New Hampshire Property & Casualty Quiz Questions
On a Business Auto policy, Symbol #8 represents: Hired autos. Non-owned autos. Specifically described autos. Owned private passenger cars.
Hired autos
A loss reserving method that establishes aggregate reserves for all claims for a single type of insurance is known as
Loss ratio method
Which of the following items used in floor-framing is usually made of plywood or particle board? Bridge. Subfloor. Sill plates. Floor joists
Subfloor
Under the commercial auto forms, what is the limit for transportation expenses when the insured has suffered a theft loss of a private passenger type vehicle? $20 per day subject to a maximum payment of $600. $15. $15 per day subject to a maximum limit of $450. $25.
$20 per day subject to a maximum payment of $600
Dwelling forms may be used to cover all of the following, EXCEPT: A farm house. A permanently installed mobile homes. A house with a maximum of 5 roomers or boarders. Dwellings under construction.
A farm house
All of the following would be covered under the commercial auto policy, EXCEPT: A partner using his own vehicle running a personal errand. An employee using an employer's vehicle. A partner using a company vehicle while on company business. An executive using a company vehicle on company business.
A partner using his own vehicle running a personal errand
Which of the following would be required to obtain an adjuster's license in New Hampshire? An attorney Claims processed by a salaried office employee A person that adjusts automobile claims A licensed company insurance agent
A person that adjusts automobile claims
Which of the following is used when estimating general damages for a personal injury claim in New Hampshire? The severity of the injury based on a rating scale created by the American Medical Association. The amount of general damages awarded to others in the geographical region that have suffered a similar personal injury. An arithmetic formula that uses a multiplier to calculate the pain and suffering of the claimant. The jury in the personal injury case is completely responsible for awarding general damages in any amount they prefer.
An arithmetic formula that uses a multiplier to calculate the pain and suffering of the claimant.. EXPLANATION: There are mathematical formulas that can assist in awarding general damages in a personal injury case in New Hampshire. It involves adding the medical expenses, property damage, lost earnings, future lost income, and the estimated future medical expenses. Then, this total is multiplied by a number between 1.5 and 5. Which multiplier is used is based on the length and severity of the pain and suffering of the claimant.
Requirements that truckers be financially responsible for cargo they carry are imposed by: The federal government. State government. City and county governments. Both state and federal governments.
Both state and federal governments.
The Part B - Medical Payments coverage under a standard Personal Auto policy will cover the insured if he/she is injured while a passenger on a: Train. Bus. Subway. Airplane.
Bus. is correct. EXPLANATION: Personal auto medical coverage is available to the policyholder or a family member (resident relative) injured while occupying, or as a pedestrian, struck by a motor vehicle or trailer designed for use on public roads. It also covers any other persons while they are occupying your motor vehicle. It does not cover injuries sustained while riding in vehicles not intended for use on public roads such as trains, subways and airplanes.
Fidelity bonds which apply their "limit" to each employee involved in a covered loss are called: Commercial blanket bonds. Scheduled bonds. License and bid bonds. Blanket position bonds.
Commercial blanket bonds.. EXPLANATION: When written on a scheduled or position basis, the bond limit applies per employee or position. When written this way, the definition of "occurrence" is changed to mean all losses caused by each employee. However, the limit of the commercial crime form applies per loss regardless of the number of employees involved in the loss.
Under the commercial auto policy providing physical damage, which of the following offers the broadest coverage? Comprehensive. Specified cause of loss. Named perils. Broad named perils.
Comprehensive. is correct. EXPLANATION: Comprehensive coverage would be the broadest because it covers loss that is not defined as collision. The specified cause of loss is a named peril form and thus, is more limited.
Which of the following is excluded fro coverage under a Homeowners policy? Personal liability coverage. Damage caused by an automobile. Coverage for personal property. Coverage for appurtenant structures.
Damage caused by an automobile.
Which of the following would NOT be covered by the NFIP? Overflow of water from a pond on the insured property. Mudslides from recent heavy rain. Collapse of land along the shore of a body of water. Inundation and overflow of surface waters.
Damage caused by mudflow is covered under the policy. Mudslides are not.
Angie has suffered an automobile physical damage loss. All of the following are the insured's duties after a loss under Angie's Personal Automobile policy, EXCEPT: Take reasonable steps after the loss to protect the property from further damage. Promptly notify the police if the vehicle is stolen. Allow the insurer to inspect and appraise the damaged property. Facilitate the repairs to the vehicle and submit the invoice to the insurer
Facilitate the repairs to the vehicle and submit the invoice to the insurer - The insured is not permitted to make repairs on the vehicle until after the vehicle has been inspected and/or appraised and an agreement as to the damages has been reached with the insurer.
Insurance companies add the name of the claimant's attorney as an additional loss payee on claim settlement drafts. Which of the the following statements describes the reason for this? The insurance company lists the name of the attorney, because it's the role of the attorney to make sure all other parties are paid out of the settlement money. Most claim settlement drafts are complicated. If the name of the attorney is listed there, it prompts the attorney to explain the settlement to the claimant. If the insurance company only lists the claimant on the settlement, the claimant may not pay the attorney his/her fee from that payment, and the attorney could then sue the insurance company for payment. The name of the attorney is listed on the settlement draft because when the claimant hired the attorney, the attorney became the claimant-in-fact. Therefore, the settlement belongs to the attorney to distribute acco
If the insurance company only lists the claimant on the settlement, the claimant may not pay the attorney his/her fee from that payment, and the attorney could then sue the insurance company for payment.
Claims expenses covered under Section II -- Personal Liability of the standard Homeowners forms do NOT pay for which of the following? The costs to defend the insured in court. Premiums on bonds required in a suit the company defends. Loss of the insured's earnings subject to a pre-determined limit of $300 per day. Interest on judgment that accrues after the judgment has been entered.
Loss of the insured's earnings subject to a pre-determined limit of $300 per day. is correct. EXPLANATION: The policy will pay the loss of the insured's earning for up to $250 per day, not $300.
Which of the following statements is TRUE concerning Part A - Liability coverage on a standard Personal Automobile policy? The coverage is "excess" for owned automobiles. The coverage is provided only for accidents caused by those who are "insureds" under the policy. It provides for unlimited wage loss coverage. The minimum required for financial responsibility to cover property damage is $7,000
The coverage is provided only for accidents caused by those who are "insureds" under the policy
Gavin, the named insured under a Personal Auto policy, his daughter Tabitha, and two of her friends are riding in the covered auto when Gavin accidentally runs a stop sign, striking another vehicle. Everyone in Gavin's vehicle was injured as well as the driver and two passengers in the other car. Who would be covered for their injuries under Part A of Gavin's policy? Gavin and Tabitha. Gavin, Tabitha, and Tabitha's friends. Gavin, Tabitha, Tabitha's friends, the driver and passengers in the other car. The driver and passengers in the other car.
The driver and passengers in the other car
Which of the following people does NOT have an insurable interest in an insured property? A home owner's interest in the local town's water pipes that deliver water to his home. A mechanic's interest in a customer's convertible, which is sitting in his garage overnight. A tenant's interest in the premium wood flooring that she had installed in her apartment. A bank's interest in the new minivan they just financed for a young couple.
The homeowner has no insurable interest in the town's water pipes as he does not own them.
When an insured is fulfilling the duty of proving a loss by taking an inventory of the damaged property, who pays the expenses incurred by the insured? The insured. The insurer. The adjuster will provide funds to pay for these expenses. Who pays these expenses will be negotiated at the settlement of the claim.
The insured.. EXPLANATION: The insured is instructed to "keep a record of your expenses for emergency and temporary repairs, for consideration in the settlement of the claim." Reasonable expenses paid by the insured to protect the property from further loss are the obligation of the insurer. Thus any other expenses incurred by the insured are NOT paid by the insurer and the insurer will only pay the "reasonable expenses" to protect the property if the insured maintains an inventory of expenses paid. Until that time, the insured is responsible for all expenses.
Nathan owns an ice cream shop in a strip mall next door to Eli's Hot Dogs & More restaurant. Eli's restaurant is damaged by fire, and Nathan is denied access to his ice cream shop by the fire department because it is adjacent to the damaged restaurant. If Nathan's Commercial Property policy includes a Business Income coverage form, then the insurance company will cover Nathan's loss of business income for: A maximum of six months. A maximum of thirty days. A maximum of sixty days. A maximum of four weeks.
When the loss of income is due to the actions of a civil authority (in this case, the fire department), coverage is limited to only four weeks, after a waiting period of 72 hours. More coverage can be purchased for an additional premium.
When will an insurance company pay damages on behalf of an insured under a CGL policy?
when the company determines that the insured is legally liable
Alexander has covered a home he has inherited under a DP-1 form with the EC perils included. The home is situated on property that has been passed down in Alexander's family for generations and there is a fairly large family cemetery on the property. How much coverage would Alexander have under Coverage B of his policy, to cover the grave markers and mausoleums in his family cemetery? $0 $5,000 $1,000 $2,000
$0 - Coverage B of the Dwelling forms excludes grave markers and mausoleums.
What is the maximum limit that can be paid on a property or casualty claim under the New Hampshire Insurance Guaranty Association?
$300,000 - Claims in excess of $50.00 that do not exceed $300,000 can be paid by the New Hampshire Guaranty Association.
What is the Collision coverage deductible under a Personal Automobile policy in New Hampshire? $250 $500 $1,000 $200
$500
All of the following statements are TRUE regarding BOP Property Coverages, EXCEPT: The limit of both Coverage A & B must be shown on the declarations page of the policy. A business owner who rents the premises to conduct business must purchase both Coverage A & B of the policy. A business owner who rents the premises to conduct business need only purchase Coverage B of the policy. A business owner who rents the premises to conduct business need not purchase Coverage A of the policy.
A business owner who rents the premises to conduct business must purchase both Coverage A & B of the policy. is correct. EXPLANATION: A business owner who rents the premises to conduct business is not required to purchase Coverage A which covers the building owned by her landlord.
What is a "board foot" ?
A piece of lumber 12" wide by 1' long by 1" thick - this is a unit of measurement to calculate pricing
An "independent adjuster" may also be known as all of the following, EXCEPT: A catastrophe adjuster. A staff adjuster. A public adjuster. A field adjuster.
A public adjuster. is correct. EXPLANATION: An independent adjuster will never be known as a "public" adjuster as these two licenses are the opposite of each other. Independent adjusters on behalf of insurance companies, and public adjusters work on behalf of the policyholders.
A settlement in which the claimant receives payment in installments over a period of time instead of a lump sum is: A Structured Settlement. Scheduled Payment Release. Full Release Settlement. Open-Ended Release
A structured settlement is usually reserved for large settlements. Structured settlements may call for part of the full amount to be paid as a lump sum.
If there were other existing insurance, coverage under crime insurance would be: Primary Pro rated Excess Excluded
Crime insurance has the "other insurance clause" which states that the coverage would be pro-rated between the other insurance coverage if the other insurance is subject to the same terms and conditions. The insurer will only pay its share of the loss.
A bank robber locks the employees and several customers in a vault and demands money for their release. If the bank is forced to pay the demands, what crime coverage if any will cover this loss? Securities stolen by others Guests Property Employee Theft Extortion-Commercial Entities
Extortion-Commercial Entities. EXPLANATION: If the entity gives in and pays the demands, the "Extortion-Commercial Entities" crime form will respond.
A customer is injured on the insured's premises and the insured is not found legally liable. The insured carries a Commercial General Liability policy. Which of the following CGL coverages would apply to cover the customer's injuries?
Medical payments
Which of the following is not considered a valid reason for the cancellation of a residential risk? Nonpayment of premium One large claim Physical changes in the risk causing an increase in hazard Fraud or concealment
One large claim
Under Part A of a Personal Automobile policy, "supplementary payments" refer to which of the following? Payment of defense and other expenses by the insurance company beyond the limits of liability. Payments made by the insured for damages exceeding his policy limits. Payments received by the insured directly from the person or persons who caused a loss. Payments made by the insurance company for the insured's own medical expenses, to supplement any other medical insurance.
Payment of defense and other expenses by the insurance company beyond the limits of liability.
What is true about controlled forms?
These forms are usually issued according to published rules and rates
What is a constructive total loss?
When the cost for repair of an item is more than the current value of that item
Depreciation of a total loss to a vehicle as a result of normal wear and tear and rust is limited to: $1,500 $2,000 $1,000 $3,000
$1,000.
A vehicle rolled over exiting the interstate. The insured carries collision coverage with a $1,000 deductible and other than collision coverage with a $500 deductible. The damage to the vehicle is $2,000. What amount is the insurer responsible to pay? $2,000. $1,000. $1,500. Nothing.
$1,000.. EXPLANATION: A vehicle that rolls over and sustains damage is considered to be a collision claim versus an other than collision claim. The damage to the vehicle is $2,000 and the deductible is $1,000. Therefore, the insurer is liable for $1,000.
The insured owns a one-family dwelling with a detached garage. The dwelling is insured for $200,000. How much coverage applies to the detached garage? $10,000. $15,000. $20,000. $0.
$20,000 - The policy provides for 10% of the dwelling (Coverage A) limit. Therefore, the garage is insured for $20,000 for the same perils that apply to the dwelling.
In New Hampshire, every insurer, upon notice of a claim, must acknowledge the receipt of such notice in writhing within:
10 days
When does a "standard fire policy" go into effect in New Hampshire? Noon 12:01 pm 12:01 am 1:00 pm
12:01 AM
Under a standard Equipment Breakdown policy, the full replacement cost will be paid on the claim, if the equipment is repaired within what time period following the loss? 6 months 12 months 18 months 24 months
24 months. EXPLANATION: The insured must repair or replace the damaged property within 24 months after the date of the breakdown (unless the time period is extended by the insurer in writing), or recovery of the loss is limited to the lesser of the cost it would have taken to repair the damaged property, or the actual cash value of the property at the time of the breakdown.
A 2 to 4-Family Dwelling is covered under the NFIP for incidental occupancies if it occupies less than: 25% of the building's replacement cost value. 25% of the building's actual cash value. 25% of the building's total floor area. 25% of the building's common living areas.
25% of the building's total floor area
Policies issued under the National Flood Insurance Program provide removal coverage for property which is moved to another location to protect it from a flood. This coverage applies for up to: 45 days. 10 days. 30 days. 60 days.
45
The amount of loss under a fire insurance policy is due and payable within ______ days after receipt by the insurance company of proof of loss. The insured may commence an action after the expiration of that time to recover the same. 15 30 60 45
60
Whenever the Commissioner has reason to believe that any person involved in the insurance business in New Hampshire is engaging in any method of competition, or any act or practice that appears to be unfair or deceptive may call for a hearing. A ____notice must be sent to the involved parties. 10 20 15 12
A 10-day notice must be sent to all parties.
Which of the following businesses would be eligible for a Businessowners policy? A dental office. A contractors business that provides insulation services. A savings and loan. A small wig manufacturing business.
A dental office.. EXPLANATION: A dental office is the only business listed that would be eligible for coverage under a Businessowners policy. Manufacturing businesses are generally not accepted for BOP coverage due to the "Products" liability exposure. The contractor providing insulation services would not be eligible for a Businessowners policy due to the risk involved in performing the service. The savings and loan would not be covered due to the large crime risk.
Which of the following is not "mobile equipment" under the business auto policy? A self-propelled vehicle with permanently attached street-cleaning equipment. A Caterpillar tractor. A forklift. An electric-powered cart used solely for transportation within a large warehouse.
A self-propelled vehicle with permanently attached street-cleaning equipment. is correct. EXPLANATION: In the definition of "mobile equipment" which is usually covered by the CGL policy, a self-propelled vehicle with permanently attached street-cleaning equipment is considered to be an auto and not "mobile equipment."
Which of the following would be covered under Coverage A of a Farm insurance policy? A structure attached to the dwelling. A structure detached from the dwelling. Dwelling personal property. Livestock.
A structure attached to the dwelling..
Melinda's insurance policy is cancelled because she has not paid the premium. In this scenario, which of the elements of a valid contract is missing? Competent parties. A legal purpose. An offer and an acceptance. A valuable consideration.
A valuable consideration.
When the property covered under an insurance policy is destroyed beyond repair and nothing of value remains, this is known as: Partial average loss. Constructive total loss. General average loss. Actual total loss.
Actual total loss
Which of the following vehicles is considered a temporary substitute auto under a personal auto policy? An auto loaned by the garage while the vehicle of the insured is being repaired. A pickup truck owned by a neighbor and borrowed by an insured to run an errand. An auto purchased by an insured to replace a previously owned vehicle. An auto rented by an insured when the insured is on vacation.
An auto loaned by the garage while the vehicle of the insured is being repaired. is correct. EXPLANATION: This is as per the policy provision as respects to the definition of a substitute vehicle. The temporary substitute vehicle is considered a covered auto only IF the insured's vehicle is not usable due to service, repair, breakdown or destruction. The rental vehicle on vacation does not mention that the insured's car is inoperable.
All of the following are covered under the "supplementary payments" section of a Commercial General Liability policy, EXCEPT Court costs. Costs incurred by the insurer in investigating the claim. Insured's loss of earnings incurred at insurer's request. Costs of repair service performed on personal property at the scene of the accident.
Costs of repair service performed on personal property at the scene of the accident.
Which coverage of a Homeowners policy would pay for damage to a neighbor's window caused by the insured? Coverage A Coverage E Additional Coverages This is an exception to an exclusion.
Coverage E - Personal Liability would pay for the property damage to others caused by the insured under a Homeowners policy.
Which of the following would be covered by the Sign Coverage Form for Newman Sign Company? Customer signs in their care custody and control Newman's sign repair trucks Sign manufacturing equipment at the shop Accounts Receivable for uncollectible accounts
Customer signs in their care custody and control.
Which of the following is not a subject for supplementary payments under a CGL policy? Reasonable expenses incurred by the insured at the insurance company's request Expenses for first aid at the time of an accident Cost of bail bonds Interest on the amount of a judgment not yet paid by the insurer
Expenses for first aid at the time of an accident
Which of the following is not eligible for coverage under any of the Homeowners forms? A tenant living in an apartment building. A condominium unit-owner. A residence on a farm. A mobile home used as a permanent residence.
Farm dwellings and personal property are not eligible for coverage under a Homeowners form. Separate Farm insurance coverage is available.
The Part A - Liability section of a standardized personal auto policy will provide coverage for which of the following vehicles? A taxi cab. His pick-up truck when it is rented to a neighbor. His family car while being used in car pool. A limousine he rents out for weddings and special occasions.
His family car while being used in car pool.. EXPLANATION: The only one that would be covered is the family car while being used in a car pool. Using a vehicle as a taxi, livery service or as part of any ride sharing network is excluded.
Conrad is a contractor with Builders' Risk coverage written on a reported value basis on his current construction job. He started clearing the land on May 1st, digging the basement on May 13th, pouring the foundation on May 31st, blocking the basement walls on June 5th, flooring the first floor above the basement on June 15th, and constructing the walls of the first floor on June 30th. When did Conrad's Builders' Risk policy begin providing coverage? June 5th. June 15th. May 1st. May 13th.
If a Builders' Risk form is written on a reported value basis and the building includes a basement, coverage begins on the date construction begins on the lowest floor that will be located above the basement. In this scenario, this would be on June 15th.
Which of the following is not a common risk management technique? Multiply the risk by engaging in hazardous activities. Avoid the risk by avoiding the activity or selling the property which created the risk. Assume the risk through deductibles or self-insurance. Share the risk with others.
Multiply the risk by engaging in hazardous activities.
The Commercial Articles Coverage Form is designed to cover: Jewelry in excess of $250,000 Bulldozers and other construction equipment Musical instruments and related equipment; cameras and related equipment Retail sporting equipment
Musical instruments and related equipment; cameras and related equipment . EXPLANATION: The Commercial Articles Form covers cameras, projection machines, musical instruments and their related equipment.
The insured is transporting his yacht on its trailer and pulling it with his truck. The trailer separates from the truck hitch and the boat strikes another vehicle. There is property damage and bodily injury to a third party. The yacht and trailer are a total loss. What coverage would apply under the yacht policy? All the damages would be covered Only the third party damages would be covered Only the damage to the yacht and trailer None of the damages are covered
Only the damage to the yacht and trailer. EXPLANATION: The damage to the yacht and trailer would be covered. The bodily injury and property damage to a third party would be covered under an auto policy.
Which of the following would be considered "general damages" that could be awarded to a plaintiff in a negligence case? Lost wages. Medical expenses. Pain and suffering. Vocational rehabilitation
Pain and suffering. is correct. EXPLANATION: General damages reimburse an injured party for intangible, non-economic items such as pain and suffering.
The insured carries employee theft coverage. An employee does not steal money, securities or other property but forges some of the insured's checks. What will the insurance carrier do? Deny the claim because it does not involve the theft of money Pay the claim Deny the claim because it does not involve the theft of other property Send the insured a reservation of rights letter
Pay the claim. EXPLANATION: This insuring agreement provides coverage in case an employee takes money, securities, or other property unlawfully from the insured, thereby depriving the insured of that item. Therefore, loss or damage to money, securities and other property that results from forgery is also covered in this insuring agreement.
Blake has been planning to quit his job as a clerk in a United States Court House and open an antique store. After doing some research and finding that antiques do not sell well, he decides to abandon the plan and stay on at the court house. Blake is practicing: Risk transference. Risk retention. Risk avoidance. Risk reduction.
Risk avoidance
A prospective insured wishes to protect her firm against criminals taking money from a messenger going from the firm to a bank. In this situation, the prospect should purchase coverage for: Robbery. Fidelity. Assault. Burglary.
Robbery. . EXPLANATION: Robbery is defined as the taking of property by force with the threat of violence or injury.
Which of the following is the policy territory as described in the standard Personal Automobile policy? The United States, its territories and possessions, Puerto Rico and Canada. The United States, its territories and possessions, Mexico, Puerto Rico and Canada. The United States, its territories and possessions and Canada. The United States, its territories and possessions, Mexico and Canada.
The United States, its territories and possessions, Puerto Rico and Canada..
Which of the following cause of loss forms provides named peril coverage? The broad form only. The basic form only. The basic and broad forms only. The basic, broad, and special forms.
The basic and broad forms only.. EXPLANATION: The basic and broad cause of loss forms provide named peril coverage, the special form provides open peril coverage.
A New Hampshire insured has wrecked his vehicle. The insurer has asked for an estimate of damage. Who is responsible for the fee for this first estimate? The insured. The insurer. The garage if they are hired to perform the repair work. The fees are not permitted in New Hampshire.
The insured. is correct. EXPLANATION: The insured or claimant will only be responsible for the cost of one damage estimate for motor vehicle property damage liability and collision and comprehensive claims. The insurer will be responsible for any charge incurred by the insured or claimant for a second or any subsequent damage estimates required by the insurer.
Sebastian throws a roast in the oven and decides to go to the movies, thinking that he has plenty of time before roast will be fully cooked. After the movie, he is caught behind a car accident and it takes him several hours to get home. When Sebastian finally arrives home, the roast is completely blackened and the contents of his home are thoroughly covered in soot from the smoke. Which of the following statements is true regarding how this claim would be handled under a Homeowners policy? The loss would be covered under the peril of fire . The loss would not covered because the peril of smoke is excluded. The loss would be covered under the peril of smoke . The smoke was not caused by an unfriendly fire and therefore, the loss is excluded.
The loss would be covered under the peril of smoke.. EXPLANATION: Even though the cause of this loss was not a fire, the loss is still covered under the peril of smoke. Property forms include the peril of smoke. This is a separate peril and the smoke damage does not have to occur as a result of a fire under a Homeowners policy.
What is the main purpose of government regulation of the insurance industry? To provide a better understanding to the general public of the importance of insurance. To keep insurance losses from falling to the government for payment. To help insurance companies make a profit. To protect the insurance consuming public.
To protect the insurance consuming public
The definition of "occupying" in the personal auto definitions means all of the following, EXCEPT: In a vehicle. Upon a vehicle. Out of or off of, a vehicle. Under a vehicle.
Under a vehicle.. EXPLANATION: "Occupying" means in, upon, getting in, on, out or off. "Under the vehicle" is not included in the definition of occupying.
Jack Tate ignores the safety warnings and instructions when setting the controls of the steam boiler and as a result, the boiler explodes. Jack carries Equipment Breakdown coverage. The adjuster for Pressure R Us Insurance Company may do which of the following?
Deny coverage under the intentional errors & omissions exclusion
Coverage would be provided for trees, shrubs, or other plants under the additional coverages of the standard Homeowners policies in which of the following situations? The insured's 16-year-old son accidentally drives over the new shrubs the named insured has just planted along his driveway. An expensive fruit tree that is killed by the insured's dog who repeatedly urinates at the base of the tree. A neighbor, driving his own vehicle, accidentally runs over the insured's holly tree when he runs off his own driveway and into the insured's yard. Shrubs that are ruined because the named insured emptied motor oil into the yard while changing the oil in his car.
A neighbor, driving his own vehicle, accidentally runs over the insured's holly tree when he runs off his own driveway and into the insured's yard.. EXPLANATION: Trees, shrubs and other plants will not be covered when the named insured or a resident of the named insured's household destroys them. The only situation that would be covered is when the neighbor, driving his own vehicle, accidentally runs over the insured's holly tree when he runs off his own driveway and into the insured's yard.
Which of the following statements best describes a representation in an insurance application? A representation is a statement made by the applicant that he believes to be true when made, but which might prove to be false. A representation is a promise by the applicant that certain conditions will continue to exist throughout the policy term. A representation explains the promise made by the insurance company. Another name for a representation is a warranty.
A representation is considered to be the truth, to the best of the applicant's knowledge and belief. It is an honest statement of a supposed fact. A misrepresentation is a knowingly false statement. A warranty is a statement guaranteed as factual.
When it is known that an employee is guilty of theft or other dishonest act, how is coverage affected? Coverage will continue if the employee agrees to make complete restitution. Coverage continues until the expiration date of the coverage. Coverage is cancelled immediately. Coverage will continue if an additional premium is charged for the increased exposure.
Coverage is cancelled immediately. is correct. EXPLANATION: When it is known that an employee has committed a crime, the coverage for that employee terminates immediately for future losses.
Which of the following statements is TRUE regarding the HO-6 form? It does not cover the insured for liability. It excludes coverage for loss of use. It covers the walls, floors, and ceilings of dwelling unit. It covers the siding on the outside of the condominium unit.
It covers the walls, floors, and ceilings of dwelling unit..
A method of setting claim reserves based on the claim's circumstances and the claim representative's experience in handling similar claims is known as:
The "individual case method" sets claim reserves based on the claim's circumstances and the claim representative's experience in handling similar claims.
The Commercial Property broad cause of loss form would cover which of the following types of water damage? A flood that ruins the floors of the covered building after heavy rain. A mudslide that enters the covered building. Seepage of ground water into a cracked foundation. Water escaping from a cracked water heater.
The broad cause of loss form excludes water damage from floods, sewer backup, mudslides, or seepage of ground water. It would, however, cover damage caused by the accidental discharge of water that is a result of the cracking or breaking of a water or steam system or appliance.
The Building & Personal Property coverage form provides: Outdoor signs, only if they are attached to the building, for up to $2,500 if damaged or destroyed by an insured peril. Outdoor signs, whether attached to the building or not, for up to $2,000 if damaged by a peril insured against. Outdoor signs, only if they are not attached to the building, for up to $2,000 if damaged or destroyed by an insured peril. Outdoor signs, whether attached to the building or not, for up to $2,500 if damaged by a peril insured against.
Outdoor signs, whether attached to the building or not, for up to $2,500 if damaged by a peril insured against
Marty has full coverage under a standard Personal Auto policy for the three cars he owns. He and the members of his household are covered as insureds under the policy. Marty's 16-year-old son Gordy, spends the weekend at his friend Steve's home and during the visit, drives one of Steve's family's cars with permission. Gordy has an accident and he is at-fault for bodily injury to others. Which of the following statements best describes how this claim will be paid? Part A - Liability of both Marty's and Steve's family's policy will pay for their portion of the claim "pro-rata" Marty will have to pay for the claims out-of-pocket because Gordy is not covered under Marty's policy or Steve's family's policy. Part A - Liability of Steve's family's policy will pay the entire claim and Marty's policy will not apply. Part A - Liability of Steve's parents policy will be primary and the Part A - Liability section of Marty
Part A - Liability of Steve's parents policy will be primary and the Part A - Liability section of Marty's policy will be excess to pay the claim.
Which of the following is the first duty of the insured after suffering a property loss? Take steps to protect the property from further loss. Have the damaged property appraised. Hire an outside claims adjuster. Increase his coverage.
Take steps to protect the property from further loss.
Sally Roe's vehicle is rear-ended by John Doe. Sally and John are good friends. Sally tells John not to worry about the damage. She says she has insurance and will tell her insurance company to pay for the damage. She will waive her subrogation right so that John won't have to pay anything. Her insurer will: Honor the waiver. Not honor the waiver. Proceed with subrogation against John Doe and will not honor the waiver. Refuse to pay the claim because of the waiver of subrogation.
roceed with subrogation against John Doe and will not honor the waiver.. EXPLANATION: Sally does not have to file a claim. She can pay for the damage herself if she chooses. However, she cannot ask her insurance company to pay for her damage without allowing it the right to subrogate. With insurance, subrogation is the substitution of one party (insurer) for another party (insured) to pursue any rights the insured may have against a third party liable for the loss paid by the insurer. Once the insurer has paid for the insured's (Sally's) damage, it has the contractual right to recover not only Sally's deductible, but also the money it paid for Sally's repairs from the at-fault party (John). Sally cannot "waive" this contractual right.
Which of the following contractors would be eligible for a Businessowners policy? A carpenter doing all of his own work building kitchen cabinets in people's homes and earns $75,000 per year. A general contractor. A roofing contractor with an annual payroll of $400,000. A tree removal service.
A carpenter doing all of his own work building kitchen cabinets in people's homes and earns $75,000 per year. . EXPLANATION: The BOP is a commercial package policy that provides property and liability insurance to certain types of small businesses. Some small businesses, such as tree removal services, are not eligible. General contractors and contractors with annual payroll in excess of $300,000 are also ineligible.
Which of the following dwelling forms provides broad perils coverage for personal property? DP-2 and DP-3 only DP-1, DP-2, and DP-3 DP-3 only DP-2 only
DP-2 and DP-3 only. EXPLANATION: The DP-1 includes only the perils of fire, lightning, and internal explosion. A DP-1 policyholder can add the extended coverage and vandalism perils by indicating this choice on the declarations page, but the broad perils (damage by burglars, etc) is NOT available. Both the DP-2 and the DP-3 forms automatically provide fire, lightning, EC, vandalism, and the broad perils for personal property.
The "Pollution Clean-Up and Removal" coverage under the Building and Personal Property coverage form of a CPP: Is completely excluded. Is a coverage extension. Is an additional coverage. Is an optional coverage.
Is an additional coverage.. EXPLANATION: "Pollution Cleanup and Removal" is an additional coverage under the Building and Personal Property coverage form (one of several Commercial Property coverage forms that can be added to a Commercial Package Policy).
Which of the following is not considered a "breakdown" under Equipment Breakdown coverage? Mechanical failure Rupture or bursting caused by centrifugal force Electrical failure Lack of power, light, heat, steam or refrigeration
Lack of power, light, heat, steam or refrigeration. EXPLANATION: Breakdown is direct physical loss that causes damage to covered equipment requiring it to be repaired or replaced. It must be caused by a failure of pressure or vacuum equipment, a mechanical failure, including rupture or bursting caused by centrifugal force, or an electrical failure, including arcing, provided the loss or damage is not excluded elsewhere in the coverage form. The lack of power, light, heat, steam or refrigeration is specifically excluded.
The term "undamaged stock", as defined in an Equipment Breakdown policy, applies to which of the following situations? Refers to stock that has not suffered a reduction in value. Refers to the salvage value of the stock after a total loss. Refers to the reduction in the value of the stock as a result of damage to other stock. Losses are not adjusted on a replacement cost basis.
Refers to the reduction in the value of the stock as a result of damage to other stock.. EXPLANATION: This term applies to the reduction in value of undamaged stock parts that become unmarketable or obsolete. If an item cannot be sold because of a loss to other stock, it loses value. Therefore, if there is damage as a result of a direct loss, the insurer limits its liability for unmarketable or obsolete stock. The maximum limit payable is $25,000. As an example, ABC Manufacturing manufactures and sells cutlery sets. A mechanical breakdown loss results in the knives being destroyed. The forks and spoons in the warehouse are undamaged. All cutlery parts are made from the same batch of metal and cannot be properly matched to create a new batch of knives. The forks and spoons are sold as separates at a deep discount because they cannot be marketed as a set. The value of this loss is the reduction in value between the price as separate items and what ABC could have been received as part of a set.
Coverage E under the farm forms covers which of the following? Unscheduled personal property Scheduled personal property Scheduled real property coverage Blanket real property coverage
Scheduled personal property is correct. EXPLANATION: Coverage E covers scheduled farm personal property. Each item to be covered is listed and an amount of insurance is stated.
l of the following would be advantages to an insured or an insurer for purchasing or writing a Commercial Package policy, EXCEPT: Packing policies together allows insurers to charge insureds lower premium rates. Duplicate policy language is eliminated in package policies, making them easier for insureds to understand. Packaging monoline policies together creates fewer working hours for insurers in servicing policies. Packaging monoline policies together can provide broader coverage under each coverage part than purchasing the policies separately.
Packaging monoline policies together can provide broader coverage under each coverage part than purchasing the policies separately.. EXPLANATION: Packaging monoline policies together does NOT create a policy that provides broader coverage. The coverage parts would provide the exact same coverage whether they are included in a package policy or a monoline policy.
