ExamFx: Property and Casualty Insurance

A commercial property special form covers property in transit up to: a. $500 b. Full replacement cost c. $5,000 d. ACV

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 insured works outside the home. The insured's sister lives with him and cares for his 4 children. When his home was severely damaged by fire, they move into an apartment while repairs are being made. The largest apartment available in the area has 2 bedrooms, so the insured's sister stays in a motel while the repairs are made. How much will the HO3 pay for their additional living expenses? A. Nothing B. All of the expense up to the Coverage D limit C. The cost of renting and apartment, but not the cost of the motel room D. The cost of renting the apartment, and 50% of the cost of the motel

B. All of the expense up to the Coverage D limit Coverage D will pay the expenses incurred to maintain the same lifestyle as before the loss

Under businessowners policy Section I, if an insurer wants to nonrenew a policy, how many days before the expiration date must the insurer notify the mortgageholder? a. 10 days b. 15 days c. 20 days d. 30 days

a. 10 days If an insurer will not be renewing a policy for nonpayment of premium, according to busienssowners policy Section I, it must notify the mortgageholder at least 10 days before the policy expires

A tornado that destroys a property would be an example of what? a. A peril b. A pure risk c. A loss d. A physical hazard

a. A peril A peril is the cause of loss insured against in an insurance policy

The declarations page of the homeowners policy provides all of the following information EXCEPT a. A statement that earthquake damage is not covered. b. The amount of premium charged for each coverage. c. The insured's address. d. What deductible amount applies to each loss. The statement that earthquake damage is not covered is found in the policy form.

a. A statement that earthquake damage is not covered. The declarations section provides information as to who is insured, where they are located, when the policy provides coverage, how much coverage and the amount of deductible applied to a loss. The statement that earthquake damage is not covered is found in the policy form.

Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? a. Additional coverage b. Exclusions c. Declarations d. Insuring agreement

a. Additional coverage The additional coverage portion of a policy provides an additional amount of coverage for specific loss expense, at no additional premium

A person who is not named as an insured on the declarations page of a policy but is protected by the policy is known as the a. Additional insured b. Policyowner c. Named insured d. First named insured

a. Additional insured An additional insured is usually added by endorsement and is not named on the declarations page but is protected by the policy

In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation? a. Agreed value b. Replacement cost c. Stated amount d. Market value

a. Agreed value Agreed value is a property policy with a provision agreed upon by the insurer and insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written. When a loss occurs, the policy pays the agreed value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation.

Which of the following clauses establishes the procedure for determining the amount of a loss when insurer and the insured cannot agree on the value of property or amount of loss? a. Appraisal clause b. Loss payment clause c. Valuation clause d. Loss settlement clause

a. Appraisal clause Either an insured or insurer can request an appraisal. Each hires an appraiser. The appraisers then select a disinterested third party (umpire). Disagreements between the appraisers are settled by the umpire whose decisions are usually binding on both parties.

A professional who wants coverage for all liability exposures should purchase what form of liability insurance? a. Commercial general and professional b. Directors and officers c. Fiduciary and employment practices d. Employee benefits

a. Commercial general and professional Commercial general liability excludes professional liability, and professional liability does not cover premises liability

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of a. Concealment b. Waiver c. Fraud d. Breach of Warranty

a. Concealment In insurance, concealment is the withholding of information that will result in an imprecise underwriting decision

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. Contractors equipment floater b. Bailee's customers form c. Builders risk form d. General property form

a. Contractors equipment floater The contractors equipment floater covers equipment left unattended on a job site until the project is finished

All of the following are supplemental payments found in liability policies EXCEPT a. Costs the insured incurred in hiring an attorney b. All expenses and defense costs incurred by the insurer c. Reasonable expenses incurred by the insured d. Limited amounts for bail bonds and other bonds related to a claim

a. Costs the insured incurred in hiring an attorney Supplemental payments pay the insurance company's expenses and will not pay expenses incurred by the insured unless incurred at the insurer's request

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 D b. Coverage A c. Coverage B d. Coverage C

a. Coverage D Coverage D provides fair rental value coverage when insured rental dwellings suffer a loss covered by Coverage A,B, or C

Which commercial crime form would provide coverage for a loss that did not necessarily happen during the policy period but was revealed during the policy period? a. Discovery form b. Retro form c. Reporting form d. Loss sustained form

a. Discovery form The discovery form is used for loses that are discovered during the policy period but may not have happened during the policy period. The discovery form is one of the conditions contained in the crime general provisions forms, which contain conditions and exclusions applying to all crime forms. This discovery period is normally 1 year.

According to the appraisal condition of a homeowners policy, what procedure may be followed if the insurer and insured do not agree as to the size of a loss? a. Either party may make a written request for an appraisal b. The insured is required to accept what the insurer is willing to pay. c. The parties must pursue a lawsuit. d. The policyholder is allowed to hire an appraiser, and the insurer will pay the amount determined.

a. Either party may make a written request for an appraisal. If the insurer and the insured are unable to reach an agreement as to the value of damaged property, either party may make a written request for appraisal.

Which of the following would modify the original insurance contract by either adding or removing coverage? a. Endorsements b. Additional coverage form c. Conditions d. Flexible policy

a. Endorsements Endorsements change the policy's original terms, conditions, or coverages. Endorsements can add or delete coverage, or merely correct items such as the insured's name, address, etc.

What type of compensatory damages will pay for pain and suffering and disfigurement? a. General b. Special (specific) c. Tort d. Normal

a. General General compensatory damages are for intangible elements that cannot be specifically measured in terms of dollars

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost? a. Indemnity b. Stop-loss c. Consideration d Reasonable expectations

a. Indemnity The principle of indemnity stipulates that the insured can only collect for the amount of the loss even if the policy is written with greater benefit limits.

If an insured needs protection on property other than money and securities inside the premises from losses caused by breaking and entering after business hours, which of the following Crime Coverage forms should be purchased? a. Inside Premises- Robbery or Burglary of Other Property b. Robbery and Safe Burglary c. Extortion d. Theft, Disappearance and Destruction

a. Inside Premises- Robbery or Burglary of Other Property Covers taking of property, other than money or securities, when there is visible sign of forcible entry or exit from the premises

The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the a. Insurance agreement. b. Conditions. c. Exclusions. d. Declarations

a. Insurance agreement The insuring agreement is the part of the policy structure that describes the insured perils and the method of indemnification

How does the mobilehome endorsement affect the other coverage of law or ordinance in an homeowners policy? a. It removes the coverage. b. It broadens the coverage. c. It limits the coverage. d. It has no effect.

a. It removes the coverage The mobile home endorsement makes the other coverage of law or ordinance inapplicable to the policy.

What type of property does a personal floaters policy cover? a. Movable personal property, wherever it may be located b. Permanently attached property located on the insured's premises c. Moveable personal property, located exclusively outside of the insured's home d. Movable personal property located in the insured's home, only

a. Movable personal property, wherever it may be located A personal floater refers to an inland marine policy designed to cover movable personal property, wherever it may be located

A customer was injured in a supermarket parking lot when a grocery cart rolled into the customer's leg. Coverage for this claim would be provided under a. Premises and operations. b. Completed operations. c. Workers compensation. d. Product liability

a. Premises and operations. Premises and operations would cover claims arising from injuries that occur on the insured's premises or because of the insured's business operations.

The Gramm-Leach-Bliley Act was passed to: a. Protect private customer information filed with a financial institution b. Define insurance as interstate commerce c. Allow consumers access to credit and private consumer reports. d. Allow insurance companies access to medical information for underwriting purposes.

a. Protect private customer information filed with a financial institution Customers must be given two disclosure notices (one at the onset of business and one before information is disclosed), as well as a yearly updated disclosure notice.

The Federal Fair Credit Reporting Act a. Regulates consumer reports b. Protects customer privacy c. Regulates telemarketing D. Prevents money laundering

a. Regulates consumer reports The Federal Fair Credit Reporting Act regulates consumer reports, also known as consumer investigative reports, or credit reports

Which of the following would NOT be considered a flood? a. Sewer backup b. Overflow of tidal waters c. Mudslides d. Runoff of surface waters

a. Sewer backup Flood is defined by the National Flood Insurance Program. It does not include sewer backup.

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

The policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called a. Subrogation. b. Consent to settle loss. c. Right of salvage. d. Appraisal.

a. Subrogation. When insureds accept loss payment from the insurance company, they must transfer their rights to recovery to the insurer. This prevents the insured from collecting twice for the same loss and allows the insurer to idemnify the insurance company.

To be eligible for coverage under the National Flood Insurance Program, an insured must live in which of the following communities? a. That has met the minimum floodplain management guidelines b. That is surrounded by water c. That has met the minimum population requirements d. That gets flooded at least annually

a. That has met the minimum floodplain management guidelines To be eligible for the flood program an insured must live in a community that has met the minimum floodplain management guidelines

Surety bonds are written for a definite limit called a. The bond penalty b. Indemnity limit c. The limit of liability d. Loss costs

a. The bond penalty If the specific obligation guaranteed by the bond is not fulfilled, a sum of money, known as a penalty, becomes payable as damages

Peril is most easily defined as a. The cause of loss insured against. b. An unhealthy attitude about safety. c. The chance of a loss occurring. d. Something that increases the chance of loss.

a. The cause of loss insured against. Perils are the causes of loss insured against in an insurance policy.

A parking garage owner completed major renovations to a parking garage just prior to selling it to another company. Three months later, overhead concrete fell onto cars in the second floor level. Under the garage coverage policy conditions, which of the following is true? a. The damage occurred when the concrete fell. b. The renovation contractor is liable c. The first owner is responsible for the damage. d. The damage occurred when the renovations were done.

a. The damage occurred when the concrete fell. Under the conditions of a garage coverage policy, the loss occurs at the time of the incident, not when the faulty work was done.

Negligence is defined as a. The failure to do what a reasonable prudent person would do under given circumstances b. An unbroken chain of events that results in bodily injury or property damage to another person c. Conduct that is so hazardous that the individual engaging in it will be held fully responsible for any resulting injury or damage d. An intentional act that results in bodily injury or property damage to another person

a. The failure to do what a reasonable prudent person would do under given circumstances Negligence is defined as the failure to use care that a reasonable, prudent person would have in a similar situation or circumstance

Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT a. The insurer does not have the right to inspect the insured's property and operations. b. The insurer does not make safety inspections for the insured. c. The insurer does not guarantee that conditions are safe or healthful d. The insurer does not guarantee that the insured is meeting all required safety regulations.

a. The insurer does not have the right to inspect the insured's property and operations. The inspection and survey condition DOES allow the insurer the right to inspect the property and operations. These inspections are important in determining the insurability of the insured's property and operations, in setting proper insurance rates, and in making loss control recommendations.

Which of the following statements is true concerning a bonded contractor who defaults on a construction performance contract? a. The obligee may engage another contractor and then seek reimbursement from the surety b. The surety may cancel the bond and avoid paying any losses or expenses c. The contractor will lose his license to operate in the state. d. The principal has no obligation to complete any remaining work or to pay for the expenses

a. The obligee may engage another contractor and then seek reimbursement from the surety The bonding company would have to see that the job was completed and then seek recovery for its expenses from the bonded contractor (principal)

An insured's 9-year-old son threw a ball, accidentally breaking a neighbor's plate glass window. The insured was found legally liable for the cost of replacing the window. This is an example of a. Vicarious liability b. Intervening cause c. Juvenile delinquency d. Absolute liability

a. Vicarious liability Under vicarious liability, an insured may be held responsible for the acts of other family members or independent contractors engaged by the insured to perform work

When a parent is required to pay for damages caused by his or her children, this is an example of a. Vicarious liability b. Strict liability c. Intervening cause d. Assumption of risk

a. Vicarious liability When one party is held liable for the act of another party, it is called vicarious liability. Employers are responsible for employees acting within the scope of their employment. Parents sometimes are held responsible for the acts of the ir children.

When does a business need to purchase a liquor liability policy? a. When it is in the business of manufacturing, distributing, serving, or furnishing alcoholic beverages b. When employees consume alcoholic beverages c. When it does not have a general liability policy d. When it entertains customers or employees at events where liquor is served

a. When it is in the business of manufacturing, distributing, serving, or furnishing alcoholic beverages Homeowners and general liability policies provide host liquor liability coverage to insureds that entertain guests, employees, or organizations at events where liquor is served, but those in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages need to purchase liquor liability coverage

Which of the following would NOT be covered by medical payments to others in Section II of your HO policy? a. You cut your leg while whacking weeds in your backyard with your neighbor's weed whacker b. Your child's nanny falls while walking down your steps c. You are walking your neighbor's dog and it bites someone d. You allow the neighborhood kids to play flag football in your yard; one is injured

a. 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.

The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to a. $200,000 b. $250,000 c. $100,000 d. $150,000

b. $250,000 It is written for the value of the dwelling up to $250,000 on a replacement cost basis.

An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay? a. $0 b. $30,000 c. $32,000 d. $40,000

b. $30,000 This insured only carried 75% of the amount of insurance he had agreed to carry ($120,000 of the agreed $160,000), so the insurer will pay only 75% of the loss, or $30,000. If the insured had carried the required amount of insurance, partial losses would be paid in full. In the event of a total loss, the face of the policy would be paid. If the full amount is not carried, divide the actual amount carried by the amount that should be carried (the coinsurance amount), and multiply it by the loss.

Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records? a. $1,000 b. $5,000 c. $10,000 d. $25,000

b. $5,000 A special limit of $5,000 per occurrence applies to loss or damage to precious metals, precious and semiprecious stones, peals, furs, manuscripts, drawings or records

If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person? a. $30,000 b. $50,000 c. $100,000 d. $180,000

b. $50,000 The first limit shown ($50,000 in this case) is the most the policy will pay for bodily injury to any one person.

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 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

Under the conditions of a Film Coverage Form, how long must the insured maintain records or each production? a. 1 year after production completion b. 3 years after the policy expires c. 5 years after the policy expires d. 7 years after the production completion

b. 3 years after the policy expires The insured must maintain accurate records of each production for at least 3 years after the policy expires

Which coverage form would provide coverage for all incoming and outgoing shipments? a. Mail coverage b. Annual transit c. Trip transit d. Motor truck cargo

b. Annual transit Annual transit policies provide coverage for a shipper's or receiver's incoming and outgoing shipments during the year

Under a businessowners policy, an insured can cancel the policy a. Only at the time of policy renewal b. At any time by mailing a written notice of cancellation c. At any time with 10 days' advance written notice d. Only after the policy has been in force for 120 days

b. At any time by mailing a written notice of cancellation The insured may cancel the policy at any time by mailing the insurance company a written notice of cancellation.

A policy that insures all property at multiple locations for a single amount is referred to as a. Specific b. Blanket c. Reporting d. Special

b. Blanket Blanket coverage provides one limit of insurance for multiple locations or classes of property with the entire limit of insurance available to respond to any loss. No single item is assigned a specific amount of insurance. However, different amounts of insurance may be shown for buildings in general and contents in general

Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as a. Cessation b. Cancellation c. Rescission d. Nonrenewal

b. Cancellation Cancellation is the termination of an in-force insurance policy by either the insured or the insurer prior to the expiration date shown in the policy. Termination may be voluntary, involuntary, or in mutual accordance with provisions contained in the policy.

What term best describes the act of withholding material information that would be crucial to an underwriting decision? a. Breach of warranty b. Concealment c. Withholding d. Leading

b. Concealment Concealment occurs when a person withholds a material fact that is crucial to making a decision. In insurance, this involves withholding information that would be important for making underwriting decisions.

Which of the following coverages will respond if a claim is made or a suit is brought against an insured for damages due to bodily injury or property damage by an occurrence to which the coverage applies? a. Coverage D- Loss of Use b. Coverage E- Personal Liability c. Coverage F- Medical Payments to Others d. Coverage C- Personal Property

b. Coverage E- Personal Liability Coverage E- Personal liability will respond if a claim is made or a suit is brough against an insured for damages due to bodily injury (BI) or property damage (PD) caused by an occurrence to which the coverage applies

In property and casualty insurance, what is the term for the amount of a loss that the insured must cover out of pocket, and the insurer will pay for the additional amount of the loss above this limit? a. Premium b. Deductible c. Self-insured retention d. Coinsurance

b. Deductible In property insurance, the amount of loss retained by the insured is called the deductible; in liability insurance, it is called retention. Most property coverages include a deductible; most liability policies do not include retention

Which of the following provisions requires that the insured protects the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer signed proof of loss within a specified period of time? a. Proof of loss b. Duties after loss c. Legal action d. Loss settlement

b. Duties after loss Duties after loss provision requires that the insured protects the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer signed proof of loss within a specified period of time

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 would be named on the declarations page of a property or liability policy? a. Additional insureds b. First named insured c. Beneficiaries d. All insureds

b. First named insured First named insured is the individual whose name appears first on the policy's declaration

The policy conditions define a. The amount of coverage b. How parties to the contract must act following a loss c. The basic underwriting information d. The excluded perils

b. How parties to the contract must act following a loss Conditions is an essential part of a policy structure. Conditions define what each party to the policy is required to do contractually in the event of a loss

The proof of loss statement must be a. An oral statement b. In writing c. Both oral and in writing d. In a videotape format

b. In writing

All of the following are factors in the determination of actual cash value EXCEPT: a. Replacement cost b. Insurance premium paid c. Type and quality of property d. Age of the property

b. Insurance premium paid Actual cash value is a valuation method in which the value of property is determined using the replacement cost for property of like kind and quality, minus depreciation. The original cost is not a factor.

Persons covered under an insurance policy, whether named or not, are known as the a. Additional insureds. b. Insureds. c. Named insureds. d. First named insureds.

b. Insureds The insureds are persons covered under a policy, whether named or not.

All of the following statements describe the concept of strict liability EXCEPT a. It is applied in product liability cases b. It is imposed on defendants engaged in hazardous activities c. Claimants may need to provide proof that a product defect caused an injury d. It is imposed regardless of fault

b. It is imposed on defendants engaged in hazardous activities Strict liability is commonly applied in product liability cases. The business is then liable for defective products regardless of fault or negligence

Which of the following would NOT be considered causes for flood conditions covered by the National Flood Insurance Program? a. Mudflow and collapse b. Landslides c. Overflow of inland or tidal waters d. Unusual and rapid accumulation of runoff of surface waters from any source

b. Landslides A flood, as defined by the National Flood Insurance Program, is a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties from overflow of inland or tidal waters, unusual and rapid accumulation or runoff of surface waters from any source, or mudflow

Duties of the insurer found in property policy conditions include all of the following EXCEPT a. Return any premiums to the insured b. Notify the insured in the event of financial difficulty c. Pay covered losses d. Provide advance notice of cancellation

b. Notify the insured in the event of financial difficulty The insurance department monitors the financial conditions of insurers. The insurers report to the state, not to policyholders.

What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk? a. Primary and excess b. Other insurance c. Valid insurance d. Noncurrency

b. Other insurance Other insurance is a provision in an insurance policy that defines how the policy will respond if there is other valid insurance written on the same risk

A bond is written for a set limit, and the surety will be liable only for this amount of the limit. This limit is known as the a. Limit of liability b. Penalty c. Face value d. Stated amount

b. Penalty A bond is written for a set limit, sometimes called the penalty. If the principal's obligation exceeds the limit, the surety will be liable only for the amount of the limit

An insured has a liability policy that sets the amount for all claims that arise from a single incident at $50,000. Which type of limit of liability does this insured's policy have? a. Split b. Per occurrence c. Per person d. Aggregate

b. Per occurrence Per occurrence sets the amount for all claims that arise from a single incident at a certain number.

Who are the parties to a bond? a. Contractor, broker, and dealer b. Principal, obligee, and guarantor c. Insured and agent d. Surety and custodian

b. Principal, obligee, and guarantor The principal (obligor) makes a promise to perform for the obligee (insured); the guarantor (surety) pays loss to obligee if the promise is not kept

Who would participate in a Write Your Own (WYO) flood insurance program? a. Businesses requiring National Flood Insurance policies b. Private insurers that write and services National Flood Insurance policies on a risk-bearing basis c. Lloyd's associations d. Government insurance companies that write and service National Flood Insurance policies

b. Private insurers that write and services National Flood Insurance policies on a 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.

In case of a loss, the indemnity provision in insurance policies a. Pays the insured as much as 95% of the loss b. Restores an insured person to the same financial state as before the loss c. Allows the insured to collect 20% more than the actual loss d. Pays the insured a percentage of the loss above and beyond the loss

b. Restores an insured person to the same financial state as before the loss Indemnity (sometimes referred to as reimbursement) is a provision in an insurance policy that states that in the event of loss, an insured or a beneficiary is permitted to collect only to the extent of the financial loss, and is not allowed to gain financially because of the existence of an insurance contract

According to the businessowners policy (BOP) definitions, which of the following does NOT mean valuable papers and records? a. Inscribed deeds b. Securities c. Manuscripts d. Drawings and maps

b. Securities Valuable papers and records means inscribed, printed or written documents, manuscripts, and records (including abstracts, books, deeds, drawings, films, maps, or mortgages). The term does not mean money or securities

What are the two types of compensatory damages? a. Normal and punitive b. Special and general c. Pure and speculative d. Tort and general

b. Special and general Compensatory damages are intended to compensate someone for both tangible and intangible elements of a loss. Special damages are for the actual measurable losses, such as value of property or medical bills. General damages cannot be specifically measured in dollars such as pain and suffering.

When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as a. Specific insurance. b. Stated amount. c. Replacement cost. d. Actual cash value.

b. Stated amount. In stated amount coverage, the value of the insured property is determined at the time the policy is written. In the event of a loss, that amount is paid without regard to any coinsurance provision. However, if the loss is less than total, the insurer has salvage rights with the insured having first right of refusal of the salvage.

Burglary is defined as a. Taking of property by use of force, violence, or fear b. Taking of property from within the premises leaving visible signs of forced entry c. Taking of property from the care of a person in a violent act d. Any act of stealing

b. Taking of property from within the premises leaving visible signs of forced entry Signs of forced entry or exit to closed premises must be present for burglary coverage to apply

When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays a. A percentage of the loss as described on the declarations b. The excess over the self-insured retention c. The amount specified in the policy under the additional coverage provisions d. The amount in excess of the policy's limits of liability

b. The excess over the self-insured retention Retention is the equivalent of a deductible in property insurance.

A homeowner sells his house to a friend. The friend wants to keep the homeowner's current policy in effect. Under the assignment provision, which of the following is most likely? a. The friend will have to apply for coinsurance from another insurance company. b. The homeowner will need to get written consent from the insurer before the policy can be reassigned c. The policy will have to be cancelled d. The homeowner should let the friend take over the premium payments.

b. The homeowner will need to get written consent from the insurer before the policy can be reassigned In property and casualty insurance, assignments of policies are usually valid only with the prior written consent of the insurer

Under the provisions of the business income coverage form, all of the following are true EXCEPT a. The insured is reimbursed for payroll that continues after the loss begins b. The insured is reimbursed for the loss from the date of loss to the date of restoration or policy expiration date, whichever comes first c. 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 d. The insured agrees to resume all or part of operations as quickly as possible

b. 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 business is restored or the limits of coverage are exhausted.

Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? a. The insured would have to pay the self-insured retention limit b. The insured would be responsible for the amount required as underlying limits in the event of a claim c. It would have no effect on the umbrella policy d. The policy will be cancelled

b. The insured would be responsible for the amount required as underlying limits in the event of a claim The amount of insurance required as underlying limits in other policies is treated as a deductible amount to the umbrella for that particular exposure, so if underlying limits are not maintained, it is the insured's responsibility.

In terms of parties to a contract, which of the following does NOT describe a competent party? a. The person must be mentally competent to understand the contract b. The person must have at least completed secondary education c. The person must not be under the influence of drugs or alcohol d. The person must be of legal age

b. The person must have at least completed secondary education The parties to a contract must be capable of entering into a contract in the eyes of the law. Generally, this requires that both parties be of legal age, mentally competent to understand the contract, and not under the influence of drugs and alcohol

Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value? a. They are subject to a $1,000 deductible b. They are automatically provided with replacement cost coverage c. They qualify for maximum compensation under the flood insurance program d. They are excluded from the flood insurance policy

b. 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

The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information a. As soon as practical b. Within 45 days c. Within 30 days d. Within 60 days

b. Within 45 days This is a standard CGL claims-made provision

Representations are written or oral statements made by the applicant that are a. Immaterial to the actual acceptability of the insurance contract b. considered true to the best of the applicant's knowledge c. Guaranteed to be true d. Found to be false after further investigation

b. considered true to the best of the applicant's knowledge Representations are statements made by an applicant that they believe to be true.

Equipment breakdown coverage is written with a single limit or insurance per accident. What is the sublimit for hazardous substance cleanup or repair or replacement of contaminated property? a. $15,000 b. $20,000 c. $25,000 d. $50,000

c. $25,000 Equipment breakdown coverage is written with a single limit of insurance per accident. However, within this limit, the policy has the following sublimits: $25,000 for expediting expenses; $25,000 for hazardous substance cleanup, repair or replacement of contaminated property; $25,000 for ammonia contamination damage; $25,000 for water damage.

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.

The Employee Theft crime policy form includes a coverage extension that applies to employees temporarily outside the coverage territory for up to a. 30 days b. 60 days c. 90 days d. 120 days.

c. 90 days The coverage includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 90 days

What is material misrepresentation? a. Any misstatement by the producer b. Concealment c. A statement by the applicant that upon discovery, would affect the underwriting decision of the insurance company d. Any misstatement made by an applicant for insurance

c. A statement by the applicant that upon discovery, would affect the underwriting decision of the insurance company A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company

An uninsured motor vehicle includes all of the following EXCEPT a. A vehicle not covered by an auto insurance policy b. A vehicle that has no liability bond in force c. A vehicle owned and operated by a self-insurer d. A vehicle which flees a hit-and-run accident

c. A vehicle owned and operated by a self-insurer An uninsured motor vehicle does not included vehicles owned and operated by self-insurers, unless the self-insurer becomes insolvent

Which of the following types of valuation work best for property whose value does not fluctuate much? a. Stated amount b. Inflation guard c. Agreed value d. Market value

c. Agreed value Agreed value works best for items whose value does not fluctuate much. When a loss occurs, the policy pays the agreed value as specified on the policy schedule, regardless of the insured item's appreciation or depreciation

In insurance, an offer is usually made when a. The agent hands the policy to the policyholder b. An agent explains a policy to a potential applicant c. An applicant submits an application to the insurer d. The insurer approves the application and receives the initial premium

c. An applicant submits an application to the insurer In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy

Insurable interest in a property policy must be proven a. When a claim is paid b. At the time of application c. At the time of loss d. When a policyowner is changed

c. At the time of loss Between the time a policy is issued and when a loss occurs, ownership may have changed, mortgages may have been put into place, etc. Therefore, in property and casualty insurance, insurable interest must exist at the time of loss

Which of the following other coverages is NOT included in the basic form dwelling policy? a. Personal property temporarily away from the insured premises b. Tenant's improvements, alterations, and additions c. Breakage of glass d. Removal coverage

c. Breakage of glass Breakage of glass is included in the DP-2 and DP-3 only

An insured is driving her car through a residential area when she loses control and crashes into a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have? a. Aggregate b. Per occurrence c. Combined single d. Split

c. Combined single Combined single is a single dollar limit of liability applying to the total of damages for bodily injury and property damage combined resulting from one accident or occurrence.

What are the two major sections of commercial crime policies? a. Property and liability b. Occurrence and claims made c. Commercial entities and government entities d. Discovery form and loss sustained form

c. Commercial entities and government entities The crime program offers policies in two major sections: commercial entities and government entities. For each section the insured can select a form that has different coverage triggers, discovery form or a loss sustained form.

Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT a. Legal purpose b. Offer and acceptance c. Conditions d. Consideration

c. Conditions Conditions are part of the policy structure. Consideration is an essential part of a contract.

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated? a. Representation b. Adhesion c. Consideration d. Good faith

c. Consideration The binding force in any contract is consideration. Consideration on the part of the insured is the payment of premiums and the health representations made in the application. Consideration on the part of the insurer is the promise to pay in the event of loss.

A beauty parlor burns to the ground. What type of loss is this to the owner? a. Specific b. Consecutive c. Direct d. Consequential

c. Direct Damage caused by a peril that is insured against is classified as direct loss

Professional liability coverage protects against legal liability resulting from a. Misrepresentation b. Unethical conduct c. Errors and omissions d. Warranties

c. Errors and omissions Professional liability in fields other than medical is classified as errors and omission insurance. It covers liability arising out of the failure to use due care and the degree of skill expected of a person in a particular profession

All of the following are true regarding deposit premium EXCEPT: a. It must be paid in advance b. It is an estimated premium paid at the policy issue c. It is 50% of the actual premium d. It could be adjusted by the audit

c. It is 50% of the actual premium Deposit premium is an estimated premium paid in advance at the time the policy is issued that may be adjusted by the audit based on actual exposures

The insured's house is located one mile from the county's new landfill and across the road from the entrance of a rock quarry. It would cost $150,000 to rebuild the house if something happened to it, but when the insured tried to sell it, the best offer he received was $80,000. The insurance company will insure the house for only $80,000. What method of valuation is used to insure this property? a. Replacement cost b. Functional replacement cost c. Market value d. Actual cost value

c. Market value When insured for market value, it is insured for what a willing buyer would pay prior to a loss. This is different from actual cash value or replacement cost.

All of the following would be covered under the medical expense coverage of a businessowners policy EXCEPT a. X-ray services b. First aid when the accident occurred c. Mental health counseling d. Ambulance services

c. Mental health counseling This coverage includes accidental bodily injury only; it does not cover any counseling

Which policy consists of the declarations and conditions, endorsements, and other attachments applicable to a single line of insurance? a. Casualty b. Commercial package c. Monoline d. Insurance

c. Monoline A monoline policy contains only one coverage part.

Workers compensation will pay under which of the following situations? a. Only when the employee is engaging in a negligent act b. Only when an employee is at fault c. Paid without consideration of fault or negligence on the part of either employee or employer d. Only when the employer is engaging in a negligent act

c. Paid without consideration of fault or negligence on the part of either employee or employer Workers compensation, which takes the form of a monetary benefit, is paid without any consideration of fault or negligence on the part of either the employee or employer

Under a dwelling policy, which of the following clauses applies if an insured has lost one of two matching silver candlesticks? a. Fractional loss b. Portion loss c. Pair or set d. Sets coverage

c. Pair or set Pair or set is a clause stating that if only one item of a set has been lost, the insurer is not obligated to pay the total value of the set.

What type of information would be found in a policy's insuring agreement? a. Policy limits b. Insurer's address c. Renewal dates d. Location of premises

c. Renewal dates An Insuring Agreement establishes the obligation of the insurance company to provide the insurance coverages as stated in the policy. The insuring agreement lists the parties to the contract, effective and renewal dates, the description of coverage provided, and perils (among other things). Location of premises, policy limits, supplemental representations, and insurers' name and address can all be found in the Declarations.

Which of the following is used in the formula for calculating the actual cash value of a property? a. Fair market value b. Agreed value c. Replacement cost d. Stated value

c. Replacement cost The ACV method of valuation reinforces the principle of indemnity because it recognizes the reduction of value of property as it ages. To calculate ACV, depreciation is subtracted from the current replacement cost.

Which of the following is used in the formula for calculating the actual cash value of a property? a. Fair market value b. Agree value c. Replacement cost d. Stated value

c. Replacement cost The actual cash value method

A property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use what loss valuation method? a. Replacement cost b. Reproduction cost c. Stated amount d. Actual cash value

c. Stated amount A stated amount is an amount of insurance scheduled in a property policy which is not subject to any coinsurance requirements in the event of a covered loss

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? a. The Guaranty Association b. Consumer Privacy Act c. The Fair Credit Reporting Act d. Unfair Trade Practices Law

c. The Fair Credit Reporting Act The purpose of the Fair Credit Reporting Act is to protect consumers against the circulation of inaccurate or obsolete information and to ensure that consumer reporting agencies are fair and equitable in their treatment of consumers.

Which of the following circumstances would be EXCLUDED under medical payments coverage of a personal auto policy? a. The insured's mother is injured while exiting from the insured vehicle b. The insured is struck by another vehicle while crossing the street c. The insured is injured while driving his motorcycle on his resident premises. d. The insured's friend is injured in an accident while riding as a passenger in the insured's car

c. The insured is injured while driving his motorcycle on his resident premises. Coverage does not apply when the insured is occupying a vehicle with fewer than four wheels.

When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be a. Strict liability b. An intervening cause c. The proximate cause d. The direct cause

c. The proximate cause The proximate cause of a chain of events resulting in injury is one that is sufficiently related to an injury that the courts determine it is in fact the cause of that injury

An insured covered under a Mobile Homeowners Policy wants to move the location of the covered mobile home. Which of the following must the insured obtain from the insurer? a. Loss of Use Coverage b. Additional Coverage Property Removed Endorsement c. Transportation/Permission to Move Endorsement d. Housing and Transportation Coverage

c. Transportation/Permission to Move Endorsement If the insured wishes to move the mobile home in a situation in which it is not threatened by an insured peril, they must obtain from the insurer a Transportation/Permission to Move Endorsement

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? a. Indemnity b. Representation c. Warranty d. Concealment

c. Warranty A warranty is insurance is a statement guaranteed to be true. When an applicant is applying for an insurance contract, the statements he or she makes are generally not warranties but representations. Representations are statement that are true to the best of the applicant's knowledge

An insured owns a building that is valued at $400,000. To comply with the 80% coinsurance provision of his insurance policy, how much should he insure the property for? a. 100% of the market value b. $400,000 c. $32,000 d. 80% of the property's replacement cost or more

d. 80% of the property's replacement cost or more The coinsurance clause states that in consideration of a reduced rate, the insured agrees to maintain a certain minimum amount of insurance of the insured property. In the event of a covered loss, insurance is designed to pay replacement cost minus depreciation.

What type of liability would a person who owns wild animals have? a. Vicarious b. Implied c. Direct d. Absolute

d. Absolute Any conduct that is inherently dangerous, such as using explosives or keeping wild animals, imposes absolute liability. The claimant does not have to prove anything.

Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? a. Exclusions b. Declarations c. Insuring agreement d. Additional coverage

d. Additional coverage The additional coverage portion of a policy provides an additional amount of coverage for specific loss expense, at no additional premium

Which of these is defined as the maximum limit of coverage available under a liability policy during a policy year, regardless of the number of claims that may be made or the number of accidents that may occur? a. Per person limit b. Per occurrence limit c. Split limit d. Aggregate limit

d. Aggregate limit Aggregate limit is the maximum limit of coverage available under a liability policy during a policy year, regardless of the number of claims that may be made or the number of accidents that may occur.

With respect to the business of insurance, a hazard is a. the risk taken when performing something dangerous b. the tendency of poorer risks to seek insurance more often than better risks c. The basic reason for an insured to purchase insurance. d. Any condition or exposure that increases the possibility of loss.

d. Any condition or exposure that increases the possibility of loss. A hazard is any condition or exposure that increases the possibility of loss occurring. Hazards are generally classified as either physical, moral, or morale.

Which of the following is NOT covered under accounts receivable coverage form? a. Interest on loans required to offset uncollectible amount pending payment of the insurance proceeds b. Sums due the insured that are uncollectible due to a covered loss c. Expenses to reestablish the records, if possible, and collection expense that are in excess of normal costs d. Any loans required to offset uncollectible amounts

d. 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.

Insurable interest in a property policy must be proven a. When a policyowner is changed b. When a claim is paid c. At the time of application d. At the time of loss

d. At the time of loss Between the time a policy is issued and when a loss occurs, ownership may have changed, mortgages may have been put into place, etc. Therefore, in property and casualty insurance, insurable interest must exist at the time of loss

If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy? a. Umbrella policy b. Excess policy c. General liability policy d. Auto policy

d. Auto policy The underlying policy is the primary liability policy. In this scenario, it's the insured's personal auto policy.

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.

Which of the following is an additional coverage that is covered by the broad causes of loss form? a. Lightning b. Ordinance or law c. Setting d. Collapse

d. 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.

The part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the a. Exclusions b. Declarations c. Insuring clause d. Conditions

d. Conditions The conditions is the part of an insurance policy that sets forth the obligations and duties of the insurer and the insured

Which of the following is NOT an essential element of an insurance contract? a. Consideration b. Agreement c. Legal purpose d. Counteroffer

d. Counteroffer In order for insurance contracts to be legally binding, they must have four essential elements: agreement (offer and acceptance), consideration, competent parties, and legal purpose. Counteroffer is not required.

Which of the following property coverages would provide protection to contents damaged by fire? a. Coverage D b. Coverage A c. Coverage B d. Coverage C

d. Coverage C Coverage C- Personal Property provides coverage for the contents of an insured dwelling

Which of the following would be covered under a business liability insurance policy? a. Bodily injury resulting from environmental pollution b. Loos of electronic data due to a burglary c. Bodily injury to an employee covered by workers compensation insurance d. Damage to a watercraft while on shore at the insured's premises

d. Damage to a watercraft while on shore at the insured's premises A watercraft parked or stored on the shore of an insured's premises would be covered under a business liability policy

What term includes damage where the insured peril was the proximate cause of loss? a. Indirect b. Consequential loss c. Negligent loss d. Direct loss

d. Direct loss Direct loss is direct, physical damage to buildings and/or personal property. Direct loss also includes other damage where the insured peril was the proximate cause of loss.

Which of the following provisions requires that the insured protects the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer signed proof of loss within a specified period of time? a. Legal action b. Loss settlement c. Proof of loss d. Duties after loss

d. Duties after loss Duties after loss provision requires that the insured protects the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer signed proof of loss within a specified period of time

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. Last named insured b. Beneficiary c. Insurer d. First named insured

d. First named insured Some commercial polices 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.

Replacement cost is defined as a. The market value of property of like kind and quality b. Full replacement of property with like kind and quality, less an allowance for physical deterioration and depreciation c. Payment of the full policy limits in the event of a total loss d. Full replacement of property at its current cost, new and without reduction for depreciation

d. Full replacement of property at its current cost, new and without reduction for depreciation Replacement cost policies do not consider depreciation if the proper amount of insurance is maintained. Policies that provide replacement cost coverage require that the amount of insurance written be 80% or more of the replacement cost of the property at the time of loss

A Mobile Homeowners Policy is structured is structured the same as a a. Personal Auto Policy b. Dwelling Policy. c. Commercial Package Policy d. Homeowners Policy

d. Homeowners Policy The coverage structure of the Mobile Homeowners Policy follows the structure of the Homeowners policy

When would a misrepresentation on the insurance application be considered fraud? a. Never: statements by the applicant are only representations b. When the application is incomplete c. Any misrepresentation is considered fraud d. If it is intentional and material

d. If it is intentional and material A misrepresentation would be considered fraud if it is intentional and material. Fraud would be ground for voiding the contract.

Who is responsible for filling out a notice of claim form? a. Adjuster b. Agent c. Insurer d. Insured

d. Insured Notice of claim is a form or statement from an insured to an insurer, informing the insurer that events leading to a possible claim have occurred.

Which of the following statements is NOT true regarding a personal umbrella liability policy? a. It may cover certain exposures not provided under the primary layer. b. It may require the payment of a self-insured retention c. It provides excess liability coverage over underlying personal liability d. It provides errors and omissions coverage for an agency

d. It provides errors and omissions coverage for an agency Personal umbrella policies cover the personal exposure of the insured. Errors and omissions coverage is provided only in a professional liability policy.

Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated? a. Law of masses b. Law of averages c. Law of group evaluation d. Law of large numbers

d. Law of large numbers The law of large numbers, which states that the larger a group is, the more accurately losses reported will equal the underlying probability of loss, is the basis for statistical prediction of loss upon which rates for insurance are calculated.

Which of the following auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss? a. Medical payments b. Comprehensive coverage c. Collision coverage d. Liability coverage

d. Liability coverage Supplementary payments, found in Part A- Liability, include expenses incurred by the insured at the insurer's request, including $200 per day for attending trials or hearings

Which of the following is the basis for a claim against an insurance policy? a. Material change b. Hazard c. Misrepresentation d. Loss

d. Loss Claims result from losses by a peril insured against in an insurance policy

Which of the following would be covered under the crime coverage inside the premises- theft of money and securities? a. Loss resulting from the surrendering of property in any exchange or purchase b. Dishonest acts of employees, directors, trustees or representatives c. Accounting or arithmetic errors or omissions d. Loss or damage to a locked safe, vault, or cash register

d. Loss or damage to a locked safe, vault, or cash register. Inside the premises- theft of money and securities would cover loss or damage to a locked safe, vault, or cash register.

Untrue statement on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called a. Fraudulent statements. b. Warranties. c. Common errors. d. Material misrepresentations.

d. Material misrepresentations A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company.

When an insurance policy does not offer a continuation or replacement at its expiration date, it is considered a a. Suspension. b. Cessation. c. Cancellation d. Nonrenewal.

d. Nonrenewal. When an insurance policy does not offer a continuation or replacement at its expiration date, it is considered a nonrenewal.

Losses caused by continuous or repeated exposure to conditions resulting in injury persons or damage to property that is neither intended nor expected is the definition of which of the following terms? a. Peril b. Hazard c. Accident d. Occurrence

d. Occurrence An occurrence includes those losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected

What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy? a. Specified peril policy b. Binder policy c. Named peril policy d. Open peril policy

d. Open peril policy Open peril (special) policies cover everything except what they say they don't. Named peril policies cover only perils named in them.

Which of the following personal auto coverages would apply for damage caused by a bird hitting the windshield? a. Property damage coverage b. Uninsured motorist coverage c. Collision coverage d. Other-than-collision coverage

d. Other-than-collision coverage Other-than-collision coverage includes losses caused by contact with birds or animals, windstorm, hail, water, or flood, and breakage of glass. Please review the complete list in the text.

Before an insurer will pay any loss under a policy, what is usually required from the insured? a. Notice of claim b. A binder c. A claims-made form d. Proof of loss

d. Proof of loss A sworn statement, called proof of loss, must usually be furnished by the insured to an insurer before any loss under a policy can be paid.

A sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is called a. Notice of claim b. Claim report c. Binder d. Proof of loss

d. Proof of loss Proof of loss is a sworn statement that must usually be furnished by the insured to an insurer before any loss under a policy can be paid. Proof of loss must be in writing

In property insurance, actual cash value is define as which of the following? a. Market value of the property a t the time of the loss b. Stated value of the property as shown on the declaration c. The actual amount of a loss payable, less the policy deductible d. Replacement cost at the time of the loss, less depreciation

d. Replacement cost at the time of the loss, less depreciation A loss valuation method used in many property forms is determined by today's replacement cost minus depreciation for age and obsolescence

In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called a. Stop-loss b. Coinsurance c. Participation requirement d. Self-insured retention

d. Self-insured retention In casualty insurance, the portion of a claim not paid by insurance is called a retention. In property insurance, it is called a deductible.

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. Prior to the insurer making inspections, surveys, and reports relating to the insurance, approval from the insured must be obtained b. Requests for any changes in the policy from the insured may be made by the second named insured c. 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. d. The first named insured may cancel the policy at any time by giving written notice to the insurer

d. 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.

The most the insurer will pay for a loss under a businessowners policy is a. The amount of the loss minus the deductible b. 80% of the loss c. 20% of the loss d. The limit of insurance after the deductible is paid.

d. The limit of insurance after the deductible is paid. For losses covered under a businessowners policy, the insured must pay a deductible, after which the insurer will pay up to the limit of insurance.

The members of a limited liability company are insureds under a businessowners policy (BOP) if a. Each individual is listed as a named insured on the policy b. A single individual member of the limited liability company is listed as the named insured. c. Members of a limited liability company cannot be insureds under a BOP d. The limited liability company is designated as the named insured

d. The limited liability company is designated as the named insured If the named insured is designated as a limited liability company, the named insured and members also are insureds, but only with respect to the conduct of the business. Managers are insureds, but only with respect to their duties as managers.

When a mortgagee is named in a mortgagee clause attached to a fire or other direct damage policy a. The mortgagee is prohibited from bringing a suit against the insurer b. The loss reimbursement is paid to the insured c. The loss reimbursement is not awarded if damages arose from the insured's negligence d. The loss reimbursement is paid to the mortgagee

d. The loss reimbursement is paid to the mortgagee When a mortgagee is named in a mortgagee clause attached to a fire or other direct damage policy, the loss reimbursement will be paid to the mortgagee. The mortgagee's rights of recovery will not be defeated by any act or negligence on the part of the insured. The mortgagee is also given other rights, such as bringing a suit in their own name to recover damages