CHAPTER 7

All of the following are true of an Umbrella Liability Policy, except: A After underlying coverage is exhausted, coverage is excess B Property in the care and custody of the insured is covered C Specific minimum limits for underlying coverage are required D Certain losses excluded by the primary policy are covered

Property in the care and custody of the insured is covered-Umbrella policies also contain a property in the Care, Custody and Control exclusion.

Under a Mobile Homeowners Policy, if the mobile home is insured under Coverage A for $70,000, how much coverage would ordinarily apply to personal property under Coverage C? A $35,000 B $28,000 C $30,000 D $42,000

$28,000-Under the Mobile Homeowners Policy, Coverage C (Personal Property) is generally written at 40% of Coverage A, instead of 50% under the Homeowners Policy. 40% of $70,000 = $28,000.

Which policy would provide the best coverage for a boat not design to be pulled by a car? A A Yacht Policy B A Homeowners Policy C A Boatowners Policy D An Outboard Policy

A Yacht Policy--A Yacht Policy would be best because of the length and size of the boat.

All of the following statements regarding flood insurance are true, except:

A deductible only applies to loss of contents

All of the following statements regarding flood insurance are true, except: A The federal government is the reinsurer B Under a Flood Policy, protection is provided to property that is on normally dry land C In order to qualify for a federal loan, the property owner must purchase Flood Insurance if located in a flood area D A deductible only applies to loss of contents

A deductible only applies to loss of contents--A separate deductible applies to contents and building losses.

All of the following are true of the Personal Jewelry Floater, except: A It can be written on a valued basis B It has a 60-day automatic coverage for newly acquired items C Appraisal is usually mandatory D It has a Pair and Sets Clause

B. It has a 60-day automatic coverage for newly acquired items--Automatic Coverage under the Personal Jewelry Floater is 30 days.

What coverage is not included on the Boatowners Policy? A Property Coverage B Hull C Personal Property Coverage D Medical Payments

C Personal Property Coverage--Other coverages include watercraft liability coverage, uninsured boaters, and even towing is usually available.

All of the following are true of the Personal Articles Floater, except: A Claims are settled on a replacement cost basis B It covers losses on an open peril basis C It is used to insure individual personal property D It is written on an itemized or scheduled basis

Claims are settled on a replacement cost basis--Losses are settled on an Actual Cash Value or Valued basis.

Mobile Home Insurance includes all of the following, except:

Coverage C - Personal Property is generally written at 50% of Coverage A-Coverage C - Personal Property is generally written at 40% of Coverage A, instead of at 50%.

Which of the following statements about the National Flood Insurance Program is false? A Mudflow is covered; mudslide is not covered B The deductible applies separately to the building and contents C Coverage becomes effective after a 24-hour waiting period D Property removed to protect it from flood is covered for 45 days at other locations

Coverage becomes effective after a 24-hour waiting period--Coverage usually become effective after a 30-day waiting period; some exceptions apply.

Which statement is true about Crop/Hail Insurance? A Is reinsured by federal government B Is not subject to any deductible C Only covers the peril of hail D Covers only one (1) growing season

Covers only one (1) growing season

Umbrella policies provide coverage on which basis?

Excess

Difference in Conditions Policy,

It usually has a deductible of $10,000 or higher,This policy does NOT contain a coinsurance clause,There is no standard policy form

What coverage is not included on the Yacht policy? A Protection and Indemnity B Personal Injury Coverage C Personal Property coverage D Towing

Personal Injury Coverage--In addition to providing property and liability coverage, a yacht policy also offers protection and indemnity coverage for the insured's legal liability for bodily injury and damage to property of others, personal property coverage for property on the yacht, and coverage for fuel spills, commercial towing, and dinghies. Personal injury is not covered.

Which underlying policy is not required by a personal umbrella policy? A Personal auto B Watercraft C Homeowners D Personal Injury Coverage

Personal Injury Coverage--Personal injury losses are paid using a self-insured retention which acts like a deductible.

All of the following are true of Personal Umbrella Liability Policies, except: A Policies are written in increments of one million B Specific minimum limits for underlying coverage are required C If the Umbrella Policy provides broader coverage than the underlying policy, the umbrella will cover the entire loss, less a retention D Policies generally cover first-party claims

Policies generally cover first-party claims--Umbrella policies, like liability policies, cover third party claims.

Which of the following is not true about the FAIR plan? A Provides property coverage to both residential and farm dwellings B FAIR means Fair Access to Insurance Requirements C Agents cannot bind FAIR plan coverage D Provides basic property coverage to those who have been rejected in the standard market

Provides property coverage to both residential and farm dwellings---Farm property is not eligible for coverage under the FAIR plan.

Fine arts and antiques are classes of property insured on a: A Stated value basis B Market value basis C Actual cash basis D Replacement cost basis

Stated value basis--Fine arts are typically insured on an stated amount basis, whereby the insured and insurer agree, at time of insuring, on an amount of insurance to be paid in the event of a loss.

The Personal Articles Floater is similar to which of the following endorsements? A The Personal Property - Replacement Cost Endorsement B The Guaranteed Replacement Cost Endorsement C The Scheduled Personal Property Endorsement D The Special Personal Property Endorsement

The Scheduled Personal Property Endorsement--The PAF and the Scheduled Personal Property Endorsement to the Homeowners Policy are nearly identical. Some companies do not write the endorsement.

Which statement is false regarding an Umbrella Liability Policy? A The standard deductible on an umbrella or excess policy is $100,000 B Specific minimum limits for underlying coverage are required C Policies are usually written in increments of one million D It provides coverage for catastrophic liability losses

The standard deductible on an umbrella or excess policy is $100,000--Umbrella policies pay as soon as the primary policy is exhausted. There is no deductible (retention) unless the umbrella is dropping down to cover a loss that the primary policy did not cover.

All of the following are true of the National Flood Insurance Program except: A It covers direct loss from mudslides caused by the accumulation of water B There is no deductible C It covers direct loss from overflow of inland or tidal waters D The federal government administers the program

There is no deductible--There is a deductible on the building and a separate deductible on the contents.

How is Mobile Home insurance written? A Only written by writing a separate Mobile Homeowners Policy B Either by writing a separate Mobile Homeowners Policy or by adding an endorsement to a Homeowners Policy C Only written by adding a Mobile Home Endorsement to a Homeowners Policy D Neither by writing a separate Mobile Homeowners Policy or by adding an endorsement to a Homeowners Policy

Either by writing a separate Mobile Homeowners Policy or by adding an endorsement to a Homeowners Policy

All of the following are true of a Difference in Conditions Policy, except: A This policy does NOT contain a coinsurance clause B It usually has a deductible of $10,000 or higher C It includes the perils of fire and extended coverage D There is no standard policy form

It includes the perils of fire and extended coverage--A DIC policy is written in conjunction with a named peril policy, and the DIC policy excludes the perils of the named peril policy.

All the following are true of Crop Hail insurance, except: A Covers only one (1) growing season B Is rated on acreage basis C It protects crops even before they are visible D The insured can choose a variety of coverage options

It protects crops even before they are visible--Crop Hail insurance coverage excludes crops until normal visible (crop must be above ground).

Which statement is false regarding the National Flood Insurance Program (NFIP)? A The Regular Program allows coverage on a single family dwelling up to $250,000 due to flooding B It provides coverage up to a stipulated amount to apply to the increased cost of compliance with flood plain management ordinances or laws that regulate the repair of a building damaged by flood C It provides coverage for direct and indirect loss to covered property as the result of flooding D The Emergency Program applies after a community has agreed to, but has not yet completed, the process to adopt flood control measures

It provides coverage for direct and indirect loss to covered property as the result of flooding--The National Flood Insurance Program does not provide any indirect financial loss coverage. It covers direct loss only to the insured property from those conditions that constitute the definition of flood under the Program.

Which statement is false regarding the National Flood Insurance Program? A For contents to be covered, they must be inside a fully enclosed building B It provides unlimited coverage for qualified property owners C It is administered by FEMA D It will not provide coverage on buildings that are in, on, or over water

It provides unlimited coverage for qualified property owners--There are maximum limits for both the Regular and Emergency programs.

Some flood policies are written in the voluntary property market as a result of a program called ___________. A Write Your Own B Personal Lines Flood Program C National Flood Cooperative D Personal Flood Insurance

Write Your Own--WYO companies may structure its flood business according to guidelines and regulations of the NFIP and within its existing personal lines business to be sold by producers.

All of the following are true regarding DIC policies, except: A When written as excess insurance, there is usually a high deductible B Often written to provide coverage for earthquake or flood C There is no Standard Form D Coverage is on a named peril basis

Coverage is on a named peril basis--Coverage under a DIC policy is open peril with exclusions, not named peril.

All of the following are true of the Fine Arts Floater, except: A Coverage is written on a replacement cost basis B Coverage applies only to scheduled items C It covers such items as paintings, rare manuscripts and antiques D It has a 90-day automatic coverage for newly acquired items

Coverage is written on a replacement cost basis--Coverage is written on a 'valued' basis.