QUIZ- Property Insurance
Which of the following types of valuation works best for property whose value does not fluctuate much?
Agreed value
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?
Bailee's customer policy
In return for premium, an insurance company must
Be fair in underwriting and pay covered losses.
What is the purpose of the coinsurance clause found in property insurance polices?
Encourage the insured to insure the property closer to its full value
the policy conditions define
How parties to the contract must act following a loss.
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?
Per occurrence
Replacement cost coverage is provided in both the broad and special form dwelling policies when
The amount of insurance on the dwelling is at least 80% of its replacement cost at the time of loss.
The declarations page of the homeowners policy provides all of the following information EXCEPT
a statement that earthquake damage is not covered
Which of the following definitions best defines the term accident
a sudden, unplanned, and unexpected event
which of the following is NOT an essential element of an insurance contract
counteroffer
Which of the following is NOT covered under the Utility Services - Time Element endorsement?
damage to the insured's property caused by utility service disruption
all of the following are conditions commonly found in the insurance policy EXCEPT
insuring agreement
All of the following statements describe the concept of strict liability except
it is imposed on defendants engaged in hazardous activities
which of the following does the term proximate cause refer to
negligence that leads to an injury
The other insurance provision that limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the property is called
pro rata liability
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
proof of loss
Before an insurer will pay any loss under a policy, what is usually required from the insured?
proof of loss
all of the following are considered parts of the policy structure EXCEPT
provisions
Liability imposed on one party as a result of the actions of another person is known as
vicarious liability
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?
Agreed value
In insurance, an offer is usually made when
An applicant submits an application to the insurer
An installation floater is used to insure
Appliances intended to become a permanent part of the building
Insurable interest in a property policy must be proven
At the time of loss
The extra expense coverage form provides
Coverage that will permit the insured to continue in business without interruption following a property damage loss.
Which of the following homeowners forms is designed for individuals that own and reside in a condominium?
HO - 6
The pro rata liability clause is designed to protect the principle of
Indemnity
Which of the following is used in the formula for calculating the actual cash value of a property?act
Replacement cost
the part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the
conditions
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become
larger
For a contract to be enforceable by law, the purpose of the contract must be
legal and not against public policy
which of the following is NOT the consideration in a policy
the application given to a prospective insured
All of the following statements concerning coinsurance are true EXCEPT
the coinsurance formula will also be applied to total losses
The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land
owned or leased by the resident of the mobilehome
Which method of loss valuation is contrary to the basic concept of indemnity?
replacement cost
in property insurance, actual cash value is defined as which of the following
replacement cost at the time of loss, less depreciation
An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have?
specific
Property insurance that provides 100,000 coverage for a building and 50,000 coverage for personal property at a single location is called
specific coverage
a property insurance policy that is not subject to any coinsurance requirements but has a set a amount of insurance scheduled for the property would use what loss valuation method
stated amount
the policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called
subrogation
To be eligible for coverage under the National Flood Insurance Program, an insured must live in which of the following communities?
that has met the minimum floodplain management guidelines
The amount an insurer will pay under Coverage D (Loss of Use) depends on
the amount of coverage on the dwelling
which of the following would qualify as a competent party in an insurance contract
the applicant has a prior felony conviction
The contents coverage on a homeowners policy would pay how much after the loss of one of a pair of golden candlesticks?
the difference in the actual cash value as a pair and as a single
When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be
the proximate cause
For the purpose of insurance, risk is defined as
the uncertainty or chance of loss
Which of the following losses would most likely NOT be covered under Coverage A in the dwelling policy?
theft of a renter's lawnmower used to service the premises
Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value?
they are automatically provided with replacement cost coverage
Which of the following best expresses the purpose of a stated value contract?
to pre-establish the amount of coverage available for property items that are difficult to value
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
vicarious liability
A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT
workers compensation coverage
An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has been depreciating at $200 per year and the insured's policy is written on the actual cash value(ACV), how much will the policy pay toward the insured's new roof?
5000
What is a material misrepresentation?
A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
When a mortgagee is named in a mortgagee clause attached to a fire or other direct damage policy
A.The loss reimbursement will be paid to the mortgagee as their interest may appear. B.The mortgagee's rights of recovery will not be defeated by any act or neglect of the insured. C.The mortgagee may bring a suit in their own name to recover damages to covered property. \\\\\\\\\\D.All of the above are true.\\\\\\\\\
An applicant is purchasing a homeowners policy. A producer comes to her home, fills out the paperwork, and tells the applicant that her home will be covered as soon she signs all of the paperwork, and that she will receive a new policy in the mail in 5 business days. Even though the policy is not issued, the applicant's home is temporarily covered until then. Which of the following makes that possible?
Binder
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?
Combined single
Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy?
Damage to the dwelling caused by ash or dust from a volcanic eruption
replacement cost is defined as
Full replacement of property at its current cost, new and without reduction for depreciation.
ABC Trucking hauls products for Acme, Inc. as a contract carrier. On one shipment, the driver stopped at a truck stop for lunch. Leaving the truck in the parking lot, he made certain that the truck was locked before leaving it. Upon returning to the truck, he discovered that someone had broken into the truck and stolen the cargo. Is ABC legally liable for this loss?
No. the driver had taken responsible measures to protect the property by locking the truck.
What type of insurance policy insured against all risks of loss that are not specifically excluded by the policy?
Open peril policy
Peril is most easily defined as
The cause of loss insured against
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?
Transportation/Permission to Move Endorsement
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?
additional coverage
With respect to the business of insurance, a HAZARD is
any condition or exposure that increases the possibility of loss
Which of the following clauses establishes the procedure for determining the amount of a loss when the insurer and the insured cannot agree on the value of property or amount of loss?
appraisal clause
In equipment breakdown coverage, all accidents would be considered a single accident if they occur
at a single location at the same time and form the same cause
Under a businessowners policy, an insured can cancel the policy
at any time by mailing a written notice of cancellation
According to the common policy conditions for a commercial package policy, if the insured dies, the policy rights and duties
automatically transfer to a legal representative
The ABC Corporation has $100,000 of coverage on its building through insurance Company A, and $50,000 of identical coverage on the same building through insurance Company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs and the pro rata method is used, how much will each insurer pay?
company a will pay 16k and company b will pay 8k
When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of
concealment
The part of a property policy that shows the amount of insurance, premium, and policy term is the WHO WHAT WHEN WHERE
declarations
a beauty parlor burns to the ground, what type of loss is this to the owner
direct loss
An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay?
each policy will pay 25,000 of loss
Individuals in the business of selling construction equipment and mobile equipment should insure with a/an
equipment dealers coverage form
all of the following are found in the declarations section of a policy EXCEPT
exclusions
Which of the following would be named on the declarations page of a property or liability policy?
first named insured
Events or conditions that increase the chances of an insured loss occurring are referred to as
hazards
Which endorsement adds coverage for employee use of automobiles in the insured's business and the insured's use of rented autos if no coverage is provided on a business auto policy?
hired and nonowned auto liability
When would a misrepresentation on an insurance application be considered fraud?
if it is intentional and material
the proof of loss statement must be
in writting
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?
indemnity
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
insuring agreement
How does the mobilehome endorsement affect the other coverage of law or ordinance in a homeowners policy?
it removes the coverage
What type of property would NOT be covered under the dwelling policy special form Coverage A - Dwelling?
land on which the dwelling is located
the process of determining the premium charged and how much insurance is required for a particular loss is called
loss valuation
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?
material misrepresentation
Which of the following covers a carrier for liability for loss to cargo while it is being transported in a truck?
motor truck cargo policy - owners form
What type of property does a Personal Floaters policy cover?
moveable personal property, wherever it may be located
Which of the following would be covered under the Film Coverage Form?
none of these 1. Deterioration of a film 2. Exposure of a negative film to light 3. Electrical erasure of a tape
duties of the insurer found in property policy conditions include all of the following EXCEPT
notify the insured in the event of a financial difficulty
When does the coverage begin under the builders risk form?
on the date construction starts
An insured has a standard HO-4 policy with a $30,000 limit of coverage for personal property. While he was traveling, a fire in his hotel destroys clothes and luggage with a replacement value of $10,000 and jewelry with a replacement value of $10,000. Disregarding any deductible, and assuming a depreciation of 20% has occurred in both properties, what amount is the insurer obligated to pay?
16,000 20k - 20%
the regular national flood insurance program would insure an eligible single-family dwelling for up to
250,000
How long is the waiting period after the application has been accepted before flood coverage goes into effect?
30 days
a grave marker was damaged by vandals. It would cost $3,000 to have the damage repaired. Under these circumstances, how much would a homeowners policy pay?
3000
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?
50,000
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?
Occurrence
the federal fair credit reporting act
Regulates consumer reports
which of the following is covered under the camera and musical instruments dealers floater
a customer's camera left at a camera shop for repair
