AMFAM Property Exam
An insurance company may examine and audit a commercial package policy (CPP) insured's books and records for up to
3 years
Under the homeowners policy, in order to receive replacement cost on a partial loss, the amount of insurance carried must be at least
80% of replacement cost
An individual who owns and lives in a condominium can obtain broad coverage for personal property in the condo under which homeowners form?
HO-6
Which of the following businesses would best be written on a businessowner policy?
Hardware store
What is the purpose of the ordinance or law coverage?
This additional coverage provides an additional amount of insurance for the increased costs of repair due to zoning laws.
The difference between additional and optional coverages on a businessowners policy is
optional coverages usually require an additional premium
The chief officer of an insurance department may issue all of the following penalties to licensees who engage in unfair or deceptive practices EXCEPT
order imprisonment for willful violators
Condominium association coverage forms insure all of the following against direct physical loss or damage EXCEPT
personal property owned, used, or controlled by the condo unit owner
Which of the following is NOT included in the Nationwide Marine Definition?
personal shipments
Who is responsible for enforcing state insurance laws and regulations?
the Commissioner, Director, or Superintendent
The commercial package policy interline endorsements
are those endorsements that apply to more than one coverage form
The maximum limits for flood insurance coverage under the regular program is
$250,000
The insured's home is covered by an HO-3 policy. Two years ago, the insured bought the home for $58,000. Today, its replacement value is $60,000. How much Coverage A does the insured need to qualify for replacement cost coverage?
$48,000
What is an authorized insurer?
A company that is approved by the state's department of insurance to transact insurance business in the state.
What type of clause protects a lender when an insured purchases a new car?
A loss payable clause
An agent's license can be terminated for which of the following reasons?
After receiving verbal permission, the agent signed the insured's name on the insurance application.
What type of policy would cover lost revenue for a business that is forced to close during a period of restoration after a covered physical damage loss?
Business income
Which part of the dwelling property policy would cover lost rental revenue if the dwelling was being used as a rental property?
Coverage D
The extra expense coverage form provides
Coverage that will permit the insured to continue in business without interruption following a property damage loss.
Which part of the insurance contract contains information about the location of the insured property?
Declarations page
A businessowners policy provides which of the following crime coverage parts?
Employee theft
Which of the following is NOT a condition that appears in the commercial property conditions form?
Extended reporting period
What is the basic difference between the dwelling DP-2 and DP-3?
The DP-3 provides open peril coverage on the dwelling and other structures.
An insurance broker has contacted an insurance agent in attempt to place a large homeowners policy. When an insurance broker is involved, who does the agent legally represent?
Insurer
In an insurance transaction, who does a licensed agent legally represent?
Insurer
Claire tells a client that her homeowners policy covers earthquake, when it does not. What unfair practice has she committed?
Misrepresentation
Which of the following statements about the standard mortgage clause is TRUE?
Nothing the insured does can prevent the mortgagee from collecting under the policy.
Which of the following actions is considered rebating?
Offering a client anything of value for purchasing insurance.
When would misrepresentations in an application be a basis for voiding an insurance policy?
Only if they were material misrepresentations
What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy?
Open peril policy
Who are the owners of a mutual insurance company?
Policyowners
Which of the following statements is TRUE regarding the homeowners policy?
Property coverage is broken down into dwelling, other structures, personal property, and loss of use.
What is the meaning of actual cash value (ACV)?
Replacement cost, less depreciation
Which of the following property policy forms should be used when it is difficult to provide the insurance company with an accurate statement of values because of fluctuations in inventory from month to month?
Reporting form
Self-insurance is an example of what type of risk management?
Retention
Temporary, short-term evidence of coverage is provided by
a binder
What type of insurer pays dividends that are taxable and not guaranteed to shareholders?
a stock insurer
A voluntary relinquishment of a known right is called
a waiver
The method used to determine the value of a loss, should the adjuster and the insured disagree, is called the
appraisal method
The BOP Coverage B protects against loss to
business personal property
The conditions section of an insurance policy
describes the duties of the insured and the insurance company
The utility services (direct damage coverage) endorsement for the BOP provides coverage for
direct damage to insured property caused by utility failure
Dwelling policies may be used to insure all of the following EXCEPT
farm dwellings
The attempt to restore an insured to his pre-loss condition is known as
indemnification
An insurance policy that contains unclear language will be
interpreted against the party who wrote the contract
Flood insurance covers all of the following EXCEPT
leakage of pipes
In property insurance, an insurable interest
must be present at the time the policy is written and also at the time of loss
The Fair Credit Reporting Act
obligates insurers that use a third-party source to acquire credit information to inform applicants who have been denied coverage of the identity of that source
Under the commercial package policy, the person whose name is listed first in the declarations and is assigned certain responsibilities and obligations is
the first name insured
The farm covered causes of loss-broad form includes all of the following risks EXCEPT
voluntary parting with covered livestock