ch. 2 sample questions
A building is insured for $200,000 under an agreed value policy. The policy has a $10,000 deductible and the agreed value of the building is $220,000. After suffering a $43,000 loss, the insurer will pay (rounded to the nearest $10)
A. $29,090.
Omega Holdings owns a building with an actual cash value of $200,000. The property is insured under a Building and Personal Property Coverage Form (BPP) with a building limit of $140,000, an 80 percent coinsurance clause, and a $1,000 deductible. The policy includes a Causes of Loss—Broad Form covering the building. The building suffers $80,000 in fire damage. Which one of the following amounts will Omega's insurer pay?
A. 69000
. An insured's office building is valued $500,000, contents valued $100,000 and leased computers valued $50,000. The insured wants to be certain covered property can be repaired or replaced without any coinsurance or depreciation penalties in the event of physical loss or damage. Which Limits and Optional Coverage(s) on the Building and Personal Property Coverage Form would best suit this insured's wants?
A. Building $500,000 with Replacement Cost and Agreed Value Optional Coverages; Contents $100,000 with Replacement Cost and Agreed Value Optional Coverages; Extension of Replacement Cost to Personal Property of Others $50,000
Which one of the following is a Common Policy Condition found in the ISO Commercial Package Policy (CPP)?
A. Cancellation
Omicron Incorporated is insured under an ISO commercial property policy and an ISO equipment breakdown policy. Both policies include the Other Insurance provision. In the case of a loss for which both policies provide coverage under the same plan, terms, and conditions, which one of the following statements is correct?
A. Each policy pays in relation to all applicable policies.
Which one of the following statements is correct with respect to the Concealment, Misrepresentation, or Fraud condition of the Commercial Property Conditions Form?
A. The commercial property coverage part voids coverage if the insured conceals a material fact pertaining to the covered property.
Justin has a Commercial Package Policy (CPP) that has a Building and Personal Property Coverage Form (BPP) with a Causes of Loss—Broad Form covering his building with a $750,000 limit. A tropical storm struck Justin's building and the strong winds tore most of the shingles from the building's roof and shattered multiple windows on the 5th floor of the building. The rain from the storm caused water to enter Justin's building through the foundation, which caused significant damage to the first and second floors. Justin had equipment stored in closets on the first and second floors which were rendered inoperable due to the water damage. The total amount of damages was $40,000 for the windows and shingles; $110,000 for water damage to the first and second floors; $9,000 for the equipment on the second floor; and $7,000 for the equipment on the first floor. How much will Justin's insurer pay for damage to the first and second floors, including the equipment?
A. The losses are not covered.
The type of activities conducted inside a building, some of which are riskier than others, is referred to as the
B. Occupancy.
Harry's Holiday Shop has limited sales from January through September and increased sales from October through December. Based on that information, which one of the following endorsements to the Building and Personal Property Coverage Form might be appropriate?
B. Peak Season Limit of Insurance
The cancellation provisions in the ISO Common Policy Conditions form are nearly always
B. Superseded by state law.
Which one of the following statements is correct with respect to coinsurance used with commercial property policies?
B. The 80 percent coinsurance rate is reduced when a policy requires a higher coinsurance percentage.
Which one of the following is correct with respect to the Vacancy condition of the Building and Personal Property Coverage Form (BPP)?
B. The conditions under which a building is considered to be vacant are different for a tenant than for an owner.
Who of the following can cancel the ISO Commercial Package Policy by mailing or delivering written notice of cancellation?
B. The first named insured on the declarations page
According to the Common Policy Conditions used with the ISO Commercial Package Policy, if a cancellation results in a return payment, the refund would be sent to
B. The first named insured.
Which one of the following statements is correct with respect to the Recovered Property condition of the Building and Personal Property Coverage Form (BPP)?
B. The insured has the option of taking the recovered property and refunding the loss payment to the insurer.
Peter has a Commercial Package Policy (CPP) that has a Building and Personal Property Coverage Form (BPP) with a Causes of Loss - Broad Form covering his building with a $750,000 limit. A tropical storm struck the area near Peter's building and the strong winds tore most of the shingles from the building's roof and shattered multiple windows with flying debris. An outside fixture also sustained heavy damage due to the wind. The total amount of damages was $40,000 for the windows and shingles; and $10,000 for the outside fixture. How much will Peter's insurer pay for damage to his outside fixture?
C. $10,000
Which one of the following statements is correct regarding the Additional Covered Property endorsement to the Building and Personal Property Coverage Form, also referred to as the BPP?
C. Almost all types of property that are excluded in the BPP can be insured.
The condition of the Building and Personal Property Coverage Form (BPP) that establishes a method for the insurer and the insured to resolve disputes about the insured property's value or amount of loss is referred to as the
C. Appraisal condition.
Which one of the following statements is correct with respect to the condition Duties in the Event of Loss or Damage of the Building and Personal Property Coverage Form (BPP)?
C. If the insured fails to perform any of them, the insurer may not have to pay for the loss.
Insurers underwrite Agreed Value optional coverage carefully for which one of the following reasons?
C. Insureds are often tempted to underinsure, knowing they will not suffer a coinsurance penalty when the agreed value option is in effect.
.The inspections and surveys condition, a common policy condition attached to the ISO Commercial Package Policy, makes it clear that the insurer has the right to inspect the insured premises and
C. May recommend changes.
Which one of the following is correct with respect to the Transfer of Rights of Recovery Against Others to Us condition of the Commercial Property Conditions Form?
C. Waiver of recovery against any other party may be given by the insured, provided the waiver is made in writing before the loss occurs.
Cameron has a Commercial Package Policy (CPP) that has a Building and Personal Property Coverage Form (BPP) with a Causes of Loss - Broad Form covering his building with a $750,000 limit. A tropical storm struck Cameron's building and the strong winds tore most of the shingles from the building's roof and shattered multiple windows with flying debris. The total amount of damages was $20,000 for the windows and $20,000 for the shingles. How much will Cameron's insurer pay for damage to his windows and shingles?
D. $40,000
Taunton Company (Taunton) has a Commercial Package Policy (CPP) that has a Building and Personal Property Coverage Form (BPP) with a Causes of Loss—Broad Form. Because the building is older and has unique architectural features, Taunton decided to insure the building on a replacement cost basis. There is a $2 million coverage limit on the building, with a 90 percent coinsurance clause and $2,000 deductible. The building was struck by lightning and a resulting fire caused substantial damage to the building. The cost to repair the damaged portion of the building with materials of like kind and quality was $500,000. At the time of the loss, the replacement cost value of the building was determined to be $2.2 million. How much would the insurer pay when the repairs are completed if the replacement cost option is activated?
D. $498,000
Which one of the following is the maximum National Flood Insurance Program (NFIP) limit per building for commercial properties?
D. $500,000
Although buildings can be classified in many ways, the system used to classify buildings for purposes of rating commercial property insurance is based on their
D. Ability to resist fire.
The Limited Coverage for Unmanned Aircraft (Scheduled and/or Blanket Coverage) endorsement
D. Can be added to the Building and Personal Property Coverage Form and a few other commercial property coverage forms to cover physical loss to covered drones.
Adjacent properties can increase the probability of loss to the insured's building and contents. When rating commercial property exposures, the term used to refer to the hazard posed by adjacent or surrounding properties is
D. External exposure.
Which one of the following statements is correct regarding the Spoilage Coverage endorsement to the Building and Personal Property Coverage Form?
D. It covers damage to perishable stock resulting from on-premises breakdown, among other causes.
Under which one of the following provisions of the Building and Personal Property Coverage Form (BPP) must the insurer be notified within 180 days after the occurrence of loss that a claim will be made under the terms of the optional coverage in order for that optional coverage to pay the maximum benefit available?
D. Replacement Cost
Which one of the following statements is correct with respect to the Valuation condition of the Building and Personal Property Coverage Form (BPP)?
D. Subject to certain exceptions, insured property is valued at its actual cash value (ACV).
Under the Legal Action Against Us condition of the Commercial Property Conditions Form, if the insured wishes to bring legal action against the insurer, he or she must do so within which one of the following timeframes?
D. Two years after the date on which the direct physical loss occurred