1-9. Property and Liability Insurance Flashcards
1
Q
- All states require the use of standard Insurance Services Office (ISO) forms for homeowners insurance.
A
False
- Rationale: Many states do not require standard ISO forms. Accordingly, most insurance policies are variations on these forms.
2
Q
- If the replacement cost provisions of a homeowner’s policy allow for 80% of replacement value and the homeowner insured the property for 80% of rebuilding costs the homeowner would be reimbursed only $80,000 if his $100,000 home were destroyed. (Note: do not consider automatic inflation-guard coverage or endorsements.)
A
True
2.
3
Q
- For high-value items such as jewelry and furs, protection generally is available as an endorsement to a homeowners policy.
A
True
3.
4
Q
- When a client does not need property coverage but does need personal liability coverage, he or she can purchase a Comprehensive Personal Liability (CPL) policy.
A
True
4.
5
Q
- The claim expense provision in a CPL policy excludes costs for the insured’s court defense.
A
False
- Rationale: The claim expense provision states that, in addition to paying damages determined by the court, the policy will pay for the insured’s defense.
6
Q
- Most professional liability insurance is inexpensive.
A
False
- Rationale: The cost of professional liability insurance is quite high. This is necessitated by the fact that people are more likely to sue a professional for failure to use reasonable care.
7
Q
- Umbrella liability policies are sometimes known as catastrophic liability insurance policies.
A
True
7.
8
Q
- One of the responsibilities of a title insurance company is to research county records to ensure that there are no liens on a property.
A
True
8.
9
Q
- Liability is the only portion of a Personal Auto Policy (PAP) that is mandatory.
A
True
9.
10
Q
- Under pure no-fault coverage, an insured cannot sue another driver or another driver’s insurance company.
A
True
10.
11
Q
- If a PAP covers a client’s auto, it also covers the client’s trailer.
A
True
11.
12
Q
- Uninsured motorist coverage provides payment for client losses when an uninsured motorist is at fault. However, coverage does not extend to hit-and-run accidents.
A
False
- Rationale: Uninsured motorist coverage provides payment for losses caused by uninsured motorists and by hit-and-run drivers.
13
Q
- Under the general provisions of a PAP, the bankruptcy of the insured does not eliminate insurer obligations.
A
True
13.
14
Q
- It is often appropriate to carry no physical damage coverage on very old cars.
A
True
14.
15
Q
- A disadvantage to Commercial Package Policies is that there is no discount for buying them as a package (multiple policies) rather than as a single unit.
A
False
- Rationale: One advantage to these policies is that there is generally a discount for buying them as a package. This is far less expensive than buying individual policies for each commercial insurance need.
