Big Insurance test

The deductible under the "regular" flood insurance program for each coverage (building and contents) is:

$1,000

The West Virginia Guaranty Association will cover an amount not to exceed ________ per policy for the return of unearned premium.

$10,000

An unauthorized insurer is transacting insurance in West Virginia. The Commissioner may, after notice and hearing, fine the violator $________ for each unauthorized act or transaction of unauthorized insurance.

$20,000.

An insured owns a set of six drawing pens designed and used by Benjamin Franklin. Each pen is worth $1,000 alone, but the set is worth $12,000. One pen is destroyed by a covered peril. Under the pair or set clause the insurance company will pay a maximum of which of the following amounts?

$7,000

Which of the following is covered under the Federal Employees Compensation Act? I. Federal employees exempt under state workers compensation laws. II. Active duty military members. III. Members of the Merchant Marine under the Jones Act. IV. Longshoremen and harbor workers.

1 only

Under the ISO standard BOP form, how much would be paid for any one tree, shrub, or plant i

1,000

how far ahead does the insurable have to notify the mortgagee before cancellation or non-renewal?

10 days

The insured is covered under a DP-1 Dwelling Policy with coverage on the dwelling in the amount of $100,00. He has a detached garage valued at $10,00. Both structures are destroyed by a fire. What is the total amount recoverable under the policy?

100,000 under the DP-1 form the 10% of Coverage A for other detached structures is NOT additional coverage. It is part of the dwelling limit. The policy cannot pay more than the total dwelling limit of $100,000.

Mine subsidence claims must be paid to the insured within ______ of proof of loss.

120

The conditions section of an insurance contract specifies which of the following? I. The property location. II. The insurance company's responsibilities. III. The insured's responsibilities. IV. The policy duration.

2 and 3 only

The insured has purchased a DP-3 form to cover his dwelling that is valued at a replacement cost of $100,000. He insures it for $60,000 and has a $30,000 fire loss. What can he expect to be paid?

22,500. An insured has not complied with the 80% requirement for replacement cost coverage. He is underinsured by 25%. He should have carried $80,000 and instead carried only $60,000. The policy will pay 75% of the $30,000 or $22,500. The company can also pay the ACV of the loss

The medical payments coverage on the farm policy can be claimed for up to

3 years

Convenience stores selling gasoline must have a minimum of ______ square feet in total floor area in order to qualify for the BOP?

3,000.

Businessowners policies provide "Preservation of Property" coverage when property is removed from the premises to protect it from a covered cause of loss. The coverage will apply at other locations for up

30 day

ndividual producers must maintain copies of continuing eduction course completion certificates listing the courses of instruction successfully completed, which has been executed by the organization sponsoring the courses, for a period of not less than:

4 years

An individual producer license fee of ____ is required every two years prior to license renewal.

50

If the insurer makes a change that broadens coverage under an existing policy without additional premium charge. The implementation date under the dwelling forms must fall within

60 days prior to, or during, the policy period stated in the declarations.

The Homeowners Policy excludes liability coverage for which of the following motorized vehicles owned by an insured?

A Snowmobile operated off the insured's premises.

What is the definition and difference between a hostile fire and a friendly fire? which is covered in DP-1 Basic Form.

A fire must be hostile not friendly to be covered by the DP-1 Basic form. A friendly fire is one that is contained in the place intended for it. A hostile fire is one that has spread beyond its intended place.

A slippery floor is an example of:

A physical hazard

Which of the following is covered under the broad form farmowners policy that is not covered under the basic form farmowners policy?

Accidental shooting of livestock

How are losses evaluated for payment under the Watercraft and Yacht policies?

Actual cash value at the time of the loss.

The Extended Business Income provision covers the first 60 days after the loss for reimbursement of earnings for the insured business:

After the repairs have been made to the insured property.

Miranda's home is covered under a Homeowners policy with an Earthquake Endorsement attached. She has selected the base deductible of 5% and her limit of liability under Coverage C is greater than Coverage A. Her Coverage C limit of liability is $1,000. What is the deductible that Miranda will have to pay?

Although 5% multiplied by $1,000 is $50, the endorsement states that the deductible will never be less than $

A power surge sparks a small electrical fire in an office building. The electrical fire triggers the automatic sprinkler system and the water from the sprinklers, soaks the carpet and shorts-out all the computers, causing thousands of dollars in damage. The office must close for two months during repairs. The cost of renting a temporary office space while the physical damage to the office building is repaired is considered:

An indirect loss

Which of the following situations would be covered by liability insurance under a Personal Automobile policy?

An insured who rents a private garage, backs his car in and damages the garage. .

DP-2 Covers?

Automatically includes all the DP-1 perils, the EC perils and VMM. Plus the Broad Perils.

Broad Perils are?

BIG AFFECT b-burglary damage, i-ice and snow weight, g-glass breakage, a-accidental discharge or overflow of water or steam, f-falling objects, f-freezing of pips, e-electrical damage, c-collapse (additional coverage peril), t-tear apart, cracking or bulging

Which of the following fit the category of court or litigation bond, which are sometimes called financial guarantee bonds?

Bail bonds

Which of the following statements is correct? I. Unendorsed DP-2 and DP-3 settle all losses to personal property at actual cash value. II. Unendorsed DP-2 and DP-3 settle all partial losses to dwellings at replacement cost if insured 80% to value.

Both I and II

With Commercial Property Insurance, replacement cost coverage may be written for:

Buildings, personal property of the insured, and property of others..

What coverages are direct loss coverages?

Coverage A, Coverage B, and Coverage C

Which of the following statements concerning installation floaters is not true?

Coverage is written on a named perils basis only..

ack Tate ignores the safety warnings and instructions when setting the controls of the steam boiler and as a result, the boiler explodes. Jack carries Equipment Breakdown coverage. The adjuster for Pressure R Us Insurance Company may do which of the following?

Deny coverage under the intentional errors & omissions exclusion.

Mr. Simpson owns a dwelling in a rural area close to a small wooded area. He is covered under a DP-3 form. A deer sees it's reflection in a picture window and jumps through and enters the dwelling causing significant wall and floor damage. Some of the furniture is damaged and must be replaced. he is covered for $100,00 on the dwelling and $50,00 on the contents. Which of the following would apply to this loss?

Deny the contents claim and pay the dwelling loss on a replacement cost basis. Since the DP-3 is an open peril form in regard to the dwelling, this type of loss is not excluded, the dwelling damage is covered. The contents coverage is provided on a broad name peril basis. This type of loss would not be covered for the contents damage as it is not a listed peril.

DP-1 Basic covers?

Dwelling, other structures, and personal property. That is damaged by Fire, lighting, and Internal Explosion.

optional coverages that can be covered in DP-1 Form?

Extended Coverage Perils, And Vandalism & Malicious Mischief (VMM) an endorsement.

Which of the following perils are covered under an unendorsed Standard Fire Policy?

Fire and lightning

Commercial general liability policies provide coverage for:

Fire damage to a warehouse the drug company leases as a result of their negligence..

A Building and Personal Property Coverage form provides coverage for all of the following types of property, EXCEPT:

Growing crops and lawns.

Which of the following terms may be properly applied to negligence? I. Civil wrong. II. Unintentional. III. A tort.

I, II, and III

Supplemental payments under liability policies are:

In addition to the policy limits

Which statement is true concerning auto Physical Damage coverage in a Personal Auto Policy?

It can cover owned and nonowned automobiles.

What personal auto endorsement is needed when two persons living in the same household, other than husband and wife, jointly own a private passenger auto, pickup, or van?

Joint Ownership endorsement

A furrier customers policy does not cover:

Loss in excess of the value of the property as declared by the owner.

Which of the following liability coverages may require the insured's consent before the insurance company settles and pays a loss?

Medical professional liability.

A homeowner who moves into a new house and discovers that it has several major defects, may seek a claim against the contractor's: I. Products and completed liability coverage. II. Owner's and contractor's protective liability coverage.

Neither I nor II.

The insured is covered under a DP-3 with contents coverage. he has a hunting rifle stolen by forcible entry into the dwelling. The front door is severely damaged and must be replaced. Which of the following is a true statement regarding this loss?

Only the damaged caused by the burglars will be paid. Theft is not a covered peril under the dwelling program unless endorsed on the policy.

The principle of indemnity is best illustrated by which of the following insurance policy clauses?

Other Insurance.

Homeowner policies typically provide coverage for all of the following, EXCEPT:

Personal injury.

Which of the following coverage would be BEST suited for a prospective insured who wants coverage against liability that may arise after an electrical repair job is finished?

Products and Completed Operations Liability.

Which type of damages is not intended to indemnify the plaintiff?

Punitive damages

what are open perils

Refers to property insurance that insures against loss to covered property from all causes except those that are specifically excluded

What do they mean by other structures in Dwelling forms?

Structures connected to the dwelling by only a fence, utility line or similar connection are considered to be other structures

Which of the following coverages does not have a limit of insurance listed on the CGL Declarations page?

Supplementary payments.

The Earthquake Endorsement will provide coverage to the dwelling and/or personal property with the deductible stated as:

The Earthquake Endorsement will provide coverage to the dwelling and/or personal property with the deductible stated as:

An endorsement may be attached to a Homeowners policy to create a personal package policy to insure mobile homes. The Mobile Homeowners endorsement may be attached to which of the following Homeowners forms?

The HO-2 or HO-3 only

Extra expense insurance covers which of the following?

The additional cost of continuing a business after a direct loss..

The insured has forgotten to close an upstairs window. A strong storm blows through and wind and water severely damage the contents and floors of the dwelling. The insured carries a DP-2 dwelling form. What will be the outcome of this loss?

The claim will be denied. Because the peril of wind did not create an opening in the structure. The insured was negligent in leaving the window open.

An insured lived close to Mount St. Helens and carried a DP-2 Policy. when the volcano erupted, the movement of the earth caused his home to collapse. He reported the claim as a volcanic eruption loss. What do you feel would be the result of this claim?

The claim would be denied. Earth movement is not covered under the volcanic eruption peril. The insured would need earthquake coverage.

What information would not normally be found on an insurance binder?

The conditions and general exclusions of the insurance contract.

Which of the following is a valid defense an employer may use to deny paying a Workers Compensation claim?

The injury was caused by the willful negligence of the employee. .

When an insured cancels a Homeowners policy before the renewal date, the un

The insurer is permitted to retain a higher percentage of the UEP than when the insurer cancels the policy..

The insured is covered under a BOP special form. Thieves break into the insured's warehouse and steal building materials. The insurer will:

The insurer will pay the entire claim, subject to policy limits, less any deductible..

Under an Equipment Breakdown Protection policy with $500,000 in coverage, a covered "accident" resulted in the following: I. $500,000 worth of damage to the property. II. $10,000 damage to the property of another in the insured's care. III. $5,000 in legal fees to defend the insured in this case. The policy will pay a total of:

The maximum that can be paid is $500,000 because that is the limit of the policy. Legal expenses are in addition to the limit of coverage, adding $5,000 to the amount the insurer will pay, making the correct answer $505,000.

Mr. Jones purchased a policy on the dwelling in the amount of $40,00. His wife also purchased a policy in the amount of $20,00 unbeknown to her husband from another company. In case of a $15,000 loss, what will her company pay on the loss?

The other insurance clause deals with this issue. Her company has one third of the total coverage. There, her company will pay $5,000 or one third of the claim.

A water pipe has burst and the insured has suffered floor and ceiling damage in his two-story home. The cost to remove and replace the walls to get to the pipe is $300. The cost to repair the damaged floor is $400. The pipe that burst must now be replaced according to new building codes. The cost to replace the pipe is $200. How much will the insured policy pay?

The policy will pay $700. The insurance company is not responsible for the pipe the burst; only the other damages. therefore, the policy will pay $700.

Capital Heating & Air Conditioning installs a central air conditioning system in a newly constructed office building. The system is defective and will not work, delaying the opening of the building and costing the building owner lost rental revenue. Is the owner's claim covered under Capital's CGL policy?

This claim is not covered because of loss of use of "impaired property" exclusion..

Some items covered under the ISO standardized Businessowners policy have a theft limit. Which of the following items does NOT have a specific theft limitation?

Tobacco products..

hich of the following is NOT excluded under Section II - Liability of the Businessowners policy?

Valet services bodily injury

In the newest edition of the Commercial Property form, which of the following is now considered part of the building?

Vegetated Roofs

EC Peril are?

WC SHAVVER w- windstorm, c-civil commotion, s-smoke, h-hail, a-aircraft, v-vehicles, v-volcanic eruption, e-explosion, r-riot

When would the personal auto policy respond to a loss with a three wheeler?

When used in an emergency situation.

An employer is about to start working in a new state and will hire workers who reside there. Would the employer's current Workers Compensation policy automatically provide coverage for this new state?

Yes, if the new state was listed on the information page in Part 3C - Other States Insurance

coverage e

additional living expenses. will pay additional living expenses while property is unfit for use. under DP-1 this maust be purchased sepretly. under DP-2 and DP-3 they combine fair rental value and additional living expenses coverage for 20% of the soverage a.

In situations where the insured and the insurer may disagree on the value of an item, it would be best to insure that item as:

agreed value

When do policy periods end?

all policies are eddective at 12:01a.m.

other coverages in dwelling policy unclude.

debris removal/ improvements, alteration, and additions- if the insured is a tenaant of the described location, he or she may use up to 10% of coverage c against the above/ world-wide coverage may use up to 10 % of the coverage c limit while anywhere in the world/ reasonable repairs, in an event covered property is damaged the insurer will pay for those measures teaken involve repiar to other damaged property/ property removed, cover personal property against direct loss while being removed from the premises no more than 30 days/ tree, shrubs and other plants, the limot to this coverage will not be more the 5% of coverage A or nomore then 500 for any one tree/ fire department service charge, 500 for fire department charges/ collaspe for dp-1.

what section of an insurance contract contains the terms used throughout the policy?

definitions

mortgage clause when must you notify about cancelation.

if a mortgagee is named in the dwelling policy any loss payable will be paid to the mortgagee. 10 days before cancelation.

what coverage are indirect loss coverages

indirect loss cannot be sustained without having first sustained a direct loss. coverage d and e are indirect coverages.

Mr. Smith causes an automobile accident on a West Virginia highway. His car has struck the car of Ms. Jones. Mr. Smith is totally at fault. After Mr. Smith's limits of bodily injury liability coverage is exhausted, Ms. Jones files suit against Mr. Smith and is able to collect damages based on which coverage?

legal liability

Who is the principal in a bid bond?

the contractor

An insured's home is covered by the DP-3 form. The policy provides $20,00 in coverage on a home that would cost $50,000 to replace. When high winds destroy the roof, it is determined that it will cost $2,000 to replace it. Assuming the actual cash value of the rook is $750, how much will the insured collect for this loss?

1,000. In order to receive replacements cost coverage under the DP-3 form for structures, an insured must carry at least 80% of the dwelling replacement value. The value of the dwelling is $50,00 so the insured should have carried at least $40,00. Since this insured carried only $20,00, he is 50% underinsured. The policy will pay 50% of the $2,000 loss or $1,000

which of the following claims would be paid under the CGL policy

A hair dryer purchased in the United States and sent to the sister of a customer in France as a gift, catches fire when it is first used in France.

Sue Stokers owns an expensive collection of jewelry. She is worried about the fluctuating values of gold, silver and diamonds. She has the collection appraised. Her agent suggests a Personal Articles Floater to insure these items. If she wants to avoid a decrease in her coverage due to a decrease in market value, what is the best clause she can have included in her policy?

Agreed amount clause

If a mortgagee is named in a dwelling policy, any loss payable under Coverage A or B will be paid to who?

Mortgagee and will be named the insured.

coverage a

dwelling buildings. the inseured sets amount of coverage based on RPV for DP-2 and DP-3 but ACV on DP-1. coverage for materials and supplies located on or next to the described location used to construct alter or repair the dwellig. also cover building eqipument and outdoor equipment.

Which of the following commercial crime insuring agreements would cover theft of currency?

employee theft

coverage d-

fair rental value. 20% of coverage a. payment will be for the shortest time required to repair or replace that part of the described location. It means that the rental value minus the expenses which do not continue.

The mobile home coverage endorsement can be added to a Homeowner policy to include the perils of transportation. Which is not one of those perils covered during the course of transportation?

flood

An insured carried a DP-2 with $10,000 contents coverage. He owns a canoe and stores it at a lake in a private non-owned garage. fire destroys the garage and the boar. How much coverage will his policy provide?

nothing. the extension of the coverage that applies to personal property off the premises of 10% does not extend to cover rowboats and canoes.

dwelling policy endorsements

theft coverage endorsement. Broad theft coverage - will provide theft coverage for personal property both on and off premises limited theft coverage- on premises personal liability coverage personal and business automatic increase in insurance endorsement- provides an increase in the coverage a amount of 4%, 6%, or 8% dwelling under construction.

A 40-year old commercial building is insured for $300,000 and has suffered a partial loss as a result of a hot water heater explosion. It will cost $17,000 for the increased cost of construction to comply with the building codes and $20,000 for all other covered damages. The building is covered under a standard Commercial Property policy, with the special cause of loss form attached. The insured submits the proof of loss for all of the repairs, including the increased costs to comply with the new building codes. Which of the following describes how this claim will be paid?

he insurer will pay $10,000 for the increased cost of construction, plus $20,000 for the cost of all other covered damages. .

DP-3 Covers?

open Perils (unnamed) for Dwelling and other structures and provides broad form perils for personal property.

Coverage b

other structures. 10% additional coverage under DP-2 and DP-3. under DP-1 the 10% is included in the dwelling limit. Detached garage and any other outbuilding.

Proceeds from a commercial property insurance policy can be assigned by:

the policyholder

coverage c

personal property based on actual cash value. gives coverage only at the insured location. will provide 10% of coverage c off premises on a worldwide basis.

duties after loss

propmpt notice, to protect property from an further loss, keep accurate records, and make resonabel repairs, cooperate with insurer, show damaged property, send proof of loss within 60 days.

loss settlement

settle losses to personal property at actual cash value, has to have 80% rule. if cos to repair or replace the damage loss is less then 5% of the limit of coverage on the building and less then 2,500 the insurer will pay replacement cost basis.