insurance questions
Who is responsible for filling out a notice of claim form? AInsured BAdjuster CAgent DInsurer
a
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? AAdhesion BConsideration CGood faith DRepresentation
b
Before an insurer will pay any loss under a policy, what is usually required from the insured? AA claims-made form BProof of loss CNotice of claim DA binder
b
How long is a waiting period upon purchase of flood coverage through NFIP? A10 days B30 days C60 days DThere is no waiting period.
b
The declarations page of the homeowners policy provides all of the following information EXCEPT AWhat deductible amount applies to each loss covered by the policy. BA statement that earthquake damage is not covered. CThe amount of premium charged for each coverage. DThe insured's address.
b
The type of insurance used to cover goods for one specific trip is called AMotor truck cargo policy. BTrip transit. CCommercial property. DBailee policy.
b
Valuable papers and records form provides coverage for the reconstruction of all of the following types of records EXCEPT AHistorical records. BPrepackaged software. CBlueprints. DDeeds.
b
All of the following are considered parts of the policy structure EXCEPT AInsuring clause. BConditions. CProvisions. DExclusions. Incorrect! Provisions is
c
An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay? AThe first policy written will pay $75,000, and the other three policies will contribute proportionately to pay for the remaining $25,000. BThe policy with the earliest effective date will pay the entire loss, and the other policies will pay nothing. CEach policy will pay $25,000 of the loss. DEach policy will pay the total policy limits of $100,000.
c
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? AIndemnity BRepresentation CWarranty DConcealment
c
In return for premium, an insurance company must AProvide the insured with coverage adequate for all potential losses. BUse standardized tables of coverage for specific risks to be excluded from coverage. CGive the insurer valuable consideration. DBe fair in underwriting and pay covered losses.
d
Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as ARescission. BNonrenewal. CCessation. DCancellation.
d
The process of determining the premium charged and how much insurance is required for a particular loss is called AAgreed value. BLoss payment. CCoinsurance. DLoss valuation.
d
Which of the following is a method of claim settlement used in casualty insurance when the insured and insurer cannot agree on how to settle a claim? AProof of loss BRestoration CAppraisal DArbitration
d
Which of the following may be covered by electronic data processing coverage form under an inland marine policy? AComputer hardware that is specifically scheduled. BExtra expense the insured incurs to continue the business following a loss. CData processing media, including magnetic tapes or paper tapes, punch cards and discs DAll of these are covered.
d
Which of the following would be covered under the Film Coverage Form? ADeterioration of a film BExposure of a negative film to light CElectrical erasure of a tape DNone of these are covered.
d
What level of coinsurance must you have to get BPP coverage extension?
80% coinsurance
What are common carriers required to issue to every shipper that it transports goods for? AA motor truck cargo form BA common carrier cargo liability notice CA uniform bill of lading DA transit coverage form
c
What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy? ABinder policy BNamed peril policy COpen peril policy DSpecified peril policy
c
Coverage under a Floor Plan Merchandise form is written on a reporting form basis that requires the insured to file reports with the insurer. What is the time frame for those reports? AWithin 30 days after the end of each month BWithin the first 10 days of each month CBy the 15th of each month D20 days after the report is due
A
Which of the following claims does NOT fall under the scope of liability coverage of Section II of a homeowners policy? AThe named insured is borrowing a friend's jacket which is later damaged. BThe named insured's 8-year-old son throws a rock and strikes a neighbor's child, breaking her eye-glasses and cutting her face. CThe named insured's dog bites the neighbor, tearing his clothes and causing him to be treated by a doctor. DA visitor slips on some ice causing him to be injured when falling down the porch steps.
a
The homeowners policy covers collapse caused by all of the following EXCEPT AWeight of too many people attending an event hosted in the house. BFoundation cracks. CWeight of snow. DHidden insect or vermin damage.
b
A business using its own trucks to move its own cargo would insure the cargo using AMotor truck cargo - owners form. BMotor truck cargo - truckers form. CMotor carrier form. DTrip transit coverage.
a
An insured owns and operates a commercial business. He has included a business income coverage form with his commercial package policy. When the insured's business is severely damaged by fire, the business income coverage will pay for ANet income plus continuing expenses of the business. BSales value production less the cost of raw stock. CAnnual sales less the cost of merchandise. DLoss of total annual sales.
a
Besides the peril of earthquake, which other peril is covered by the earthquake cause of loss form under a commercial property policy? AVolcanic eruption BTidal wave CHurricane DLightning
a
The main difference between an HO-4 and an HO-6 is AHO-6 provides limited dwelling coverage as well as contents coverage. BHO-4 does not cover additional living expenses. CHO-6 does not cover additional living expenses. DHO-4 provides limited dwelling coverage as well as contents coverage.
a
Which of the following is NOT true concerning the fair rental value coverage provided in a dwelling policy? ALoss or expense caused by the cancellation of a lease is covered. BIt pays for the loss of rent you would have collected less any expenses that would not have continued. CCoverage continues until repairs are completed. DThe period of time to repair or replace is not limited by the expiration date of the policy.
a
Which of the following would NOT be considered an insured under a homeowners policy? AA divorced spouse living in another state BResidents of the household that are blood relatives of the insured CAn individual under age 21 in the care of but not related to the insured DIndividuals named in the policy declarations
a
ABC Trucking hauls products for Acme, Inc. as a contract carrier. On one shipment, the driver stopped at a truck stop for lunch. Leaving the truck in the parking lot, he made certain that the truck was locked before leaving it. Upon returning to the truck, he discovered that someone had broken into the truck and stolen the cargo. Is ABC legally liable for this loss? ANo, the driver had taken reasonable measures to protect the property by locking the truck. BYes, ABC's liability is absolute for the cargo in its possession. CThe truck stop would be liable for the loss. DNone of the above.
a (ABC, as a contract carrier, would not be legally liable for this loss. If ABC were operating as a common carrier rather than a contract carrier, it would have been legally liable.)
Which of the following dwelling policy forms primarily insures a structure on an actual cash value basis? ADP-1 BDP-2 CDP-3 DAll DP forms
a (DP-1 insures the structure on an actual cash value basis. DP-2 and DP-3 insure the structure on a replacement cost basis.)
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? A10 days B15 days C20 days D30 days
a (If an insurer will not be renewing a policy for nonpayment of premium, according to businessowners policy Section I, it must notify the mortgageholder at least 10 days before the policy expires.)
Which of the following is covered under the Mail floater of a Commercial Inland Marine policy ONLY if is sent by registered mail? ACurrency and unsold travelers checks BPostage and revenue stamps CMoney orders, checks, drafts, notes DBonds, stocks, stock certificates, coupons attached to bonds
a (Property covered only when sent by registered mail includes the following: bullion; platinum and other precious metals; currency and unsold travelers checks; or jewelry, watches, precious and semiprecious stones and similar property.)
A covered watercraft was damaged in an accident. The actual cash value of the damaged property was assessed at $10,000. The cost of repairs for the watercraft 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? A$5,000 B$10,000 C$15,000 D$25,000
a (The limit of liability for Part D will be the lesser of amount shown in the Declarations, actual cash value of the stolen or damaged property, or amount necessary to repair or replace the property.)
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? A$175,000 B$180,000 C$200,000 D$100,000
a (The limit of the equipment breakdown policy applies to property of the insured, property of others, and expediting expenses in any combination as long as expediting expense does not exceed $25,000.)
An advertising company has its annual holiday party for employees and customers, after which a customer who had too much to drink is involved in an automobile accident. Occupants of the other car involved in the accident sue the company for serving the customer too much alcohol. Will the company's businessowners policy provide coverage? AYes, none of the exclusions will apply. BYes, employer liability obligates the company to pay. CNo, accidents outside the company premises are not covered. DNo, liquor liability is excluded.
a (The liquor liability exclusion applies only to insureds in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages. In this case, the company's businessowners policy most likely will have to pay.)
Which of the following covers a carrier for liability for loss to cargo while it is being transported in a truck? AMotor truck cargo policy - truckers form BMotor truck cargo policy - owners form CTrip transit policy DTruckers coverage form
a (The motor trucker cargo truckers is liability insurance and the owners form is property coverage.)
The Physicians and Surgeons Equipment Floater in NOT intended for which of the following? AMedical supplies located in a hospital BSurgeon's supplies located in the surgeon's office CWaiting room furniture in a doctor's office DOffice equipment located in a dentist's office Incorrect
a (This coverage form protects individuals in the medical or dental profession for loss to valuable medical and dental equipment, materials and supplies, including office equipment and furniture, and similar property of others. Coverage is not intended for hospitals, schools or other institutions.)
All of the following types of property are covered by a standard builders risk form EXCEPT ATools 50 feet away from the building. BThe building itself. CTemporary structures. DMachinery that will be permanently attached to the building.
a (dooesn't cover tools not intended to be permanently apart of the building)
A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean? ACoverage is automatic. BThere is no coverage. CCoverage applies without premium. DThis must be a misprint on the form.
b
All of the following are other coverages included in both the broad and special form dwelling policy EXCEPT ALawns, trees, shrubs, and plants. BTheft of personal property. CCollapse. DBreakage of glass.
b
An insured covered under a Mobile Homeowners Policy wants to move the location of the covered mobile home. Which of the following must the insured obtain from the insurer? AAdditional Coverage Property Removed Endorsement BTransportation/Permission to Move Endorsement CHousing and Transportation Coverage DLoss of Use Coverage
b
How long is a waiting period upon purchase of flood coverage through NFIP? A10 days B30 days C60 days DThere is no waiting period.
b
The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land ALeased by the owner of the land. BOwned or leased by the resident of the mobilehome. COwned or leased by a landlord who does not reside on the premises. DOwned by a landlord who does not use the mobilehome located on it.
b
Under a dwelling policy, which of the following is NOT a factor in determining a loss? AThe amount necessary to repair or replace the property BThe amount negotiated by the insured CThe policy limit DThe amount reflecting the insured's interest in the property at the time of loss
b
Under the dwelling policy, if an insurer chooses to repair or replace damaged or lost property, it must inform the insured within how many days of receiving proof of loss? A10 days B30 days C45 days D60 days
b
Which of the following coverages is included in an unendorsed homeowners policy? AEarthquake BMedical payment to others CPersonal property replacement coverage DFungi, wet or dry rot, or bacteria
b
Which of the following is covered under the Camera and Musical Instruments Dealers floater? AMoney kept on premises of a camera shop BA customer's camera left at a camera shop for repair CA musical instrument sold and delivered to a customer DFurniture, fixtures and office supplies in a music store
b
Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value? AThey are subject to a $1,000 deductible. BThey are automatically provided with replacement cost coverage. CThey qualify for maximum compensation under the flood insurance program. DThey are excluded from the flood insurance policy.
b
What type of property does a Personal Floaters policy cover? AMovable personal property located in the insured's home, only BMovable personal property, wherever it may be located CPermanently attached property located on the insured's premises DNone of these
b (An HO-3 covers losses on an open peril basis. An HO-2 covers losses on a named peril basis. Both forms cover damage to the dwelling caused by ash or dust from a volcanic eruption.)
The insured purchased a $200,000 extra expense policy. If the percentages applying to the limit of insurance are 40%, 80%, and 100%, what would be the maximum payable for a 47-day loss? A$80,000 B$120,000 C$160,000 D$200,000
b (Extra expense coverage is written with a minimum of 3 applicable percentages that apply to the limit of insurance in the declarations. When the period of restoration is 30 days or less, the first percentage applies; when it is more than 30 days and not more than 60 days, the second percentage applies; when more than 60 days, the third percentage applies. In this case, the calculation should be 80% of $200,000, so $160,000.)
Within the first 60 days of coverage under a dwelling policy, how much notice is required for the cancellation of a policy? A5 days B10 days C15 days D20 days
b (No matter what the reason, if a policy is canceled within the first 60 days, only 10 days advance notice is required.)
Which of the following risks would NOT be eligible for coverage under a homeowners policy? AAn applicant who owns and lives in a single-family dwelling that also contains incidental business activities BAn applicant who owns and lives on a commercial farm CAn applicant who lives in a duplex that she does not own DAn applicant who owns and lives in a duplex
b (Risks that contain a farming exposure are not eligible for homeowners insurance.)
Which of the following losses would NOT be covered by the dwelling policy if the dwelling is vacant for over 60 days? AInternal explosion BVandalism CFire DWindstorm
b (Under a dwelling policy, vandalism and malicious mischief (VMM) coverage is suspended after 60 days.)
Frank's Steaks furnishes meat to steakhouses. An accident on the premises causes the building to lose refrigeration for 32 hours. The state inspectors will not allow the meat in the refrigerating units to be sold for human consumption, and Frank loses $18,500 in disposing of the meat. What coverage under Frank's BOP policy will cover the loss? AProtective safeguards BUtility service - direct damage CUtility service - time element DExtra expense
b (Utility service - direct damage would pay for the loss of the meat that was damaged because of no refrigeration.)
Which of the following watercraft will NOT be covered by business liability insurance? ANonowned watercraft 50 feet long used for transporting personal property of the insured BOwned watercraft 53 feet long CAn auto parked at the insured's premises DWatercraft while on shore at a premises owned by the insured
b (Watercraft while on shore at a premises owned by the insured and nonowned watercraft less than 51 feet long not being used to carry persons or property for a fee will be covered.)
An endorsement added to a businessowners policy that provides coverage for direct damage caused by utility service disruption stemming from a covered peril is called ALoss of business income. BUtility Services - Direct Damage. CUtility Services - Time Element. DAdditional expense.
b(The Utility Services - Direct Damage endorsement pays the insured for loss caused by utility service disruption when such disruption of service was caused by an insured peril.)
A Mobile Homeowners Policy is structured the same as a ADwelling Policy. BCommercial Package Policy. CHomeowners Policy. DPersonal Auto Policy.
c
According to the appraisal condition of a homeowners policy, what procedure may be followed if the insurer and insured do not agree as to the size of a loss? AThe parties must pursue a lawsuit. BThe policyholder is allowed to hire an appraiser, and the insurer will pay the amount determined. CEither party may make a written request for an appraisal. DThe insured is required to accept what the insurer is willing to pay.
c
An installation floater is used to insure AAll types of for-sale merchandise. BDams, power plants, water plants, and other such installations. CAppliances intended to become a permanent part of the building. DBuildings under construction.
c
Another person has alleged that you are responsible for damage to their property. You notify your homeowners insurer. The insurer will AProceed according to your request. BDefend with the hopes of not paying damages. CEither pay or defend as it decides. DPay the alleged damages.
c
Assuming the insurer and the insured agree to the amount payable for a loss covered under a dwelling policy, how soon after the insurer has received proof of loss must it make payment? A30 days B45 days C60 days D90 days
c
If a loss occurs, the insured with a homeowners policy is required to do the following EXCEPT ANotify the police if a loss is caused by theft. BProtect the property from further damage, and keep records of any repair expenses. CArrange for an appraisal by an unbiased third party. DProvide the insurer with prompt notice of the loss.
c
In which of the following situations would the jewelers block extension cover a loss? AA 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. BAn 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. CA jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged. DA jewelry store is robbed while displaying bracelets and necklaces at a public exhibition.
c
What type of property would NOT be covered under the dwelling policy special form Coverage A - Dwelling? AOutdoor equipment located on the premises and used to service the location BAttached structures CLand on which the dwelling is located DMaterials and supplies on the premises used to alter or repair the dwelling
c
Which of the following additional perils is covered under both the basic form and broad form dwelling policies? AWeight of ice, snow, or sleet BFreezing of plumbing, heating, or air conditioning systems CInternal explosion DFalling objects
c
Which of the following statements regarding coverage for the flood and earthquake perils is true? AFlood and earthquake coverage is available only through government insurance. BFlood insurance is usually provided in property policies, but earthquake coverage is available by endorsement only. CBoth flood and earthquake are excluded perils in all property policies. DFlood and earthquake coverage is available in all policies.
c
Which of the following would provide coverage for loss of income when an insured rental dwelling is rendered uninhabitable because of a covered loss? ACoverage B BCoverage C CCoverage D DCoverage A
c
A commercial property special form covers property in transit up to A$500. BFull replacement cost. C$5,000. DACV.
c (A commercial property special form covers property in transit up to $5,000. This extension of coverage may be added to the special form. It is additional insurance (in addition to the coverage limit), and coinsurance does not apply.)
Both the broad theft and limited theft endorsements on the dwelling program exclude all of the following types of property EXCEPT AMotor vehicles licensed for the road. BAircraft. CWatercraft. DCredit cards.
c (Canoes have limited coverage.)
Under the HO-4 and HO-6 homeowners policy forms, property is insured against AComprehensive form perils. BBroad form perils. CBasic form perils. DSpecial form perils.
c (HO-4 and HO-6 provide the same level of coverage as Coverage C in the HO-2 and HO-3.)
To be eligible for businessowners policy (BOP) coverage, an office building CANNOT be higher than A2 stories. B3 stories. C6 stories. D10 stories.
c (Office buildings eligible for coverage under BOP may not be more than 6 stories high and more than 100,000 square feet.)
All of the following are additional causes of loss included in the broad form of a commercial property policy EXCEPT AFalling objects. BWeight of ice, snow, or sleet. CWater damage. DReplacement cost.
d
All of the following are other coverages under the dwelling policy EXCEPT AOther structures. BDebris removal. CImprovements, alterations, and additions. DEarth movement.
d
If more than one person has an insurable interest in the property covered under a dwelling policy, ALiability will be split evenly among all people who have insurable interest. BAll involved insurers must decide which one will be liable for the loss. CAll insureds must decide which one will be liable for the loss. DThe insurer will be liable for only the insured's interest in the damaged property.
d
Jean owns a craft store. The protective safeguards endorsement of her BOP requires the store to have a functional automatic sprinkler system. A winter storm freezes the pipes to the sprinkler system, causing the system to shut down. How many hours does Jean have to restore the system before she must notify her insurer? A12 hours B24 hours C36 hours D48 hours
d
The homeowners policy form that covers condominium unit owners is AHO-2. BHO-3. CHO-4. DHO-6.
d
Under the commercial property coverage program, the basic causes of loss form insures against loss caused by AEarth movement. BNuclear hazard. CPower failure off the premises. DSprinkler leakage.
d
Under the dwelling policy form, what is the maximum time limit during which multiple volcanic activities would be considered part of one occurrence? A24 hours B36 hours C48 hours D72 hours
d
Which of the following is NOT an optional coverage available in a businessowners policy? AOutdoor signs and exterior-grade floor glass BMechanical breakdown CEmployee dishonesty DWorkers compensation
d
Which of the following risks is eligible for coverage under a businessowners policy? ABanks BAutomobile dealers CBars or taverns DCondominiums
d
Which of the following would be considered causes for flood conditions covered by the National Flood Insurance Program? AOverflow of inland or tidal waters BUnusual and rapid accumulation or runoff of surface waters from any source CA mudflow DAll of the above could be considered flood sources
d
Which of the following would qualify as a competent party in an insurance contract? AThe applicant is intoxicated at the time of application. BThe applicant is a 12-year-old student. CThe applicant is under the influence of a mind-impairing medication at the time of application. DThe applicant has a prior felony conviction.
d
Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? AExclusions BDeclarations CInsuring agreement DAdditional coverage
d
Which of the following is defined as a covered cause of loss in businessowners property coverage? ARain BSmoke from agricultural smudging CPollution DLeakage from fire-extinguishing equipment
d (Only leakage for fire-extinguishing equipment is defined as a covered loss. The other causes are specifically excluded from coverage.)
A BOP (businessowners policy) is most similar to AAuto. BUmbrella. CCargo. DHomeowners.
d (The BOP is most similar in structure to the personal lines homeowners policy because both require that the policy provide property insurance and liability insurance in a single policy.)
Which of the following is true regarding the fire department service charge under the builders risk form? AIt is an automatic coverage for $500. BIt is not available in this form. CIt is a high-deductible endorsement. DIt is an additional coverage.
d (The fire department service charge is considered an additional amount of insurance. Up to $1,000 coverage is included.)
Which of the following is NOT covered under accounts receivable coverage form? AAny loans required to offset uncollectible amounts BInterest on loans required to offset uncollectible amounts pending payment of the insurance proceeds CSums due the insured that are uncollectible due to a covered loss DExpenses to reestablish the records, if possible, and collection expenses that are in excess of normal costs
a
Which coverage form would provide coverage for all incoming and outgoing shipments? AMail coverage BAnnual transit CTrip transit DMotor truck cargo
b
Which of the following is true of dwelling policy coverage? ASpecial forms only have special exclusions. BExclusions apply to all three policy forms. CExclusions only apply to broad policy forms. DThere are no exclusions in basic forms.
b
Which of the following would be named on the declarations page of a property or liability policy? AAdditional insureds BFirst named insured CBeneficiaries DAll insureds
b
Which of the following is NOT the consideration in a policy? AThe premium amount paid at the time of application BThe promise to pay covered losses CThe application given to a prospective insured DSomething of value exchanged between parties
c
Events or conditions that increase the chances of an insured loss occurring are referred to as
hazards
Actual Cash Value (ACV)
replacement cost minus depreciation
Coinsurance Formula
(amount of insurance carried/amount of insurance required) x loss = amount of recovery
A contract for the transport of goods between the shipper and the carrier is called AA bill of lading BA bailment CA binder DA bill of sale
a
A person who is not named as an insured on the declarations page of a policy but is protected by the policy is known as the AAdditional insured. BPolicyowner. CNamed insured. DFirst named insured.
a
All of the following are conditions commonly found in the insurance policy EXCEPT AInsuring agreement. BCancellation and nonrenewal. CSubrogation. DAppraisal.
a
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? APart A BPart B CPart D DPart E
a
Personal property coverage under a homeowners policy would cover AThe insured's camera if it is stolen while the insured is on vacation. BA neighbor's fence if damaged by the insured. CProperty moved to a newly acquired residence after 60 days. DA pet that the insured is temporarily keeping for a friend.
a
The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to A$250,000. B$100,000. C$150,000. D$200,000.
a
The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as the AExclusions. BDeclarations. CEndorsements. DConditions.
a
What is the maximum amount an insurer will pay under the equipment dealers pollution cleanup and removal extension of an inland marine policy? A$10,000 for all expenses incurred during a 12-month period B$15,000 all expenses incurred during a 12-month period C$20,000 all expenses incurred during a 12-month period D$5,000 for all expenses incurred during a 12-month period
a
Which of the following describes the transfer of a legal right or interest in an insurance policy? AAssignment BAbandonment CObligation DLegal purpose
a
Which of the following is a mandatory part of an insurance policy that varies with each individual policy? ADeclarations BConditions CExclusions DInsuring agreement
a
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? AConsequential BDirect CSpecial DAdditional
a (aka indirect loss)
What does Personal Property of Others include?
at the premise or within 100 feet and is in insured's care custody or control (think dry cleaners)
A beauty parlor burns to the ground. What type of loss is this to the owner? AConsecutive BDirect CConsequential DSpecific
b
A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT AGeneral liability coverage BWorkers compensation coverage CCrime coverage DBoiler and machinery coverage
b
What does building in a BPP cover?
building, materials/supplies within 100 feet and, and outdoor signs (up to $2500)
The Gramm-Leach-Bliley Act was passed to AAllow consumers access to credit and private consumer reports. BAllow insurance companies access to medical information for underwriting purposes. CProtect private customer information filed with a financial institution. DDefine insurance as interstate commerce.
c
The part of a policy that clarifies terms in the policy is the AConditions. BExclusions. CDefinitions. DInsuring agreement.
c
A person who is not named as an insured on the declarations page of a policy but is protected by the policy is known as the APolicyowner. BNamed insured. CFirst named insured. DAdditional insured.
d
Chapter: Types of Property Policies Question 8 of 15 Which coverage form would provide coverage for all incoming and outgoing shipments? ATrip transit BMotor truck cargo CMail coverage DAnnual transit
d
When a mortgagee is named in a mortgagee clause attached to a fire or other direct damage policy AThe loss reimbursement will be paid to the mortgagee as their interest may appear. BThe mortgagee's rights of recovery will not be defeated by any act or neglect of the insured. CThe mortgagee may bring a suit in their own name to recover damages to covered property. DAll of the above are true.
d
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following? ALegal purpose BContract of adhesion CAcceptance DConsideration
d
What does BPP cover?
in building or within 100 feet
A unique feature in a bailee form is that it covers ACustomers' property whether or not the insured has been negligent. BFire and theft losses to the insured's stock held for sale without any deductibles. CAll loss and has no exclusions. DThe building occupied by the insured whether it is owned or leased.
a
According to businessowners policy Section I, which of the following is NOT a condition to be met for the terms of the policy to apply to mortgageholders? AThe mortgageholder must petition the state department of insurance for named status. BIf the insurer denies the claim, the mortgageholder may still take steps to receive loss payment. CThe mortgageholder has the right to receive loss payment. DThe insurer will pay covered losses or damage to each mortgageholder shown in the declarations.
a
All of the following are found in the declarations section of a policy EXCEPT the AExclusions. BPolicy premiums. CName of the insured. DLimits of insurance.
a
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? APer occurrence BPer person CAggregate DSplit
a
An insured has a special form dwelling policy written for $100,000 on a dwelling. The dwelling's replacement cost is $115,000. Fire causes $75,000 in damage to the dwelling, $15,000 damage to a separate garage, and kills 10 trees valued at $600 each. How much will the policy pay for the trees? A$5,000 B$10,000 C$60,000 D$75,000
a
Duties of the insurer found in property policy conditions include all of the following EXCEPT ANotify the insured in the event of financial difficulty. BPay covered losses. CProvide advance notice of cancellation. DReturn any premiums to the insured.
a
Which of the following would NOT be covered by HO liability insurance? AIntentional tort BBodily injury CFirst aid expenses DProperty damage
a
The proof of loss statement must be AAn oral statement. BIn writing. CBoth oral and in writing. DIn a videotape format.
b
The part of a property policy that shows the amount of insurance, premium, and policy term is the AConditions. BEndorsements. CDeclarations. DInsuring clause.
c
Under the conditions of a Film Coverage Form, how long must the insured maintain records of each production? A7 years after production completion B1 year after production completion C3 years after the policy expires D5 years after the policy expires
c
Which of the following limits, shown in the declarations of a policy, applies to medical expenses? APer injury BPer incident CPer person DPer occurrence
c
What is a material misrepresentation? AConcealment BA statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company CAny misstatement made by an applicant for insurance DAny misstatement by the producer
b
When a regular bill of lading is issued, who will be responsible for the invoice cost of any damaged property? AThe driver of the truck BThe carrier CThe person to whom the goods are being shipped DThe shipper
b
Which of the following would modify the original insurance contract by either adding or removing coverage? AFlexible policy BEndorsements CAdditional coverage form DConditions
b
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? A100% of the market value B$400,000 C$32,000 D80% of the property's replacement cost or more
d
Which situation would NOT be covered by the basic Causes of Loss form under a commercial property policy? AThe Surf Side Club Waterfront Restaurant is damaged when flood waters rise and seep into the restaurant. BPiccolo Pete's Café has its door broken by vandals trying to get inside. CThe automatic fire protective sprinkler system inside New Realities Book Shop leaks, causing damage to the store. DGordon's Motorcycle Heaven is damaged by the sudden sinking of land created by the action of water on limestone.
a
A property insurance policy that insures a commercial building on a replacement cost basis includes the ordinance or law coverage endorsement. This endorsement will cover all of the following expenses EXCEPT AOrdinance with which the insured was required to comply prior to the loss. BLoss to the undamaged portion of the building. CAny increased cost of repairs or reconstruction. DDemolition and removal cost.
a (This endorsement incorporates the coverages that were provided by contingent liability endorsement, demolition cost endorsement, and increased cost of construction endorsement. Often, if the insured has an exposure to one of these coverages, there will be exposure to all of them. No coverage will be provided for ordinances or laws the insured was required to comply with prior to the loss.)
A policy condition that stipulates how the amount of damaged or lost property will be determined if the insured and the principal do not agree on the value of a property loss is known as AThird-party provision. BAppraisal. CCoinsurance. DLoss valuation.
b
How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card? A$100 B$500 C$1,000 D$5,000
b
If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to A$350. B$500. C$750. D$1,000.
b
In terms of parties to a contract, which of the following does NOT describe a competent party? AThe person must be mentally competent to understand the contract. BThe person must have at least completed secondary education. CThe person must not be under the influence of drugs or alcohol. DThe person must be of legal age.
b
In the event of a loss covered by the policy, if the insurer requests a signed sworn proof of loss, the named insured is required to submit it within A30 days. BA specified time. C1 year. D5 business days.
b
Individuals in the business of selling construction equipment and mobile equipment should insure with a/an APersonal property floater. BEquipment dealers coverage form. CContractors equipment floater. DInstallation floater.
b
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called ADescribed coverage. BSpecific coverage. CSchedule coverage. DBlanket coverage.
b
A businessowner has a building and personal property policy that covers a shed in which he stores extra parts. If he buys a second shed for the same purposes, this will be automatically covered for how long? A15 days B20 days C30 days D45 days
c
All of the following are exclusions that apply in all three types of Dwelling Policies EXCEPT AWater damage BEarth movement CFire or lightning DGovernment action
c
An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has been depreciating at $200 per year and the insured's policy is written on the actual cash value(ACV), how much will the policy pay toward the insured's new roof? A$1,000 B$4,000 C$5,000 D$6,000
c
In insurance, an offer is usually made when AThe agent hands the policy to the policyholder. BAn agent explains a policy to a potential applicant. CAn applicant submits an application to the insurer. DThe insurer approves the application and receives the initial premium.
c
Representations are written or oral statements made by the applicant that are AFound to be false after further investigation. BImmaterial to the actual acceptability of the insurance contract. CConsidered true to the best of the applicant's knowledge. DGuaranteed to be true.
c
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? A24 hours B72 hours C168 hours D240 hours
c
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? APer occurrence limit of liability BSplit limit of liability CAggregate limit of liability DCombined single limit of liability
c
The extension of coverage under the Commercial Fine Arts Floater includes coverage for newly acquired property for a maximum of A$20,000. B$5,000. C$10,000. D$15,000.
c (An extension of coverage is included for newly acquired property for 30 days for up to 25% of the total limit of insurance, for a maximum of $10,000.)
All of the following people would be considered insureds under the liability section of a homeowners policy EXCEPT AA 15-year-old foster child residing in the premises. BThe mother of the insured who is residing in the household. CThe legal representative of a deceased insured. DThe 22-year-old niece of the insured who is visiting.
d
In a commercial package policy, who may cancel the policy in writing and make changes to the policy with the consent of the insurer? ALast named insured BBeneficiary CInsurer DFirst named insured
d
The ABC Corporation has $100,000 of coverage on its building through insurance Company A, and $50,000 of identical coverage on the same building through insurance Company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs and the pro rata method is used, how much will each insurer pay? ACompany A will pay $20,000; Company B will pay $4,000. BCompany A will pay $12,000; Company B will pay $12,000. CCompany A will pay $24,000; Company B will pay $0. DCompany A will pay $16,000; Company B will pay $8,000.
d
The commercial property declarations page contains which of the following information? ACommon policy conditions BInterline endorsements CCause of loss forms DDescription of the property insured
d
The contents coverage on a homeowners policy would pay how much after the loss of one of a pair of golden candlesticks? AThe replacement cost of the pair BThe actual cash value of the pair CNothing DThe difference in the actual cash value as a pair and as a single
d
The policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called AConsent to settle loss. BRight of salvage. CAppraisal. DSubrogation.
d
Under the provisions of the business income coverage form, all of the following are true EXCEPT AIf the insured and insurer are unable to come to agreement as to the value of the loss, either party may make a written demand for an appraisal. BThe insured agrees to resume all or part of operations as quickly as possible. CThe insured is reimbursed for payroll that continues after the loss begins. DThe insured is reimbursed for the loss from the date of loss to the date of restoration or policy expiration date, whichever comes first.
d
What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk? AValid insurance BNonconcurrency CPrimary and excess DOther insurance
d
When a disagreement occurs as to how to settle a loss in a "fender bender" between two cars, what procedure is followed? AA lawsuit is filed BAppeal to the DOI CThe adjuster's first opinion must be accepted DArbitration through the court
d
When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of AMisrepresentation. BFraud. CWarranty. DConcealment.
d
Which of the following clauses establishes the procedure for determining the amount of a loss when the insurer and the insured cannot agree on the value of property or amount of loss? ALoss payment clause BValuation clause CLoss settlement clause DAppraisal clause
d
Which of the following is NOT one of the available additional coverages in the builders risk form? AFire department service charge BPollutant cleanup CVandalism DDebris removal
d
How does the mobilehome endorsement affect the other coverage of law or ordinance in a homeowners policy? AIt removes the coverage. BIt broadens the coverage. CIt limits the coverage. DIt has no effect on this coverage.
a
Which of the following statements concerning the builders risk coverage form is correct? AIt covers the interest of the builder only and cannot include coverage for the owner. BIt may not be written for perils other than fire and extended coverage. CIt may be written on a reporting form for the completed value of the structure. DIt usually continues in effect for one year after completion of the structure.
a
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information? AThe Guaranty Association BConsumer Privacy Act CThe Fair Credit Reporting Act DUnfair Trade Practices Law
c
For a contract to be enforceable by law, the purpose of the contract must be AFor financial gain. BFor the benefit of the general public. COf pure intent. DLegal and not against public policy.
d
Which of the following best describes the amount of loss assessment coverage included under a homeowners policy liability coverage section? AUp to $10,000 aggregate for the policy period BUp to $5,000 aggregate for the policy period CUp to $1,000 per occurrence DUp to $2,500 per occurrence
d (Section II - Loss Assessment Coverage - applies to assessments against the insured by a condominium association or other cooperative body of property owners. Coverage is limited to $1,000, but an increased limit of coverage is available by endorsement.)