1 - Property Insurance & Management

Question 1

The typical homeowners insurance policy has two main sections. What are they?

Answer 1

Section 1- Covers the property of the insured.

Section 2 - Provides personal liability coverage.

Question 2

Name the regulatory agency that oversees all types of insurance in New York.

Answer 2

The New York State Department of Financial Services (NYSDFS).

Question 3

True or False: Insurance Brokers may represent one more licensed insurance companies.

Answer 3

False - Insurance Brokers represent the property owner, not the insurance company.

Insurance agents may represent one or more licensed insurance companies.

Question 4

Name the part of an insurance policy that identifies the basic terms of the contract.

Answer 4

The delcaration page. The delcaration page is customized to the policyholder.

Question 5

What is the insurance term for an event that causes a loss?

Answer 5

A Peril.

Question 6

What type of insurance is always excluded from a package insurance policy?

Answer 6

Flood Insurance. Flood insurance can only be obtained through federal insurance programs.

Question 7

What is the most widely used homeowners policy and what does it cover?

Answer 7

Homeowner-3 HO-3: SPECIAL FORM POLICY. It covers the home from all risks of physical loss except those excluded, such as flood, earthquake, war, or nuclear accident.

Question 8

Name the policy that protects the same perils as HO-3 policy but also protects all personal possession from risk except those specifically excluded.

Answer 8

HO-5 - THE COMPREHENSIVE FORM POLICY.

Question 9

Explain the Market Value Policy, HO-8.

Answer 9

Market Value Policy provides actual cash value coverage instead of replacement cost coverage. This type of policy is often used when the replacement cost of the property exceeds its Market Value, as with older homes.

Question 10

Explain Actual Cost Value coverage.

Answer 10

Actual Cost Value means the insured will be reimbursed for the replacement value of the property minus depreciation of the lost or damaged property.

Question 11

If someone purchases coverage and does not insure the home for at least X percent of its replacement cost, he will not receive full payment of his loss. What is X percent?

Answer 11

80 Percent.

Question 12

A document that is attached to a policy and changes or modifies the policy in some way is referred to as?

Answer 12

An endorsement.

Question 13

A standard homeowners policy typically includes how much liability coverage?

Answer 13

$100,000 worth of liability coverage.

Question 14

What is the name of the pool of insurance companies in New York that write fire insurance and offer coverage at a premium to other insurers? They also oversee C-MAP the Coastal Market Assistance Program.

Answer 14

New York Property Insurance Underwriting Association (NYPIUA).

Question 15

What association should be contacted for insurance against losses resulting from floods?

Answer 15

FEMA - The Federal Emergency Management Association. FEMA administers the National Flood Insurance Program (NFIP).

Question 16

Section 3445 of the New York Insurance Law requires insurers to provide proper disclosure to their insured of any deductibles of this type attached to their homeowners policies.

Answer 16

Windstorm deductibles.

Question 17

How many days does an insurance company have to cancel a homeowners or tenants policy with as long as a specific reason stated?

Once a policy exceeds the date stated above, how long must the policy be in effect for?

Answer 17

60 days.

3 years.

Question 18

What is the name of the excess liability policy that provides additional coverage and kicks in once the primary policies coverage is exhausted?

Answer 18

An Umbrella Policy.

Question 19

What is an All-Risk policy?

Answer 19

An All-Risk policy covers expenses incurred when business is suspended due to a disaster-related event such as a tornado.

Question 20

If a deductible on an insurance policy is raised from $500 to $1000, what would happen to the premium on the policy?

Answer 20

I would be reduced.

Question 21

True or False: A company or an individual who works for more than one owner should have a real estate license.

Answer 21

True.

Question 22

What purpose do the Management Proposal and the Management Agreement serve?

Answer 22

The management proposal sets forth the commitments of the property manger when he is employed. Within the proposal, the property and land are described, budgets are drafted, and fees are cited.
The management agreement CREATES an agency relationship in which the owner is the principal and the property manager is the agent for the purposes specified in the agreement.

Question 23

A neighborhood of cluster housing or other design with supporting businesses is referred to as?

Answer 23

A Planned Unit Development (PUD).

Question 24

An annual budget that includes income and expenses for week-to-week operations is referred to as?

Answer 24

An Operating Budget.

Question 25

What are capital expenses?

Answer 25

Expenses required to improve or maintain a building.

Question 26

Capital Reserve budget is often referred to as?

Answer 26

The Replacement Reserve Budget.

Question 27

A forecast of income and expenses projected over a short term, typically 5 years, is referred to as?

Answer 27

Stabilized Budget.

Question 28

Define Net Operating Income.

Answer 28

Net Operating Income = Gross income - Operating expenses.

Question 29

What is Effective Gross Income?

Answer 29

Effective Gross Income = Gross Income - Vacancy Rate & Credit loss

Question 30

What is a Property Management Report?

Answer 30

A report that is produced periodically, usually monthly, by the Property Manager (Agent) for the Owner (Principal) that accounts for all funds received and disbursed.

Question 31

T or F: Real Estate Asset Managers Focus on day-to-day operations of the property.

Answer 31

False - Real Estate Asset Managers act as the property owner’s advisor for the property. They focus on long-term financial planning rather than on day-to-day operations of the property.

Question 32

What are the two primary goals of the property manager?

Answer 32

1) Produce the best possible net operating income for the owner. 2) Increase the value of the principal (owner’s) investment.

Question 33

What should be established before a rental of a project is organized and structure?

Answer 33

An operating budget, a capital reserve budget, and a stabilized budget.

Question 34

A property manager is necessarily involved in leasing when managing what type of property?

Answer 34

PUDs - Planned Unit Developments