Insurance chap 3

All of the following may be listed as an insured on a property policy, except: A named insured's legal representative A mortgagee listed as an additional insured A business with temporary custody of the insured property The policyowner

A business with temporary custody of the insured property

After a covered partial property loss, the insured must retain an amount of the loss, and that amount is subtracted from the insurer's claim payment. This amount is known as:

A deductible

Property insurance policies that apply coverage only to perils that are stated in the policy are considered to be written on:

A named peril basis

An insured has a Homeowners policy, and a mortgage holder is shown in the Declarations. If the insured is denied a claim because they failed to submit a proof of loss, the mortgage holder may still receive loss payment if they do all of the following, except: Notify the insurer of any substantial change in risk Submit a signed and sworn proof of loss Acquire the insured's financial records and make them available for insurer inspection Pay any premium due

Acquire the insured's financial records and make them available for insurer inspection

As required by the standard fire policy, property policies must use a loss valuation basis that is not more restrictive than:

Actual cash value basis

Which of the following is considered a hostile fire? The fire in a trashcan being used to burn leaves A fireplace containing a roaring wood fire The fire in the firebox of a furnace An uncontrolled campfire in the woods

An uncontrolled campfire in the woods

Theft is specifically defined as:

Any act of stealing

D does not agree with the insurance company's value of property damaged as a result of D's recent property loss. Which of the following conditions establishes the procedure D and the insurance company must use to settle this issue?

Appraisal

When the insured and the insurer fail to agree on the amount of a property loss, the dispute resolution method is called an:

Appraisal

Which of the following methods of writing insurance is used to provide insurance on properties at different locations, using a single policy, and a single limit of insurance?

Blanket

A blanket limit of insurance could apply to any of the following risks, except: Building and contents coverage for multiple buildings at multiple locations Building and contents coverage for one building at a single location Building coverage for multiple buildings at multiple locations Building coverage for one building at a single location

Building coverage for one building at a single location

The taking of property from inside the premises by a person committing forcible entry defines a:

Burglary

Casualty insurance policies may contain any of the following conditions, except: Coinsurance Premium Audit Other Insurance Severability

Coinsurance

The means by which insurers can encourage insureds to maintain insurance to value is known as:

Coinsurance

All of the following pieces of property are considered uninsurable on the standard fire policy, except: Securities Bills Computers Money

Computers

A loss occurs as a result of two perils, one of which is insured against and the other is excluded. The insurer covers the loss because both perils occurred simultaneously. In this case, coverage is provided based on the principle of:

Concurrent causation

Which of the following statements regarding deductibles is true?

Deductibles help reduce the number of frivolous or small claims

When firefighters extinguish a house fire with water, the water damage is considered a(n):

Direct loss

Which of the following statements regarding types of property loss is incorrect?

Direct losses include additional living expenses

Which of the following statements best describes the Other Insurance condition on a standard property insurance policy, when two separate property policies provide coverage for the same loss?

Each policy pays its pro rata share of the loss

Property insurance policies exclude losses resulting from inherent vice, which would include all of the following perils, except: Mechanical breakdown due to age Wear and tear Explosion Rusting

Explosion

Which construction classification uses materials that can withstand fire for at least 2 hours?

Fire-Resistive

Property policies will generally exclude all of the following perils from coverage, except: Flood Friendly fire Inherent vice Lightning

Lightning

A lender who finances an auto loan could receive claim payments under which policy condition?

Loss Payable Clause

Which of the following clauses protects the interests of the loss payee?

Loss Payable clause

Which property policy condition indicates which loss valuation method applies to covered property?

Loss Settlement

After a partial loss to property that is included in a set, the insurer may:

Pay the difference between the actual cash value of the property before and after the loss

The Other Insurance condition on the standard fire policy will use which basis to coordinate claim payments with other insurance that applies to a covered loss?

Pro rata basis

In property insurance, the direct cause of loss is known as the:

Proximate cause

All of the following statements regarding property insurance terminology are true, except: An insurance policy that pays only after primary coverage has been exhausted is said to be excess Proximate cause is a secondary cause of loss Words, terms, or phrases that are described in an insurance policy are definitions A deductible is a specified amount of loss that is retained by the insured

Proximate cause is a secondary cause of loss

Which loss valuation basis often requires the policyholder to carry insurance to value?

Replacement cost

In property insurance, the policy condition that gives the insurer the right to take possession of damaged property after paying the loss is known as:

Right of Salvage

An intruder breaks into a home, threatens the homeowner, and takes the homeowner's money. This is an example of:

Robbery

H has a Homeowners policy with one limit of insurance indicated for coverage for the building and another limit indicated for coverage for personal property. H's policy is written using what kind of property insurance limit?

Scheduled limits

K owns several buildings at different locations, with each building insured on a separate policy. Which of the following methods of writing insurance does this describe?

Specific limit

Actual cash value may be defined as:

The cost to replace or repair property, minus depreciation

Which of the following is true about the right of salvage? The insurer is required to take possession of damaged property after a loss The insurer has the right to take possession of damaged property after payment of a loss Damaged property must be disposed of after a loss. The insured has the right to keep damaged property after payment of a loss

The insurer has the right to take possession of damaged property after payment of a loss

When a property policy values property on a stated value basis, how would the insurer settle a total loss?

The insurer pays the lesser the insured's reported value of the property and the property's actual cash value

An insured owns a home with a replacement cost of $300,000 and a market value of $250,000. What is the most a valued policy will pay in the event of a total loss without a deductible?

The policy limit

Market value loss valuation means that the insurer will pay:

The price a willing buyer would pay under fair market conditions

The standard fire policy requires that all property insurance policies provide coverage for all of the following perils, except: Removal of property Theft Fire Lightning

Theft

Actual cash value is best defined as which of the following?

Today's current price, minus depreciation

When the insurance company and insured cannot agree on the amount of a property loss, the person selected to help the two hired appraisers is called a(n):

Umpire

Which of the following best describes the situation when a property has neither contents nor occupants? Vacancy Abandonment Mysterious disappearance Unoccupancy

Vacancy

Which of the following best describes a direct loss?

Water damage resulting from a burst pipe

All of the following are methods of writing property insurance limits, except: Specific coverage Scheduled coverage Blanket coverage Concurrent coverage

Concurrent coverage

What is the correct term for a secondary loss that occurs as a result of a direct loss from a covered peril?

Consequential loss

The loss of property when the cause of loss is not known is considered:

Mysterious disappearance

Which term describes coverage that applies only to loss by the perils stated in a policy?

Named perils

An insured puts $50,000 of covered inventory into storage, where the items are later damaged by a covered peril. What provision on the insured's property policy prevents the storage facility from collecting any payment from the insured's claim?

No Benefit to Bailee

Which provision specifies that no coverage applies if the loss benefits a person who has care, custody, or control of the insured's property?

No Benefit to Bailee

Coverage provided by a standard property policy contains all of the following policy terms, except: If an earthquake starts a fire that causes a loss, the fire damage is covered When other property insurance applies to the same covered loss, the policies assume pro rata liability for claim payments Coverage is provided for indirect losses that follow a direct physical loss Coverage is provided for losses resulting from a quality of the property that causes it to destroy itself

Coverage is provided for losses resulting from a quality of the property that causes it to destroy itself

An insured has a property policy that provides $50,000 of personal property coverage and $100,000 of coverage for the building, with a $1,000 deductible and an 80% coinsurance requirement. If furniture sustains $500 of covered fire damage, how much does the insurer pay?

Nothing