Chapter 3: Types of Property Policies
Which of the following dwelling policy forms primarily insures a structure on an actual cash value basis? A DP-1 B DP-2 C DP-3 D All DP forms
A DP-1 DP-1 insures the structure on an actual cash value basis. DP-2 and DP-3 insure the structure on a replacement cost basis.
Under additional coverages for homeowners policies, what is the maximum amount that can be charged to the insured for fire department services? A $500 B $1,000 C $5,000 D Fire department service charges are not allowed.
A $500 If the insured calls the fire department to the insured premises to protect the insured property from a covered peril, the HO policy will pay up to $500 of the fire department service charge.
In business income additional coverage in a businessowners policy (BOP), the waiting period that must occur before the period of restoration may begin is A 72 hours. B 45 hours. C 30 hours. D 15 hours.
A 72 hours. Under the business income additional coverage, there is no coverage for the first 3 days following the loss. The 72-hour deductible can be reduced by an endorsement for an additional premium.
Which of the following statements is true concerning the special form dwelling policy? A Coverage A is for all-risk perils, and Coverage C is for the broad form perils. B Both Coverage A and Coverage C are provided on an all-risk basis. C Both Coverage A and Coverage C are provided for the broad form perils. D Coverage A is for all-risk perils, and Coverage C is for basic perils only.
A Coverage A is for all-risk perils, and Coverage C is for the broad form perils. The all-risk coverage applies to property insured under Coverages A and B only.
Which of the following dwelling coverages would provide coverage to a garage not attached to the primary insured dwelling? A Coverage B B Coverage C C Coverage E D Coverage A
A Coverage B Coverage B covers other structures not attached to the primary dwelling, except by fence or utility line, or something similar.
Which of the following losses would most likely NOT be covered under Coverage A in the dwelling policy? A Theft of a renter's lawnmower used to service the premises B Fire damage to building material on the premises C Outdoor personal property of the insured D Supplies used for repair of the dwelling
A Theft of a renter's lawnmower used to service the premises Coverage A on the dwelling includes all attached structures and outdoor personal property or equipment used to maintain or service the premises if not covered elsewhere. The lawnmower most likely would not be covered because the dwelling insured is rented to others without content coverage. If the landlord furnishes lawnmowers or other equipment to service the premises, there is no need to schedule a small amount of content coverage.
If the actual values exceed the limit of insurance, the businessowners policy (BOP) contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by A 10%. B 25%. C 30%. D 50%.
B 25%. The BOP contains a seasonal increase provision that automatically increases the limit of insurance for business personal property by 25% if the actual values exceed the limit of insurance.
Which of the following losses would NOT be covered by a homeowners policy? A A $800 outboard motor destroyed by hail B A coin collection valued at $500 lost in a fire C A $550 utility trailer blown away by a tornado D A stolen silver tea set worth $2,000
B A coin collection valued at $500 lost in a fire An HO policy will pay up to $2,500 for silverware by theft, $1,500 for boats, motors, trailers, $1,500 for loss of trailers not used with boats, but no more than $200 for coins.
Which of the following is true of dwelling policy coverage? A Special forms only have special exclusions. B Exclusions apply to all three policy forms. C Exclusions only apply to broad policy forms. D There are no exclusions in basic forms.
B Exclusions apply to all three policy forms. Dwelling policy forms contain several general exclusions that define the actual extent of coverage provided. These exclusions are found in all three dwelling forms: broad, basic, and special.
Which of the following homeowners forms is designed to provide named peril coverage for personal property to individuals who rent an apartment? A HO-3 B HO-4 C HO-6 D HO-2
B HO-4 An HO-4 does not provide insurance under Coverages A and B because the insured does not have an insurable interest in the structure.
When does the coverage begin under the builders risk form? A On the date the premium is paid B On the date construction starts C On the date the policy is issued D On the date the policy is delivered
B On the date construction starts Coverage begins on the date construction starts.
Valuable papers and records form provides coverage for the reconstruction of all of the following types of records EXCEPT A Historical records. B Prepackaged software. C Blueprints. D Deeds.
B Prepackaged software. Coverage for reconstructing prepackaged software is specifically excluded.
Under a dwelling policy, which of the following is NOT a factor in determining a loss? A The amount necessary to repair or replace the property B The amount negotiated by the insured C The policy limit D The amount reflecting the insured's interest in the property at the time of loss
B The amount negotiated by the insured The value of a loss is decided according to the actual cash value of the property, the policy limit, the amount needed to repair or replace the property, or the amount reflective of the insured's interest in the property.
A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean? A Coverage is automatic. B There is no coverage. C Coverage applies without premium. D This must be a misprint on the form.
B There is no coverage. If no premium amount is shown, there is no coverage for that coverage part.
Under the dwelling policy, Coverage C - Personal Property is A A prohibited coverage in the dwelling form. B Limited to 50% of the amount of insurance that is written as Coverage A. C Limited to covering a servant's property while at the insured location. D Automatically provided as 50% of Coverage A.
C Limited to covering a servant's property while at the insured location. Dwelling Coverage C is limited to covering property owned by a guest or servant while the property is at the insured location. Under a homeowners policy, the property would be covered the same while on or off the premises.
Which of the following would NOT be covered by medical payments to others in Section II of your HO policy? A You are walking your neighbor's dog and it bites someone. B You allow the neighborhood kids to play flag football in your yard; one is injured. C You cut your leg while whacking weeds in your backyard with your neighbor's weed whacker.
C You cut your leg while whacking weeds in your backyard with your neighbor's weed whacker. Medical payments to others covers invitees, residence employees not covered by workers compensation, and injury to others caused by animals in your control. If you hurt yourself, accident and health insurance would be needed for your injuries.
Which of the following is NOT found in a commercial package policy? A Certificate of authority B Common policy conditions C Common policy declarations D Interline endorsements
A Certificate of authority Regardless of how the policy is written, it will be comprised of the following essential elements: common policy declarations page, common policy conditions, interline endorsements, and coverage parts.
All of the following are additional causes of loss included in the broad form of a commercial property policy EXCEPT A Water damage. B Replacement cost. C Falling objects. D Weight of ice, snow, or sleet.
B Replacement cost. Broad form causes of loss adds falling objects; weight of ice, snow, or sleet; water damage; collapse; and breakage of glass to those perils covered under the basic causes of loss.
Which of the following would NOT be considered a flood? A Runoff of surface waters B Sewer backup C Overflow of tidal waters D Mudslides
B Sewer backup Flood is defined by the National Flood Insurance Program. It does not include sewer backup.
All of the following statements are true regarding fire department service charge additional coverage under the businessowners policy EXCEPT A This coverage provides an additional $2,500 amount of insurance. B This coverage limit pays in place of the limit of insurance shown in the declarations. C This coverage limit is payable in addition to the limit of insurance shown in the declarations. D This coverage is not subject to any deductible.
B This coverage limit pays in place of the limit of insurance shown in the declarations. The fire department service charge covers charges up to $2,500 and is payable in addition to the limit of insurance shown in the declarations and is not subject to any deductible.
Which of the following is NOT settled on an actual cash value basis while covered under the business property coverage form? A Works of art or antiques B Valuable papers and records C Property of others D Manuscripts
B Valuable papers and records Valuable papers and records are valued at the cost of blank materials for reproducing the records and labor to copy the records
Under which of the following circumstances would an insurer be allowed to cancel a dwelling policy midterm? A The insured's claims have exceeded the amount of coverage. B The insured wants to make suspicious increases to his or her coverage. C The insured reached his or her limit on the number of claims. D The insured knowingly lied about the year the property was constructed.
D The insured knowingly lied about the year the property was constructed. The only way an insurer can cancel a policy midterm is if there has been a misrepresentation of a material fact or if the risk has changed substantially from when it was first insured.
The type of insurance used to cover goods for one specific trip is called A Commercial property. B Bailee policy. C Motor truck cargo policy. D Trip transit.
D Trip transit. Trip transit policies cover a single shipment of goods for a specific trip.
A commercial property special form covers property in transit up to A $5,000. B ACV. C $500. D Full replacement cost.
A $5,000. A commercial property special form covers property in transit up to $5,000. This extension of coverage may be added to the special form. It is additional insurance (in addition to the coverage limit), and coinsurance does not apply.
An installation floater is used to insure A Appliances intended to become a permanent part of the building. B Buildings under construction. C All types of for-sale merchandise. D Dams, power plants, water plants, and other such installations.
A Appliances intended to become a permanent part of the building. The installation floater covers the interest of the owner, seller, or contractor of refrigeration systems, elevators, or other pieces of large equipment intended to become a permanent part of the building on location awaiting or in the process of being installed or tested.
The major portion of the premium for an equipment breakdown policy pays A For inspections and examinations. B For repairs after a loss. C For coverage for bodily injury and property damage of others. D For replacement parts.
A For inspections and examinations. Inspecting the machinery to be insured is critical to the underwriting of equipment breakdown coverage. Finding flaws that could lead to losses and requiring corrective action is the purpose.
Which of the following homeowners forms is designed for individuals that own and reside in a condominium? A HO-3 B HO-4 C HO-6 D HO-2
C HO-6 HO-6 is designed specifically to cover the exposure of a condominium.
The extension of coverage under the Commercial Fine Arts Floater includes coverage for newly acquired property for a maximum of A $10,000. B $15,000. C $20,000. D $5,000
A $10,000. An extension of coverage is included for newly acquired property for 30 days for up to 25% of the total limit of insurance, for a maximum of $10,000.
A policy condition that states if a policy is broadened with no additional premium, then the expanded coverage will be automatically applied to all policies of the same type is known as A Liberalization clause. B Maximum indemnity clause. C Loss control clause. D Limit of insurance clause.
A Liberalization clause. The liberalization clause states that if a policy is broadened with no additional premium, then the expanded coverage will be automatically applied to all policies of the same type.
The common policy condition is a modular part combined with other parts to create the contract. The common policy condition section contains provisions that are applicable to all lines of coverage that may be included in the policy. Which of the following provisions would be found in the common policy conditions section of the policy? A The first named insured may cancel the policy at any time by giving written notice to the insurer. B Prior to the insurer making inspections, surveys, and reports relating to the insurance, approval from the insured must be obtained. C Requests for any changes in the policy from the insured may be made by the second named insured. D The insurer is granted the right to audit books and records of the insured relating to the policy for a period of up to 5 years after the end of the policy.
A The first named insured may cancel the policy at any time by giving written notice to the insurer. The insurer is granted the right to audit books and records for a period of up to 3 years. The insurer is automatically granted the right to make inspections, surveys and such relating to the insurance. Only the first named insured may make requests for any changes in the policy.
All of the following are perils covered under the broad form dwelling policy EXCEPT A Theft. B Fire. C Lightning. D Collapse.
A Theft. Theft is not a peril named in the policy.
Which of the following is NOT one of the available additional coverages in the builders risk form? A Vandalism B Debris removal C Fire department service charge D Pollutant cleanup
A Vandalism The 4 additional coverages offered by the builders risk form are debris removal, fire department service charge, pollutant cleanup and removal, and preservation of property.
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 Workers compensation coverage B Crime coverage C Boiler and machinery coverage D General liability coverage
A Workers compensation coverage Workers compensation is not available through the commercial package policy (CPP).
Which of the following would provide coverage for loss of income when an insured rental dwelling is rendered uninhabitable because of a covered loss? A Coverage B B Coverage C C Coverage D D Coverage A
C Coverage D Coverage D provides fair rental value coverage when insured rental dwellings suffer a loss covered by Coverage A, B, or C.
What is the maximum amount an insurer will pay under the equipment dealers pollution cleanup and removal extension of an inland marine policy? A $15,000 all expenses incurred during a 12-month period B $20,000 all expenses incurred during a 12-month period C $5,000 for all expenses incurred during a 12-month period D $10,000 for all expenses incurred during a 12-month period
D $10,000 for all expenses incurred during a 12-month period The maximum the insurer will pay under this extension is $10,000 for all expenses incurred during a 12-month period.
Homeowners policies provide coverage for A Losses caused by off-premises power failure. B The land under the residence. C Property of tenants, roomers, or boarders not related to any insured. D Business property while on the residence premises.
D Business property while on the residence premises. Your contents coverage will cover up to a $2,500 for loss of business property on premises.
Which of the following dwelling coverage forms would pay replacement cost for the dwelling? A DP-3 only B All dwelling property coverage forms C DP-1 D DP-2 and DP-3
D DP-2 and DP-3 DP-2 and DP-3 pay replacement cost as long as the house is insured for at least 80% of its value on the date of loss.
Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value? A They qualify for maximum compensation under the flood insurance program. B They are excluded from the flood insurance policy. C They are subject to a $1,000 deductible. D They are automatically provided with replacement cost coverage.
D They are automatically provided with replacement cost coverage. Single-family dwellings are automatically provided with replacement cost coverage if insured to at least 80% of the replacement value, or the maximum allowed under the regular flood insurance program.
Which of the following best describes the amount of loss assessment coverage included under a homeowners policy liability coverage section? A Up to $2,500 per occurrence B Up to $10,000 aggregate for the policy period C Up to $5,000 aggregate for the policy period D Up to $1,000 per occurrence
D Up to $1,000 per occurrence Section II - Loss Assessment Coverage - applies to assessments against the insured by a condominium association or other cooperative body of property owners. Coverage is limited to $1,000, but an increased limit of coverage is available by endorsement.
Both the broad theft and limited theft endorsements on the dwelling program exclude all of the following types of property EXCEPT A Credit cards. B Motor vehicles licensed for the road. C Aircraft. D Watercraft.
D Watercraft. Canoes have limited coverage.
The endorsement that provides coverage for losses arising from sudden collapse of earth arising from underground limestone created by the action of water on rock formations is a/an A Mine subsidence endorsement. B Earthquake endorsement. C Earth subsidence endorsement. D Sinkhole collapse endorsement.
D. Sinkhole collapse endorsement The sinkhole collapse endorsement will provide coverage for sinkhole collapse, which means a sudden settlement or collapse of the earth supporting the property resulting from an underground hole caused by water on limestone or other rock formations.
Bailee's Customers Insurance
Insurance coverage for legal liability resulting from damage or destruction of a bailor's property while temporarily under the care or custody of a bailee. A bailee is a person or organization that has temporary possession of someone else's personal property (dry cleaner, parking valet, jewelers, repairers, etc.)
How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card? A $100 B $500 C $1,000 D $5,000
B $500 $500 is provided automatically, and may be increased by endorsement.
All of the following are additional liability coverages automatically provided in a homeowners policy EXCEPT A Loss assessment coverage. B Personal injury. C Claims expenses. D Damage to the property of others
B Personal injury. Personal injury may be added by endorsement.
A neighbor's tree has fallen into the insured's yard. The insured's homeowners policy will only pay to remove the tree if A The damage is more than $1,000. B The neighbor has no homeowners insurance. C The tree has caused damage to the insured's vehicle. D The tree is blocking the driveway.
D The tree is blocking the driveway. An insured's homeowners policy will pay up to $1,000 to remove from premises if a neighbor's tree fell by a covered peril, or if the tree blocks a driveway or handicapped ramp, even if no damage to a covered structure has occurred.
The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to A $250,000. B $100,000. C $150,000. D $200,000.
A $250,000. It is written for the value of the dwelling up to $250,000 on a replacement cost basis.
An insured has a special form dwelling policy written for $100,000 on a dwelling. The dwelling's replacement cost is $115,000. Fire causes $75,000 in damage to the dwelling, $15,000 damage to a separate garage, and kills 10 trees valued at $600 each. How much will the policy pay for the trees? A $5,000 B $10,000 C $60,000 D $75,000
A $5,000 In the broad and special form, Coverage B (Other Structures) is an additional amount of insurance, limited to 10% of Coverage A (in this example, $10,000). Trees, shrubs, and plants are covered, limited to not more the $500 for any one tree or plant, and not to exceed 5% of Coverage A in total (in this example, $5,000).
A covered watercraft was damaged in an accident. The actual cash value of the damaged property was assessed at $10,000. The cost of repairs for the watercraft was assessed at $5,000. The insured's watercraft policy is written with a $25,000 limit. How much will the insurer pay for coverage to damage to the watercraft? A $5,000 B $10,000 C $15,000 D $25,000
A $5,000 The limit of liability for Part D will be the lesser of amount shown in the Declarations, actual cash value of the stolen or damaged property, or amount necessary to repair or replace the property.
All of the following are special personal property limits under a homeowners policy EXCEPT A $500 for business personal property on the insured premises. B $1,500 for securities, accounts, deeds, and evidences of debt. C $1,500 for trailers not used with watercraft. D $2,500 for theft of firearms.
A $500 for business personal property on the insured premises. HO forms place a $2,500 limit for business personal property that applies on premises only. A limit of $500 applies to loss of business personal property while away from the premises.
Under the conditions of a Film Coverage Form, how long must the insured maintain records of each production? A 3 years after the policy expires B 5 years after the policy expires C 7 years after production completion D 1 year after production completion
A 3 years after the policy expires The insured must maintain accurate records of each production for at least 3 years after the policy expires.
The Mail Coverage Form is always written on a reporting form basis; after the end of each reporting period shown in the declarations, reports are due within A 30 days. B 31 days. C 45 days. D 15 days.
A 30 days. The Mail Coverage Form is always written on a reporting form basis, with reports due within 30 days after the end of each reporting period shown in the declarations.
A businessowners policy is A A self-contained prepackaged policy. B A special policy designed for large retail operations. C Part of a commercial package policy. D A monoline policy.
A A self-contained prepackaged policy. A businessowners policy is similar in structure to the personal lines homeowners policy except it covers a business exposure for both property and liability losses.
Which of the following is NOT covered under accounts receivable coverage form? A Any loans required to offset uncollectible amounts B Interest on loans required to offset uncollectible amounts pending payment of the insurance proceeds C Sums due the insured that are uncollectible due to a covered loss D Expenses to reestablish the records, if possible, and collection expenses that are in excess of normal costs
A Any loans required to offset uncollectible amounts Loan principal amounts are not covered under the form. However, other expenses, such as interest on necessary loans, are covered.
Business personal property coverage form covers all of the following EXCEPT A Automobiles held for sale. B Furniture and fixtures. C Machinery that is not permanently installed. D Stock.
A Automobiles held for sale. Automobiles held for sale are among the exclusions in the BPP form. The rest are covered types of property.
Which of the following is an additional coverage that is covered by the broad causes of loss form? A Collapse B Lightning C Ordinance or law D Settling
A Collapse Collapse is an additional coverage found in the broad causes of loss form. Collapse does not include settling. Lightening is a named peril and ordinance or law is an exclusion.
A unique feature in a bailee form is that it covers A Customers' property whether or not the insured has been negligent. B Fire and theft losses to the insured's stock held for sale without any deductibles. C All loss and has no exclusions. D The building occupied by the insured whether it is owned or leased.
A Customers' property whether or not the insured has been negligent. The bailee/customers form is liability coverage for the customers' property the bailee has accepted into his care. Negligence on the part of the bailee is not required for a loss to be covered.
The Physicians and Surgeons Equipment Floater in NOT intended for which of the following? A Medical supplies located in a hospital B Surgeon's supplies located in the surgeon's office C Waiting room furniture in a doctor's office D Office equipment located in a dentist's office
A Medical supplies located in a hospital This coverage form protects individuals in the medical or dental profession for loss to valuable medical and dental equipment, materials and supplies, including office equipment and furniture, and similar property of others. Coverage is not intended for hospitals, schools or other institutions.
Which of the following covers a carrier for liability for loss to cargo while it is being transported in a truck? A Motor truck cargo policy - truckers form B Motor truck cargo policy - owners form C Trip transit policy D Truckers coverage form
A Motor truck cargo policy - truckers form The motor trucker cargo truckers is liability insurance and the owners form is property coverage.
An insured owns and operates a commercial business. He has included a business income coverage form with his commercial package policy. When the insured's business is severely damaged by fire, the business income coverage will pay for A Net income plus continuing expenses of the business. B Sales value production less the cost of raw stock. C Annual sales less the cost of merchandise. D Loss of total annual sales
A Net income plus continuing expenses of the business. In the event of a covered loss, the business income coverage will pay those profits that would have been realized if there had been no loss and the expenses of the business that continue, even though the business is not operating.
ABC Trucking hauls products for Acme, Inc. as a contract carrier. On one shipment, the driver stopped at a truck stop for lunch. Leaving the truck in the parking lot, he made certain that the truck was locked before leaving it. Upon returning to the truck, he discovered that someone had broken into the truck and stolen the cargo. Is ABC legally liable for this loss? A No, the driver had taken reasonable measures to protect the property by locking the truck. B Yes, ABC's liability is absolute for the cargo in its possession. C The truck stop would be liable for the loss. D None of the above
A No, the driver had taken reasonable measures to protect the property by locking the truck. ABC, as a contract carrier, would not be legally liable for this loss. If ABC were operating as a common carrier rather than a contract carrier, it would have been legally liable.
Under the commercial property coverage program, the basic causes of loss form insures against loss caused by A Sprinkler leakage. B Earth movement. C Nuclear hazard. D Power failure off the premises.
A Sprinkler leakage. Sprinkler leakage, once a specialty coverage, is now included in the basic causes of loss.
Johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. When would her coverage be effective? A 5 days after the application and premium payment are mailed B 12:01 am the day after the application and premium payment are mailed C 30 days after the application has been accepted D 12:01 pm on the 5th day after the endorsement request has been mailed
B 12:01 am the day after the application and premium payment are mailed During the first 30 days after a community enters the emergency or normal programs, coverage on a flood policy begins at 12:01 a.m. the day after application and premium payment have been mailed.
How long is the waiting period after the application has been accepted before flood coverage goes into effect? A 5 days B 30 days C 6 months D 12:01 am the next day
B 30 days The waiting period is 30 days as required by the National Flood Insurance Program.
An insured with a homeowners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. The removal coverage applies for A 5 days. B 30 days. C 60 days. D 90 days.
B 30 days. Removal coverage applies for 30 days when the property has been removed to be protected.
According to the loss payment condition in HO policies, losses must be paid within how many days of the insurer receiving proof of loss? A 30 days B 60 days C 90 days D 120 days
B 60 days All losses will be paid within 60 days of receiving the proof of loss.
Coverage under the builders risk form will end in all of the following situations EXCEPT A The insured has sold the property. B 60 days after the construction has ended. C Construction has been abandoned. D 60 days after the building became occupied.
B 60 days after the construction has ended. Coverage under the builders risk form ends if it is abandoned without any plans to complete it or if the insured's interest in the property ceases, or 60 days after the building is occupied, or 90 days after construction is completed.
Professional photographers and musicians may insure their equipment with A An installation floater. B A commercial articles floater. C A theatrical property coverage form. D A contractors equipment floater.
B A commercial articles floater. The commercial articles form covers photo equipment or musical instruments used commercially, such as by a professional band.
In which of the following situations would the jewelers block extension cover a loss? A An employee of a jewelry store is wearing a cameo brooch and ring set to display to customers. During the day, she discovered the brooch has fallen off, and she can't find it. B A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged. C A jewelry store is robbed while displaying bracelets and necklaces at a public exhibition. D A jeweler agrees to exhibit a necklace and earrings set in a showcase away from the premises. The case is broken into, and the set is stolen.
B A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged. Property in transit by registered mail is covered under the jewelers block extension.
The inspections and surveys condition in a businessowners policy A Guarantees that all working conditions are safe and healthful. B Allows the insurer the right to inspect the insured's premises. C Validates that the insured is in compliance with state and federal guidelines. D Obligates the insurer to make annual safety inspections
B Allows the insurer the right to inspect the insured's premises. The inspections and surveys condition gives the insurance company the right to inspect the insured's premises and operations at any reasonable time during the policy period. Inspections and surveys are not required. This condition does not make safety inspections, nor does it guarantee that the conditions are safe, healthful, or meet safety regulations.
Which of the following could be covered by an HO policy? A Property of a tenant not related to the insured B An oriental rug in an on-premises apartment C Birds, fish, and animals D A sports car kept in an attached garage
B An oriental rug in an on-premises apartment Homeowners contents coverage does not apply to animals, cars, or property of those who pay to be at your house; it does provide up to $2,500 for a loss of landlord's furnishings in an on-premises apartment.
The insured's mother-in-law broke her leg falling down the front steps of the insured's premises. The insured's homeowners medical payments coverage will A Share equally in the cost with the mother-in-law's health insurance. B Apply to injuries of any guests or visitors. C Pay as excess over the mother-in-law's health insurance. D Pay only if the mother-in-law has no health insurance of her own.
B Apply to injuries of any guests or visitors. Homeowners medical payments coverage applies to injury of any guests or visitors of the insured who are on the insured's premises with the insured's permission.
A builder's risk form is most often written as which of the following? A Specific value form B Completed value form C Scheduled form D Reporting form
B Completed value form A building under construction could be insured on reporting forms, but the value of the building should only increase during the policy period. To prevent all the administrative work required for reporting forms, most often completed value forms are used.
A builder's risk form is most often written as which of the following? A Specific value form B Completed value form C Scheduled form D Reporting form
B Completed value form A building under construction could be insured on reporting forms, but the value of the building should only increase during the policy period. To prevent all the administrative work required for reporting forms, most often completed value forms are used.
Individuals in the business of selling construction equipment and mobile equipment should insure with a/an A Personal property floater. B Equipment dealers coverage form. C Contractors equipment floater. D Installation floater.
B Equipment dealers coverage form. An equipment dealer's coverage form covers a dealer's stock in trade consisting primarily of mobile agricultural equipment and construction equipment. It also covers property of others in the dealer's care, custody, or control. It excludes coverage for autos, motorcycles, aircraft, and watercraft.
Which of the following losses would be covered by an unendorsed homeowners policy? A Collapse caused by earthquake B Fire or lightning C Faulty or defective zoning D Theft in a structure under construction
B Fire or lightning Fire and lightning are included in the basic perils, which in turn are included in almost all homeowners policies. Earthquake coverage is only by endorsement. Theft in or to buildings
In a commercial package policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer? A Insurer B First named insured C Last named insured D Beneficiary
B First named insured Some commercial policies may have more than one named insured. Complications and confusion over contractual duties are reduced by making the insurer and the first named insured the primary parties for carrying out responsibilities.
What type of property does a Personal Floaters policy cover? A Movable personal property located in the insured's home, only B Movable personal property, wherever it may be located C Permanently attached property located on the insured's premises D None of these
B Movable personal property, wherever it may be located Personal floaters refers to an inland marine policy designed to cover movable personal property, wherever it may be located.
The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land A Leased by the owner of the land. B Owned or leased by the resident of the mobilehome. C Owned or leased by a landlord who does not reside on the premises. D Owned by a landlord who does not use the mobilehome located on it.
B Owned or leased by the resident of the mobilehome. The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land owned or leased by the resident of the mobilehome.
All of the following are additional liability coverages automatically provided in a homeowners policy EXCEPT A Loss assessment coverage. B Personal injury. C Claims expenses. D Damage to the property of others.
B Personal injury. Personal injury may be added by endorsement.
Who would participate in a Write Your Own (WYO) flood insurance program? A Businesses requiring National Flood Insurance policies B Private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis C Lloyd's associations D Government insurance companies that write and service National Flood Insurance policies
B Private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis A WYO program is made up of private insurers that write and service National Flood Insurance policies on a no risk-bearing basis through a special arrangement with the Federal Insurance Administration. WYO programs retain part of the flood insurance premium to pay for commissions and administrative costs. The remaining premiums, plus investment, are used to cover losses.
Which of the following perils is covered by the HO-2 and HO-3? A War B Sudden and accidental rupture of a heating system C Loss due to power interruption that occurs off the premises D Flood
B Sudden and accidental rupture of a heating system Off-premises power failure, flood, and war are excluded from all DP and HO policies.
An apartment occupant's personal property would be insured under which homeowners form? A Unit-owners form (HO-6) B Tenant broad form (HO-4) C Comprehensive form (HO-5) D Broad form (HO-2)
B Tenant broad form (HO-4) The HO-4 form (tenant broad form) is for the apartment dweller. It covers what the insured owns, their contents, and has no coverage for the apartment.
An insured's accounts receivable records have been damaged. The loss may be covered with A The valuable papers coverage form. B The accounts receivable coverage form. C Commercial property insurance. D The commercial articles coverage form.
B The accounts receivable coverage form. The accounts receivable coverage form reimburses the insured for amounts that can't be collected from customers due to damage to the company's records.
The insured purchased a $200,000 extra expense policy. If the percentages applying to the limit of insurance are 40%, 80%, and 100%, what would be the maximum payable for a 47-day loss? A $80,000 B $120,000 C $160,000 D $200,000
C $160,000 Extra expense coverage is written with a minimum of 3 applicable percentages that apply to the limit of insurance in the declarations. When the period of restoration is 30 days or less, the first percentage applies; when it is more than 30 days and not more than 60 days, the second percentage applies; when more than 60 days, the third percentage applies. In this case, the calculation should be 80% of $200,000, so $160,000.
A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of expediting expenses, how much will the insured collect under the policy? A $200,000 B $100,000 C $175,000 D $180,000
C $175,000 The limit of the equipment breakdown policy applies to property of the insured, property of others, and expediting expenses in any combination as long as expediting expense does not exceed $25,000.
The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period? A 90 days B 120 days C 1 year D 3 years
C 1 year Medical payments coverage of a businessowners policy (BOP) will pay medical, dental, hospital, and funeral services incurred within one year from the date of an accident to a person who suffers bodily injury by accident on or next to the insured's premises, or because of the insured's operations.
To be eligible for businessowners policy (BOP) coverage, an office building CANNOT be higher than A 2 stories. B 3 stories. C 6 stories. D 10 stories.
C 6 stories. Office buildings eligible for coverage under BOP may not be more than 6 stories high and more than 100,000 square feet.
Dwelling policy Coverage C - Personal Property will cover all of the following EXCEPT A Computer software. B Canoes. C Animals and birds. D Hobby aircraft.
C Animals and birds. Animals, birds and fish are among the types of property that will not be covered by
An individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it? A Builders risk form B General property form C Contractors equipment floater D Bailee's customers form
C Contractors equipment floater The contractors equipment floater covers equipment left unattended on a job site until the project is finished.
In dwelling policies, automatic increase in insurance is A Coverage without additional premium. B Coverage for newly acquired property. C Coverage by endorsement. D Automatic coverage.
C Coverage by endorsement. Automatic increase in insurance is an endorsement that may be added to a DP to increase the amount of insurance by an annual percentage to offset the effects of inflation. This endorsement requires additional premium.
Which of the following is NOT covered by the condominium unit owners endorsement? A Appliances in the building B Fixtures in the building C Furniture in the building D Alterations to the building
C Furniture in the building Alterations, appliances, fixtures and improvements that are part of the building, but which the insured is required to maintain coverage on because of the condominium association agreement, can be insured with this endorsement. Furniture is not specifically covered.
Which of the following would be covered under the Broad Form (DP-2) policy's falling object peril? A Damage to outdoor television antennas if there is no interior damage B Exterior pavement and patio damage C Interior building damage if the exterior was damaged first D Damage to the building's awnings
C Interior building damage if the exterior was damaged first In DP-1 and DP-2 policy forms, loss or damage resulting from falling objects is covered, except for damage to awnings, fences, outdoor equipment, outdoor radio and television antennas or aerials, masts, or towers. Damage to the interior of the building is covered only if the exterior has been damaged first.
Which of the following is true regarding the fire department service charge under the builders risk form? A It is not available in this form. B It is a high-deductible endorsement. C It is an additional coverage. D It is an automatic coverage for $500.
C It is an additional coverage. The fire department service charge is considered an additional amount of insurance. Up to $1,000 coverage is included.
How does the mobilehome endorsement affect the other coverage of law or ordinance in a homeowners policy? A It limits the coverage B It has no effect on this coverage C It removes the coverage D It broadens the coverage
C It removes the coverage The mobilehome endorsement makes the other coverage of law or ordinance inapplicable to the policy.
What type of property would NOT be covered under the dwelling policy special form Coverage A - Dwelling? A Outdoor equipment located on the premises and used to service the location B Attached structures C Land on which the dwelling is located D Materials and supplies on the premises used to alter or repair the dwelling
C Land on which the dwelling is located The insurer will not cover land, including land on which the dwelling described in the declarations is located.
Which of the following covers a carrier for liability for loss to cargo while it is being transported in a truck? A Trip transit policy B Truckers coverage form C Motor truck cargo policy - truckers form D Motor truck cargo policy - owners form
C Motor truck cargo policy - truckers form The motor trucker cargo truckers is liability insurance and the owners form is property coverage.
Which situation would NOT be covered by the basic Causes of Loss form under a commercial property policy? A The automatic fire protective sprinkler system inside New Realities Book Shop leaks, causing damage to the store. B Gordon's Motorcycle Heaven is damaged by the sudden sinking of land created by the action of water on limestone. C The Surf Side Club Waterfront Restaurant is damaged when flood waters rise and seep into the restaurant. D Piccolo Pete's Café has its door broken by vandals trying to get inside.
C The Surf Side Club Waterfront Restaurant is damaged when flood waters rise and seep into the restaurant. Damage caused by flood, surface water, mudslide, water that backs up from a sewer or drain, or ground surface water that seeps through foundations, basements, doors or windows is not covered.
Under the provisions of the business income coverage form, all of the following are true EXCEPT A The insured agrees to resume all or part of operations as quickly as possible. B The insured is reimbursed for payroll that continues after the loss begins. C The insured is reimbursed for the loss from the date of loss to the date of restoration or policy expiration date, whichever comes first. D If the insured and insurer are unable to come to agreement as to the value of the loss, either party may make a written demand for an appraisal.
C The insured is reimbursed for the loss from the date of loss to the date of restoration or policy expiration date, whichever comes first. Business income will pay beyond the expiration date of a policy. It will pay until the
If more than one person has an insurable interest in the property covered under a dwelling policy, A All involved insurers must decide which one will be liable for the loss. B All insureds must decide which one will be liable for the loss. C The insurer will be liable for only the insured's interest in the damaged property. D Liability will be split evenly among all people who have insurable interest.
C The insurer will be liable for only the insured's interest in the damaged property. If more than one person has an insurable interest in a property, the insurer will be liable only for the insured's interest in the loss.
All of the following types of property are covered by a standard builders risk form EXCEPT A Temporary structures. B Machinery that will be permanently attached to the building. C Tools 50 feet away from the building. D The building itself.
C Tools 50 feet away from the building. Property covered under a builders risk coverage form includes the building or structure, temporary structures, foundations, fixtures, machinery, equipment, materials, and supplies within 100 feet of the premises if intended to become a permanent part of the building. Tools that are not intended to become a permanent part of the structure will not be covered, no matter how close they are to the building.
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 $2,000. How much will the Loss Assessment additional coverage of the insured's homeowners liability policy pay? A Nothing B Up to $500 C Up to $1,000 D $2,000
C Up to $1,000 The policy will pay up to $1,000 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.
Which of the following losses would NOT be covered by the dwelling policy if the dwelling is vacant for over 60 days? A Windstorm B Internal explosion C Vandalism D Fire
C Vandalism Under a dwelling policy, vandalism and malicious mischief (VMM) coverage is suspended after 60 days.
Coverage under a Floor Plan Merchandise form is written on a reporting form basis that requires the insured to file reports with the insurer. What is the time frame for those reports? A By the 15th of each month B 20 days after the report is due C Within 30 days after the end of each month D Within the first 10 days of each month
C Within 30 days after the end of each month Coverage is written on a reporting form basis that requires the insured to file reports with the insurer within 30 days after the end of each month.
Under the additional living expenses coverage, if a civil authority prohibits the insured from using the dwelling because of direct damage to a neighboring location from a peril covered in the insured's policy, loss would be covered for up to A 1 month. B 90 days. C 1 week. D 2 weeks
D 2 weeks A dwelling policy will pay loss of use due to civil authority for a maximum of two weeks.
Which of the following is covered under the Camera and Musical Instruments Dealers floater? A A musical instrument sold and delivered to a customer B Furniture, fixtures and office supplies in a music store C Money kept on premises of a camera shop D A customer's camera left at a camera shop for repair
D A customer's camera left at a camera shop for repair Covered property includes customer's property left for repair, cleaning or service.
Following a property loss that is covered under a businessowners policy, if the insurer and insured cannot agree on the amount of the loss, what method is used to resolve the issue? A Arbitration B Adjudication C No-fault procedure D Appraisal
D Appraisal The appraisal clause provision allows an insured and insurer that cannot reach an agreement on the amount of a loss settlement to each select its own appraiser. The appraisers then select a disinterested umpire. Disagreements between the appraisers are settled by the umpire. The umpire's decisions are usually binding on both parties.
According to the common policy conditions for a commercial package policy, if the insured dies, the policy rights and duties A Transfer to a legal representative after court appointment. B Die with the insured. C Are suspended until probate is completed. D Automatically transfer to a legal representative
D Automatically transfer to a legal representative The Insurance Services Office, Inc. (ISO) common policy conditions for the commercial package policy states that in the event of the insured's death, rights and duties are automatically transferred to the insured's legal representative.
Which inland marine form would provide the best protection for a dry cleaning company against loss or damage to their customer's property while in the care, custody, and control of the dry cleaners? A Furriers block policy B Personal property coverage part C Vendor's single interest policy D Bailee's customer policy
D Bailee's customer policy A bailee's policy does not cover property of the insured, but does cover their customer's property while in the care of the insured.
The extra expense coverage form provides A Extra money for an insured whose accounts receivable records have been damaged. B Additional money to pay for property damage losses at a covered location. C Payment for unforeseen expenses an insured may incur while the business is shut down following a property damage loss. D Coverage that will permit the insured to continue in business without interruption following a property damage loss.
D Coverage that will permit the insured to continue in business without interruption following a property damage loss. Extra expense coverage is for money spent to minimize a business interruption after a direct property loss.
Individuals in the business of selling construction equipment and mobile equipment should insure with a/an A Contractors equipment floater. B Installation floater. C Personal property floater. D Equipment dealers coverage form.
D Equipment dealers coverage form. An equipment dealer's coverage form covers a dealer's stock in trade consisting primarily of mobile agricultural equipment and construction equipment. It also covers property of others in the dealer's care, custody, or control. It excludes coverage for autos, motorcycles, aircraft, and watercraft.
Under which of the following conditions can broad theft coverage be added to a dwelling policy? A If permission is granted by the department of insurance B Broad theft coverage cannot be added to a dwelling policy. C If the policy has been in effect for 60 days D If the insured is owner-occupant of the dwelling
D If the insured is owner-occupant of the dwelling Broad theft coverage can be added as an endorsement to a dwelling policy if the insured is owner-occupant of the dwelling.
A business using its own trucks to move its own cargo would insure the cargo using A Motor truck cargo - truckers form. B Motor carrier form. C Trip transit coverage. D Motor truck cargo - owners form.
D Motor truck cargo - owners form. A business using its own trucks to move its own cargo would insure the cargo using the owners form.
Which of the following would be the insured's duty in the event of a loss according to the duties in event of occurrence, claim, or suit condition? A Delivering a claim to the insurer in person B Initiating the investigation of a claim C Promptly notifying the insurer of a claim by phone D Providing specific details regarding an occurrence
D Providing specific details regarding an occurrence In the event of a loss, the insured's duties include the following: promptly notifying the insurer of the occurrence (how, when, where, names and addresses of any injured persons); prompt written notice of a claim; promptly notifying the insurer of any legal papers received related to the loss; and cooperating and assisting in the investigation of a claim.
In a dwelling policy, which of the following other structures would be covered? A Used as part of a farming operation B Used by the insured in which to operate a retail business C Used by the insured to house a manufacturing operation D Rented to a neighbor for use as a private garage
D Rented to a neighbor for use as a private garage Under Coverage B, other structures may not be rented to anyone except a tenant of the main dwelling. However, a garage that is used for a private garage does not come under this exclusion of rented property and is covered even if it is rented to someone other than the occupant of the dwelling.
How much is the premium for the dwelling under construction endorsement under the dwelling policy? A 75% of the gross premium B The full value of the house C 50% of the actual value premium D The average amount of insurance during construction
D The average amount of insurance during construction The premium is based on the average value of the house and building materials from the first day of construction until completion.
When a regular bill of lading is issued, who will be responsible for the invoice cost of any damaged property? A The person to whom the goods are being shipped B The shipper C The driver of the truck D The carrier
D The carrier When a regular bill of lading is issued, the carrier will be responsible for the invoice cost of any damaged property, and the shipper does not have to specifically declare a value.
