IN insurance practice quiz
Which of the following Dwelling insuring agreements would be included on a DP-3 form but not on a DP-1 form?
"Additional Living Expenses"
Charlie has her house covered by a DP-1 form with a $50,000 Coverage A limit. There are no endorsements attached for a deductible or any other coverage. When it is damaged by a fire, Charlie is provided how much coverage for "Additional Living Expenses"?
$0
Dan insures a home for adequate limits under a DP-2. If a flood causes $1,000 in damage, what is the maximum the insurer will pay, disregarding deductibles?
$0
The insured has suffered a severe storm and some of his trees, shrubs, and plants are heavily damaged by the wind. How much coverage could the insured expect to receive for his claim under his DP-3 Dwelling policy?
$0.
The insured has suffered roof damage as a result of a tornado. He makes temporary repairs until permanent repairs can be made. He spends $1,500 for this work. How much, if any amount, will the DP-2 Dwelling policy pay on the repairs?
$1,500
The insured carries an unendorsed DP-3 dwelling policy on his home and personal contents. While traveling abroad someone broke into the home and stole $200 in cash, a shotgun valued at $1,000, and other household items valued at $2,000. Damage caused by the burglars is $1,500. Assuming no deductible applies to their coverage how much would be paid?
$1,500.
If the insured carries a DP-2 Dwelling form and insures the dwelling for 80% of its replacement cost value (the co-insurance requirement), what will he be paid if his 30-year-old roof sustains $10,000 in damages (disregarding any deductible)?
$10,000
Under a standardized DP-2 or DP-3 policy, what is the maximum that would be paid for additional living expenses if Coverage A was $60,000?
$12,000.
A commercial building with a replacement cost value of $400,000 is insured under a Commercial Property policy for $240,000. An 80% coinsurance clause applies according to the policy conditions. A $20,000 loss to the building has occurred. Disregarding any deductible, how much will the insured receive on this claim?
$15,000
Roxanne has her home covered under a DP-2 policy. She regularly works on her laptop computer at the bar in her kitchen. One day she decided to go out for lunch, leaving her laptop plugged in and turned on. While she was out, the electrical cord attached to her laptop began to short out and create sparks. One of the sparks fell on a dish towel Roxanne had left on the bar and it caught fire. This led to a larger fire that caused extensive damage to Roxanne's kitchen. The damage caused to the kitchen came to $15,000. The laptop was destroyed and it's ACV was $1,800. The policy did not have a deductible form attached. How much will be paid on this claim?
$15,000
Jewell has filed a lawsuit because she was injured by a negligent party. During the court proceeding, it is determined that Jewell was 10% negligent in her own injuries, but nonetheless the award for damages was set at $22,000. Jewell's state uses the pure comparative negligence standard to compute damage awards. Therefore, Jewell's damage award will be reduced by:
$2,200.
How much coverage is available for the theft of firearms under the Broad Theft endorsement to a Dwelling policy?
$2,500.
Under the special limits of liability for the "broad" or "limited" theft endorsement to a Dwelling policy, how much coverage is available for the theft of money?
$200
An insured carries property insurance with a limit of $25,000 and an 80% coinsurance requirement. The covered building, however, is worth $40,000. How much would she collect in the event of a total loss?
$25,000
Hamish has covered his antique automobile with a loss settlement amount that is stated in the policy of $55,000. The ACV of the vehicle is $32,000, but Hamish insured it for more because of his emotional attachment to the car. The policy deductible is $1,000. Hamish is driving his beloved automobile to an antiques car show one afternoon, when he is distracted by another antique vehicle and crashes into a brick retaining wall. Hamish's antique car is a total loss. Which of the following is the amount he should receive for his claim?
$31,000.
Brian owns a commercial building worth $600,000. When Brian purchases insurance to cover his building, he sees that the policy includes an 80% coinsurance clause. Brian must purchase at least _________ of coverage in order to be paid the full amount in case of a partial loss.
$480,000
An insured has his home covered under Dwelling policies with three different insurance companies. Company A provides 50% of the coverage, Company B provides 45% of the coverage, and Company C provides 5% of the coverage. When settling a claim for $10,000 worth of damage to the dwelling, what will Company C pay?
$500
An insured is covered under a DP-2 broad form Dwelling policy. A water pipe has frozen and burst and the insured has suffered floor and ceiling damage in his two-story home. The cost to remove and replace the walls to get to the pipe is $300. The cost to repair the floor is $400. The pipe that burst must now be replaced with a more expensive option to meet newer building codes. The cost to replace the pipe is $200. How much will the insurer pay?
$700. form does not cover pipe that burst and caused damage but will cover other damages
Under a standardized Dwelling form, a loss by a covered peril for Improvements, Alterations and Additions is covered for up to
0% of the Coverage C limit of liability
Kari has her home covered under a DP-3 form and has suffered a loss that will require major repairs. How much coverage does she have to comply with laws causing an increase in costs due to new regulations requiring newer plumbing materials be used when the repairs are made?
10% of the Coverage A limit as additional insurance
Jason has his home covered by a Dwelling policy with Coverage C included. When he transports covered property temporarily off the premises, it is destroyed by fire. How much coverage does Jason have to cover his destroyed property?
10% of the Coverage C amount.
The standardized Dwelling forms consider all eruptions of a volcano within a __________ period to be a single "occurrence".
72-hour
Which of the following is NOT excluded under Coverage C of a Dwelling policy?
A canoe used on the premises by the insured
A standardized Personal Automobile policy contains all of the following sections/parts, EXCEPT:
A common Conditions section applying to all coverage parts
Which of the following initiates a lawsuit to deal with a liability insurance claim dispute?
A complaint
All of the following are types of businesses that would be covered by the "Permitted Incidental Occupancies" endorsement to a Dwelling policy, EXCEPT:
A dog grooming business with a receptionist and 3 groomers employed by the named insured
The standard Dwelling coverage forms may be used to cover all of the following, EXCEPT:
A farm house
A defendant in a lawsuit has been found negligent. Due to this finding, the plaintiff has been awarded damages for pain and suffering. This means the plaintiff has received:
A general damage award.
Sam the shopkeeper mops the floor of his store and forgets to set the "Caution: Wet Floor" sign in the area to warn his customers. Sarah walks through the store a few moments later, slips on the floor and injures her arm and leg. This is an example of:
A negligent tort.
Which of the following could be considered "your covered auto" under a standard Personal Auto policy?
A newly acquired car reported to the insurer..
Which of the following losses would be covered by the EC peril of "Windstorm or Hail" under a Dwelling policy?
A roof that suffered damage in a tornado..
The amount it would cost to repair or replace property minus depreciation, is the definition of:
Actual cash value
Which of the following BEST describes a tort?
An act causing harm to an innocent party for which a civil remedy is provided through the payment of monetary damages.
The "Sudden and Accidental Tearing Apart, Cracking, Burning or Bulging" broad form peril applies to all of the following, EXCEPT:
Any structural wall of the covered dwelling or other structure
Alec goes to an amusement park and rides a roller coaster that was designed to flip the riders upside down. Alec is taller than the average person so when the roller coaster flips, he hits his head on the safety bar. After receiving medical care, Alec files a claim against the amusement park, seeking payment for his medical bills, pain and suffering. What defense against negligence would the amusement park most likely use to deny this claim?
Assumption of risk
A dwelling or building constructed of modified fire resistive materials has a fire resistance rating of:
At least 1 hour
In which of the following cases of alleged negligence would the defendant not be legally liable?
Bill was restoring an antique auto at his auto store's garage when Jeff drove by the garage. Jeff slowed his car and looked over his shoulder to admire the antique car. Suddenly his car struck a telephone pole. Jeff sues Bill for damages.
The ACV settlement under a property insurance policy may be determined using "broad evidence rule", which means that the loss is valued:
By establishing the value of the property using any evidence a court finds relevant.
Which of the following is NOT an "other coverage" of the DP-1 form?
Collapse.
Which of the following statements is NOT TRUE regarding "common law"?
Common law is codified law.
Danielle has elected to purchase and attach the "Automatic Increase in Insurance" to her Dwelling policy. Which of the following coverages of the policy will be affected by this endorsement?
Coverages A & B
A liability policy written on an "occurrence" form:
Covers a liability claim when the occurrence took place during the policy period, regardless of when the claim is filed
Under the DP-3 special form, which of the following losses would NOT be covered?
Damage to the dwelling that is caused by an infestation of mice
Which of the following statements regarding the eligibility requirements for coverage under a Dwelling policy is TRUE?
Dwellings owned by corporations or other business entities are eligible..
Coverage D of a Dwelling policy provides coverage for:
Fair Rental Value.
Which of the following is an "other coverage" provided on a DP-1 form?
Fire Department Service Charge
Monique's house is covered in brick veneer. Monique's house is which of the following types of construction?
Frame.
A method of replacing damaged property with something not exactly like the damaged item, but will perform in a similar fashion is known as:
Functional replacement cost
All of the following are functions of the standard mortgage clause in a property insurance policy, EXCEPT:
Guarantees that the mortgage payments will be made by an insurance policy, if the insured does not make the payments.
Bill was sued and the court determined that he was negligent. This means
He failed to do what a reasonably prudent person would do in the same circumstance
Torts that can be covered by insurance policies include all of the following, EXCEPT
Intentional torts purposely committed to cause harm to another
Which of the following statements is TRUE regarding the DP-2 cause of loss form?
It automatically includes the EC perils, V&MM coverage, and the broad form perils
Which of the following statements is CORRECT regarding the Building Ordinance or Law endorsement to a Dwelling policy?
It creates a new coverage on the DP-1 policy.
When the "Building Ordinance or Law" endorsement is added to a DP-2 policy:
It increases coverage above the automatic 10% coverage already provided
Which of the following statements is TRUE regarding the DP-3 special form?
It provides open peril coverage on the structure and named peril coverage on the personal property..
Mike purchased a policy several years ago to cover him for liability. Last year, Mike determined that the limits of his liability policy were not high enough to cover him adequately should a loss occur, so he purchased an excess liability policy to provide more coverage. Mike experiences a loss, and discovers that his underlying liability policy had expired before the loss, but his excess liability policy is still in effect. How will this loss be paid?
It will be denied, due to nonconcurrency
Tort law applies to all of the following, EXCEPT
Liability arising from breach of contract..
Which of the following is NOT a general exclusion of all the Dwelling policy forms?
Lightning
Which of the following would be considered compensatory special damages paid to an injured party when the insured is negligent and causes the injury?
Lost wages
Max has his home covered under a DP-2 form. During a storm, a large oak tree in Max's yard splits in two and one side of the tree falls against the back wall and roof of the covered dwelling. Which of the following accurately describes the coverage that will apply to Max's loss?
Max will be covered for the damage to both the exterior of his dwelling and the interior of his dwelling
For a liability policy to pay a claim, the person who is legally liable:
Must be an "insured" under the policy
Dana lives in a state that has passed a Valued Policy Law (VPL). This means that insurers issuing property policies in the state:
Must pay the full limit of the policy, stated on the Declarations page, in the event of a total loss..
Using the modified comparative negligence standard, a plaintiff in a lawsuit who is 60% at fault for her injuries will receive:
No award.
A type of insurance that permits an insured to collect from his/her own insurance company, without proving the negligence of a third-party, is known as:
No-fault
All of the following are duties of the insured after they cause a liability loss, EXCEPT:
Notifying the insurance company of the injured third party
Which of the following terms best describes an accident including continuous and repeated exposure to similar harmful conditions?
Occurrence.
All of the following statements are TRUE regarding the Broad Theft coverage endorsement to a Dwelling policy, EXCEPT:
Off-premises coverage can be purchased by the named insured for a tenant's personal property
The penalty for failure to satisfy a coinsurance requirement of a property insurance policy is that:
Only a portion of a partial loss will be paid
All of the following are factors in proving negligence, EXCEPT:
Others involved.
Which of the following would be considered "general damages" that could be awarded to a plaintiff in a negligence case?
Pain and suffering
Aiden is reimbursed by his insurance company for the cost of a new sofa, after a 10-year-old sofa is destroyed by fire. Which of the following best describes the loss settlement method used in this situation?
Replacement cost value
Which of the following loss valuations can be stated as "we agree to pay the cost to repair or replace without deduction for depreciation?"
Replacement cost.
In a liability policy, the limits of coverage can be expressed as all of the following, EXCEPT:
Restricted
The purpose of the appraisal clause in a property insurance policy is to:
Settle disputes concerning the amount of a loss
What type of liability is specifically imposed by statutory law?
Strict liability.
Wyatt is a blasting contractor who set off a blasting charge, damaging several buildings in the area and causing severe bodily injury to several people. Which of the following types of liability apply in this scenario?
Strict liability.
What type of liability is imposed by law without regard to fault on those participating in certain activities or owning certain things that are considered especially hazardous?
Strict/Absolute
Which of the following is the endorsement that may be attached to a Dwelling policy to increase the amount of insurance coverage necessary to keep pace with increasing market prices?
The "Automatic Increase in Insurance" endorsement
Which of the following Dwelling Insurance forms is also referred to as the "Dwelling Fire" form?
The DP-1 form
Which of the following Dwelling forms provides "open peril" coverage for dwellings and other structures?
The DP-3 special form
Tori owns a cabin in the Ozark Mountains that she rents to Vincent. Tori has the cabin covered under a DP-2 policy. One cold evening, Vincent started a large fire in the cabin's fireplace and left the room to start dinner in the kitchen. Vincent didn't realize that he forgot to open the chimney flue before starting the fire and by the time he came back into the living room, it was completely filled with smoke. Vincent immediately opened the doors and windows to "air-out" the cabin but when the smoke cleared, there was extensive soot damage to the walls, ceilings and furnishings in the room. Which of the following statements is true regarding how this claim will be handled?
The claim will be paid because the DP-2 extends the peril of "smoke" to cover smoke damage from a fireplace
The DP-1 basic form peril of "internal explosion" will cover which of the following losses?
The explosion of a furnace that the insured owns, inside the covered dwelling.
Which of the following losses would be covered under the standard Dwelling policy optional coverage Vandalism & Malicious Mischief (V&MM)?
The graffiti painted on the siding caused by a gang in the neighborhood while the insured was out for the evening.
Following the payment of a claim, the salvaged property becomes the property of
The insurer
When the loss settlement condition under a property insurance policy indicates that the claim will be settled at the "agreed value", which of the following is TRUE
The insurer will pay the value that was agreed upon and scheduled in the policy.
Under a liability policy, "supplementary payments" include all of the following, EXCEPT:
The negotiated settlement
Patrice has received a reduced payment for her insurance claim and the explanation states that the reduction was due to the "obsolescence" of the damaged property. Which of the following best describes the reason for the reduction in the claims payment?
The property that was destroyed was obsolete.
A requirement that a plaintiff file a lawsuit within a specific period of time after the cause of the lawsuit has occurred, which is oftentimes when the injury occurred or was discovered is known as:
The statute of limitations.
Under the DP-3 special form, which of the following would be covered?
Theft of outside lighting attached to the dwelling..
All of the following statements are TRUE with regard to punitive damages, EXCEPT
They are awarded in such a high amount that the court will not award compensatory damages to the plaintiff because they are no longer necessary
A FAIR Plan is created in a state:
To provide property policies for purchase in the residual insurance markets to those whose properties are located in "high risk" areas preventing them from obtaining insurance in the usual markets.
Flora designs and makes custom dresses out of a small room at the back of the home she owns. She has the home covered by a Dwelling policy with the Permitted Incidental Occupancies endorsement attached. She has boxed up several dresses and stored them in the back room to be shipped out later when fire breaks out and burns them up. How much coverage will Flora's endorsed Dwelling policy provide?
Up to $10,000
Which of the following statements is CORRECT regarding the coverage endorsement for grave markers under a Dwelling policy?
Up to $5,000 of coverage is provided for grave markers and mausoleums on the covered premises described in the policy
Which of the following terms means "liability through another person"?
Vicarious/Imputed liability
Under a liability policy the insurance company will pay damages on behalf of an insured when
When it is established that the insured is legally liable..
A lawsuit has been settled in a state where liability is settled according to the comparative negligence rule. The court rules that the plaintiff was 15% negligent in her own injuries. Her damages:
Will be reduced by 15%
Under a standardized Dwelling policy, when an insurer opts to repair or replace the damaged property with like kind and quality, they must do so:
Within 30 days of receiving the insured's proof of loss
All of the following statements describe an element that must be present in determining the proximate cause of a liability loss,
an uninterrupted sequence, an unbroken chain of events, a natural and continuous sequence
Actual cash value is defined more recently as "replacement cost less a deduction that reflects" all of the following
depreciation, age, condition
Which of the following buildings would be considered "vacant" according to the provisions of a standardized property insurance policy?
no furniture or occupants for 60 days
