Other Personal Lines Policies
Removal coverage under a standard fire policy remains in effect for A 5 days. B 10 days. C 15 days. D 30 days.
A 5 days. correct! Removal from premises endangered by the perils (fire & lightning) insured against automatically applies for 5 days.
A state-established program that requires insurers who write property insurance to accept risks in economically depressed areas in the same proportion as their other business bears to the total property insurance market is called A A shared and spread risk (SSR) plan. B An equitable risk option (ERO) plan. C Fair trades practice plan. D A fair access to insurance (FAIR) plan.
D A fair access to insurance (FAIR) plan. Correct! The FAIR plan provides risk protection for those risks for which insurance is unavailable through normal distribution channels.
How long is the waiting period after the application has been accepted before flood coverage goes into effect? A 30 days B 6 months C 12:01 am the next day D 5 days
A 30 days correct! The waiting period is 30 days as required by the National Flood Insurance Program.
How long is the waiting period after the application has been accepted before flood coverage goes into effect? A 30 days B 6 months C 12:01 am the next day D 5 days
A 30 days Correct! The waiting period is 30 days as required by the National Flood Insurance Program.
Which of the following is NOT true about earthquake coverage? A Coverage is commonly provided through a federally-funded program. B Coverage is excluded by most property forms. C Coverage may be added to property policies by endorsements. D Coverage may be written in a Difference of Conditions policy.
A Coverage is commonly provided through a federally-funded program. Correct! It is a peril excluded by most standard property forms. Coverage for the peril of earthquake may be added by endorsement to most property policies, or coverage may be written in a Difference in Conditions policy.
Which of the following terms best describes a trembling or shaking of the earth that is volcanic or seismic in origin? A Earthquake B Tectonic shifting C Tsunami D Geotectonic inversion
A Earthquake Correct! Earthquakes are excluded by most standard property forms, but coverage for may be added by endorsement to most property policies. Coverage may also be written in a Difference in Conditions policy.
What type of coverage do umbrella policies provide? A Excess coverage over an underlying or primary policy B Property coverage for those who do not qualify for homeowners insurance C Property coverage for the basic perils of fire, wind, and hail D Primary coverage for risks that are difficult to insure
A Excess coverage over an underlying or primary policy Correct! Umbrella policies, sometimes called catastrophe insurance, provide excess coverage over the underlying or primary liability policy.
The Standard Fire Policy would provide coverage in which of these cases? A Fire B Acts of war C Theft D Insured's neglect
A Fire Correct! Covered losses include the following: fire, lightning, and removal from premises.
Which of the following statements is NOT true regarding a personal umbrella liability policy? A It provides errors and omissions coverage for an agency. B It may cover certain exposures not provided under the primary layer. C It may require the payment of a self-insured retention. D It provides excess liability coverage over underlying personal liability.
A It provides errors and omissions coverage for an agency. Correct! Personal umbrella policies cover the personal exposure of the insured. Errors and omissions coverage is provided only in a professional liability policy.
Joe lit a fire in his fireplace and left it unattended. He had failed to check to see if the flue was open, so the smoke entered the house and, in addition to discoloring the walls, ceiling, and drapes, Joe had to hire a company to remove the smoke odor. The total expense of cleaning and repainting was $6,000. How much would Joe's Standard Fire policy pay? A Nothing B $6,000, less the deductible C The policy would pay for repainting and cleaning of the drapes, but not the removal of the smoke odor D Because the loss was caused by Joe's deductible, the policy would pay only 50%
A Nothing correct! Because a fire in the fireplace is a "friendly fire", the policy would pay nothing. Damage from smoke of a hostile fire is covered, but not from a friendly fire.
All of the following are TRUE statements regarding the requirements of an insurer to offer earth movement coverage in California EXCEPT A Only authorized agents which hold an "earth movement certificate" through the department of insurance are able to market residential property insurance which provides coverage for earth movement. B No policy of residential property insurance may be issued or delivered or initially renewed in this state by any insurer unless the named insured is offered coverage for loss or damage caused by the peril of earthquake. C Coverage may be provided in the policy of residential property insurance which specifically provides coverage for loss or damage caused only by the peril of earthquake by itself. D Coverage may be provided in the policy of residential property insurance which specifically provides coverage for loss or damage caused by the peril of earthquake alone or in combination with other perils.
A Only authorized agents which hold an "earth movement certificate" through the department of insurance are able to market residential property insurance which provides coverage for earth movement. correct! No additional certificate is required to market earth movement coverage.
All of the following statements are TRUE regarding the California Earthquake Authority (CEA) EXCEPT A The CEA is authorized to transact insurance to sell residential earthquake and any other insurance coverage as necessary. B The CEA's policies can be marketed by the participating insurers that write the underlying policy of residential property insurance. C The CEA must be administered under the authority of the Commissioner. D The CEA is authorized to transact basic residential earthquake insurance only.
A The CEA is authorized to transact insurance to sell residential earthquake and any other insurance coverage as necessary. Correct! The authority is authorized to transact insurance in this state as necessary to sell policies of basic residential earthquake insurance; however, they are NOT permitted to sell policies for any other line of insurance coverage.
Jack and Jill each own a 50% interest in a dwelling that is insured under a standard fire policy issued to Jill to cover her interest in the structure. The amount of insurance is $40,000. Following a $10,000 fire loss to the structure, Jill will receive A $10,000. B $5,000. C $2,500. D Nothing.
B $5,000. correct! Because Jill interest in the property is 50%, she will receive an amount equal to 50% of the loss.
During a house fire, an insured moves an antique chair listed on the policy to a storage unit. In the Standard Fire Policy, how many days will the antique chair be covered at the new location? A 3 days B 5 days C 15 days D 30 days
B 5 days Correct! In the Standard Fire Policy, if a covered property is removed from a location to protect it from an insured peril, the property will be covered at the new location for 5 days.
The standard fire policy specifically excludes losses which occur when a building is vacant or unoccupied for A 30 days or more. B 60 days or more. C 90 days or more. D 180 days or more.
B 60 days or more. Correct! The standard fire policy specifically excludes any loss occurring when the building is vacant or unoccupied for 60 days or more.
According to the Nationwide Marine Definitions, risks that may be the subject of inland marine insurance include all of the following EXCEPT ACargo transported by truck. BLarge pleasure boats. CProperty while stored at a warehouse. DShipments made by freight train.
B Large pleasure boats. Correct! Large pleasure boats will not be included in Inland Marine Coverage. They would instead be covered in a boatowners policy, or, if large enough, under yacht insurance.
What type of property does a Personal Floaters policy cover? A Movable personal property located in the insured's home, only B Movable personal property, wherever it may be located C Permanently attached property located on the insured's premises D None of these
B Movable personal property, wherever it may be located Correct! Personal floaters refers to an inland marine policy designed to cover movable personal property, wherever it may be located.
What type of property does a Personal Floaters policy cover? A Movable personal property located in the insured's home, only B Movable personal property, wherever it may be located C Permanently attached property located on the insured's premises D None of these
B Movable personal property, wherever it may be located correct! Personal floaters refers to an inland marine policy designed to cover movable personal property, wherever it may be located.
Joe lit a fire in his fireplace and left it unattended. He had failed to check to see if the flue was open, so the smoke entered the house and, in addition to discoloring the walls, ceiling, and drapes, Joe had to hire a company to remove the smoke odor. The total expense of cleaning and repainting was $6,000. How much would Joe's Standard Fire policy pay? A Because the loss was caused by Joe's deductible, the policy would pay only 50% B Nothing C $6,000, less the deductible D The policy would pay for repainting and cleaning of the drapes, but not the removal of the smoke odor
B Nothing Correct! Because a fire in the fireplace is a "friendly fire", the policy would pay nothing. Damage from smoke of a hostile fire is covered, but not from a friendly fire.
The Standard Fire Policy is a named perils contract, which means A All perils covered must be added through endorsements. B Only perils listed in the policy are covered. C It covers losses for any peril. D It covers the peril in its name under any circumstances.
B Only perils listed in the policy are covered. correct! Named perils contracts cover only those perils specified in the policy
All of the following statements are TRUE regarding the California Earthquake Authority (CEA) EXCEPT A The CEA is authorized to transact basic residential earthquake insurance only. B The CEA is authorized to transact insurance to sell residential earthquake and any other insurance coverage as necessary. C The CEA's policies can be marketed by the participating insurers that write the underlying policy of residential property insurance. D The CEA must be administered under the authority of the Commissioner.
B The CEA is authorized to transact insurance to sell residential earthquake and any other insurance coverage as necessary. correct! The authority is authorized to transact insurance in this state as necessary to sell policies of basic residential earthquake insurance; however, they are NOT permitted to sell policies for any other line of insurance coverage.
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays A A percentage of the loss as described on the declarations. B The excess over the self-insured retention. C The amount specified in the policy under the additional coverage provisions. D The amount in excess of the underlying policy deductible.
B The excess over the self-insured retention. correct! Retention is the equivalent of a deductible in property insurance.
Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? A The insured would have to pay the self-insured retention limit. B The insured would be responsible for the amount required as underlying limits in the event of a claim. C It would have no effect on the umbrella policy. D The policy will be cancelled.
B The insured would be responsible for the amount required as underlying limits in the event of a claim. correct! The amount of insurance required as underlying limits in other policies is treated as a deductible amount to the umbrella for that particular exposure, so if underlying limits are not maintained; it is the insured's responsibility.
The New York Standard Fire Policy is classified as "Standard" because A The rates charged for coverage is identical in every state. B The policy conditions are identical in every state. C The policy's inception and expiration time are based upon the "standard" time. D All of the above.
B The policy conditions are identical in every state. Correct! The New York Standard Fire Policy of 1943 contain the same 165 lines of policy conditions regardless of the state of issue. Each state will add endorsements to the contract to conform it to that state's requirements.
The New York Standard Fire Policy is classified as "Standard" because A The rates charged for coverage is identical in every state. B The policy conditions are identical in every state. C The policy's inception and expiration time are based upon the "standard" time. D All of the above.
B The policy conditions are identical in every state. correct! The New York Standard Fire Policy of 1943 contain the same 165 lines of policy conditions regardless of the state of issue. Each state will add endorsements to the contract to conform it to that state's requirements.
In a personal umbrella, the amount paid by the insured for certain losses not covered under the primary coverage is called A Participation requirement. B Self-insured retention. C Stop-loss. D Coinsurance.
BSelf-insured retention. Correct! In casualty insurance, the portion of a claim not paid by insurance is called a retention. In property insurance, it is called a deductible.
Johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. When would her coverage be effective? A12:01 pm on the 5th day after the endorsement request has been mailed B 5 days after the application and premium payment are mailed C 12:01 am the day after the application and premium payment are mailed D 30 days after the application has been accepted
C 12:01 am the day after the application and premium payment are mailed Correct! During the first 30 days after a community enters the emergency or normal programs, coverage on a flood policy begins at 12:01 a.m. the day after application and premium payment have been mailed.
Which amount is figured by subtracting depreciation from the replacement cost of a covered item? A Repair cost B Pro rata percentage C Actual cash value D Interest of the insured
C Actual cash value Correct! The ACV of a property is the replacement cost of that property minus depreciation.
Chapter: Other Personal Lines Policies If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy? A Excess policy B General liability policy C Auto policy D Umbrella policy
C Auto policy Correct! The underlying policy is the primary liability policy. In this scenario, it's the insured's personal auto policy.
All of the following are classes of inland marine risks EXCEPT A Domestic shipments and transportation risks B Bridges, tunnels, and other instrumentalities of transportation and communication C Common Carrier Cargo Liability D Commercial property floater risks
C Common Carrier Cargo Liability correct! The 4 classes of inland marine risks are the following: domestic shipments and transportation risks; bridges, tunnels, and other instrumentalities of transportation and communication; commercial property floater risks; and personal property floater risks.
All of the following are classes of inland marine risks EXCEPT A Domestic shipments and transportation risks B Bridges, tunnels, and other instrumentalities of transportation and communication C Common Carrier Cargo Liability D Commercial property floater risks
C Common Carrier Cargo Liability Correct! The 4 classes of inland marine risks are the following: domestic shipments and transportation risks; bridges, tunnels, and other instrumentalities of transportation and communication; commercial property floater risks; and personal property floater risks.
All of the following are excluded from coverage under a standard fire policy EXCEPT A Stocks and bonds. B Money. C Manuscripts and bullion. D Deeds and bills.
C Manuscripts and bullion. Correct! Manuscripts or bullion may be covered if specifically named in writing in the policy.
All of the following are excluded from coverage under a standard fire policy EXCEPT A Stocks and bonds. B Money. C Manuscripts and bullion. D Deeds and bills.
C Manuscripts and bullion. correct! Manuscripts or bullion may be covered if specifically named in writing in the policy.
All of the following are TRUE statements regarding the requirements of an insurer to offer earth movement coverage in California EXCEPT A Coverage may be provided in the policy of residential property insurance which specifically provides coverage for loss or damage caused only by the peril of earthquake by itself. B Coverage may be provided in the policy of residential property insurance which specifically provides coverage for loss or damage caused by the peril of earthquake alone or in combination with other perils. C Only authorized agents which hold an "earth movement certificate" through the department of insurance are able to market residential property insurance which provides coverage for earth movement. D No policy of residential property insurance may be issued or delivered or initially renewed in this state by any insurer unless the named insured is offered coverage for loss or damage caused by the peril of earthquake.
C Only authorized agents which hold an "earth movement certificate" through the department of insurance are able to market residential property insurance which provides coverage for earth movement. Correct! No additional certificate is required to market earth movement coverage.
Who would participate in a WYO program? A Government insurance companies that write and service National Flood Insurance policies B Businesses requiring National Flood Insurance policies C Private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis D Lloyd's associations
C Private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis Correct! A WYO (write your own) program is made up of private insurers that write and service National Flood Insurance policies on a no risk-bearing basis through a special arrangement with the Federal Insurance Administration. WYO programs retain part of the flood insurance premium to pay for commissions and administrative costs. The remaining premiums, plus investment, are used to cover losses. Review ContentNext Question
Chapter: Other Personal Lines Policies Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? A The insured would have to pay the self-insured retention limit. B The insured would be responsible for the amount required as underlying limits in the event of a claim. C It would have no effect on the umbrella policy. D The policy will be cancelled.
Correct! The amount of insurance required as underlying limits in other policies is treated as a deductible amount to the umbrella for that particular exposure, so if underlying limits are not maintained; it is the insured's responsibility. Review ContentNext Question
Johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. When would her coverage be effective? A 30 days after the application has been accepted B 12:01 pm on the 5th day after the endorsement request has been mailed C 5 days after the application and premium payment are mailed D 12:01 am the day after the application and premium payment are mailed
D 12:01 am the day after the application and premium payment are mailed correct! During the first 30 days after a community enters the emergency or normal programs, coverage on a flood policy begins at 12:01 a.m. the day after application and premium payment have been mailed.
Which of the following would be considered causes for flood conditions covered by the National Flood Insurance Program? A Overflow of inland or tidal waters B Unusual and rapid accumulation or runoff of surface waters from any source C A mudflow D All of the above could be considered flood sources
D All of the above could be considered flood sources Correct! A flood, as defined by the National Flood Insurance Program is a general and temporary condition of partial or complete inundation of 2 or more acres of normally dry land area or of 2 or more properties from overflow of inland or tidal waters, unusual and rapid accumulation or runoff of surface waters from any source, or mudflow.
A Boatowners policy covers A Damage to the boat and trailer. B Liability. C Medical payments. D All of these.
D All of these. correct! Boatowners policies, like homeowners policies, cover property, liability, and medical payments.
If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy? A Umbrella policy B Excess policy C General liability policy D Auto policy
D Auto policy Correct! The underlying policy is the primary liability policy. In this scenario, it's the insured's personal auto policy.
According to the Nationwide Marine Definitions, risks that may be the subject of inland marine insurance include all of the following EXCEPT A Property while stored at a warehouse. B Shipments made by freight train. C Cargo transported by truck. D Large pleasure boats.
D Large pleasure boats. correct! Large pleasure boats will not be included in Inland Marine Coverage. They would instead be covered in a boatowners policy, or, if large enough, under yacht insurance.
Larry invites his neighbors out for a day on the water in his boat powered with a 150hp outboard. While attempting to tie the boat to dock, his neighbor's hand is broken when caught between the boat and dock. What coverage would apply to the broken hand? A Larry's Outboard Boat and Motor policy B Section II-Personal Liability-of Larry's Homeowners policy C Larry's Boatowners policy is primary, and if its limits are too low, his Homeowners liability would pay as excess D Larry's Boatowners policy
D Larry's Boatowners policy correct! Outboard boat and motor policies are property coverage only; Homeowners liability does not apply to outboards with more than 25hp; Boatowners policies contain property, liability, and medical payments.
A property with which of the following deficiencies would be eligible for the California FAIR Plan? A Faulty wiring B Windows poorly installed C Heating system in poor condition D Located in a designated hazardous brush area
D Located in a designated hazardous brush area Correct! Property submitted to the California Fair Plan must be insurable property for which coverage is not available in the normal market because of its geographic location.
Annual transit policies are written on what kind of basis? A Temporary B Open-peril C Reduced liability D Named peril
D Named peril correct! Annual transit policies are used by businesses that ship goods on a regular basis. Coverage can be written for various types of shipments. These policies are written on a named peril basis.
The standard fire policy only covers those perils specified in the policy for that reason it is known as a(n): A Open peril policy. B Broad peril policy. C All inclusive policy. D Named peril policy.
D Named peril policy. Correct! The standard fire policy is a named perils contract, and it only covers the perils specified in the policy.
The Standard Fire Policy is a named perils contract, which means A It covers losses for any peril. B It covers the peril in its name under any circumstances. C All perils covered must be added through endorsements. D Only perils listed in the policy are covered.
D Only perils listed in the policy are covered. Correct! Named perils contracts cover only those perils specified in the policy
Who would participate in a WYO program? A Lloyd's associations B Government insurance companies that write and service National Flood Insurance policies C Businesses requiring National Flood Insurance policies D Private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis
D Private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis correct! A WYO (write your own) program is made up of private insurers that write and service National Flood Insurance policies on a no risk-bearing basis through a special arrangement with the Federal Insurance Administration. WYO programs retain part of the flood insurance premium to pay for commissions and administrative costs. The remaining premiums, plus investment, are used to cover losses.
Which of the following would NOT be considered a flood? A Overflow of tidal waters B Mudslides C Runoff of surface waters D Sewer backup
D Sewer backup correct! Flood is defined by the National Flood Insurance Program. It does not include sewer backup.
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays A The amount specified in the policy under the additional coverage provisions. B The amount in excess of the underlying policy deductible. C A percentage of the loss as described on the declarations. D The excess over the self-insured retention.
D The excess over the self-insured retention. Correct! Retention is the equivalent of a deductible in property insurance.
Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value? A They qualify for maximum compensation under the flood insurance program. B They are excluded from the flood insurance policy. C They are subject to a $1,000 deductible. D They are automatically provided with replacement cost coverage.
D They are automatically provided with replacement cost coverage. Correct! Single-family dwellings are automatically provided with replacement cost coverage if insured to at least 80% of the replacement value, or the maximum allowed under the regular flood insurance program.