Property 3
Jaime purchased a home outside the high-risk flood zone where the mortgagee would have required her to buy flood insurance. What percentage of flood losses occurs in moderate- to low-risk flood zones where Jaime's home is located?
25
Doug owns a single-family home with a replacement cost value of $500,000 and contents valued at $250,000. What is the maximum amount of insurance he can buy under a standard flood policy?
250,000 on home 100,000 on contents
Abode Insurance Company intends to cancel the homeowner's insurance policy it issued for Suzanne's house. How many days' written notice is Suzanne entitled to before the cancellation takes effect?
30 days
Earl's ISO businessowners policy (BOP) has a liability and medical expenses limit of $300,000 and a general aggregate limit of $600,000. Five people visiting Earl's business are seriously injured in an explosion, and each is awarded $150,000 in damages. How much will Earl's insurer pay in response to this claim?
300,000
Among Glenda's business insurance policies is an equipment breakdown policy that covers breakdowns of covered equipment at her factory. Which of the following does not qualify as a breakdown?
A large boiler ruptures and floods the factory floor.
Which of the following incidents would be covered by the equipment insurance breakdown policy?
A surge in electricity damages a boiler.
Josephine's novelty store is protected by a businessowners policy (BOP) that covers her building and business personal property. In what situation will the personal and advertising injury liability coverage of Josephine's BOP cover a claim?
Josephine detains a suspected shoplifter who turns out to be innocent.
Which of the following statements is correct with regard to the coverage provided by a businessowners policy (BOP) for loss of income due to an interruption in business?
The BOP covers business income and extra expense coverage when the business is inaccessible.
Water-based paint in Vincent's paint store would be destroyed if his power is off when the outside temperature is below freezing. His insurance agent suggested that the utility services—direct damage endorsement, scheduling overhead transmission lines, be added to his businessowners policy (BOP). With this endorsement, if Vincent's shop loses power because a windstorm downs power lines, then
Vincent's direct damage will be covered but his loss of business income will not be covered.
Private insurers that sell National Flood Insurance Policies on their own "paper" participate in the:
WYO write your own program
When the utility services—time element endorsement is attached to a businessowners policy (BOP), it covers income or expense loss the insured suffers because
a covered peril damages the type of utility service property identified in the endorsement.
Which of the following forms is not an essential part of a complete commercial property policy that uses ISO forms?
commercial general liability coverage form
Elwood Terrace is a multibuilding complex that includes both residential and office condominium units. The buildings are owned by a condominium association to which all condominium unit owners belong. What is the most appropriate form for insuring the association's property?
condominium association coverage form
Which of the following is not a legitimate reason for an insurer to cancel an auto insurance policy in Georgia?
consestintaley late payments
According to Insurance Services Office, Inc. (ISO), rules, which one of the following businesses would be eligible for coverage under a businessowners policy (BOP)?
convienience store
An equipment breakdown policy does not cover which of the following?
damage from smoke
The Dwelling Property 3—Special Form (DP 00 01) or DP 3 provides better coverage than the Dwelling Property 2—Broad Form (DP 00 02) or DP 2because the DP 3 automatically provides
open perils coverage rather than named perils coverage on the building
The liability section of the ISO businessowners policy (BOP) includes an aggregate limit for:
products and completed operations
Section III of a businessowners policy (BOP) contains common policy conditions. What do Sections I and II provide?
property and liability coverage
Only certain types of businesses are eligible for a businessowners policy (BOP). According to Insurance Services Office, Inc. (ISO) rules, BOP eligibility is based on the business's:
size and type
After learning that an imposter had run up bills by pretending to represent Barry's business, Barry was glad that his businessowners policy (BOP) included an identity fraud expense coverage endorsement that covered all the following related losses EXCEPT
the cost of merchandise the identity thief ordered and charged to Barry.
Clyde's tenant-occupied home is insured under a Dwelling Property 1—Basic Form (DP 00 01) or DP 1 policy that covers only the dwelling building. His policy covers losses caused by:
the perils named in his policy
After paying a vandalism claim under Sam's commercial inland marine policy, the insurer exercised its rights under the policy and attempted to recover all or part of its loss from the person who caused the covered damage and was apprehended by police. What condition in the inland marine common conditions form gives the insurer these rights?
transfer of recovery against others to the insurer
A businessowners policy combines coverages that might otherwise be written on all the following types of forms EXCEPT:
workers comp
The two unusual and irreplaceable matching totem poles at the entrance to Indian Gift Shop were valued at $5,000. After one of them was vandalized, the remaining totem pole is valued at $1,000. In accord with the pair, sets, or parts provision in the commercial inland marine policy covering these items, what will the insurer pay Gift Shop?
4,000
Jewell is having a vacation cottage built on lakeside property she inherited. Jewell's dwelling policy, which has a dwelling under construction endorsement, has a $100,000 Coverage A limit. A windstorm destroys the house when construction was only half completed. What is the maximum amount Jewell can recover under her policy?
50,000
Lara's businessowners policy (BOP) shows a $500,000 limit on the covered building. What is the maximum amount she can recover for complete destruction of the building by a covered peril when the policy has been in force exactly six months?
520,000
Acme Insurance Company issued a policy for workers compensation insurance to Fallow Landscaping Company. Fallow has not paid its annual premium, so Acme will cancel the policy. How many days' notice must Acme give Fallow before the cancellation takes effect?
75 days
The large heating and air-conditioning systems Alberto installs in commercial buildings are expensive, and Alberto wants to make sure he has insurance on this equipment during the time when it is being installed. What kind of floater should Alberto purchase?
an instilation floater
Dianna's mortgage company requires her to buy flood insurance on her home. She has heard that a National Flood Insurance Policy can be purchased directly from the National Flood Insurance Program or through a private insurer. Dianna wants good coverage, but she also wants to pay as low a premium as possible. What advice should she be given?
coverage and premiums are the same from both sources
Merrill's insurance agency office is insured under an Insurance Services Office, Inc. (ISO), businessowners policy (BOP). One of Merrill's customers claims that she suffered a loss because Merrill failed to provide the property insurance she asked for that would have covered the recent damage to her building. What can the insurer that wrote Merrill's BOP be expected to do?
deny coverage because of the BOP's professional liability exclusion
Various forms attached to an otherwise complete commercial property policy may broaden coverage, narrow coverage, or modify the policy to conform to a state's specific requirements. What are forms of this type usually called?
endorsements
An extended power outage at Tyrone's Steak House would ruin thousands of dollars' worth of perishable meat in Tyrone's freezer. The business personal property coverage of his businessowners policy (BOP) provides open perils coverage that
excludes loss resulting from an interruption of power originating away from Tyrone's premises.
Student housing is in high demand, so Jordan converted her home's attached garage into an apartment that is normally occupied year-round by students who pay $300 per month. One tenant accidentally started a fire in the apartment. Jordan was unable to rent it for three months while the damage was being repaired. Which coverage in Jordan's homeowners insurance policy covers her rental income loss?
fair rental value
The apartment building Laurie owns is insured under a businessowners policy (BOP). Because Laurie's policy includes building coverage but not business personal property coverage, she does not have coverage for loss or damage to:
furniture owned by a tennate
Because Jasper's homeowners insurance policy includes sublimits or limited coverage on certain types of property he owns, Jasper buys a scheduled personal property endorsement under which he can specifically cover all the following items EXCEPT:
his gun collection
Alex's Diner is covered under an Insurance Services Office, Inc. (ISO), businessowners policy (BOP) with no endorsements. The policy's declarations page includes limits for the building coverage and for the business personal property coverage. What kind of perils coverage does Alex's policy provide?
open perils coverage on the building and personal property
The two matching gas lampposts at the base of Hiram's driveway were installed 20 years ago. If a car damages one of the lampposts, the "Loss to a Pair or Set" condition in Hiram's homeowners Homeowners Policy Special Form 3 (HO 3) policy permits his insurer to do any of the following EXCEPT
pay Hiram half the value of the pair of lampposts.
The declarations page of Julius's equipment breakdown policy lists a number of coverages, such as property damage, expediting expenses, business income and extra expense, and utility interruption. The word "INCLUDED" is shown next to "property damage," but it does not appear elsewhere in the declarations. Julius's policy provides coverage for:
property damage only
Evangelina decided to insure the contents of her apartment under Coverage C of a DP 2 broad form rather than the cheaper DP 1 basic form. Therefore, what does she have coverage for?
the damage burglars caused when they broke into her apartment Burglary damage is a named peril in the DP 2 broad form, but theft, liability, and medical payments are not automatically covered.
After Ulysses sells Pearl a Homeowners Policy Special Form 3 (HO 3), he tries to sell her an additional inland marine insurance policy to cover some specific items in her house. Pearl thinks that the homeowners policy covers all her property and asks why she should consider an additional policy. Which of the following would not be a valid reason?
the inland marine policy sale will increase Ulysses's commission income
Butch modified the family pickup truck to be able to drive it in mud races at a local pit on the weekend. His auto insurer notifies him that his policy is being cancelled. On what grounds can the insurer cancel the policy?
the truck has been substantially modified so that the risk has increased.
Although she had been told that she was getting the broadest possible property coverage, Earlene is disappointed to discover that the special causes of loss form attached to a building and personal property coverage form has exclusions for all the following perils EXCEPT:
theft
A runaway truck plowed into Eddy's house. Before the damage could be repaired, the smashed truck and smashed pieces of the house had to be taken away. The additional coverage for debris removal in Eddy's homeowners insurance policy
will cover only the expense of removing smashed pieces of Eddy's house.
