WI Property Insurance Exam

You have a standard HO-3 policy with no endorsement and your house is damaged by fire. Among your losses is a Rolex watch valued at $2,000. Disregarding the deductible, how much will the company pay for the loss of this item? a) $1,000--the maximum limit on jewelry b) $2,000 c) $2,000 minus depreciation d) nothing since the policy was not endorsed to cover the watch

$2,000 minus depreciation

You are a tenant with an HO-4 policy. You have $20,000 worth of coverage on your personal property. How much coverage do you have for loss of use? a) 10% of coverage C b) 30% of coverage C c) $4,000 d) there is no loss of use with an HO-4

30% of coverage C

A homeowner whose house suffered a $50,000 total loss was insured for $60,000. What principle would be violated if her insurance company paid her $60,000? a) indemnity b) negligence c) liability d) insurance interest

a) indemnity

Dwelling coverage includes all of the following EXCEPT... a) land on which the dwelling is located b) the dwelling used principally for residential purposes c) materials on the described location used to repair the dwelling d) building and outdoor equipment used to service the described location

a) land on which the dwelling is located

Which of the following dwelling forms would be called the Broad form? a) DP-1 b) DP-2 c) DP-3 d) DP-4

b) DP-2

Business property on premises provides coverage for what dollar amount in a homeowners policy... a) $250 b) $500 c) $2,500 d) $5,000

c) $2,500

The ABC Insurance company has a $60,000 fire policy on a factory. The XYZ Insurance company has a $40,000 fire policy on the same factory. Assuming that the factory is worth $100,000. How much would the ABC Insurance company pay on a $10,000 covered loss at the factory? a) $10,000 b) $6,000 c) $5,000 d) depends on the coinsurance clause

$6,000

Under coverage C of a homeowner's policy, the amount of insurance provided to cover personal property of the insured is... a) 50% of the amount provided in coverage A b) 50% of the amount provided in coverage B c) equal to the amount provided in coverage A d) equal to the amount provided in coverage B

a) 50% of the amount provided in coverage A

Which of the following would be automatically covered under form HO-3? I. Personal property of the insured's daughter who is away at college II. The insured's driveway, if damaged by a falling object III. The insured's pedigreed Collie valued at $2,000 a) I and II only b) I and III only c) II and III only d) I, II, and III

a) I and II only

Which of the following would be covered by the broad theft endorsement on a dwelling policy? a) a camera the insured has with him on vacation b) a pedigree show dog c) fabric and patterns in a clothing designer studio d) an antique car

a) a camera the insured has with him on vacation

Lefty takes the liberty of breaking into the Williams Department Store and steals 30 pairs of women's shoes. Indicate whether the loss was because of a: a) burglary b) robbery c) theft d) mysterious disappearance e) fidelity

a) burglary

An insured intentionally did not disclose a material fact on an application for insurance. This would be considered... a) concealment b) lying c) coercion d) misrepresentation

a) concealment

With regard to a homeowner's policy, which coverage provides for indirect losses? a) coverage D b) coverage A c) coverage B d) coverage c

a) coverage D

A person may be considered negligent if he... a) fails to do what a reasonable and prudent person would do b) commits a deliberate act that injured another c) injures another person even though he acted prudently d) assists to the best of his ability another person who is in distress

a) fails to do what a reasonable and prudent person would do

Flood insurance covers all of the following EXCEPT... a) fences, retaining walls, outdoor swimming pools b) erosion caused by flooding c) overflow from a lake or tidal waters d) runoff of surface water

a) fences, retaining walls, outdoor swimming pools

Which of the following is the coinsurance formula? a) insurance carried / insurance required x loss = amount insurance company pays b) coinsurance percentage x replacement cost - depreciation = amount paid c) manual rate x experience credit - schedule credit = coinsurance d) value - loss x coinsurance percentage = amount paid

a) insurance carried / insurance required x loss = amount insurance company pays

An intermediary who fails to complete the required CE credits by the expiration date shall be subject to which of the following actions by the commissioner? a) license revocation b) license suspension c) monetary forfeiture d) disciplinary action/fine

a) license revocation

Which of the following statements about Open Perils coverage is TRUE? a) open peril policies cover losses from any peril that is not specifically excluded b) open peril policies cost more because of the increase in the dollar amount of coverage c) open perils name their perils d) under an open peril policy, the insurance company has the legal right to modify its claim settlement practices to control losses

a) open peril policies cover losses from any peril that is not specifically excluded

A scheduled personal property endorsement is usually issued on which of the following basis? a) open perils b) blanket c) replacement cost d) valued

a) open perils

A situation in which a person can only lose or have no change represents... a) pure risk b) speculative risk c) adverse selection d) hazard

a) pure risk

Under a personal auto policy, which of the following is correct about transportation expenses incurred as a result of theft of an insured auto? a) they are included under comprehensive coverage b) they must be added on by the purchase of rental reimbursement endorsement c) they are included under towing and labor d) they are not available

a) they are included under comprehensive coverage

Automatic coverage in a homeowners policy for loss assessment is... a) $500 b) $1,000 c) $2,500 d) $5,000

b) $1,000

An insured carries $25,000 in fire insurance with an 80% coinsurance on a building worth $40,000. How much would she collect in the event of a total loss? a) $20,000 b) $25,000 c) $32,000 d) $40,000

b) $25,000

Lawns, plants, shrubs, and trees provides what coverage amount in a homeowners policy? a) $100 per tree, plant, or shrub b) $500 per tree, plant, or shrub c) $1,000 per tree, plant, or shrub d) 10% of the coverage A (dwelling) limit

b) $500 per tree, plant, or shrub

Ten years ago an insured purchased a building for $50,000 that would cost $100,000 to rebuild today. If the physical value of the building has depreciated $2,000 each year, the building's present actual cash value is... a) $100,000 b) $80,000 c) $50,000 d) $30,000

b) $80,000

Your house has a replacement cost of $100,000. In order to have replacement cost coverage on the dwelling, your homeowner's policy must be written with a face amount equal to or greater than which of the following? a) $50,000 b) $80,000 c) $90,000 d) $100,000

b) $80,000

Which homeowners policy is the least comprehensive policy that would cover the weight of ice, snow, or sleet? a) HO-19 b) HO-2 c) HO-3 d) HO-4

b) HO-2

An insurance policy's appraisal clause is used to determine the... a) personal who is liable for damages b) amount of the loss c) existing coverage d) facts so the case can be heard in court

b) amount of the loss

One purpose of a deductible is to... a) prevent under insurance b) eliminate small claims c) prevent catastrophic claims d) allow the insured to ignore physical hazards

b) eliminate small claims

The purpose of the coinsurance clause is to... a) require the insurance company to pay all losses in full b) encourage the insured to purchase adequate insurance protection c) allow the insured to choose any amount of coverage d) permit other insurance on the same property

b) encourage the insured to purchase adequate insurance protection

Which time element coverage is designed for businesses that cannot shut down? a) business interruption b) extra expense c) contingent business interruption

b) extra expense

Which of the following is the correct formula for computing a loss ration? a) loss adjusting expenses - incurred expenses b) incurred losses + loss adjusting expenses / earned premium c) incurred expenses + loss adjusting expenses / interest rate d) incurred losses - loss adjusting expense / earned premium

b) incurred losses + loss adjusting expenses / earned premium

Part of the insured's consideration in a property insurance contract is the... a) payment of a loss by the company b) payment of the premium by the insured c) provision of a grace period d) offer a preferred contract to the customer

b) payment of the premium by the insured

At the time of loss, the insured in a property and casualty policy, the insurer's claim settlement options include all of the following EXCEPT... a) paying the value of the lost or damaged property b) replacing the property with other property of a lesser kind of quality c) paying the cost of repairing or replacing the lost or damaged property d) taking all or part of the property at an agreed or appraised value

b) replacing the property with other property of a lesser kind or quality

Lefty, who is right-handed, forced a gun into the ribs of Miss Peacock in the observatory and took all the money in her purse. Indicate whether the loss was because of a: a) burglary b) robbery c) theft d) mysterious disappearance e) fidelity

b) robbery

Equipment breakdown covers expenses resulting from... a) wear and tear b) sudden and accidental breakdown c) failing of a safety device d) accident to an object during testing

b) sudden and accidental breakdown

Which of the following must an insured do after suffering a property loss? a) have the damaged property appraised b) take steps to reduce any further loss c) hire an outside claims adjuster d) increase his coverage

b) take steps to reduce any further loss

Extra expense insurance covers which of the following? a) the additional cost of taking safety measures before a loss b) the additional cost of continuing a business after a loss c) the extra money needed to cover a firm's loss of earnings d) the extra money needed to cover a landlord's loss of rental income

b) the additional cost of continuing a business after a loss

A bad guy remains in an office building after hours in order to steal office equipment. Which of the following coverages would protect the owner of the property against this loss? a) burglary b) theft c) robbery d) removal

b) theft

Under a building and personal property coverage form, with a cause of loss broad form, which of the following perils is covered? a) soil erosion b) volcanic action c) mudslide d) military action

b) volcanic action

Three years ago, an insured moved to an unfurnished apartment. She bought new furniture that cost $9,000. Last week there was a fire in the apartment that destroyed the furniture. Replacement cost is $10,500. The adjuster told the insured that her furniture depreciated $2,500. If insurance is written on an Actual Cash Value basis, how much will it pay for the loss? a) $10,500 b) $6,500 c) $8,000 d) $9,000

c) $8,000

The waiting period for Flood insurance is... a) 15 days b) 20 days c) 30 days d) 60 days

c) 30 days

Which of the following dwelling coverage forms would pay replacement cost for the dwelling? a) all dwelling property coverage forms b) DP-1 c) DP-2 and DP-3 d) DP-3 only

c) DP-2 and DP-3

Which of the following forms would give you open perils on the house? a) DP-1 b) DP-2 c) DP-3 d) it is not available

c) DP-3

Which of the following statements is correct about a written promise by an intermediary to provide coverage? a) it is contrary to insurance laws b) an example of estoppel c) acceptable under insurance laws d) example of waiver

c) acceptable under insurance laws

Which of the following grants express authority to an agent? a) fiduciary contract b) state provisions c) agent contract with the insurance company d) agents insurance license

c) agents contract with the insurance company

A sudden, unintended, and unexpected event is know as... a) negligence b) a warranty c) an accident d) an occurrence

c) an accident

Which commercial floater will cover loss for personal property of others under the insured's care, custody, and control? a) contributing properties b) recipient properties c) bailee coverage d) personal floater

c) bailee coverage

Which of the following insurance principles is designed to encourage you to purchase adequate insurance protection on your property? a) indemnification b) subrogation c) coinsurance d) insurable interest

c) coinsurance

The portion or the policy that specifies exactly what items will be covered and the dollar amounts of coverage is called the... a) insuring clause b) exclusions c) declarations d) conditions

c) declarations

All of the following are other coverages under the dwelling policy EXCEPT... a) debris removal b) other structures c) earthquake d) improvement, alterations, and additions

c) earthquake

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? a) domestic b) unauthorized c) foreign d) alien

c) foreign

In P&C, the term used to describe situations or conditions that can increase risk, such an ice on streets or faulty wiring in a building is called... a) risk b) cause of loss c) hazard d) peril

c) hazard

Which of the following statements is correct about a written promise by an intermediary to provide coverage? a) it is contrary to insurance laws b) it is an example of estoppel c) it is acceptable under insurance laws d) it is an example of a waiver

c) it is acceptable under insurance laws

You purchase a property policy in order to insure your commercial building. Two months later, your insurance company offers the same policy to new customers with improved benefits, but the policies are sold for the same premium rate as your policy. Which of the following clauses in your policy would result in your policy automatically including these new improved benefits even though they are not specifically stated in your policy? a) additional coverage b) extension of coverage c) liberalization d) other insurance

c) liberalization

A commercial building and personal property coverage form automatically provides for which of the following extensions of coverage? a) agreed value b) replacement cost c) newly acquired property d) rental value

c) newly acquired property

An insurance company may have reason to discontinue an insured's property coverage after expiration. This is referred to as... a) cancellation b) expiration c) non-renewal d) non-continuation

c) non-renewal

Which of the following is an excluded peril under a homeowner's policy? a) lightning b) civil commotion c) nuclear contamination d) smoke

c) nuclear contamination

Your white car turns to rust during the next six months as the result of acid rain. In P&C, this phenomenon would be classified as an... a) fortuitous event b) accident c) occurence d) proximate cause

c) occurence

What is the term for the entity that an agent represents regarding contractual agreements with third parties? a) designee b) insured c) principal d) client

c) principal

In insurance, an offer is usually made when... a) the agent delivers the policy to the policyholder b) the agent explains policy provisions to a potential applicant c) the applicant submits an application for insurance d) the insurer approves the application and receives the initial premium

c) the applicant submits an application for insurance

Baxter hired Lefty as an employee unbeknownst that Lefty was a crook. Baxter finds out the following week that Lefty has taken $10,000 in cash from the safe. Baxter had Lefty listed in case a loss like this should occur. Indicate whether the loss was because of a: a) burglary b) robbery c) theft d) mysterious disappearance e) fidelity

c) theft

Lefty goes into the William Department Store. Near closing time, he hides until everyone has left for the day. He then goes to jewelry department and takes all the diamonds. He unlocks the door to the store and makes his escape undetected. Indicate whether the loss was because of a: a) burglary b) robbery c) theft d) mysterious disappearance e) fidelity

c) theft

Lefty is on the prowl. He sneaks into a factory and takes the sleeping guard's wallet without the guard noticing. Indicate whether the loss was because of a: a) burglary b) robbery c) theft d) mysterious disappearance e) fidelity

c) theft

Which of the following statements is true about additional coverage? a) they are automatically included only if medical payments coverage is purchased b) they are included for a minimum premium c) they are included at no extra cost d) they are optional on the part of the insured

c) they are included at no extra cost

Which of the following best describes the concept of risk? a) result of loss b) amount of loss c) uncertainty of loss d) cause of loss

c) uncertainty of loss

An insured dwelling property broad form provides $40,000 coverage on her dwelling and $25,000 coverage on its contents. If vandals cut down a tree on her property valued at $500, the maximum amount she will receive is which of the following? a) $0 b) $250 c) $400 d) $500

d) $500

Exclusions exist in insurance policies for which of the following reasons? I. To eliminate catastrophic losses II. To eliminate coverage for certain types of loss III. To eliminate coverage for uninsurable perils a) I only b) I and II only c) II and III only d) I, II, and III

d) I, II, and III

Which of the following types of property would be included under coverage A of a building and personal property coverage form? I. A central air-conditioning system II. Wall-to-wall carpeting III. A permanently installed intercom system a) II only b) I and II only c) II and III only d) I, II, and III

d) I, II, and III

Claims related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses are covered by which part of a policy? a) exclusions b) declarations c) insuring agreement d) additional coverages

d) additional coverages

Which of the following is not named as an insured on the declaration page of a policy but are protected by the policy, usually in regards to a specific interest is known as... a) policy owner b) named insured c) first named insured b) additional insured

d) additional insured

Which of the following would be considered incompetent under insurance law? a) a fourteen-year-old honor student b) a man under the influence of alcohol c) a customer who buys a policy under duress d) all of the above

d) all of the above

The part of the policy which sets forth the rules of conduct, duties, and obligations of the parties is called the... a) exclusions b) declarations c) insuring clause d) conditions

d) conditions

The difference in the contents coverage on an HO-3 and HO-5 is... a) contents are covered open peril on HO-3 and named peril on HO-5 b) contents are covered for replacement cost on HO-5 AND actual cash value on HO-3 c) contents are covered for replacement cost on HO-3 and actual cash value on HO-5 d) contents are covered open peril on HO-5 and named peril on HO-3

d) contents are covered open peril on HO-5 and named peril on HO-3

In a dwelling policy, which of the following provides coverage for additional living expenses incurred by an owner-occupant in the event a covered peril makes the premises uninhabitable due to a covered loss? a) coverage A b) coverage B c) coverage C d) coverage D

d) coverage E

Additional coverages under a homeowner's policy would cover... a) the dwelling b) materials and supplies c) other structures d) debris removal

d) debris removal

The definition of Actual Cash Value includes which of the following? a) original cost b) fair market value c) offer d) depreciation

d) depreciation

You recently had a brand new detached garage built next to your home for $9,000. You have an HO-3 policy with $100,000 of coverage on the dwelling, but you've never had a garage before. In order to have the garage covered, you should do which of the following? a) upgrade to an HO-5 b) buy a separate commercial property for the garage c) keep the HO-3 and add a garage endorsement d) do nothing

d) do nothing

Inland marine definition covers all the following property EXCEPT... a) imports b) exports c) bridges and tunnels d) fixtures and furniture

d) fixtures and furniture

Which of the following insurance principles is designed to keep you from profiting by insuring and then destroying other people's property? a) indemnification b) subrogation c) coinsurance d) insurable interest

d) insurable interest

Which of the following dwelling forms would give you open perils on the contents? a) DP-2 b) DP-3 c) DP-4 d) it is not available

d) it is not available

Douglas leaves his watch on top of the bedroom dresser. He entertains 20 people and stores their coats in the bedroom. A week later Douglas notices that his watch is nowhere to be found. Indicate whether the loss was because of a: a) burglary b) robbery c) theft d) mysterious disappearance e) fidelity

d) mysterious disappearance

Some merchandise was stolen. The business owner did not know whether a customer took it or an employee took it. Indicate whether the loss was because of a: a) burglary b) robbery c) theft d) mysterious disappearance e) fidelity

d) mysterious disappearance

Assume you own a commercial building valued at $100,000. If you were to insure the building under a property policy containing a 75% coinsurance clause and you were to insure the building for $50,000, how much would you anticipate receiving as a settlement for a $30,000 loss? a) $30,000 b) $6,000 c) $20,000 d) none of the above

d) none of the above

Hooligans break into Harry's pickup and steal the CB radio built into the dash. Which of the following HO forms would provide him with coverage for this loss? a) HO-2 b) HO-3 c) HO-5 d) none of the above

d) none of the above

Which of the following conditions of the property policy, if any, describes the procedure for an insured to use in a disagreement with the insurance company about the amount of a loss? a) pro rata liability b) subrogation c) audit d) none of the above

d) none of the above

Automatic increase in insurance is an endorsement for the dwelling policy that increases the amount of insurance by an annual percentage to... a) increase the effects of inflation b) reduce the chance of depreciation of the property c) increase the chance depreciation of the property d) offsets the increase of inflation

d) offsets the increase of inflation

A homeowners policy provides liability coverage for which of the following? a) bodily injury only b) property damage only c) bodily d) property damage and bodily injury

d) property damage and bodily injury

Gertrude Frump has an insurable interest in all of the following EXCEPT... a) improvements she made to her apartment b) the life of her husband, Lurch c) her automobile d) property her uncle might leave her

d) property her uncle might leave her

Which of the following would be considered a risk sharing arrangement? a) stock b) mutual c) surplus lines d) reciprocal

d) reciprocal

Which of the following is part of the formula for calculating the Actual Cash Value of a building? a) fair market value b) stated value c) purchase cost d) replacement cost

d) replacement cost

When an insurance company sues a negligent third part to recover a loss payment, paid to an insured, the company is exercising its right of... a) assignment b) arbitration c) indemnification d) subrogation

d) subrogation

Which of the following actions of classifying risk is prohibited? a) surcharging an auto policy because of a series of traffic violations b) charging a rate for auto insurance based on the record of four drivers c) establishing a property insurance rate based on the number of people living in the household d) surcharging property insurance to an individual based on the individual's developmental disabilities

d) surcharging property insurance to an individual based on the individual's developmental disabilities

One of the main advantages for having Boiler and Machinery is the policy pays for... a) losses of objects in transit b) an accident caused directly or indirectly by earth movement c) losses due to ordinance or law d) the inspection service by the insurance company

d) the inspection service by the insurance company

The declarations section of an insurance policy provides which of the following? a) the conditions and exclusions b) the insurance statements about the condition of the property c) specifications for the payment of the loss d) the insured's name and address and the time duration of the policy

d) the insured's name and address and the time duration of the policy

For the purpose of insurance, risk is defined as... a) the guaranty of loss b) the cause of loss c) an event that increases the chance of loss d) the uncertainty or chance of loss

d) the uncertainty or chance of loss

In property insurance, insurable interest must exist at the... a) inception of the policy b) time of premium payment c) time of application d) time of loss

d) time of loss

All of the following are excluded under the causes of loss earthquake form EXCEPT... a) enforcement of any ordinance or law b) off-premises power failure c) government seizure of property d) volcanic eruption

d) volcanic eruption

All the below are additional coverages in a homeowners policy EXCEPT... a) reasonable repairs b) loss assessment c) debris removal d) watercraft

d) watercraft

All of the following are essentials of a contract EXCEPT a... a) acceptance b) consideration c) offer d) written instrument

d) written instrument