Property Basics Exam
Actual Cash Value in property insurance is best defined as which of the following? A Property replacement cost B Appraised Value C Market Value D Replacement cost at the time of loss, minus depreciation
D. Actual Cash Value valuation provides that the policy will pay the cost to repair or replace the damaged property at the time of loss, less a depreciation factor based upon the age of the property.
Which of the following best describes a hostile fire? A A fire caused by a spark escaping from a fireplace and igniting a carpet B The fire in the firebox of a furnace C A fireplace fire whose heat can be felt through the glass fireplace door D A fire in a trashcan being used to burn leaves
A. Fire insurance is intended to insure against hostile fires. A friendly fire, confined to its proper place, is not insured against by a fire insurance policy.
Which of the following is a property insurance provision that serves to prevent the insured from collecting twice for the same loss? A Subrogation B Indirect Loss C Scheduled Coverage D Agreed Value
A. Subrogation comes into play when a negligent third party is the cause of the loss. Since the insurance company has paid the loss, it receives the insured's right of recovery from the third party.
In Property and Casualty Insurance, when a form is attached to alter or add to policy provisions or conditions, it is known as: A An endorsement B A consideration C A warranty D An exclusion
A. Endorsements are used to modify a policy. They may be used to broaden or restrict coverage, or further define conditions.
A description of the insured property is found in the: A Claim Settlement B Declarations C Scope of Coverage D Definition
B. A description of the insured property is found in the: A Claim Settlement B Declarations C Scope of Coverage D Definition
When an insurer elects not to renew the policy after expiration, it said to be a: A Cancellation B Nonrenewal C Termination D Lapse
B. When an insurer determines that it does not wish to continue coverage for an insured, but is prohibited from cancellation by law or regulation, it may choose not to renew the policy.
All of the following statements regarding the property policy structure are correct, except: A The Declarations Page lists other parties having an insurable interest in the property B The insured's duties and obligations are listed in the conditions section C Additional coverages are added to the policy for an additional premium D The insuring agreement describes the perils that are covered under the policy
C. Additional coverages are automatically included without an additional premium.
Kevin owns several buildings at several locations. He has them insured each on a separate policy and with separate amounts. Kevin has them insured on which of the following methods of writing insurance? A Agreed Value B Blanket C Specific D Scheduled
C. Providing Specific insurance means providing a separate policy on each property. Scheduled and Blanket insurance covers more than one property per policy.
The part of an insurance policy that states where the risk is located is the: A The Insuring Agreement B The Definitions C Declarations D The Conditions
C. The function of the Declarations is to apply the common policy to a specific insured and property. The risk location, therefore, is found in the Declarations.
The following are all found on the Declarations Page, except: A Amount of the deductible B Location of the insured property C Expiration date of the policy D The exclusions
D. The Declarations Page contains the information necessary to tailor the policy to the individual and property insured. The exclusions, common to all policies, are found in the Exclusions section of the policy and coverage forms.
The provision that establishes the method by which coverage will be applied if other insurance applies to the loss, is sometimes called: A The Claim Settlement provision B The Limit of Liability provision C The Subrogation provision D The Other Insurance provision
D. The Other Insurance provision is sometimes known as the pro rata liability provision because it provides for claim settlement to be proportioned to the amount of other insurance.
Under Coinsurance, all of the following are true, except: A There is no penalty when the insured suffers a total loss B Coinsurance results in a reduced rate C If the specified percentage of insurance is not carried, the insured will share in the loss D The value of the property at the time the policy was written determines the amount of insurance required at the time of loss
D. The coinsurance clause stipulates that the value of the property at the time of loss determines the amount of insurance required at the time of loss.
In property insurance, the clause that prevents the insured from relinquishing ownership and leaving damaged property to the insurer and claiming a total loss, is the: A Property Assignment clause B Claim Settlement clause C Loss Payable clause D Abandonment of Property Clause
D. The Abandonment clause simply makes clear that the company will not accept property abandoned by an insured when there is a claim dispute.
When the insurer and the insured cannot agree on the value of the property or the amount of a loss, which clause establishes the procedure to use? A Definitions Clause B Claim Settlement Clause C Loss Payable Clause D Appraisal Clause
The Appraisal Clause of the insurance policy provides a method of settling disputes between the insurer and the insured as an alternative to legal action.
The Insuring Agreement in an insurance policy is best described as: A It determines the coverage that is provided B A description of the property being insured C The Additional Coverages provided by the policy D The name and address of the insured and the name of the insurer
The insuring agreement is the company's commitment of protection to the insured.
