Chapter 8 - Miscellaneous Personal Lines Coverage

S has a sailboat covered under a Boatowners Policy with a deductible of $300. The hull suffers collision damage totaling $500, and later, the motor suffers a $300 fire loss. S submits two claims to the insurer. How much would the insurer cover for the losses? a. $200 b. $800 c. $500 d. $300

a. $200 The deductible for any watercraft policy applies per occurrence, meaning S would be responsible for the first $300 of both claims. The insurer would then pay the remaining cost, which would be $200 on the collision claim.

All earth movements within what period of time are considered a single occurrence of earth movement under personal Earthquake policies? a. 72 hours b. 24 hours c. 48 hours d. 60 hours

a. 72 hours All earth movements occurring within a 72-hour period are considered a single occurrence of earth movement. This applies to personal Earthquake policies, as well as the Earthquake Endorsement available to Homeowners policies.

Boatowners policies typically provide which of the following coverages? a. Open perils coverage for physical damage to the hull and equipment b. Open perils coverage for damage to the hull and motor, with exclusions for losses to personal effects c. Named perils coverage for physical damage to the hull, trailer, and related equipment d. Open perils coverage for damage to the hull and named perils coverage for damage to equipment and accessories

a. Open perils coverage for physical damage to the hull and equipment Hull coverage is provided on an open perils basis, covering the hull, motor, trailer, equipment, and accessories. Personal effects coverage is usually provided by Boatowners policies, but coverage will be limited.

An insured protects a small fishing boat under a Boatowners policy. Which of the following coverages is not provided? a. Personal injury liability coverage b. Bodily injury liability coverage c. Physical damage coverage for the hull, motor, and trailer d. Medical payments coverage for passengers

a. Personal injury liability coverage Personal injury liability coverage is not provided by Boatowners policies. Coverage is provided for the insured's bodily injury and property damage liability, medical payments coverage for passengers, and physical damage coverage for the hull, motor, trailer, equipment, and accessories.

An unendorsed Mobile Homeowners policy will settle losses to the mobile home on which basis? a. Replacement cost b. Market value c. Actual cash value d. Stated value

a. Replacement cost Like Homeowners policies, Mobile Homeowners policies automatically offer a replacement cost loss valuation basis, subject to an 80% insurance to value requirement, for the mobile home. An endorsement is available to change the valuation to actual cash value instead. Personal property losses are valued at their actual cash value.

A flood damages a single-family home that is in a community in the early stages of participation with the NFIP. What is the maximum amount a resident may receive for damages to personal property? a. No coverage is provided b. $10,000 c. Up to the Coverage C limit on the insured's Homeowners policy d. $100,000

b. $10,000 The home is part of the Emergency Program of the NFIP. One- to four-family dwellings are eligible for personal property coverage up to $10,000. Nonresidential buildings in the Emergency Program are eligible for personal property coverage up to $100,000.

An insured is obtaining flood insurance through the NFIP, and their policy is written using the maximum available limits: $35,000 for the building and $10,000 for the contents. Which building would these limits apply to? a. A 2-family dwelling in the Regular Program b. A single-family dwelling in the Emergency Program c. An apartment building in the Emergency Program d. A small business in the Regular Program

b. A single-family dwelling in the Emergency Program Under the Emergency Program, 1- to 4-family dwellings may receive flood insurance limits of up to $35,000 for the building and up to $10,000 for contents. Other residential buildings in the Emergency Program may receive limits of up to $100,000 for the building and $10,000 for contents.

M owns a mobile home affixed to a permanent foundation. Mobile home insurance can be written: a. Mobile homes cannot be insured b. Either by writing a separate Mobile Homeowners policy or by adding an endorsement to a Homeowners policy c. Only by writing a separate Mobile Homeowners policy d. Only by adding a Mobile Home Endorsement to a Homeowners policy

b. Either by writing a separate Mobile Homeowners policy or by adding an endorsement to a Homeowners policy Insurance on mobile homes may be written by adding a Mobile Home Endorsement to a Homeowners policy, or by writing a separate Mobile Homeowners policy.

On a Mobile Homeowners policy, Coverage A insures all of the following items, except: a. Utility tanks b. Personal effects c. Floor coverings d. Permanently installed dressers and cabinets

b. Personal effects Personal effects, meaning the insured's personal property, are covered under Coverage C - Personal Property. Coverage A - Mobile Home insures the mobile home itself and any attached structures, like appliances, floor coverings, dressers, cabinets, and utility tanks.

In which of the following circumstances would the insured be required to pay the self-insured retention of a Personal Umbrella Liability policy? a. The limits of the underlying policy have been exhausted b. The Umbrella drops down to act as the primary policy c. There is a substantial change in the risk d. The insurance carrier is declared insolvent

b. The Umbrella drops down to act as the primary policy The insured is only required to pay a self-insured retention when the Umbrella drops down to serve as the primary policy, which happens when the underlying policy does not cover a loss. If the Umbrella policy is activated after the limits of the underlying policy have been exhausted, the Umbrella policy provides excess liability coverage, and the retention would not apply.

Personal injury coverage is not provided by an insured's Homeowners policy, but is provided by the insured's Umbrella Liability policy. If the insured is sued for slander, which of the following statements is correct? a. The insured must pay 5% of the total claim b. The insured must pay the Umbrella policy's self-insured retention c. The insured's Homeowners policy will pay defense costs d. The Homeowners policy will pay the entire claim

b. The insured must pay the Umbrella policy's self-insured retention Because personal injury coverage is not provided by the Homeowners policy, the coverage provided by the Umbrella policy drops down to act as primary insurance, requiring the insured to pay the policy's self-insured retention. The Umbrella insurer will pay for the defense costs.

Under a personal Earthquake policy, all earth movements are considered a single occurrence if they occur within: a. 52 hours b. 24 hours c. 72 hours d. 48 hours

c. 72 hours All earth movements occurring within a 72-hour period are considered a single occurrence of earth movement.

A Difference in Conditions policy is a special form used to fill in coverage gaps found in a property policy. Which of the following is correct regarding DIC policies? a. The standard DIC form is developed and filed by the NAIC b. DIC policies are written with a standard deductible of $1,000 c. DIC policies are written on an open perils basis, excluding perils covered under standard property forms d. DIC policies must have a coinsurance requirement of at least 80%

c. DIC policies are written on an open perils basis, excluding perils covered under standard property forms Difference in Conditions policies are designed to provide coverage for all perils not covered under standard property forms. Because of the very broad coverage possibilities of a DIC policy, each insurer writing this form develops its own policy form. Coinsurance provisions are generally not included in these policies, and the policies carry a high deductible, such as $10,000.

Which of the following is true regarding the Yacht Policy? a. It covers damage to the hull and fittings, and liability coverage must be attached by endorsement b. It is designed for boats that can be towed by automobiles c. It has navigational limits that describe the area where the yacht is allowed to operate d. Coverage is excluded for fuel spills

c. It has navigational limits that describe the area where the yacht is allowed to operate Like a Boatowners policy, a navigational territory applies to Yacht policies to determine where the insured watercraft may be operated and have coverage. Physical damage coverage and liability coverage, known as Protection and Indemnity insurance, is provided automatically, without needing an endorsement.

All of the following are true of a Personal Umbrella Liability policy, except: a. Coverage is excess over the underlying policy b. Specific minimum limits for underlying coverage are required c. Liability losses relating to the insured's business are covered d. Coverage applies worldwide

c. Liability losses relating to the insured's business are covered Personal Umbrella Liability policies will exclude losses arising out of business pursuits or the insured's professional liability.

Which statement regarding a Difference in Conditions policy is correct? a. DIC policies always have a coinsurance requirement b. The standard deductible is $250 c. There is no standard DIC policy form d. At a minimum, DIC policies must provide coverage for fire and lightning

c. There is no standard DIC policy form Because DIC policies are written to fill certain coverage gaps specific to insureds, there is no standardized DIC policy form. However, DIC policies commonly do not have a coinsurance requirement and do not provide coverage for perils covered by standard policy forms, like fire and lightning losses. The standard deductible is high, often at least $10,000.

A small fishing boat and trailer worth $20,000 are damaged at a lake when the insured drove over a log. The physical damage is best covered under the insured's: a. Personal Auto policy with the Miscellaneous Type Vehicle Endorsement b. Special Form (HO-3) Homeowners policy c. Umbrella Liability policy d. Boatowners policy

d. Boatowners policy Physical damage to this kind of watercraft is best provided by a Boatowners policy. A Homeowners policy would offer limited coverage, subject to a special limit under Coverage C, but personal property under the HO-3 is subject to named perils coverage, which would not include collision.

The Emergency Program of the National Flood Insurance Program (NFIP) is intended for: a. Communities with established floodplain management standards b. Property owners who need flood insurance, but are located in a community that denied NFIP participation c. Communities with finalized rating maps developed by the NFIP d. Communities in the earliest stages of NFIP participation

d. Communities in the earliest stages of NFIP participation The Emergency Program is designed for participating communities in the earliest stages of NFIP participation, meaning they are in the process of establishing floodplain management programs and do not have finalized rating maps, which are developed by the NFIP.

Hull coverage on a Boatowners Policy provides which of the following? a. Named perils coverage, with losses settled on an actual cash value basis b. Named perils coverage, with losses settled on a replacement cost basis c. Open perils coverage, with losses settled on a replacement cost basis d. Open perils coverage, with losses settled on an actual cash value basis

d. Open perils coverage, with losses settled on an actual cash value basis Hull coverage provides open perils coverage for direct and accidental loss to the hull, motor, trailer, equipment, and accessories manufactured for marine use. Losses are settled on an actual cash value basis.