Property and Causalty
Which of the following is used in the formula for calculating the actual cash value of a property? A Stated value B Fair market value C Agreed value D Replacement cost
Replacement cost
In property insurance, actual cash value is defined as which of the following?
Replacement cost at the time of the loss, less depreciation
When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as
STATED AMOUNT
Under businessowners policy Section I, if an insurer wants to nonrenew a policy for nonpayment of premium, how many days before the expiration date must the insurer notify the mortgageholder?
10 DAYS
A contract for the transport of goods between the shipper and the carrier is called
A bill of lading
What type of liability would a person who owns wild animals have? AImplied
Absolute
An installation floater is used to insure
Appliances intended to become a permanent part of the building.
The part of a property policy that shows the amount of insurance, premium, and policy term is the
Declarations.
A Mobile Homeowners Policy is structured the same as a
Homeowners Policy.
The policy conditions define
How parties to the contract must act following a loss.
An additional loss that results from a direct loss of property is called a/an
INDIRECT LOSS
Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?
Indemnity
An additional loss that results from a direct loss of property is called a/an
Indirect loss.
Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Law of large numbers
A policy condition that states if a policy is broadened with no additional premium, then the expanded coverage will be automatically applied to all policies of the same type is known as
Liberalization clause.
In case of a loss, the indemnity provision in insurance policies
Restores an insured person to the same financial state as before the loss.
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called
Specific coverage.
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called
Specific coverage. One location is insured for a specific amount of insurance on the structure and contents.
Peril is most easily defined as
The cause of loss insured against.
When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be
The proximate cause.
Personal business property out in the open is covered under commercial property policy only while
Within 150 feet of the described premises.
Which of the following coverages in dwelling and homeowners policies is for indirect losses? a)Contents b)Loss of use c)Dwelling d)Structures
b)Loss of use
Which of these is defined as the maximum limit of coverage available under a liability policy during a policy year, regardless of the number of claims that may be made or the number of accidents that may occur?
Aggregate limit of liability
Which of the following is covered under the Mail floater of a Commercial Inland Marine policy ONLY if is sent by registered mail?
Currency and unsold travelers checks
A unique feature in a bailee form is that it covers
Customers' property whether or not the insured has been negligent.
A beauty parlor burns to the ground. What type of loss is this to the owner?
Direct Damage caused by a peril that is insured against is classified as direct loss.
0. Losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected is the definition of which of the following terms?
Occurrence
In a watercraft policy, which coverage part will respond to a claim for damages for bodily injury or property damage for which the insured becomes legally liable because of a watercraft accident?
Part A
On a DP-3 Dwelling Property Special Form policy, the coverage provided for personal property is
The same as provided on the DP-2 Broad Form.
When an insurer receives a written complaint from a policyholder, the insurer must respond to the complaint, in writing, within
21 DAYS
What are common carriers required to issue to every shipper that it transports goods for?
A uniform bill of lading
Which of the following dwelling policy forms primarily insures a structure on an actual cash value basis? a)DP-1 b)DP-2 c)DP-3 d)All DP forms
A) DP-1
The Industry Placement Facility is
An organization of insurers that divides policies among companies participating in the Illinois FAIR plan.
Which coverage form would provide coverage for all incoming and outgoing shipments?
Annual transit
In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation? a)Market value b)Agreed value c)Replacement cost d)Stated amount
B AGREED VALUE
Which of the following is NOT found in a commercial package policy? A Interline endorsements B Certificate of authority C Common policy conditions D Common policy declarations
B Certificate of authority
In which of the following situations would the jewelers block extension cover a loss? a)A jeweler agrees to exhibit a necklace and earrings set in a showcase away from the premises. The case is broken into, and the set is stolen. b)An employee of a jewelry store is wearing a cameo brooch and ring set to display to customers. During the day, she discovered the brooch has fallen off, and she can't find it. c)A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged. d)A jewelry store is robbed while displaying bracelets and necklaces at a public exhibition. Property in transit by registered mail is covered under the jewelers block extension.
C
Combined single
Combined single is a single dollar limit of liability applying to the total of damages for bodily injury and property damage combined resulting from one accident or occurrence.
Who will transport the property of anyone who hires them?
Common carriers
An insured's business is damaged because of a fire, and he is forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this?
Consequential
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
Consideration
Which of the following dwelling coverages would provide coverage to a garage not attached to the primary insured dwelling?
Coverage B
In what capacity does an insurance producer act in the conduct of the business when handling premium funds?
Fiduciary
A commercial property special form covers property in transit up to
Full replacement cost.
Replacement cost is defined as
Full replacement of property at its current cost, new and without reduction for depreciation.
The main difference between an HO-4 and an HO-6 is
HO-6 provides limited dwelling coverage as well as contents coverage.
To purchase insurance, the policyowner must have financial interest in the property being insured. This is known as
Insurable interest.
What type of information would be found in a policy's insuring agreement?
Renewal dates
Events in which a person has both the chance of winning or losing are classified as
Speculative risk involves the chance of gain or loss and is not insurable.
A property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use what loss valuation method?
Stated amount
The transfer of an insured's right to seek damages from a negligent party to the insurer is found in which of the following clauses?
Subrogation
The legal process that gives the insurer, after payment of a loss, the right to seek recovery from a third party that was responsible for the loss is known as
Subrogation.
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
Warranty
The extension of coverage under the Commercial Fine Arts Floater includes coverage for newly acquired property for a maximum of
$10,000.
Any person violating Illinois Premium Finance laws, if convicted, may be imposed a civil fine of up to
$2,000 each violation.
The minimum amount of reinsurance offered for a residence with Mine Subsidence coverage is
$200,000.
The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to
$250,000.
Which of the following defines the term controlled business?
Insurance written on the interests of the producer who solicits a policy
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become
Larger.
Under the dwelling policy, Coverage C - Personal Property is
Limited to covering a servant's property while at the insured location.
The purpose of the FAIR plan is
To make basic property insurance more available to Illinois residents.
An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?
$30,000 !This insured only carried 75% of the amount of insurance he had agreed to carry ($120,000 of the agreed $160,000), so the insurer will pay only 75% of the loss, or $30,000. If the insured had carried the required amount of insurance, partial losses would be paid in full. In the event of a total loss, the face of the policy would be paid. If the full amount is not carried, divide the actual amount carried by the amount that should be carried (the coinsurance amount), and multiply it by the loss.
If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person?
$50,000 The first limit shown ($50,000 in this case) is the most the policy will pay for bodily injury to any one person.
How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card?
$500
The Earthquake and Volcanic Eruption Endorsement added to Commercial Property policies consider all earthquake shocks as one earthquake if they occur within what maximum time period?
168 hours
All of the following statements concerning coinsurance are true EXCEPT A The insured agrees to maintain insurance equal to some specified percentage of the value of the property. B If the insurance carried is less than required, the insurance may not cover the whole loss. C The coinsurance formula will also be applied to total losses. D It is used to help adequacy and equity in rates.
C In the event of a total loss, the coinsurance clause does not operate and the face amount of the policy is paid.
An individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it?
Contractors equipment floater
Which of the following coverages in dwelling and homeowners policies is for indirect losses?
Loss of use
The insured's house is located one mile from the county's new landfill and across the road from the entrance of a rock quarry. It would cost $150,000 to rebuild the house if something happened to it, but when the insured tried to sell it, the best offer he received was $80,000. The insurance company will insure the house for only $80,000. What method of valuation is used to insure this property?
Market value
Which phrase best describes the lateral or vertical ground movement caused by a failure of man‑made underground mines?
Mine subsidence
An insured has a liability policy that sets the amount for all claims that arise from a single incident at $50,000. Which type of limit of liability does this insured's policy have?
Per occurrence sets the amount for all claims that arise from a single incident at a certain number.
Refusing to write property insurance only because of the geographical location is
Unfair discrimination.
The process of determining the premium charged and how much insurance is required for a particular loss is called
b)Loss valuation.
All of the following are conditions commonly found in the insurance policy EXCEPT: A Insuring agreement. B Cancellation and nonrenewal. C Subrogation. D Appraisal.
A Insuring agreement.
An insured relocated to another state for work. However, she still owns and insures a house in this state, but has had no one living in it for 3 months. She is also storing some furniture and clothes in the house. From an insurance standpoint, the insured's house is considered
Unoccupied.
A building is insured, but no one has lived or worked in it for 10 years. The building is completely empty of any furniture or personal belongings. From an insurance standpoint, the building is considered
Vacant.
An insured owns a building that is valued at $400,000. To comply with the 80% coinsurance provision of his insurance policy, how much should he insure the property for?
80% of the property's replacement cost or more The coinsurance clause states that in consideration of a reduced rate, the insured agrees to maintain a certain minimum amount of insurance on the insured property. In the event of a covered loss, insurance is designed to pay replacement cost minus depreciation.
All of the following are considered parts of the policy structure EXCEPT: A Provisions. B Exclusions. C Insuring clause. D Conditions.
A Provisions.
Losses caused by vandalism and malicious mischief are excluded under a homeowners policy if the dwelling had been vacant for more than
60 days.
The dwelling insured on HO-2, HO-3, or HO-5 forms is covered for replacement, provided that it is insured for at least what percentage of the replacement cost on the date of loss?
80%
All of the following are excluded in the equipment breakdown basic policy EXCEPT a)Explosion of steam boilers. b)Ordinance or law coverage. c)Business interruption. d)Loss of power, lights, heat, steam, or refrigeration.
A
The common policy condition is a modular part combined with other parts to create the contract. The common policy condition section contains provisions that are applicable to all lines of coverage that may be included in the policy. Which of the following provisions would be found in the common policy conditions section of the policy?
The first named insured may cancel the policy at any time by giving written notice to the insurer.
Losses that result from the freezing of a plumbing system while the dwelling is vacant would be EXCLUDED under a homeowners policy UNLESS
The insured had drained the plumbing system.
The purpose of the Inspection Bureau is
To inspect properties for which basic property insurance is being sought.
Which of the following best expresses the purpose of a stated value contract?
To pre-establish the amount of coverage available for property items that are difficult to value The value of the insured items is determined at the time the policy is written, not at the time of loss.
Insurable interest in a property policy must be proven
At the time of loss.
Insurable interest in a property policy must be proven
At the time of loss. Between the time a policy is issued and when a loss occurs, ownership may have changed, mortgages may have been put into place, etc. Therefore, in property and casualty insurance, insurable interest must exist at the time of loss.
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as
CONSIDERATION
For the purpose of insurance, risk is defined as
The uncertainty or chance of loss.
A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean?
There is no coverage.
When a parent is required to pay for damages caused by his or her children, this is an example of
Vicarious liability. When one party is held liable for the act of another party, it is called vicarious liability. Employers are responsible for employees acting within the scope of their employment. Parents sometimes are held responsible for the acts of their children.
What is the minimum amount of coverage that should be carried on an HO-2 on a home that was purchased four years ago for $75,000, which today has a replacement value of $100,000? a)$80,000 b)$100,000 c)$60,000 d)$75,000
a)$80,000
Which of the following types of valuation works best for property whose value does not fluctuate much?
Agreed value
An insured's 9-year-old son threw a ball, accidentally breaking a neighbor's plate glass window. The insured was found legally liable for the cost of replacing the window. This is an example of
Vicarious liability. Under vicarious liability, an insured may be held responsible for the acts of other family members or independent contractors engaged by the insured to perform work.