EXAM FX (Types of Property Policies)

What is the standard deductible that applies to the direct property coverages?

$250

What are the 3 special limits for the limited theft endorsement?

$1,500 for watercraft, including their trailers $1,500 for other trailers $2,500 for firearms and related equipment

What are the 8 other coverages that are extensions of the major coverages (A,B,C,D, & E)

-other structures (up to 10%) -debris removal -improvements, alterations, & additions (up to 10%) -worldwide coverage (up to 10%) -rental value and additional living expense (up to 20%) -reasonable repairs -property removed (5 days DP-1 and 30 days DP-2/DP-3) -fire department service charge (up to $500)

Who is an insured?

-the named insured -relatives of the named insured -nonrelative residents in the care of the name insured and under the age of 21 -full-time students under the age of 24who are relatives and were residents prior to attending school -any person legally responsible for the insured's animals, watercraft, or certain types of motorized vehicles

What are the primary differences between the DP-2 and DP-3?

-theft is covered in special -accidental discharge or overflow of water and steam is expanded to include off premises -no exclusions for antennas, outdoor equipment, fences or awnings for falling objects on special from -special form includes damage from freezing or thawing of water under roof shingles (an ice dam)

Special form exclusions (additional)

-weather conditions -acts, decisions, or the failure to act -faulty planning, design or materials

friendly fire

(like a fireplace) if a friendly fire escapes its boundaries and causes damage to other property, it would be considered a hostile fire and will be covered by the insurance policy

What is the maximum number of roomers or boarders for properties insured under the dwelling policy?

5

In a watercraft policy, which coverage part will respond to a claim for damages for bodily injury or property damage for which the insured becomes legally liable because of a watercraft accident? A)Part A B)Part B C)Part D D)Part E

A) Part A Part A is Liability Coverage and will pay for damages for bodily injury or property damage for which any insured becomes legally liable because of a watercraft accident.

Both the broad theft and limited theft endorsements on the dwelling program exclude all of the following types of property EXCEPT a) Watercraft B) Credit Cards C)Motor vehicles licensed for the road D) Aircraft

A) Watercraft Canoes have limited coverage

In broad and special forms, how is personal property valued at time of loss?

ACV

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.

Which coverage form would provide coverage for all incoming and outgoing shipments? A)Motor truck cargo B)Mail coverage C)Annual transit D)Trip transit

C)Annual transit

Which of the following is covered under the Mail floater of a Commercial Inland Marine policy ONLY if is sent by registered mail? A)Money orders, checks, drafts, notes B)Bonds, stocks, stock certificates, coupons attached to bonds C)Currency and unsold travelers checks D)Postage and revenue stamps

C)Currency and unsold travelers checks

All of the following are major coverages included in the homeowners policy EXCEPT A)Dwelling. B)Loss of use. C)Loss of income. D)Personal property.

C)Loss of income.

Which of the following coverages is included in an unendorsed homeowners policy? A)Fungi, wet or dry rot, or bacteria B)Earthquake C)Medical payment to others D)Personal property replacement coverage

C)Medical payment to others Medical payment to others is automatically included in Section II of all HO policies.

All of the following are additional liability coverages automatically provided in a homeowners policy EXCEPT A)Damage to the property of others. B)Loss assessment coverage. C)Personal injury. D)Claims expenses.

C)Personal injury Personal injury may be added by endorsement.

Which dwelling policy primarily insures a structure on an actual cash value basis?

DP-1 DP-2 & DP-3 insure the structure on a replacement cost basis

Which dwelling forms would pay replacement cost for the dwelling?

DP-2 & DP-3 as long as house is insured for at least 80% of its value at date of loss

Does dwelling coverage include the land on which the dwelling is located?

No

If the policy expires while additional living expenses or fair rental value is being paid, do the payments stop?

No

Is a house that has 5 residential units covered under the dwelling policy?

No

Is theft covered in the broad from policy?

No

Is there a minimum amount of insurance required for the Basic Form?

No

Is there off-premises coverage for a property at a newly acquired principal residence?

No however, on premises limit will apply for 30 days

exclusions for volcanic eruptions on basic

loss caused by earthquake, land shock waves, or tremors

How is the special from different from basic and broad?

open peril form - all perils are insured except for those specifically included

exclusions for smoke coverage on basic

smoke from agricultural smudging, industrial operations, or from friendly fires

what is the additional living expense?

the policy pays for the increase in normal living expenses the insured incurs white the described premises are unfit for normal use

sudden and accidental damage from artificially generated electrical current exclusions

tubes, transistors ore electronic components of circuitry that are part of appliances

What is the only property not included on Coverage A - Dwelling?

land, including the land on which the dwelling described in the declarations is located

What types of properties can homeowners policies be used on

-1 to 4-family owner-occupied residences -No more than 2 families or 2 roomers or boarders per unit -Various ownership types to include installments sale contracts, life estates, dwellings under construction, townhomes, and duplexes -insuring a tenant of nonowned dwelling (renter's form) -a residential condominimum or cooperative unit -seasonal dwellings and secondary residences

exceptions to windstorm or hail

-essentially everything that is not the actual building (awnings, antennas, bushes) - nothing inside the building is covered unless it results from damage of the building (ex. hail entering through a hole caused by the hail or windstorm)

exclusions for vandalism coverage

-glass breakage (except glass building blocks) -damage to property IS covered, but the actual property stolen is not -no coverage if property is vacant for more than 60 consecutive days

Structure of a DP Form

1) Agreement 2) Definitions 3) Deductible 4) Coverages, including other coverages 5) Perils Insured Against 6) General Exclusions 7)Conditions

What other coverages are only in the broad and special forms?

-Lawn, shrubs, trees, plants ($500 per or 5% of amount of coverage on dwelling) -breakage of glass -collapse -ordinance or law (10%)

General exclusions in all 3 dwelling forms

-ordinance or law -earth movement (however any resultant damages or fire or explosion are covered) -water damage -power failure (unless from off-premise trigger) -neglect -war -nuclear hazard -intentional loss -governmental action

accidental discharge or overflow of water or stream exceptions

-if over a period of weeks or months -repair cost for appliance itself -discharge from an off-premises storm drain, stream, or sewer pipe -if building is vacant for more than 60 consecutive days

What types of property are not included under coverage B- other structures

-land, including where other structure is located -structures rented or held for rental to anyone other than a tenant of the dwelling when not used as a private garage -other structures that are used in business, whether in whole or in part useless -gravemarkers and mausoleums

Exclusions to the Limited theft endorsement

-losses caused by tenants, roomers or boarders, family members, or employees -money, bank notes, gold, silver -securities, accounts, deeds -jewelry, watches, precious stones

3 coverage forms available under dwelling program

-basic -broad -special forms

What property is not covered in coverage C - personal property?

-coins, currency, passports -animals, birds, fish -aircraft for flight (and its parts) -hovercrafts and parts -watercrafts, other than rowboats and canoes -motor vehicles, other than those for a handicap -data restoration -credit cards, debit cards -water or stream -gravemarkers and mausoleums

What are the 7 additional broad form perils?

-damage by burglars -falling objects -weight of ice, snow or sleet -accidental discharge or overflow of water or steam -sudden or accidental tearing apart, cracking, burning, or bulging -freezing -sudden and accidental damage from artificially generated electric current

exception to vehicles coverage on basic

-damage caused by owned or operated vehicle or of a resident -also no coverage for damages to fences, driveways, or walks caused by vehicle

Exclusions for falling objects under broad form

-damage to awnings, fences, outdoor equipment - no coverage for falling object itself

What are the 4 core property coverages an insured can select from?

-dwelling (direct) -other structures (direct) -personal property (direct) -fair rental value (indirect)

How many days advance notice is required for a cancelled policy due to nonpayment or any other reason within the first 60 days?

10 days

After 60 days of coverage, a notice of __ days is required for nonrenewal

30

Under the dwelling policy, if an insurer chooses to repair or replace damaged or lost property, it must inform the insured within how many days of receiving proof of loss?

30 days

After vacancy for more than __ consecutive days, vandalism and malicious mischief are excluded under a dwelling policy

60

How many days from receiving proof of loss (and coming to an agreement) is there a loss payment?

60 days

Under the dwelling policy form, what is the maximum time limit during which volcanic activities would be considered part of one occurrence?

72 hrs

who is the limited theft endorsement designed for?

A landlord

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)Apply to injuries of any guests or visitors. B)Pay as excess over the mother-in-law's health insurance. C)Pay only if the mother-in-law has no health insurance of her own. D)Share equally in the cost with the mother-in-law's health insurance.

A)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.

In dwelling policies, automatic increase in insurance is A)Coverage by endorsement. B)Automatic coverage. C)Coverage without additional premium. D)Coverage for newly acquired property.

A)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.

What is the 5th additional property coverage added by the broad and special forms?

Additional living expense (indirect)

First aid costs for others injured on the insured's premises A)Are deducted from the liability limit. B)Are paid in addition to the liability limit. C)Apply only if the insured is legally liable. D)Also cover injuries to the insured's family members.

B)Are paid in addition to the liability limit. First aid costs for others apply even if you are not legally liable and are in addition to the stated limits, but do not apply to those regularly at the location.

Which of the following is an example of a protective safeguard in a businessowners policy? A)Professional liability endorsement B)Automatic sprinkler system C)Errors and omissions insurance D)Recordkeeping

B)Automatic sprinkler system The protective safeguards endorsement adds a policy condition requiring the insured to maintain protective safeguards (automatic sprinkler system, fire alarm, etc.) as a condition for coverage.

The main difference between an HO-4 and an HO-6 is A)HO-4 provides limited dwelling coverage as well as contents coverage. B)HO-6 provides limited dwelling coverage as well as contents coverage. C)HO-4 does not cover additional living expenses. D)HO-6 does not cover additional living expenses.

B)HO-6 provides limited dwelling coverage as well as contents coverage. HO-4 provides no dwelling coverage because a tenant does not own the dwelling; the condo owner does own the condo and is provided with coverage for improvements. Both HO-4 and HO-6 cover theft and additional living expenses

All of the following are true of Coverage B - Other Structures EXCEPT A)Land where the other structures are located is not covered. B)It must be added by endorsement to a homeowners policy. C)This coverage is not applicable on the HO-4 policy form. D)The amount of coverage provided by Coverage B is an amount equal to 10% of Coverage A.

B)It must be added by endorsement to a homeowners policy Homeowners policies automatically provide an amount of insurance in Coverage B that is equal to 10% of the amount written as Coverage A. This amount may be increased by endorsement.

All of the following statements are true regarding employee dishonesty optional coverage under the businessowners policy (BOP) EXCEPT A)Coverage includes all property, including money and securities owned or held by the insured. B)It provides coverage for all employees, even those employees who were terminated in the past 90 days. C)It provides coverage for direct loss or damage to business personal property. D)Losses result from dishonest acts of any of the insured's employees.

B)It provides coverage for all employees, even those employees who were terminated in the past 90 days. By definition, an employee covered under the employee dishonesty optional coverage is one who is currently employed or who was terminated in the past 30 days.

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.

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)Up to $500 B)Up to $1,000 C)$2,000 D)Nothing

B)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.

acronym for broad coverage perils

BB BICE-GOLF Bursting of heating systems Burglary damage Breaking of water heaters Ice, snow, or sleet weight Collapse of building or part of Electrical damage (artificial) Glass breakage Objects falling from outside Leakage of water or steam damage Freezing of plumbing

Which form is a named peril coverage form that provides the most limited coverage?

Basic Form (DP-1)

Does the broad theft endorsement provide coverage for on-premises, off-premises, or both?

Both - off-premises coverage can be insured only if on-premises coverage is written

Under a dwelling policy, which of the following is NOT a factor in determining a loss? A)The amount reflecting the insured's interest in the property at the time of loss B)The amount necessary to repair or replace the property C)The amount negotiated by the insured D)The policy limit

C)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.

Which property coverage would provide protection to contents damages by fire?

Coverage C - Personal Property

How long is the waiting period after the application has been accepted before flood coverage goes into effect? A)6 months B)12:01 am the next day C)5 days D)30 days

D)30 days

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

Which of the following is NOT a primary property coverage in homeowners coverage? A)Dwelling B)Other structures C)Loss of use D)Collapse

D)Collapse Collapse is an additional coverage, not a primary property coverage.

Additional coverages in the liability section of a homeowners policy cover all of the following EXCEPT A)Claims expense. B)Expenses the insured incurs rendering first aid for bodily injury to third parties. C)Damage to the property of others. D)Damage to a third-party property for which the insured is legally liable.

D)Damage to a third-party property for which the insured is legally liable. Legal liability coverage is a primary liability coverage, not an additional coverage.

The homeowners policy form that covers condominium unit owners is A)HO-2. B)HO-3. C)HO-4. D)HO-6.

D)HO-6.

The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land A)Owned or leased by a landlord who does not reside on the premises. B)Owned by a landlord who does not use the mobilehome located on it. C)Leased by the owner of the land. D)Owned or leased by the resident of the mobilehome.

D)Owned or leased by the resident of the mobilehome.

Does the dwelling policy can be used to insure: a) dwelling only b)contents only c)both dwelling and contents d)all of the above

Does the dwelling policy can be used to insure: d)all of the above

What coverage is included on the basic form?

Fire, Lightning, and internal explosion

Dwelling coverage is provided for all homeowners forms except...

HO-4

A Mobile Homeowners Policy is structured the same as a A)Commercial Package Policy. B)Homeowners Policy. C)Personal Auto Policy. D)Dwelling Policy.

Homeowners policy

Is liability coverage included under dwelling program?

No, but can be added

if coverage c for personal property applied if it is referenced on the policy?

Only if there is a limit shown and a premium charged

Can the insured choose between ACV and replacement cost?

The insured can choose ACV instead of replacement cost. This must be done within 180 days of loss

What is fair rental value?

When a property is damaged from a covered peril and the building is uninhabitable, the policy will pay the fair rental value of the premises -this coverage does not apply to a loss associated with the cancellation of a lease

When can fair rental value and additional living expense be added as property coverages?

When one of the direct property coverages is written first

What are the extended coverage perils insured on the basic form?

Windstorm Hail Aircraft/vehicles Riot/civil commotion Volcanic eruption Explosion Smoke (WHARVES)

In broad form are lawns, trees, shrubs, and plants covered?

YEs - from fire, lightning, riot, etc. Limited to a max of $ 500 per tree/plant and a maximum per loss of 5% of coverage on dwelling

Is stolen property from a burglary covered under the broad form?

Yes -still no coverage if vacant for more than 60 consecutive days

Hostile fire

a fire that was not intentional and not contained with its intended boundaries

How is the broad form more expansive than the basic for vandalism?

breakage of glass is covered and there are no exceptions to explosions

The limited theft endorsement is intended for which type of property?

an apartment building in which the owner does not reside

If an insurer makes a change to broaden coverage in a dwelling policy while it is in effect, the changes will apply...

automatically

How is property coverage indicated?

by showing a limit of liability and premium on the declarations page

Water Backup and Sump Pump Overflow Endorsement

coverage for up to $5,000 in loss or damage, subject to a $250 deductible

When can broad theft coverage be added as an endorsement to a dwelling policy?

if the insured is owner-occupant of the dwelling

what is automatic increase in insurance used for?

it increases the amount of insurance by an annual percentage to offset the effects of inflation

freezing exclusions

items not considered appliances -reasonable steps to maintain heat must be taken

What are other structures? Examples?

other separate structures at the same location ex. detached garages, sheds, fences

exclusions for weight of ice, snow, or sleet

piers, wharves, docks, awnings, fences, swimming pools, retaining walls, pavement or patios

How much is the premium for the dwelling under construction endorsement under the dwelling policy?

the average amount of insurance during construction

How do the homeowners and dwelling property forms differ?

the homeowners form includes coverage for personal property of the insured and personal liability protection

if more than one person has an insurable interest in the property covered under a dwelling policy, who is liable?

the insurer will be liable for only the insured's interest in the damaged property