Chapter 8: Miscellaneous Personal Lines Coverage

Coverage D - Increased Cost of Compliance on an NFIP flood policy has a limit of: A. $15,000 B. $20,000 C. $10,000 D. $30,000

$30,000

Under NFIP, the inundation of land may be the result of:

- Overflow of inland or tidal waters, such as a tidal wave generated by a hurricane. - Unusual and rapid accumulation or runoff of surface waters. - Mudslides or mudflow caused by accumulation of water. - Collapse or destabilization of land along a shoreline resulting from erosion or the effect of waves or currents exceeding normal, cyclical levels.

A Mobile Homeowners policy is most similar to: A. A Tenants policy B. A Homeowners policy C. A Travel Trailer policy D. A Personal Auto policy

A Homeowners policy

National Flood Insurance Program (NFIP)

A federal program created to help mitigate future flood losses through the use of building and zoning ordinances and by providing homeowners with access to affordable flood insurance protection.

Fair Access to Insurance Requirements (FAIR) Plan

A program that writes basic property insurance for those who cannot obtain coverage in the standard market or have been terminated in the voluntary market.

As a standard, what value are losses valued at for Inland Marine policies?

Actual Cash Value (ACV), but an agreed value option is available.

What do some insurers require for floaters at or before the policy is bound?

An appraisal with a description of the item and a statement of its value.

Inland Marine insurance is not typically used to insure which type of property? A. Stamps B. Jewelry C. Autos D. Cameras

Autos

Coverage Automatically Provided Under Most Boatowners Policies

Boatowners policies provide coverage for the insured's bodily injury and property damage liability, medical payments coverage for passengers, and physical damage coverage for the hull, motor, trailer, equipment, and accessories. Uninsured boaters' coverage is not automatically included, but that coverage is available at the insured's request.

Tenants of mobile homes may obtain insurance on which form? A. Basic Form (DP-1) Dwelling policy. B. Mobile Homeowners policy. C. Contents Broad Form (HO-4) Homeowners policy. D. Modified Coverage Form (HO-8) Homeowners policy, with the Mobile Home Endorsement.

Contents Broad Form (HO-4) Homeowners policy.

When a client's Homeowners policy application is rejected by an insurance company due to underwriting rules, an insurance agent may request coverage under which of the following? A. Write Your Own Homeowners Program B. FAIR Plan C. Assigned Risk Plan D. Joint Underwriting Association

FAIR Plan

Perils covered under the Fine Arts Floater:

Fire or Lightning, Explosion, Aircraft, Collision, Windstorm, Earthquake, Flood, Malicious Damage or Theft, Derailment or Overturn of a Conveyance.

Personal Jewelry Floater

Floater that insures scheduled jewelry, and some forms may also protect scheduled furs.

What is the Personal Inland Marine policy?

Form of coverage used to insure moveable property against direct loss. For property that is particularly at risk of loss, and other personal lines property policies may not provide coverage or may limit coverage to a specific amount of peril.

Assuming the required underlying policies are in place, a Personal Umbrella Liability policy would cover all of the following liability claims, except: A. Personal injury to an insured's neighbor. B. Injury to a third party after fuel escapes from a fuel system. C. Property damage to a neighbor's house after the insured accidentally drives through the dining room window. D. Bodily injury resulting from an auto accident caused by the insured.

Injury to a third party after fuel escapes from a fuel system.

Examples of items that could receive coverage under the Personal Articles Floater:

Jewelry, Furs, Cameras, Musical Instruments, Silverware & Goldware, Golfing Equipment, Fine Arts, Stamp Collections, Coin Collections.

After an earthquake damages an insured's property, an Earthquake policy would provide coverage for which of the following losses? A. Loss to awnings and outdoor antennas. B. Loss to furniture inside a structure held for rent. C. Loss to the insured's vehicles. D. Loss to retaining walls.

Loss to furniture inside a structure held for rent.

Which of the following is true regarding coverage provided by a flood policy written by the National Flood Insurance Program? A. Policies automatically include loss of use coverages. B. Coverage is available only for personal residential buildings. C. Coverage is available for crops and livestock for eligible farm properties. D. Losses to buildings and losses to personal property are subject to separate deductibles.

Losses to buildings and losses to personal property are subject to separate deductibles.

What basis are Inland Marine policies written under and what parameter of coverage?

Open Peril Basis with worldwide coverage.

Hull coverage on a Boatowners Policy provides which of the following? A. Open perils coverage, with losses settled on a replacement cost basis. B. Named perils coverage, with losses settled on a replacement cost basis. C. Named perils coverage, with losses settled on an actual cash value basis. D. Open perils coverage, with losses settled on an actual cash value basis.

Open perils coverage, with losses settled on an actual cash value basis.

The National Flood Insurance Program defines flood to include all of the following, except: A. Overflow of the insured's sump pump B. Unusual and rapid runoff of surface water C. Overflow of inland or tidal waters D. Mudflow caused by accumulation of water

Overflow of the insured's sump pump

An insured protects a small fishing boat under a Boatowners policy. Which of the following coverages is not provided? A. Personal injury liability coverage B. Bodily injury liability coverage C. Physical damage coverage for the hull, motor, and trailer D. Medical payments coverage for passengers

Personal injury liability coverage

What are the options an insurer has with the Loss to a Pair, Set, or Parts Condition?

Repair or replace the part to restore its pre-loss value, Pay the difference between the ACV before and after loss, or Pay for the value of the lost or damaged part.

An unendorsed Mobile Homeowners policy will settle losses to the mobile home on which basis? A. Stated value B. Market value C. Actual cash value D. Replacement cost

Replacement cost

The Cameras Floater may be used to insure all of the following items, except: A. Tapes and films related to a covered camera. B. Projection and sound equipment. C. A digital camera an insured who does photography in their spare time. D. Television cameras the insured uses when hired onto film projects.

Television cameras the insured uses when hired onto film projects.

When would the insured be required to pay the self-insured retention of a Personal Umbrella Liability policy?

The Umbrella drops down to act as the primary policy.

Fine Arts Floater

This floater insures private collections of fine arts. Items are only insured at a scheduled location, and if transferred, they must be handled by competent packers.

What are common exclusions of an Inland Marine Policy?

War, nuclear hazard, governmental action, intentional loss, and neglect.

A flood damages a single-family home that is in a community in the early stages of participation with the NFIP. What is the maximum amount a resident may receive for damages to personal property? A. Up to the Coverage C limit on the insured's Homeowners policy. B. No coverage is provided. C. $100,000 D. $10,000

$10,000

A single-family dwelling may purchase up to what amount of flood insurance in the NFIP's Emergency Program? A. $100,000 B. $35,000 C. $250,000 D. $50,000

$35,000

In order to be eligible for flood coverage, communities must join the NFIP within what time period after being notified by FEMA that the community is in a flood-prone area? A. 6 months B. 1 year C. 30 days D. 2 years

1 year

Which of the following may be insured on a replacement cost basis under the National Flood Insurance Program? A. 1- to 4-family residences and residential condominiums. B. Nonresidential or commercial buildings less than 3 stories high. C. Nonresidential or commercial buildings valued at less than $250,000. D. Single-family residences only.

1- to 4-family residences and residential condominiums.

When does NFIP coverage become effective after the applicant completes the application and pays the premium?

30 calendar days.

An insured is obtaining flood insurance through the NFIP, and their policy is written using the maximum available limits: $35,000 for the building and $10,000 for the contents. Which building would these limits apply to? A. A small business in the Regular Program. B. A 2-family dwelling in the Regular Program. C. An apartment building in the Emergency Program. D. A single-family dwelling in the Emergency Program.

A single-family dwelling in the Emergency Program.

Which of the following flood losses would not be covered under an NFIP policy? A. A water main in the street breaks, flooding the insured's basement. B. A home on a seaside cliff falls to the beach resulting from swift erosion. C. Mudslides cover a garage on the banks of a major river following torrential rains. D. Tidal waters flood a coastal home following a hurricane.

A water main in the street breaks, flooding the insured's basement

NFIP Participating (Eligible) Communities

Communities in flood-prone areas must join the NFIP within 1 year of being notified of their eligibility for flood protection. Communities that join are known as participating communities.

What is a Loss to a Pair, Set, or Parts condition?

Condition that in the event of a lost article that is part of a pair or set, or if it consists of several parts, lets the insurer elect what to do for recovery.

Under a policy written through the National Flood Insurance Program, all of the following statements about coverage are correct, except: A. Residential and nonresidential buildings may be insured by the NFIP. B. Mobile homes on a permanent foundation may be insured by the NFIP. C. Coverage only applies to direct loss to insured buildings and contents. D. Coverage becomes effective after a 24-hour waiting period.

Coverage becomes effective after a 24-hour waiting period.

The National Flood Insurance Program provides which of the following coverages? A. Coverage for wharves, piers, and docks. B. Coverage for direct and indirect losses. C. Coverage for trees, shrubs, and other plants, limited to $500 for any one tree, shrub, or plant. D. Coverage for property removed to protect it from flood, for up to 45 days at other locations.

Coverage for property removed to protect it from flood, for up to 45 days at other locations.

J has a Homeowners policy with a $300,000 policy limit. Since J moved into the home, J has begun collecting fine art pieces and purchases a Fine Arts Floater to add specific coverage for the collection. Which of the following statements regarding the Fine Arts Floater is correct? A. Coverage for newly acquired items automatically applies for up to 30 days. B. The fine art pieces must be scheduled on the floater in order to be covered. C. Coverage includes breakage of statuary caused by a flood. D. Coverage limits are based on market value.

Coverage includes breakage of statuary caused by a flood.

Under a Personal Umbrella Liability policy, all of the following statements are true, except: A. Coverage is provided for the insured's liability arising out of the ingestion of lead by a third party. B. Underlying insurance is required and must meet specific minimum limits. C. After underlying insurance is exhausted, coverage provided by the Umbrella is excess coverage. D. Certain losses excluded by the primary policy may be covered by the Umbrella policy.

Coverage is provided for the insured's liability arising out of the ingestion of lead by a third party.

Inland Marine policies are often referred to as?

Floaters

Moveable property is also known as?

Floating property

A stand-alone Earthquake policy does not cover damage resulting from: A. Mudslide B. Flood C. Landslide D. Land tremors

Flood

What is the Personal Articles Floater (Scheduled Articles Floater)?

It is used to insure individual items of personal property, which are listed on the policy.

Under flood insurance provided by the National Flood Insurance Program, which of the following statements regarding flood insurance is NOT correct? A. Coverage is provided for direct losses to property caused by the inundation of normally dry land. B. In order to qualify for a federal loan, a property owner located in a special flood hazard area must purchase flood insurance. C. No deductible applies to loss of contents. D. The federal government is the reinsurer for all flood losses.

No deductible applies to loss of contents.

Examples of items insured under the Fine Arts Floater:

Paintings, pictures, etchings, tapestries, art glass windows, statuary, antiques, manuscripts, porcelains, and other works of rarity or artistic merit.

An insured protects a small fishing boat under a Boatowners policy. Which of the following coverages is not provided? A. Personal injury liability coverage B. Medical payments coverage for passengers C. Physical damage coverage for the hull, motor, and trailer D. Bodily injury liability coverage

Personal injury liability coverage

D owns a 75-horsepower inboard motorboat. A Watercraft policy insuring the motorboat would cover which of the following losses? A. Physical damage to the motorboat resulting from a car accident while the boat is being towed. B. Bodily injury to a passenger while the watercraft was hired for charter. C. Damage to a parked car after D hits it with their truck while towing the watercraft. D. Hull damage to the motorboat that occurs during a lay-up period.

Physical damage to the motorboat resulting from a car accident while the boat is being towed.

A Personal Umbrella Liability policy does not provide coverage for which of the following? A. Personal injury liability B. Bodily injury liability C. Personal automobile liability D. Property damage liability to property in the insured's care, custody, or control

Property damage liability to property in the insured's care, custody, or control.

In which of the following circumstances would the insured be required to pay the self-insured retention of a Personal Umbrella Liability policy? A. There is a substantial change in the risk. B. The limits of the underlying policy have been exhausted. C. The insurance carrier is declared insolvent. D. The Umbrella drops down to act as the primary policy.

The Umbrella drops down to act as the primary policy.

P has a Homeowners policy with a $100,000 personal liability limit and a Personal Umbrella Liability policy with a $1 million limit. After P's Homeowners policy was cancelled, a liability claim results in P being liable for $250,000 in damages for bodily injury. How does the Personal Umbrella Liability policy respond? A The Umbrella policy covers the entire $250,000 claim, without P needing to pay a self-insured retention. B The Umbrella policy denies coverage because underlying insurance is not in place at the time of the claim. C The Umbrella policy covers $150,000 of the claim, without P needing to pay a self-insured retention. D The Umbrella policy drops down to provide primary coverage for the entire claim, subject to a self-insured retention.

The Umbrella policy covers $150,000 of the claim, without P needing to pay a self-insured retention.

NFIP Definition of Flood

The general and temporary condition of partial or complete inundation of land that is normally dry land. The flood must involve 2 or more acres of insured's land, or both the insured's property and an adjacent piece of property.

K has an unendorsed Special Form Homeowners policy with a $200,000 limit of personal liability, and a Personal Umbrella Liability policy with a $1 million limit. A suit is brought against K by a local business, claiming that K slandered the business on social media and caused business to decline. How will K's Personal Umbrella Liability policy respond? A. The policy does not cover claims made against K for personal injury. B. The policy will only pay damages owed to the business that are in excess of $200,000. C. The policy drops down to act as primary insurance, and K must pay a self-insured retention. D. Any damages covered by the policy as excess insurance will be subject to a high deductible that K must pay.

The policy drops down to act as primary insurance, and K must pay a self-insured retention.

Cameras Floater

This floater insures personally used cameras, as well as any related projection equipment, sound equipment, discs, films, tapes, and other accessories. Coverage for newly acquired cameras is provided for 30 days and may continue if the insured reports the items and pays an additional premium. Coverage is limited to 25% of the amount of insurance for cameras for $10,000, whichever is less.

Most Boatowners policies will automatically provide all of the following coverages, except: A. Hull coverage B. Uninsured boaters C. Bodily injury and property damage liability D. Medical payments

Uninsured boaters

Under a Personal Umbrella Liability policy, coverage could be provided for liability arising out of: A. Lead contamination on the insured's property. B. Unpaid acts of the insured, who is acting as a board member of a nonprofit. C. The transmission of a communicable disease from the insured to a third party. D. Acts of the insured, who is acting as a salaried director of a corporation.

Unpaid acts of the insured, who is acting as a board member of a nonprofit.

For an antique insured under a Personal Articles Floater, coverage would not be provided for damage caused by: A. Vandalism caused by a guest B. Theft C. Wear and tear D. Flood

Wear and Tear

Common Exclusions of the Personal Articles Floater:

Wear and tear, deterioration, inherent vice, insects, or vermin.

Which of the following consumers would have personal injury liability coverage? A. D, who has an unendorsed Broad Form Dwelling policy. B. G, who has a Special Form Dwelling policy with the Personal Liability Supplement. C. Q, who has an unendorsed Comprehensive Form Homeowners policy. D. X, who has a Personal Umbrella Liability policy.

X, who has a Personal Umbrella Liability policy.

Under a Boatowners policy, which of the following is correct about the deductible? A. The policy includes one deductible for collision losses and another deductible for other than collision losses. B. The deductible only applies to liability claims. C. Watercraft policies do not have a deductible. D. The policy's deductible applies per occurrence.

he policy's deductible applies per occurrence.