Questions & Answers to Review for the Property Insurance Exams

An insured owns a large dog. The first day he has to leave the dog home alone to go to work, the insured comes back to find his $400 couch torn apart, his $100 coffee table chewed up, his $50 window curtain shredded, and a $200 window pane shattered where his dog jumped through. The insured has personal property coverage under a special form dwelling policy. How much of this loss will the policy cover?

$0.

The broad theft coverage endorsement on the dwelling form specifies all of the following limitations EXCEPT:

$1,000 on the silverware.

An insured suffers a windstorm loss in which the insured's driveway is blocked by two of the insured's trees and two of the neighbor's trees. The total amount of the removal adds up to the following: three trees at $300 per tree, and one tree at $600. How much will the insurer pay for the loss?

$1,000.

An insured has a standard HO-4 policy with a $30,000 limit for personal property. While he was traveling, a fire in his hotel destroys clothes and luggage with a RCV of $10,000 and jewelry with a RCV of $10,000. A depreciation of 20% has occurred in both properties, how much will the insurer pay?

$16,000.

A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured's building, and $30,000 of expediting expenses, how much will the insured collect under the policy?

$175,000.

What is the resident producer license fee payable once every two years?

$180. It was recently updated to $215.

Which loss listed below would be fully covered by a homeowners policy?

$2,000 silver tea set stolen.

A grave marker was damaged by vandals. It would cost $3,000 to have the damage repaired. Under these circumstances, how much would a homeowners policy pay?

$3,000.

A covered watercraft was damaged in an accident. The ACV of the damaged property was assessed at $10,000. The cost of repairs was assessed at $5,000. The insured's watercraft policy is written with a $25,000 limit, how much will the insurer pay for coverage to damage to the watercraft?

$5,000.

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.

All of the following are special personal property limits under a homeowners policy EXCEPT:

$500 for business personal property on the insured premises.

Insured covered under a Mobile Homeowners Policy move their mobile home to prevent it from being damaged by a fire. What is the maximum amount the policy will pay for this?

$500.

A home is insured for $200,000 under an HO-3. Last week, the owner purchased a new home and began to move his personal property to the new residence. Last night, vandals did $8,000 to the property that had been moved to his new residence. Disregarding any deductible, how much will the HO-3 pay?

$8,000.

Firms must have producers that will be responsible for their compliance with state laws and regulations. What is the minimum number of producers that must be present in a given firm?

1.

In Illinois, any type of property or casualty insurance policy that is not being renewed because of nonpayment of premium requires an advance notice of how many days to the insured and a copy to the writing producer?

10 days.

Within what time period from the receipt must the insurer refund any premiums due to the insured?

15 days.

An insured with a homeowners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. The removal coverage applies for:

30 days.

The Director Informs a producer that its license has been terminated and immediately receives a request for the charges to be reviewed in court. Within what maximum number of days must the hearing be held?

30 days.

The removal coverage included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long?

30 days.

Under the dwelling policy, if an insurer chooses to repair or replace damaged or lost property, it will inform the insured within how many days of receiving proof of loss?

30 days.

For commercial property or casualty insurance policies, other than Ocean Marine, advance written notice of at least 60 days must be provided to the first named insured whenever the renewal premium will increase by __ or more.

30%

According to the loss payment condition in HO policies, losses must be paid within how many days of the insurer receiving proof of loss?

60 days.

Cancellation of a commercial lines policy for any other reason than nonpayment of premium requires how many days' advance written notice?

60 days.

When a commercial property insurance policy, in effect for more than 60 days is cancelled for an allowable reason, other than non-payment of premium, the insurer must give written notice to the first named insured of at least:

60 days.

According to business property coverage form vacancy condition, if a policy is issued to the owner of a building, the building will be considered vacant if what portion of the square footage is unused?

69%

How soon after a direct loss does the period of restoration for business income coverage under businessowners property insurance begin?

72 hours.

Which of the following would be covered by the broad theft endorsement on a dwelling policy?

A camera the insured has with him on vacation.

Which of the following would NOT be allowed to offer insurance advice for a fee or commission in this state?

A director of an insurance company.

Which of the following risks would be eligible for coverage under a dwelling policy form?

A duplex that is occupied by two families, each of which have a bedroom rented to a boarder.

When insurance is written on a dwelling form, which of the following types of property would be insured under Coverage B (Other Structures)?

A garage separated from the dwelling.

Which of the following coverages is NOT included in the basic dwelling policy?

Additional living expense.

Which of the following defines 'financing insurance premiums'?

Advancing monies directly or indirectly to an insurance company pursuant to the terms of an acquired premium finance agreement; Allowing 10% or more of a producer's or registered firm's accounts receivable to be more than 90 days past due.

The limited theft endorsement is intended for which type of property?

An apartment building in which the owner does not reside.

Which of the following could be covered by an HO policy?

An oriental rug in an on-premises apartment.

Dwelling policy Coverage C - Personal Property will cover all of the following EXCEPT:

Animals and birds.

If a loss occurs, the insured with a homeowners policy is required to do the following EXCEPT:

Arrange for an appraisal by an unbiased third party.

In equipment breakdown coverage, all accidents would be considered a single accident if they occur:

At a single location at the same time and from the same cause.

In the event that a premium finance agreement is cancelled or prepaid, the service charge or other allowable charge will be:

Be retained by the premium finance company.

Which of the following statements regarding coverage for the flood and earthquake perils is true?

Both flood and earthquake are excluded perils in all property policies.

Which of the following is NOT found in a commercial package policy?

Certificate of authority.

If an insurance producer knowingly and consistently converts fiduciary monies for personal use, the producer will be charged with a:

Class 4 felony.

The basic dwelling form (DP-1) provides all of the following coverages without endorsement EXCEPT:

Coverage for additional living expense.

Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy?

Damage to the dwelling caused by lava or dust from a volcanic eruption.

What does mine subsidence coverage include?

Damaged sewer line of public building caused by adjacent coal mine.

Which of the following is true of dwelling policy coverage?

Exclusions apply to all three policy forms.

Which of the following claims would be included under the dwelling policy?

Fire damage to the insured's rowboat stored in the attached garage.

Which of the following homeowners forms is designed to provide named peril coverage for personal property to individuals who rent an apartment?

HO-4.

A homeowner has misplaced some of her insured personal property and has no idea what may have happened to it. Which HO policy form would cover such a loss?

HO-5.

The main difference between an HO-4 and an HO-6 is:

HO-6 provides limited dwelling coverage as well as contents coverage.

Elaborate homes and those with detailed designs or decorative architecture with replacement costs greater than ACV or market value are insured on:

HO-8.

Policies covering fire and marine property may be canceled within 10 days following receipt of a written notice by the named insured if the insured building(s):

Have not been repaired, following a fire loss, within 60 days after an insurance settlement; Have been unoccupied for 60 consecutive days; Have not been serviced by heat, water or public lighting for 30 consecutive days.

Which endorsement adds coverage for employee use of automobiles in the insured's business and the insured's use of rented autos if no coverage is provided on a business auto policy?

Hired and nonowned auto liability.

Under which of the following conditions can broad theft coverage be added to a dwelling policy?

If the insured is owner-occupant of the dwelling.

Under a homeowners policy, all of the following information must be included in the insured's signed, sworn proof of loss EXCEPT:

Insured's income and net worth at the time of loss.

A structure may be eligible for coverage under the National Flood Insurance Program if it meets all of the following requirements EXCEPT:

Is entirely over water.

Which of the following is NOT true regarding the automatic increase in increase endorsement in dwelling policies?

It does not require additional premium.

All of the following are true of Coverage B - Other Structures in homeowners policies EXCEPT:

It must be added by endorsement to a homeowners policy.

How does the mobilehome endorsement affect the other coverage of law or ordinance in a homeowners policy?

It removes the coverage.

Which of the following types of property would be covered in homeowners coverage forms?

Landlord furnishings in an on-premises apartment.

Which of the following describes an insurer's responsibility for payment under a policy as stated in the common policy provisions?

Limits of liability.

With respect to the commercial package policy, an interline endorsement is one that:

May apply to more than one line of insurance that is included in the package.

What is the limit to the number of 90-day temporary licenses that a person may hold?

No more than 1 per lifetime.

A trust officer of a bank wants to counsel people on their life insurance policies, for a small fee. What licensure must the officer receive in order to do this legally?

None.

When does the coverage begin under the builders risk form?

On the date construction starts.

Which statement best describes agreement as it relates to insurance contracts?

One part accepts the exact terms of the other party's offer.

The HO-3 homeowners policy provides:

Open peril coverage on the dwelling and broad form coverage on personal property.

Which of the following would be covered under a building and personal property coverage form?

Outdoor sign.

Coverage for all of the following is found in Section 1 of a homeowners policy EXCEPT:

Personal liability

Valuable papers and records form provides coverage for the reconstruction of all of the following types of records EXCEPT:

Prepackaged software.

The equipment breakdown coverage form values loss on a/an:

Replacement cost basis.

According to the businessowners policy (BOP) definitions, which of the following does NOT mean valuable papers and records?

Securities.

On a property policy that provides mine subsidence coverage, the premium for the mine subsidence coverage must be:

Stated separately in the policy.

Who is covered by an HO-4 policy?

Tenants.

All of the following statements regarding personal property coverage in the homeowners program are correct EXCEPT:

The HO-3 policy covers the mysterious disappearance of personal property.

Theft coverage under an HO-8 is restricted to:

The actual cash value of what was stolen, with limits for certain classes of property.

Which of the following statements is CORRECT regarding business income coverage under the businessowners policy (BOP)?

The business income losses are payable for 12 consecutive months following the occurrence.

An insured was having a new home built. While digging, the contractor found it was necessary to blast the foundation in order to remove the rocks. The force of the blast broke several windows and some chinaware in a neighbor's home several blocks away. Who pays for this damage?

The contractor.

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.

Under the provisions of the business income coverage form, all of the following are true EXCEPT:

The insured is reimbursed for the loss from the date of loss to the date of restoration policy expiration date, whichever comes first.

Which of the following statements is correct regarding the debris removal coverage under the businessowners policy (BOP)?

The insured's limit of liability is 25% of the sum of the direct loss payment plus the deductible amount.

If the premiums collected by an insurer participating in the WYO flood program are insufficient to cover losses, which of the following would be true?

The insurer will be reimbursed for the excess costs by the NFIP.

The most the insurer will pay for a loss under a businessowners policy is:

The limit of insurance after the deductible is paid.

An insured's diner suffered a fire loss. In addition to this, the floor covering had to be replaced because of water damage. It took 4 weeks for the repairs to be completed. The insured's policy includes both direct & indirect loss coverage. What part of the loss is indirect loss?

The loss of income for the time the diner was closed.

The cancellation provision in a businessowners policy specifies all of the following EXCEPT:

The method of transferring the owner's rights.

All of the following are considered insured under the hired and nonowned auto liability endorsement added to a businessowners policy EXCEPT:

The owner of a nonowned vehicle.

In Illinois, when a fire policy is cancelled, the insured must be notified of his or her eligibility for insurance through the FAIR plan, UNLESS:

The reason for cancellation was nonpayment of premium.

All of the following are TRUE about the completion of prelicensing training EXCEPT:

The requirement can be fulfilled by completing training through lecture course, home study or online.

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.

Personal lines insurance policies which have been in force for 60 days or more may be cancelled for one or more of the following reasons, EXCEPT:

The writing producer no longer represents the insurance company that issued the policy.

All of the following are perils covered under the broad form dwelling policy EXCEPT:

Theft.

If an insurance policy has the additional coverage provision, how does it affect the policy premium?

There is no additional premium.

All of the following statements are true regarding fire department service charge additional coverage under the businessowners policy EXCEPT:

This coverage limit pays in place of the limit of insurance shown in the declarations.

What amount of coverage is provided on HO policies for watercraft?

Up to $1,500.

Which of the following would NOT be considered part of the insured location under the liability section of a homeowners policy?

Vacant farmland owned by the insured.

Besides the peril of earthquake, which other peril is covered by the earthquake cause of loss form under a commercial property policy?

Volcanic eruption.

According to the Insured Duties after a Loss provision in homeowners policies, if the insurer requires a signed, sworn proof o loss, the insured must provide within how many days?

60 days.

Which coverage form would provide coverage for all incoming and outgoing shipments?

Annual transit.

The difference in the contents coverage on an HO-3 and HO-5 is which of the following?

Contents are covered open peril on HO-5, and named peril on HO-3.

Which of the following exclusions would specifically fall under Coverage E in Homeowners insurance?

Contractual liability.

Which of the following is covered under a dwelling policy?

Fire caused by an earthquake.