Other Coverages and Options QUIZ

The insured has a one million-dollar personal umbrella policy with a retention limit of $1000. The insured suffers a $15,000 loss that is excluded by the underlying policy, but not the umbrella. How much of this loss would be paid under the umbrella?

$14,000 If the umbrella has to pay out where there is no primary underlying coverage the insured will have to pay a self-insured retention limit similar to a deductible before the umbrella pays.

The National Flood Insurance (NFIP) Regular Program offers which of the following for maximum limits on a single-family residence?

$250,000 for home/$100,000 for contents -regular program max limits for a single family home $35,000 Home / $10,000 -are the max limits in the Emergency Program. $500,000 Home / $100,000 Contents -max limits for a commercial property in the Regular Program. Additional limits may be available in Surplus Markets under an Excess Flood policy.

The mandatory waiting period before flood coverage to begin is

30 days

Examples of insurance industry programs that help provide a public service for consumers with exposures not normally available through standard insurers are often knows as Residual Markets. the following are examples

Joint Underwriting or Reinsurance plans Fair Access to Insurance Requirements (FAIR) plans insurance underwriting plans Residual markets exist in many states for auto and property insurance, special reinsurance needs like Hurricane or Earthquake, and temporary emergency markets like malpractice liability when there is a capacity problem offering such coverage. Aviation insurance may be written by risk retention groups, but it is not a residual market.

The National Flood Insurance Program permits private insurance companies to provide flood coverage under the:

Write your own program The NFIP permits flood policies to be written by private insurance companies under the "Write your own" program and subject to federal guidelines. Policies and premium are the same as under a policy purchased from the NFIP.

Lawyers Professional Liability insurance policies contain all of the following

affords coverage for financial injury coverage provided on a claims-made basis policy condition requires the insureds consent to settle a claim

What errors and omissions (E&O) policy will cover bodily injury as well as financial liability?

architects and engineers E&O Insurance agent, accountant, and attorney errors will not hurt you physically. The architect and engineer mistakes can not only cause someone financial damage, but physical injury as well.

Because of the limitations in home and auto insurance, specialty policies for all of the following exist, EXCEPT

autos used in a busines Autos used in a business could be insured on a business auto policy or rated for use such as a person in sales on a personal auto policy. The other three do not qualify for coverage under the home or auto policy and require a specialty type of insurance for proper coverage

which of the following is NOT a type of surety bond

blanket bond blanket bod is a type of fidelity bond -refers to insurance coverage carried by banks and brokerage houses that protects against any losses incurred by unlawful or dishonest activity on the part of employees.

Fiduciary liability would be purchased by all of the following, EXCEPT

coin collector shop Any account sponsored by or administered by an employer or third party administrator could be held liable for mismanagement and over stating values. Any institution charged with the safekeeping of money for others also needs the protection. A coin collector shop needs crime insurance.

Fiduciary liability would be purchased by all of the following, EXCEPT

coin collector shops Any account sponsored by or administered by an employer or third party administrator could be held liable for mismanagement and over stating values. Any institution charged with the safekeeping of money for others also needs the protection. A coin collector shop needs crime insurance.

Maritime Piracy

consists of any criminal acts of violence, detention, rape, or depredation committed for private ends by the crew or the passengers of a private ship or aircraft that is directed on the high seas against another ship, aircraft, or against persons or property on board a ship or aircraft.

Liquor liability insurance

covers a tavern for the exposure of serving alcoholic beverages for money and the related vicarious liability The exposure a bar or tavern has for serving alcoholic beverages is not covered by a CGL policy. They must buy a separate liability contract to cover liquor liability.

The liability policy that covers issues such as sexual harassment, wrongful discharge, and discrimination is

employment practices This is a relatively new liability contract. "Employment practices" coverage does cover such issues as allegations of discrimination in the workplace, harassment, etc. All insurers offer the coverage on claims made forms.

Identity Fraud Expense covers which of the following?

expenses incurred to restore a persons identity Identity Fraud Expense does not pay loan or credit card balances for fraudulent transactions. It does pay the extra expenses including possible lost wages to repair your credit and restore your identity, but not the cost to repair the hacked software.

The National Flood Insurance Program is an example of a form of insurance regulated by the:

federal govt

Mighty Manufacturing administers the employee benefits plan which includes Health Savings and Health Reimbursement accounts along with a 401K retirement plan. The employer needs

fiduciary liability The Employment Retirement Income Securities Act establishes fiduciary responsibilities for those sponsoring and/or administering employee benefit plans. There is no such thing as an exemption form.

Aviation carriers providing coverage for Drones will base the insurability on all of the following, Except:

flying radius The flying radius is not an underwriting concern when covering a Drone operations

Which of the following losses would be covered by a flood policy?

heavy rains cause a lake to overflow and flood the basement and first floor of the house The flood policy covers the inundation and overflow of surface waters. It does NOT cover sewer backup or additional living expenses. The tornado is a wind loss and is covered by standard insurance as well as the resulting damage from the rain that came inside.

in ocean marine insurance, damage to the ship itself is covered by

hull coverage Hull coverage covers damage to the ship itself if it collides with an object or sinks.

umbrella liability policies are designed to pay

if there is NO primary coverage after a retention limit is paid by the insured The umbrella liability is an excess policy designed to pay after the primary liability policy covering the risk is exhausted. There are times when the umbrella will provide coverage even though the primary policy does not; for instance, for liability outside of the United States. However, the insured pays a self insured (SIR) retention limit when the umbrella responds first.

Tom is the county auditor and must post a Public Official Fidelity Bond, guaranteeing that he will handle county money properly. Who is the surety in this bond arrangement?

insurance company issuing bond The surety is the party that guarantees the performance of the principal. Tom is the principal that must perform. The county is the obligee and will be paid if Tom fails to perform. The state may also be an obligee. The insurance company issuing the bond is guaranteeing Tom's actions and is known as the Surety.

Fiduciary liability insurance

insurance that covers claims that result from the breach of fiduciary duties, such as pension plan losses because of improper investments targeted at protecting businesses' and employers' assets against fiduciary-related claims (PDF) of mismanagement of a company's employee benefit plans. It is not required by the Employee Retirement Income Security Act (ERISA) or any federal statute.

Aviation carriers providing coverage for Drones will base the insurability on all of the following:

intended use expierence of the operator choice of platform

What statement is correct regarding the "general average" clause?

involves cargo jettisoned to save the ship in time of peril general average deals with cargo jettisoned voluntarily and intentionally to save the ship in time of peril. The only peril triggering a general average loss is jettison.

Voluntarily throwing cargo overboard to save the vessel from sinking is known as the peril of

jettison This is the peril of jettison. Abandonment is a condition found in commercial fire insurance, not ocean marine insurance. Barratry involves fraud of the captain and/or crew.

A firm, or corporation that purchases dram shop liability insurance is securing protection against

liquor liability Dram shop liability is the original term for Liquor liability which is contingent liability insurance for businesses that serve alcoholic beverages.

In ocean marine insurance, the word "average" refers to

loss There are two clauses dealing with loss on a ship: 1. general average 2. particular average. In a general average situation, the loss is shared by all. In a particular average situation, each party is responsible for its own loss.

What is NOT covered by the "commercial general liability" coverage?

malpractice liabiliy Malpractice liability, a form of coverage designed to cover a professional for failing to practice according to the reasonable, accepted standards of the profession is a separate policy, independent of the CGL.

Director and Officers Liability insurance covers which of the following?

misstated projections on earnings and losses The D&O policy will never cover fraud, embezzlement or any intentional dishonest or criminal act. It does not pay to reconstruct incorrect financial records. It would cover lawsuits brought by the stockholders for misstated projections and general mismanagement of the company.

Director and Officers Liability insurance covers which of the following?

misstated projections on earnings and losses he D&O policy will never cover fraud, embezzlement or any intentional dishonest or criminal act. It does not pay to reconstruct incorrect financial records. It would cover lawsuits brought by the stockholders for misstated projections and general mismanagement of the company.

What peril would be covered under a flood insurance contract?

mudflow

The party that is paid money if the Principal fails to perform is the

obligee The insurance company issuing the bond is known as the Surety/Guarantor and they will pay the Obligee (the party that wants the guarantee) if the Principal fails to perform. The Surety/Guarantor will then collect all of the monies back from the principal.

Most states require a surplus lines broker to

obtain a signed affidavit from the insured and agent acknowledging that coverage is from an unauthorized carrier in the state posts a surety bond charge sales tax on all policies issued and remit the tax to the state

An Aviation policy provides coverage for which of the following?

on the ground and in the air The policy will cover the plane on the ground, and in the air which would include take off and landing.

Perils of the sea

piracy windstorms stranding

Lawyers Professional Liability insurance policies contain all of the following EXCEPT

policy provides BI and PD coverage Errors and Omissions policies cover financial damages only, except for architects and engineers.

The federal flood insurance policy covers which of the following?

power tools stored in an attatched garage Flood insurance would cover the power tools stored in the attached garage. Contents in the basement, property out in the open, and recreational vehicles are all excluded under flood insurance.

the following ARE covered by a CGL policy

premises liability medical payments personal injury liability

The XYZ Construction Company secures a bid with New York City to repair a bridge. The city requires a surety bond to guarantee the performance of XYZ Construction. In this surety situation, XYZ Construction is known as the

principal XYZ Construction owes the duty to New York City to repair the bridge according to the prescribed terms of the contract. In a surety bond, the principal is the party owing a duty of performance.

On Surety Bonds, the insurer (surety) has the right to set terms and conditions for issuance of the bond. Which of the following is NOT true?

principal has no responsibility or obligation once bond is issued the Principal has the duty to perform and to repay the Surety in the event of a claim by the Obligee.

On Ocean Marine insurance, which of the following would cover maritime liability?

protection and indemnity Ocean Marine is the oldest form of insurance in the world and back in the day they did not call it liability or even casualty insurance. It was called Protection and Indemnity because liability protects the insured and indemnifies them against actions brought by the plaintiff.

On Ocean Marine insurance, which of the following would cover maritime liability?

protection and indemnity Ocean Marine is the oldest form of insurance in the world and back in the day they did not call it liability or even casualty insurance. It was called Protection and Indemnity because liability protects the insured and indemnifies them against actions brought by the plaintiff. Protection and Indemnity (P&I) insurance is liability coverage for watercraft. It protects the insured from liabilities, from bodily injury, or property damage arising out of the use, or ownership of declared vessels.

Ocean marine insurance

provides coverage for property while it is in transit, on land, on water conveyances, and at warehouses. Ocean marine insurance does provide both bodily injury and property damage liability (protection and indemnity and running down) and "all risk" perils coverage is certainly available.

Insurers participating in the "Write your Own" program for flood insurance are required to

remit premiums received over claims paid to the US treasuary the "Write your own" program was designed to allow private insurers to participate in the flood program. All policies are the same and approved by the NFIP not the state DOI. The NFIP will guarantee payment of claims over premiums received, but if there is an excess in premiums received over the claims paid out, the difference is sent by the insurer to the US Treasury.

What is NOT a "peril of the sea?"

shipboard fire A shipboard fire is an example of hull coverage and not caused by a peril of the sea. used in the days of wooden rowed or sailing ships, was a ship filled with combustibles, deliberately set on fire and steered (or, when possible, allowed to drift) into an enemy fleet, in order to destroy ships, or to create panic and make the enemy break formation.

boat owners package policy is designed for

smaller watercraft under 26 feet in length. If the boat is 26 feet or longer is best insured on a yacht policy.

boat owners package policy.

stand alone policy, NOT an endorsement covers liability and physical damage 3 parts of a Boat owners policy: -physical damage to the boat in the event of an accident, -medical bills for injured persons -liability coverage for lawsuits. It may also include over coverage. It is intended to be as comprehensive as possible so the boat owner only has one policy (and one payment). This is typically used to cover smaller watercraft less than 26 feet and with a speed capability less than 55 mph).

the following statements about flood insurance are true

standard deductible is $1500 in the emergency program insured must live in an eligible community participating in the flood program there is a 30-day waiting period for start of coverage on new applicatons submitted

On Surety Bonds, the insurer (surety) has the right to set terms and conditions for issuance of the bond. the following are true

surety may require an indemnification agreement surety provides the written guaranty to the obligee surety has right to recover from principal

Which of the following statements about flood insurance is FALSE?

there is no limit on real or personal property

Which one of the following is usually true about commercial umbrella liability policies

they are NOT standardized within the industry

An insured wishes to purchase insurance that would protect him in the event that his personal liability limits are exhausted. As his agent, you would suggest he purchase a(n)

umbrella liability policy

A Difference in Conditions type of insurance will fill in the gaps in coverage not provided by the standard property form. All of the following are examples of a Difference in Condition form, EXCEPT

wind insurance Wind is a covered peril in property insurance. Some policies may limit or exclude the peril if the windstorm is over a certain strength. The other three choices are all examples of a DIC type of insurance.

A boat owner's policy is similar to a

yacht policy The boat owner's is very similar to a yacht policy. The primary difference is the length of the boat--the yacht policy has a few additional requirements designed for much larger boats.

Because of the limitations in home and auto insurance, specialty policies for all of the following exist,

yachts recreational vehicles personal watercraft

On a boat owners package policy who is covered under medical payments?

you and the people on your boat Similar to auto insurance, medical payments coverage on a boat policy covers you and the people riding on your boat. The people injured on the dock or on another watercraft would be covered under the liability section of your boat owners package policy.