage

B. Comprehensive

**Which section of an insurance policy states the obligations of the parties to the contract? A Exclusions B Conditions C Endorsements D Declarations

B. Conditions

Which section of an insurance policy states the obligations of the parties to the contract? A Declarations B Conditions C Endorsements D Exclusions

B. Conditions

**Which insurance concept is designed to eliminate small claims and help reduce the cost of insurance? A Exclusions B Deductibles C Coinsurance D Indemnity

B. Deductibles

**Which of the following is an example of a peril? A Gasoline stored on the premises B Earthquake C Indifference D Unlocked front door to a home

B. Earthquake

Who is authorized to request changes in the BOP? A. Any insured B. First named insured C. First named insurer D. Insurance Commissioner

B. First named insured

Which of the following perils is NOT included in Earthquake coverage? A. Earthquake movement B. Flood C. Mudslide D. Landslide

B. Flood

Which Homeowners policy form is for dwelling owners who cannot insure their older homes for replacement cost? A HO-6 B HO-8 C HO-3 D HO-2

B. Ho-8

Which statement BEST describes the CGL's claims-made form? A. It covers occurrences that take place after the policy period B. It covers occurrences that take place after the retroactive date C. It covers occurrences that take place within 60 days of the policy expiration date D. It covers occurrences that take place within 60 days before the policy begins

B. It covers occurrences that take place after the retroactive date

Coverage A - Dwelling includes all of the following in the Dwelling forms EXCEPT? A. The dwelling B. Land on which the dwelling is located C. Equipment used to service location D. Structures attached to the dwelling

B. Land on which the dwelling is located

**Which provision encourages the insured to maintain insurance to a certain value? A Replacement cost B Limit of liability C Coinsurance D Insuring Agreement

B. Limit of Liability

the amount of coverage provided for a particular type of coverage is referred to as the: A. Per occurrence limit B. Limit of Liability C. Restoration limit D. Maximum limit

B. Limit of Liability

Payments for necessary medical expenses that are made regardless of the insured's legal liability are covered under which of the following liability coverages? A. Bodily Injury B. Medical Payments C. Punitive Damage D. Personal Injury

B. Medical Payments

The failure to act as a reasonable and prudent person is known as: A Fraud B Negligence C Assumed liability D Strict liability

B. Negligence

Bodily injury includes all of the following, except: A Disease B Personal injury C Physical trauma to a person D Death

B. Personal Injury

The definition of "bodily injury" includes all of the following, EXCEPT? A. Sickness B. Personal Injury C. Disease D. Death

B. Personal Injury

Which of the following is NOT a supplementary payment under Coverages A and B of the CGL? A. Cost of bail bonds up to $250 B. Personal injury and advertising injury C. Reasonable expenses incurred by the insured at the insurer's request D. Claims-related expenses

B. Personal Injury and advertising injury

Insurance that protects professionals from losses that arise out of their professional conduct is referred to as: A Workers' Compensation B Professional Liability C Employer's Legal Liability D Commercial General Liability

B. Professional Liability

The DP-2 Broad Form provides loss settlement for dwellings on which of the following bases? A. Actual cash value B. Replacement value C. Agreed value D. Stated value

B. Replacement value

A statement made on the application that is true the applicant's knowledge is a: A. Concealment B. Representation C. Warranty D. Misrepresentation

B. Representation

All of the following are fidelity bonds, except: A Individual bond B Surety bond C Name schedule bond D Commercial Blanket bond

B. Surety bond

When owned by the insured contractor, all of the following items of property can be protected by the Contractors Equipment Floater, except:

Blueprints

G is interested in obtaining a Special Form Dwelling policy for a secondary home G owns. All of the following statements about the DP-3 are correct, except:

Both the home and G's personal property located in the home would be covered on an open perils basis

Which of the following does NOT appear in the Section IV COnditions of the Business Auto Coverage Form? A. Appraisal B. Duties in event of an accident C. Exclusions D. Coverage territory

C. Exclusions

**Which of the following forms provides named perils coverage to the owner of a condominium or cooperative unit? A HO-4 B HO-8 C HO-6 D HO-5

C. HO-6

**Which Homeowners policy form is for dwelling owners who cannot insure their older homes for replacement cost? A HO-6 B HO-3 C HO-8 D HO-2

C. HO-8

If a homeowners policy insures the dwelling for $500,000 what is the limit of liability applying to personal property? A. $100,000 B. $200,000 C. $250,000 D. $500,000

C. $250,000

Which of the following is NOT a "your covered auto?" A. A car shown in the declarations B. A newly acquired auto C. A pickup used for the transportation of goods D. A trailer owned by the insured

C. A pickup used for the transportation of goods

Which of the following is NOT an "uninsured motor vehicles" under Uninsured Motorists Coverage? A. A hit-and-run vehicle B. A vehicles that has no liability insurance C. A vehicle owned by the insured and not insured on this policy D. A vehicle that has a liability policy in force, but the insurer denies coverage

C. A vehicle owned by the insured and not insured on this policy

Which of the following is NOT excluded under Part A - Liability Coverage? A. Someone who intentionally causes bodily injury or property damage B. An employee on the job C. A vehicle used in a car pool D. A motorcycle

C. A vehicle used in a car pool

When a policy pays for the cost to repair or replace damaged property at its current value less depreciation, the loss settlement is on what basis? A. Stated value B. Scheduled value C. Actual cash value D. Pro-rata

C. Actual Cash Value

Which of the following risks is NOT eligible for a BOP? A. An apartment building B. An office building C. An amusement park D. A family restaurant

C. An amusement park

The Garage Coverage Form generally insures customers' autos on what basis? A. Specific B. Scheduled C. Blanket D. Pro Rata

C. Blanket

Bodily harm, sickness, or disease, including resulting death is the definition of _____________________? A. Personal Injury Coverage B. Vicarious Liability Coverage C. Bodily Injury Coverage D. Third Party Coverage

C. Bodily Injury Coverage

Which of the following coverage forms pays for loss of income during the period a business is shut down due to a covered property loss? A. Extra Expense B. Builders Risk C. Business Income D. Building and Personal Property

C. Business Income

**The Personal Articles Floater provides for all of the following, except: A Claims are settled on an actual cash value basis B Worldwide coverage C Coverage for commercial property D Coverage on an open perils basis

C. Coverage for commercial property

Which part of an insurance policy includes the limits of liability? A Exclusions B Conditions C Declarations D Insuring Agreement

C. Declarations

Which section of an insurance policy includes the names of the insurer and insured, the effective and expiration dates, and the limits of liability? A Exclusions B Conditions C Declarations D Insuring Agreement

C. Declarations

Which insurance concept is designed to eliminate small claims and help reduce the cost of insurance? A Coinsurance B Exclusions C Deductibles D Indemnity

C. Deductibles

Which of the following endorsements is added to any of the commercial auto coverage forms to extend coverage to an individual who doesn't have personal auto insurance? A. Additional Insured — Lessor B. Designated Insured C. Drive Other Car Coverage D. Employees as Additional Insureds

C. Drive other car coverage

All of the following are eligible for coverage on the Dwelling property forms, EXCEPT? A. Dwellings with four apartment units B. Dwellings with incidental business occupancies C. Dwellings located on farms D. Permanently located mobile homes

C. Dwellings located on farms

**If an insured's claim was denied, the mortgagee can collect under the policy as long as the mortgagee meets all of the following requirements, except: A Notify the insurer of any change of ownership or change in risk if aware of those changes B Pay any premium due under the policy on demand if the insured fails to do so C Hire a private investigator to follow the insured D Submit proof of loss to the insurer if the insured fails to do so

C. Hire a private investigator to follow the insured

Which of the following is NOT one of the CGL policy's general conditions? A. Bankruptcy B. Other Insurance C. Impaired Property D. Premium Audit

C. Impaired Property

Which of the following is NOT one of the General Provisions of the personal auto policy? A. Bankruptcy B. Changes C. Insuring Agreement D. Fraud

C. Insuring Agreement

**Which peril is covered under the DP-1? A Weight of ice, snow, or sleet B Falling objects C Lightning D Freezing

C. Lightning - Fire - Lightning - Internal explosion

Under what coverage on the homeowners policy are claim payments for Fair Rental Value made? A. Dwelling B. Personal Property C. Loss of Use D. Other Structures

C. Loss of use

Which of the following is NOT true of Medical Expenses coverage in the BOP? A. Funeral expenses are included B. Expenses must be incurred within one year of a covered accident C. Payment is not made until the insured's legal liability is proven D. Payment is made if injury occurs on the insured's premises

C. Payment is not made until the insured's legal liability is proven

Under the Personal Auto policy, the definition of bodily injury includes all of the following, except: A Bodily harm B Sickness C Physical damage D Death

C. Physical damage

Liability policies typically cover all of the following, except: A Property damage B Bodily injury C Punitive damages D Medical payments

C. Punitive damages

Which of the following types of risk is insurable? A Speculative B Whole C Pure D Partial

C. Pure

**Which peril is NOT covered under Part D of a Personal Auto policy? A Riot B Flood C Road damage to tires D Earthquake

C. Road damage to tires

**The scrap value of damaged property is the: A Actual cash value B Appraisal value C Salvage value D Arbitration value

C. Salvage value The amount for which property can be sold at the end of its useful life. In property insurance, the salvage value is the scrap value of damaged property

*What is another name for the Homeowners form HO-4? A Modified Coverage Form B Broad Form C Tenant's Form D Special Form

C. Tenant's Form

Which of the following defines a hazard? A Coverage for only certain perils B The transfer of a risk C The increase in the chance of a peril occurring D The cause of a loss

C. The increase in the chance of a peril occuring

Which of the following is not included in the Common Policy Conditions? A. Cancellation B. Examination of books and records C. The names of the insured and the insurer D. Inspections and surveys

C. The names of the insured and the insurer

Liability insurance is sometimes referred to as: A. Necessary insurance B. Two-party insurance C. Third-party insurance D. Just-in-case insurance

C. Third-party insurance

What type of policy can broaden coverage and add further insurance for losses covered by the underlying policies? A Commercial General Liability B Extra Expense C Umbrella Liability D Professional Liability

C. Umbrella

** For insurance purposes, an unfurnished beach house in which no one lives is considered: A Unused B Empty C Vacant D Unoccupied

C. Vacant

The liability assigned to one party for the conduct of another, based solely on a relationship between the two, is: A Gross negligence B General liability C Vicarious liability D Personal injury

C. Vicarious liability

What peril is covered under the Basic, Broad, and Special Causes of Loss Forms? A. Falling objects B. Weight of ice, snow, or sleet C. Windstorm D. Water damage caused by accidental discharge

C. Windstorm

**An insured and insurer will utilize which of the following when they are unable to agree on the amount of a property claim to be paid? A Subrogation B Recession C Appraisal D Assignment

C. appraisal

The abrupt falling down or caving in of a building disallowing it to be used for its intended purpose is the definition of:

Collapse

Section II of a Businessowners policy provides the same liability coverage as a:

Commercial General Liability policy

According to the Nationwide Marine Definition, all of the following risks may be insured by inland marine insurance, except: A Cargo being transported for export B Domestic shipments C Commercial autos D Transmission towers and their equipment

Commercial autos

The Electronic Data Processing Coverage Form typically provides coverage for which of the following items of property used for commercial purposes?

Computer hardware, data, and media The Electronic Data Processing Coverage Form provides coverage for computer hardware and associated equipment, data, and media, including software. Portable computers like laptops, notebooks, and tablets are often excluded from coverage under this form.

Which of the following applies when two parties rely upon the promises of the other?

Concept of utmost good faith

Under a policy written through the National Flood Insurance Program, all of the following statements about coverage are correct, except:

Coverage becomes effective after a 24-hour waiting period Coverage becomes effective 30 calendar days after the applicant completes the application for a policy through the NFIP.

An insured's employee who has custody and care of property inside the premises, but was not employed only to have care and custody of the property, is called a:

Custodian

VMM losses on the DP-1 are excluded if the dwelling has been vacant for how many consecutive days? A. 10 days B. 30 days C. 45 days D. 60 days

D. 60 days

All of the following drivers may be considered an uninsured motorist, except: A A person borrowing the auto with permission B A driver whose insurer denies coverage C A hit-and-run driver D A driver with no liability insurance

D. A driver with no liability insurance

Which of the following coverages is NOT provided on a DP-1? A. Dwelling B. Personal property C. Fair rental value D. Additional living expense

D. Additional living expense

What is the term used for the total amount of insurance available in a policy year? A. Restoration limit B. Liberalization C. Subrogation D. Aggregate limit

D. Aggregate Limit

The process of a neutral third party making a decision on a disputed claim is called: A Liberalization B Right of salvage C Assignment D Arbitration

D. Arbitration

When is insurable interest required to exist on a property policy? A At the time of application B At policy delivery C When the first premium is paid D At the time of loss

D. At the time of loss

All of the following are parties to a surety bonds EXCEPT? A. Principal B. Obligee C. Surety D. Beneficiary

D. Beneficiary

Which of the following IS covered under Coverage C Medical Payments? A. Bodily injury to an insured B. Bodily injury to a person hired by an insured C. Bodily injury to persons covered by a Workers' Compensation law D. Bodily injury to an insured's customer

D. Bodily Injury to an insured's customer

Umbrella policies provide insurance on what basis? A. Named perils B. Replacement value loss settlement C. Underlying D. Excess

D. Excess

If an insured's claim was denied, the mortgagee can collect under the policy as long as the mortgagee meets all of the following requirements, except: A Submit proof of loss to the insurer if the insured fails to do so B Notify the insurer of any change of ownership or change in risk if aware of those changes C Pay any premium due under the policy on demand if the insured fails to do so D Hire a private investigator to follow the insured

D. Hire a private Investigator

Which of the following is true for all of thefts in the dwelling property forms? A. Is covered under DP-3 only B. Has a $1,000 limit C. Is automatically provided D. Is excluded

D. Is excluded

Which of the following statements about Professional Liability Insurance is TRUE? A. It is similar to other forms of liability insurance B. It provides coverage for bodily injury and property damage C. It provides coverage for personal injury D. It is usually written on a claims-made form

D. It is usually written on a claims-made form

All of the following are included in Section I of a homeowners policy, EXCEPT? A. Personal Property B. Dwelling C. Other Structures D. Medical Payments to Others

D. Medical Payments to Others

Which of the following is not an element to a legal contract? A Legal purpose B Competent parties C Agreement D Negotiation

D. Negotiation

Which of the following coverages applies when the insured's neighbor sues for injuries sustained during a ping pong match? A. Dwelling B. Personal Property C. Medical Payments to Others D. Personal Liability

D. Personal Liability

Which of the following is NOT a farm property coverage form? A. Farm Property B. Mobile Agricultural and Machinery C. Livestock D. Poultry

D. Poultry

A Commercial General Liability policy will provide coverage for bodily injury and property damage arising from which of the following? A Damage to the insured's own property B Insured's intent to cause injury C Workplace injuries, as obligated under Workers' Compensation laws D Products and completed operations

D. Products and completed operations

** Lightning strikes a home and starts a fire that destroys the structure and its contents. The lightning is the: A Indirect loss B Pure risk C Speculative risk D Proximate cause

D. Proximate cause

**Which type of loss valuation will replace damaged or destroyed property with its equivalent at current cost? A Market value B Actual cash value C Stated amount D Replacement cost

D. Replacement cost

**Gambling is an example of which type of risk? A Partial B Pure C Whole D Speculative

D. Speculative

Gambling is considered which of the following types of risk? A Stable B Insurable C Pure D Speculative

D. Speculative one with both the possibility of gain or loss. Because gambling offers the chance to gain, insurance is not available

What party determines the benefits paid under a WC policy? A. The National Association of Insurance Commissioners B. The Workers' Compensation Insurance Bureau C. Federal Regulations D. State Regulations

D. State Regulations

Which of the following coverages will protect the insured against drivers who have auto liability insurance, but have insufficient coverage to respond to claims? A Uninsured motorists coverage B Other Than Collision coverage C At-fault coverage D Underinsured motorists coverage

D. Underinsured motorists coverage

For insurance purposes, an unfurnished beach house in which no one lives is considered: A Empty B Unused C Unoccupied D Vacant

D. Vacant

A statement on the application that is guaranteed to be true by the applicant is considered a: A. Misrepresentation B. Concealment C. Representation D. Warranty

D. Warranty

**Which loss would NOT be covered by the National Flood Insurance Program? A Mudflow caused by accumulation of water B Overflow of inland or tidal waters C Unusual and rapid accumulation or runoff of surface waters D Water main break

D. Water Main Break

A corporation has commercial property coverage that uses the Causes of Loss - Basic Form. Which of the following losses does the Basic Form insure against?

Damage to the roof caused by a severe windstorm Windstorm is a basic peril insured against by all Causes of Loss forms. Falling objects, the weight of snow, and accidental discharge of water from a plumbing system are perils covered under the Broad and Special forms only.

The part of an insurance policy that states where the risk is located is the:

Declarations The function of the Declarations page is to apply the common policy to a specific insured and property. The risk location, therefore, is found in the Declarations.

Which of the following is an eligible risk under the Businessowners Coverage Form?

Dental lab

All of the following are duties of an insured after a loss, except: A Giving prompt notice to the insurer B Forwarding any demands to the insurance company C Determining the valuation method the insurer will use to pay the loss D Protecting property from further damage

Determining the valuation method the insurer will use to pay the loss The valuation method of the insurer applies to property losses and will be stated in its own condition, based on the policy form selected at the time insurance was purchased.

Which of the following coverages is not included in either of the Utility Services endorsements available to Businessowners policies? A Direct loss to electronic data B Loss due to interruption of water supply coverage C Business income loss due to the interruption of utility services D Direct loss to covered property

Direct loss to electronic data

After cancelling a Commercial Crime policy with one insurer, the insured obtains another policy written on the Loss Sustained Form from another insurer. The new policy is effective as of the prior policy's cancellation date in order to avoid a gap in coverage. For a loss to be covered by the new policy, the loss must occur:

During the policy period of the prior policy or during the policy period of the new policy

The Dwelling Program may provide coverage to which of the following residences?

Dwellings used for incidental business

A Broad Form Dwelling policy will cover all of the following losses, except:

Expenses incurred from a local ordinance requiring the insured to treat pollutants

Property insurance policies exclude losses resulting from inherent vice, which would include all of the following perils, except:

Explosion

Common exclusions of filed Commercial Inland Marine policies include all of the following, except:

Fire or lightning

A travel agency discovers that it has been charged for payments to a print shop drawn on checks written by an unknown third party masquerading as the travel agency comptroller. Under which Commercial Crime Insuring Agreement would this loss be covered?

Forgery or Alteration

Coinsurance Formula

Formula used when a penalty is applied to partial losses: (DID/SHOULD) X LOSS = AMOUNT PAID

under all the coverages which does not have a general limit?

General Aggregate

The Outdoor Property Coverage Extension available on a Businessowners policy will not pay for which of the following? A Growing crops B Trees, shrubs, and plants C Unattached signs D Radio and television antennas

Growing crops

A deer chews a hole in an insured's shed sitting next to a pond. Which of the following forms could cover this damage?

HO-3 The HO-3 Special Form covers everything except what is excluded, known as open perils coverage. A deer is not a peril that is listed as an exclusion. However, the HO-3 will exclude losses caused by birds, rodents, insects, and any animal owned or kept by an insured.

A loss caused by which of the following would be automatically covered under a Businessowners policy? A Off-premises power failure B Increased cost of construction C Earth movement D Mechanical breakdown

Increased cost of construction

All of the following property losses are excluded by the Businessowners Coverage Form, except: A Losses caused by earth movement B Losses caused by off-premises power failure C Increased cost of construction D Losses caused by rust or smog

Increased cost of construction

First Named Insured

Individual or entity whose name appears first on the Declarations has rights and responsibilities not applying to other insureds. VERY important on commercial lines policies

Which of the following covers property during transportation, unloading, and installation, up to the point control is given to the buyer?

Installation Floater

When an individual faces the risk of economic loss in the event of property damage, this indicates which of the following?

Insurable interest

Under the Dwelling Program, Special Form (DP-3) dwelling coverage:

Is limited by the named exclusions Dwelling coverage under Coverage A is provided on an open perils basis on the Special Form, meaning all risks are insured against except for those specifically named. Catastrophic perils are included in the named exclusions. The DP-1 and DP-2 protect the dwelling against named, or scheduled, perils.

Which of the following is true concerning the Home Day Care Coverage Endorsement added to a Homeowners policy?

It extends Section II coverages to the insured's home day care business

Bonds that are used in court proceedings to guarantee the payment of costs related to the legal action are called:

Judicial bonds

For a claim to be paid, insurable interest for a property or casualty contract must exist at the time of:

Loss

A lender who finances an auto loan could receive claim payments under which policy condition?

Loss Payable Clause

Which Commercial Crime form provides coverage for any covered loss, as long as it occurs during the policy period and is discovered up to 1 year after policy termination?

Loss Sustained Form

When coverage is provided under the Additional Coverages of Section II of a Homeowners policy, payments are:

Made in addition to policy limits

An applicant accidentally including inaccurate information in the insurance application is guilty of

Misrepresentation Misrepresentation is a false statement contained in the application. Fraud is an intentional deception of the truth in order to induce another to part with something of value or to surrender a legal right. Concealment is the willful holding back or secretion of material facts pertinent to the issuance of insurance or a claim. Estoppel applies to the insurer, not the applicant.

If a Commercial Crime Policy includes the Employee Theft and Outside the Premises Insuring Agreements, which of the following acts would be covered?

Money is stolen from a cash register by an employee who is scheduled on the policy Acts by the named insured, a partner, or a member are excluded by Commercial Crime policies.

Blanket Limit

Multiple items of property, one policy, one limit of coverage

All of the following provisions are included on the Personal Jewelry Floater, except:

Newly acquired items are automatically covered for 60 days Automatic coverage for newly acquired items under the Personal Jewelry Floater applies for 30 days, and coverage may continue if the insured reports the item and pays any additional premium required by the insurer. Personal Inland Marine floaters can settle losses based on the property's actual cash value or based on an agreed value. Policies written on an agreed value basis are also known as valued policies.

Which provision stipulates that coverage will not benefit a party that is holding, storing, or moving insured property for a fee?

No Benefit to Bailee

Coverage B: Other structures If structured rented out to others =

No Coveraged

In surety bonding, the party to whom the surety is answerable and who benefits from the bond is the:

Obligee

Mysterious Disappearance

Occurs when the cause of loss of property is NOT KNOWN. This is not theft, burglary, or robbery.

Under the Discovery Form available for Commercial Crime coverage, the latest a covered loss can be discovered and be covered by the policy is:

One year after policy expiration

Under the Commercial Inland Marine Conditions Form, if an insured breaches a condition at one location, the breach will:

Only affect coverage at that location

HO-5 Homeowners comprehensive form

Only one thats open perils form

Commercial Inland Marine policies are typically written on what basis?

Open perils

Inland Marine policies are generally written on a(n):

Open perils basis

Insured

Other individuals, such as spouse, children, or resident relatives, or entities as designated in the policy

Which of the following is automatically covered under a Businessowners policy?

Outdoor signs attached to the building

Under Commercial Inland Marine policies, the insurer may do which of the following in the event of loss or damage to a pair or set?

Pay the difference between the value of the pair or set before and after the loss When settling losses for lost or damaged pairs or sets, the insurer may pay the difference between the value of the pair or set before and after the loss, or it may repair or replace any part to restore the pair or set to its original value.

Under the Business Income With Extra Expense Coverage Form, extra expenses are defined to include all of the following expenses, except: A The costs to relocate and equip the temporary location B The cost to continue operations at the described location C Expenses incurred to minimize the suspension of business D Payroll

Payroll Payroll is considered part of business income, not extra expenses. Extra expenses are those expenses that the insured incurs that would not have been incurred had the loss not occurred.

The Damage to Premises Rented to You limit under the Businessowners Coverage Form may be subject to which of the following type of limit?

Per fire limit

L stores gas cans in the garage that are used to refill the law mower's tank. An electrical fire starts in the garage and ignites the nearby gas, which causes a partial loss to the garage. The fire is known as a:

Peril The chance of a loss was increased by the nearby gas cans, meaning they are physical hazards

Which of the following would NOT be considered part of the residence premises on a Homeowners policy?

Premises rented occasionally to the named insured for personal use

Contributory Negligence

Prevents recovery for damages if claimant was negligent to any extent

Binder

Proof of temporary insurance coverage until a policy can be issued ● Issued for a maximum of 60 days ● Ends when policy is issued ● Must include name of insurer

Inland Marine policies are primarily designed to insure:

Property that is mobile in nature and may be away from insured's premises

The Government Crime coverage forms are designed for:

Public utilities operations

Which of the following properties is ineligible for the Dwelling Program?

R's owner-occupied residence located on R's farm

F has a Basic Form Dwelling policy with Extended Coverages and VMM coverage. The policy insures losses caused by all of the following perils, except:

Radioactive contamination

Liability for use of which of the following vehicles is not covered by a Homeowners policy?

Recreational dune buggy that is owned by the insured and used on a public beach An owned vehicle designed for recreational use off public roads must be used on the insured premises for coverage to apply.

Statements that are believed to be true to the best of the applicant's knowledge and belief are known as:

Representations Representations are statements that are believed to be true to the best of the applicant's knowledge and belief at the time of application. Warranties are guaranteed to be true.

Which term is defined as the possibility of loss?

Risk

Which of the following indicates the taking of property from the care and custody of a person by someone who has threatened bodily harm to that person? A Theft B Robbery C Assault D Burglary

Robbery

Which of the following is not covered under the Valuable Papers and Records Floater?

Securities Money and securities are not covered under the Valuable Papers and Records Floater.

Under the Building and Personal Property Coverage Form on a Commercial Package policy, which of the following is included in coverage for the insured's business personal property?

Telephone systems Business personal property coverage includes machinery and equipment that is not permanently installed in the building. Stock is also covered as business personal property, but autos held for sale are considered property not covered. Other vehicles and animals are only covered if they are held for sale. Land, lawns, and growing crops are also considered property not covered.

Which of the following statements about the limits of liability under Section II of the BOP is NOT correct? A The Liability and Medical Expense limit applies per person or organization for personal injury claims B The Damage to Premises Rented to You limit applies only to premises rented to the insured C The Medical Expense limit is a per person limit D The Products-Completed Operations Aggregate limit is equal to the Liability and Medical Expense limit

The Products-Completed Operations Aggregate limit is equal to the Liability and Medical Expense limit The Products-Completed Operations Aggregate limit is twice the Liability and Medical Expense limit. The same is true for the General Aggregate limit.

Which Causes of Loss form available for the property coverage forms on a Commercial Package policy will cover loss of merchandise due to a burglary?

The Special Form only

The Hired Auto and Non-owned Auto Liability Endorsement on a Businessowners policy covers the liability of:

The business

Under a Commercial Crime policy written on the Discovery Form, what is the latest date that a covered loss can occur?

The policy expiration date

Coverage A under the Homeowners policy includes coverage for which of the following?

The dwelling on the insured premises, plus any structures that are attached to the dwelling

Under the Earthquake and Volcanic Eruption Endorsement attached to the commercial property coverage part, which of the following statements is correct?

The endorsement's deductibles apply separately for each building, personal property in each building, and personal property in the open The Earthquake and Volcanic Eruption Endorsement includes deductibles, written as percentages of the applicable limit of liability, that will apply separately to each building, to personal property located at each building, and to personal property in the open.

Which of the following would NOT be an insured under Section II of the Homeowners policy?

The insured's tenant

Who do producers represent when transacting the business of insurance?

The insurer

The Builders Risk Coverage Form includes all of the following conditions, except: A Losses are settled on an actual cash value basis B Payments for covered losses are subject to a deductible stated in the Declarations C The insured may not abandon property to the insurer D The form includes an 80% coinsurance requirement

The form includes an 80% coinsurance requirement The Builders Risk Coverage Form does not have a coinsurance requirement. Instead, the standard form requires the insured to have insurance equal to the replacement cost of the completed building, regardless of what stage of construction the building is in.

B owns a store that is protected by a Commercial Crime Policy with the Employee Theft, Inside the Premises - Theft of Money and Securities, and Outside the Premises Insuring Agreements. G, a cashier at the store, quits. Two weeks after their last day, G returns to pick up some personal items left behind and, while there, steals money from the cash register. How would B's Crime Policy respond?

The loss is covered in full by the Employee Theft Insuring Agreement

Bailor

The owner of property held in the possession of a bailee

Named Insured

The party named on the Declarations; receives the broadest coverage of all insureds

Which of the following is stated in the Insuring Agreement? A The perils excluded by the policy B The location of insured property and the named insured's mailing address C The Other Insurance provision D The perils insured against

The perils insured against The Insuring Agreement states the insurance company's promise to pay the insured, including the exact perils insured against by the policy.

The Other Insurance condition on a casualty insurance policy specifies:

The process of paying claims when the insured has two policies apply to the same loss

Which of the following is true of the Insuring Agreement? A It provides the name and address of the insured and the name of the insurer B The promise to indemnify an insured for a covered cause of loss C It lists the policy premium amount D It provides the policy conditions

The promise to indemnify an insured for a covered cause of loss

Burglary

The taking of property from inside the premises or a locked safe/vault by a person who commits forcible entry or exit while trespassing

Robbery

The taking of property from the care and custody of a person who has been threatened with bodily harm

In the event a company's records are destroyed, the Accounts Receivable Coverage Form would cover uncollectable sums if the loss resulting from which of the following perils?

Theft

Under a Broad Form Dwelling policy (DP-2), which peril is not included for coverage without an endorsement?

Theft

As defined by a Commercial Crime policy, which of the following is correct? A Burglary includes losses evidenced only by an inventory shortage B Money includes evidences of debt C Burglary must include threat of violence D Theft includes any unlawful taking of property, including burglary and robbery

Theft includes any unlawful taking of property, including burglary and robbery

Under the Builders Risk Coverage Form, coverage for fixtures, machinery, and equipment used to service the building is provided if:

They are intended to be permanently located in or on the described building The Builders Risk Coverage Form automatically includes coverage for fixtures, machinery, and equipment used to service the building when that property is intended to be permanently located in or on the described building or within 100 feet of the premises.

Commercial Auto endorsements: Individual named Insured

This endorsement adds personal auto coverage for private passenger autos used by the named insured

Commercial Auto endorsements: Drive other car

This endorsement extends commercial auto coverage for certain individuals who have a company car and not own a personal auto

The Common Policy Declarations of the CPP contain all of the following, except: A The policy period B Transfer of Your Rights and Duties Under This Policy C Name and address of the named insured D Description of the business being insured

Transfer of Your Rights and Duties Under This Policy Transfer of Your Rights and Duties Under This Policy is found in the Common Policy Conditions section, not the Declarations.

Selecting acceptable risks is the primary responsibility of the:

Underwriter The selection of risk is the primary responsibility of the underwriter, who protects the insurer by selecting risks that fall into the normal range of expected losses.

Under a Personal Umbrella Liability policy, coverage could be provided for liability arising out of:

Unpaid acts of the insured, who is acting as a board member of a nonprofit

Which of the following coverage forms covers the cost of replacing or reproducing documents that are important for the continuation of business, such as books, films, and maps?

Valuable Papers and Records Coverage Form Valuable papers and records coverage provides insurance for the destruction of valuable papers and records by a covered cause of loss. Examples of covered property include maps, blueprints, manuscripts, films, illustrations, abstracts, deeds, books, mortgages, etc. Money and securities are not covered.

A commercial building insured on the Building and Personal Property Coverage Form is vacant for more than 60 consecutive days. Coverage is suspended for all of the following perils, except:

Vehicles and aircraft Under the coverage form's Vacancy condition, damage or loss caused by vandalism, building glass breakage, sprinkler leakage, water damage, or theft are not covered if the building is vacant for more than 60 consecutive days immediately before the loss.

Garage coverage form

most comprehensive form

Specific limit

one Item of property, one policy, one limit of coverage

A homeowner hires a contractor for a renovation project. Before officially hiring the contractor, the homeowner wants to see evidence of liability insurance the contractor has in place. The contractor could provide proof of coverage by:

showing a certificate of insurance

Employee theft

● Covers loss of, or damage to, money securities, and other property committed by employees and resulting directly from theft ● Can be an employee acting alone or in collusion with others

Warranties

● Guaranteed to be true ● May appear in the policy as a requirement for coverage

Insured contract

● Lease of premises ● Easement or license agreement ● Obligation to indemnify a municipality ● Business contract under which the insured assumes the tort liability of another

Representation

● Statements on the application believed to be true to one's knowledge ● A representation is not guaranteed to be true

Concealment

● The withholding of known facts ● Disclosure would change the insurability decision by an insurer

An insured has coverage under the NFIP, with $500 deductibles for the dwelling and contents. The insured sustains flood damage to both their home and personal property. What is the maximum the insured will have to pay for damages, assuming the loss is under the policy limits?

$1,000 The deductible applies separately for the dwelling and the contents, so the insured is responsible for $1,000 in deductibles.

The standard limit of insurance for medical payments provided by the Personal Liability Supplement attached to a DP-2 is:

$1,000 per person

T is insuring a dwelling with the DP-3 and wants to include the Personal Liability Supplement in the policy. The standard limit for personal liability coverage under the endorsement is:

$100,000 per occurrence

If the insured fails to use an available fire extinguisher to put out a shed fire that results in $1,000 damage, how much will an HO-3 policy pay for the claim?

0

A Boatowners policy could be used to provide liability and property coverage for all of the following watercraft owned by an insured, except:

A 30-foot sailboat Boatowners policies are used for smaller watercraft, typically those that are no longer than 26 feet long and that could be towed by a car. A 30-foot sailboat would need coverage through a Yacht policy

All of the following would be included in the definition of insured location, except:

A 5-family dwelling in which the insured lives in one of the units, including the structures and grounds Eligible residential dwellings are those containing 1 to 4 residential units, so a 5-family dwelling would not be insured on a Homeowners policy or included in the definition of insured location.

On the DP-2, a loss to which of the following could be valued at its replacement cost?

A detached garage

Which property is eligible for a Broad Form Dwelling policy?

A four-family dwelling with three roomers

Property insurance policies that apply coverage only to perils that are stated in the policy are considered to be written on:

A named peril basis

A policy contains a provision stating that after the insurer pays for a covered claim, the insurer will reinstate the policy limit to its initial value. This is provided by which policy condition?

A policy contains a provision stating that after the insurer pays for a covered claim, the insurer will reinstate the policy limit to its initial value. This is provided by which policy condition?

A Homeowners policy could be used to insure all of the following dwellings, except:

A tenant-occupied house used exclusively as a rental property Homeowners policies do not provide dwelling coverage for dwellings used exclusively as a rental property, and the Homeowners Program often requires the named insured to be the owner-occupant of the dwelling.

Which of the following best describes a direct loss? A Water damage resulting from a burst pipe B Transportation expenses after a personal auto loss C Increased living expenses following a fire loss D Loss of rental income from a dwelling following a fire loss

A. Water damage resulting from a burst pipe

L and an insurer have entered into a legal insurance contract. Though L pays a set premium to the insurer, neither L nor the insurer knows if L will receive any claim payments in return, as the parties cannot predict whether or not a loss will occur during the policy period. This unequal exchange of value contngent on uncertain events best describes which type of contract?

Aleatory contract The unequal exchange of value contingent on the uncertainty of an event describes an aleatory contract. A contract of adhesion is one where one party drafts the contract without negotiations with the other party.

If the insured and insurer do not agree on the value of a property loss, what condition would apply?

Appraisal If the insured and insurer do not agree on the value of a property loss, what condition would apply?

D does not agree with the insurance company's value of property damaged as a result of D's recent property loss. Which of the following conditions establishes the procedure D and the insurance company must use to settle this issue?

Appraisal The Appraisal condition of the property insurance policy provides a method of settling disputes between the insurer and the insured as an alternative to legal action.

Which of the following places insurance with a non-admitted insurer when insurance cannot be placed with an admitted insurer? A Direct response company B Surplus Lines producer C General consultant D General use producer

B. Surplus Lines Producer

Which of the following is true regarding the HO-4 and HO-6 forms?

Both forms are used to insure the personal property and personal liability of the insured, but not necessarily the structure itself

Personal Inland Marine floaters usually contain all of the following provisions, except: A If a loss occurs to a set, the insurer may pay the difference in value of the set that results from the loss B Losses are settled on a replacement cost basis C Coverage is provided on an open perils basis D Insurers may require an appraisal of scheduled items

Losses are settled on a replacement cost basis The Loss Settlement provision contained on personal Inland Marine floaters values property at its actual cash value or based on its agreed value.

In the Dwelling Program, the Basic Form differs from the Special Form in that:

Only the Special Form offers coverage for other structures on an open perils basis The DP-3 provides coverage on an open perils basis for the dwelling and other structures, and insures personal property against the Broad Form named perils. All Dwelling forms offer Coverage D - Fair Rental Value, but only the Broad and Special forms offer Coverage E - Additional Living Expenses. All Dwelling forms value personal property at its actual cash value.

The formal statement an insured provides to an insurer, including all the details an insurer needs to assess its liability following a loss, is known as a:

Proof of loss a formal statement made by the insured and provided to the insurer that provides necessary details for the insurer to determine its liability under a policy

Which statement regarding coverages provided by the National Flood Insurance Program (NFIP) is incorrect? A Policies for eligible properties include coverage for the increased cost of compliance with floodplain management ordinances B Building coverage applies to walled and roofed buildings, including the dwelling and detached garages C The Dwelling Form provides coverage for direct and indirect losses to covered property resulting from flooding D Coverage is provided for the inundation of normally dry land by the overflow of tidal waters

The Dwelling Form provides coverage for direct and indirect losses to covered property resulting from flooding The National Flood Insurance Program does not provide any indirect financial loss coverage, such as the loss of use coverages seen on a Homeowners policy or business interruption coverages seen in commercial property insurance. It covers only direct loss only to the insured buildings and contents from those conditions that constitute the NFIP's definition of flood.

When a property policy values property on a stated value basis, how would the insurer settle a total loss?

The insurer pays the lesser the insured's reported value of the property and the property's actual cash value When losses are valued on a stated value basis, the insured gives a statement of the property's value, and the insurer will pay the lesser of the stated amount and the actual cash value.

J is looking to buy a second home to use as a rental property and is exploring insurance options. The producer offers J a property policy that provides coverage on an open perils basis. This means that:

The policy covers all direct physical loss to covered property, unless caused by an excluded peril

For an antique insured under a Personal Articles Floater, coverage would not be provided for damage caused by:

Wear and tear The Personal Articles Floater provides open perils coverage for insured items. Exclusions include wear and tear, insects or vermin, intentional losses, and war.

H lives in an area that is particularly prone to tornadoes. All of the following statements about coverage available to H to insure against the peril of windstorm are correct, except: A Because of the increased risk, windstorm coverage may be excluded on H's Homeowners policy by endorsement B H may obtain separate Windstorm insurance C Windstorm coverage is typically provided without requiring a deductible D If H is unable to obtain windstorm coverage in the voluntary market, a residual market may be available

Windstorm coverage is typically provided without requiring a deductible

All of the following pieces of property are considered uninsurable on the standard fire policy, except:

computers

An insured has a property policy that provides $50,000 of personal property coverage and $100,000 of coverage for the building, with a $1,000 deductible and an 80% coinsurance requirement. If furniture sustains $500 of covered fire damage, how much does the insurer pay

nothing The property loss would be subject to the policy deductible. Since the amount of loss does not exceed the deductible amount, the insurer would not pay for this loss. This is an example of a deductible reducing the frequency of small claims.

When coverage applies to a property loss by any peril except those that are specifically excluded, the policy is written on which basis?

open perils

A single-family dwelling may purchase up to what amount of flood insurance in the NFIP's Emergency Program?

$35,000 The NFIP's Emergency Program covers up to $35,000 on a single-family dwelling.

All of the following may be listed as an insured on a property policy, except: A A mortgagee listed as an additional insured B A business with temporary custody of the insured property C A named insured's legal representative D The policyowner

A. A mortgagee listed as an additional insured Under the No Benefit to Bailee condition, a person or organization with care, custody, or control of an insured's property may not benefit from claim payments and, therefore, cannot be named as an insured on the policy. .

Which of the following is not an element of an insurable risk? A Catastrophic perils B The ability to set a measurable value on it C Large number of homogeneous units D Accidental loss

A. Catastrophic perils

B is a broker. As a broker, B can do which of the following? A Represent the insured's interests B Bind coverage with an insurer C Operate without a license D Represent the insurer's interests

A. Represent the insured's interest licensed individuals who represent the interests of the insured, unlike agents, who represent the insurer's interests. Brokers do not have the authority to bind coverage with any insurer

The HO-3 covers losses to other structures causes by which of the following perils?

Abrupt collapse from defective construction materials Collapse is covered as an Additional Coverage on Homeowners policies, subject to specific terms, like the collapse being abrupt and resulting from specified perils. Wear and tear, smog, rust, and smoke from agricultural smudging are named exclusions on the HO-3.

Coverage D of a Dwelling policy covers which of the following losses?

Access prevented by a civil authority because of a neighboring location's direct loss by a peril covered under the insured's policy

As required by the standard fire policy, property policies must use a loss valuation basis that is not more restrictive than:

Actual cash value basis

All of the following statements regarding the structure of a property policy are correct, except: A The insured's duties and obligations are listed in the Conditions section B The Declarations page lists other parties that have an insurable interest in the property C The Insuring Agreement describes the perils that are covered under the policy D Additional Coverages are added to the policy for an additional premium

Additional Coverages are added to the policy for an additional premium Additional Coverages are automatically included without an additional premium. The Declarations page lists the named insured and other parties with insurable interest in the property, such as a mortgagee.

Which type of producer authority is not spelled out in the contract, but is necessary for carrying out the producer's duties? A Admitted B Implied C Assumed D Express

B. Implied Implied authority is not specifically listed in the contract, but is considered necessary, reasonable, and usual for the producer to carry out their duties. For example, a producer has the express authority to transact insurance business, which implies the authority to provide quotes and collect premiums

Which of the following is least likely to be a factor when determining the eligibility of a person for property insurance? A The nature of the risk, such as the type of building and the number of families living in the building B Whether the premium will be paid in full or billed to the insured C The claims history showing when prior claims occurred and how much was paid to settle the claim D Existence of any hazards, such as a nearby gas station exposure

B. Whether the premium will be paid in full or billed to the insured Underwriting considers the nature of the risk, hazards present, and claims history. How the premium will be paid is not a factor in determining an applicant's eligibility for insurance.

The possibility of a loss is known as: A A peril B An insurable interest C A risk D A hazard

C. A risk uncertainty about whether or not a loss will happen. Without the possibility of loss, no such uncertainty exists.

Agents have all of the following responsibilities, except: A Solicit and accept insurance applications, then forward them to the insurer B Represent the insurer C Issue insurance policies D Provide quotes and collect premiums

C. Issue insurance policies represent the insurer in soliciting, receiving, and forwarding applications, and they provide quotes and collect premiums.

An insured's home is insured on a Homeowners policy. During a storm, a tree falls and crashes into the side of the home. The Homeowners policy states that the insured must promptly notify the insurer of the loss. The requirement for prompt notice of loss is found in the policy's:

Conditions

The rules and procedures to be followed by the insured and the insurer are found in which section of an insurance policy?

Conditions

D has a DP-1 policy with Extended Coverage to insure a tenant-occupied dwelling. All of the following losses are covered by the policy, except:

D has a DP-1 policy with Extended Coverage to insure a tenant-occupied dwelling. All of the following losses are covered by the policy, except:

Which of the following losses would be covered under the DP-1?

Fire damage to building materials on the insured premises Coverage A includes coverage for materials and supplies located on or next to the described location that are used to construct, alter, or repair the structures on the location

All of the following statements about subrogation are correct, except: A It helps the insurer control expenses and premiums B It allows the insurer to attempt collection from a third party to reimburse a loss C It prevents the insured from collecting twice for the same loss D It allows the insurer to file suit against the insured

It allows the insurer to file suit against the insured

An insured has a Mobile Homeowners policy. If the mobile home is removed from the premises to protect it from a covered peril, how much coverage is available?

Up to $500, provided by an Additional Coverage The Property Removed Additional Coverage provides up to $500 for reasonable expenses incurred to remove the mobile home to protect it from a covered peril.

The Other Insurance condition on the standard fire policy will use which basis to coordinate claim payments with other insurance that applies to a covered loss?

pro rata basis If two primary insurance policies apply to the loss, each policy will pay a proportion of the loss, equal to the amount of insurance the policy provides compared to the total insurance covering the loss.

The Gramm-Leach-Bliley Act was responsible for which of the following? A Regulation of investment companies B Enforcement of insurance fraud regulation Cterm-0 Establishment of privacy protection for consumers D Deregulation of the trucking industry

C. Establishment of privacy protection for consumers established regulations to protect consumers' nonpublic personal information. It also allowed the merger of banks, securities companies, and insurance companies.

An insured has a Homeowners policy that protects a dwelling and a swimming pool. While a guest is staying with the insured, the insured's 8-year-oild child takes the guest's phone and purposefully throws it into the pool. The insured's policy will:

Cover the damage under the Damage to Property of Others Additional Coverage The Damage to Property of Others Additional Coverage provides limited coverage for property damage for which the insured is liable, regardless of negligence. Though the coverage would exclude coverage for losses caused intentionally by an insured who is 13 years of age or older, intentional damage by insured children under the age of 13 would be covered.

Under Dwelling policies, household and personal property, including property in transit between the insured's old and new residences, are covered under:

Coverage C the coverage for personal property. 10% of the Coverage C limit applies to the insured's personal property away from the premises, while it is anywhere in the world.

A basic form property insurance policy protecting a building and its contents provides which of the following?

Coverage against limited named perils Basic forms will provide limited coverage, meaning only a few named perils will be covered.

A Special Form (HO-3) Homeowners policy provides all of the following coverages, except: A Coverage for the removal of debris after a covered loss B Coverage for the abrupt caving in of the insured dwelling due to defective construction C Coverage for an insured required by law to test for and treat pollutants D Open perils coverage for personal property removed from the premises when endangered by a named peril

Coverage for an insured required by law to test for and treat pollutants

Under a Personal Umbrella Liability policy, all of the following statements are true, except: A Certain losses excluded by the primary policy may be covered by the Umbrella policy B Coverage is provided for the insured's liability arising out of th eingestion of lead by a third party C After underlying insurance is exhausted, coverage provided by the Umbrella is excess coverage D Underlying insurance is required and must meet specific minimum limits

Coverage is provided for the insured's liability arising out of the Ingestion of lead by a third party Umbrella Liability policies exclude coverage for injury or damage resulting from the ingestion or inhalation of lead, or any other lead contamination. Personal injury liability coverage is an example of a coverage that is often excluded by underlying policies (like a Homeowners policy) but covered by the Umbrella policy.

When a property insurance policy states that damaged property will be replaced with other property that performs the same function with similar efficiency but is not identical to the damaged property, the policy is written on which of the following bases?

Functional replacement cost Functional replacement cost represents the cost to replace property with other property that performs the same function with similar efficiency, although the replacement property is not identical to the property being replaced.

Insurable risks include all of the following elements, except: A The loss may be catastrophic B The loss must be accidental C There must be a large number of homogeneous units with the same exposures D The loss must be measurable

The loss may be catastrophic Because the insurer's solvency may be at risk due to the enormity of the loss, catastrophic losses are not considered insurable risks. War, nuclear hazard, and terrorism are catastrophic losses that are commonly excluded from insurance policies. Government insurers may offer coverage for these losses as an insurance alternative, like the Terrorism Risk Insurance Program.

K has an unendorsed Special Form Homeowners policy with a $200,000 limit of personal liability, and a Personal Umbrella Liability policy with a $1 million limit. A suit is brought against K by a local business, claiming that K slandered the the business on social media and caused business to decline. How will K's Personal Umbrella Liability policy respond?

The policy drops down to act as primary insurance, and K must pay a self-insured retention Because personal injury coverage is not provided by the Homeowners policy, the coverage provided by the Umbrella policy drops down to act as primary insurance, requiring the insured to pay the policy's self-insured retention. The Umbrella insurer will pay for the defense costs.