AMFAM Property Exam

An insurance company may examine and audit a commercial package policy (CPP) insured's books and records for up to

3 years

Under the homeowners policy, in order to receive replacement cost on a partial loss, the amount of insurance carried must be at least

80% of replacement cost

An individual who owns and lives in a condominium can obtain broad coverage for personal property in the condo under which homeowners form?

HO-6

Which of the following businesses would best be written on a businessowner policy?

Hardware store

What is the purpose of the ordinance or law coverage?

This additional coverage provides an additional amount of insurance for the increased costs of repair due to zoning laws.

The difference between additional and optional coverages on a businessowners policy is

optional coverages usually require an additional premium

The chief officer of an insurance department may issue all of the following penalties to licensees who engage in unfair or deceptive practices EXCEPT

order imprisonment for willful violators

Condominium association coverage forms insure all of the following against direct physical loss or damage EXCEPT

personal property owned, used, or controlled by the condo unit owner

Which of the following is NOT included in the Nationwide Marine Definition?

personal shipments

Who is responsible for enforcing state insurance laws and regulations?

the Commissioner, Director, or Superintendent

The commercial package policy interline endorsements

are those endorsements that apply to more than one coverage form

The maximum limits for flood insurance coverage under the regular program is

$250,000

The insured's home is covered by an HO-3 policy. Two years ago, the insured bought the home for $58,000. Today, its replacement value is $60,000. How much Coverage A does the insured need to qualify for replacement cost coverage?

$48,000

What is an authorized insurer?

A company that is approved by the state's department of insurance to transact insurance business in the state.

What type of clause protects a lender when an insured purchases a new car?

A loss payable clause

An agent's license can be terminated for which of the following reasons?

After receiving verbal permission, the agent signed the insured's name on the insurance application.

What type of policy would cover lost revenue for a business that is forced to close during a period of restoration after a covered physical damage loss?

Business income

Which part of the dwelling property policy would cover lost rental revenue if the dwelling was being used as a rental property?

Coverage D

The extra expense coverage form provides

Coverage that will permit the insured to continue in business without interruption following a property damage loss.

Which part of the insurance contract contains information about the location of the insured property?

Declarations page

A businessowners policy provides which of the following crime coverage parts?

Employee theft

Which of the following is NOT a condition that appears in the commercial property conditions form?

Extended reporting period

What is the basic difference between the dwelling DP-2 and DP-3?

The DP-3 provides open peril coverage on the dwelling and other structures.

An insurance broker has contacted an insurance agent in attempt to place a large homeowners policy. When an insurance broker is involved, who does the agent legally represent?

Insurer

In an insurance transaction, who does a licensed agent legally represent?

Insurer

Claire tells a client that her homeowners policy covers earthquake, when it does not. What unfair practice has she committed?

Misrepresentation

Which of the following statements about the standard mortgage clause is TRUE?

Nothing the insured does can prevent the mortgagee from collecting under the policy.

Which of the following actions is considered rebating?

Offering a client anything of value for purchasing insurance.

When would misrepresentations in an application be a basis for voiding an insurance policy?

Only if they were material misrepresentations

What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy?

Open peril policy

Who are the owners of a mutual insurance company?

Policyowners

Which of the following statements is TRUE regarding the homeowners policy?

Property coverage is broken down into dwelling, other structures, personal property, and loss of use.

What is the meaning of actual cash value (ACV)?

Replacement cost, less depreciation

Which of the following property policy forms should be used when it is difficult to provide the insurance company with an accurate statement of values because of fluctuations in inventory from month to month?

Reporting form

Self-insurance is an example of what type of risk management?

Retention

Temporary, short-term evidence of coverage is provided by

a binder

What type of insurer pays dividends that are taxable and not guaranteed to shareholders?

a stock insurer

A voluntary relinquishment of a known right is called

a waiver

The method used to determine the value of a loss, should the adjuster and the insured disagree, is called the

appraisal method

The BOP Coverage B protects against loss to

business personal property

The conditions section of an insurance policy

describes the duties of the insured and the insurance company

The utility services (direct damage coverage) endorsement for the BOP provides coverage for

direct damage to insured property caused by utility failure

Dwelling policies may be used to insure all of the following EXCEPT

farm dwellings

The attempt to restore an insured to his pre-loss condition is known as

indemnification

An insurance policy that contains unclear language will be

interpreted against the party who wrote the contract

Flood insurance covers all of the following EXCEPT

leakage of pipes

In property insurance, an insurable interest

must be present at the time the policy is written and also at the time of loss

The Fair Credit Reporting Act

obligates insurers that use a third-party source to acquire credit information to inform applicants who have been denied coverage of the identity of that source

Under the commercial package policy, the person whose name is listed first in the declarations and is assigned certain responsibilities and obligations is

the first name insured

The farm covered causes of loss-broad form includes all of the following risks EXCEPT

voluntary parting with covered livestock