AD Banker Miscellaneous Personal Lines Coverage Flashcards
1
Q
Fine arts and antiques are classes of property insured on a:
A
Market value basis
B
Replacement cost basis
C
Valued basis
D
Actual cash basis
A
C (Fine arts are typically insured on a valued basis, whereby the insured and insurer agree, at time of insuring, on an amount of insurance to be paid in the event of a loss.)
2
Q
Which of the following is true regarding the Camera Floater?
A
Blanket coverage is provided on cameras and lenses
B
Automatic coverage is provided on newly acquired items for 90 days
C
Automatic coverage is provided on newly acquired items for 60 days
D
Newly acquired are covered up to 25% of the policy amount until reported
A
D (Insured items are scheduled, with the exception that blanket coverage is provided on accessories. Automatic coverage is provided on newly acquired items for 30 days at a limit of insurance up to 25% of the limit designated on the schedule.)
3
Q
Which of the following coverage statements is correct about the Fine Arts Floater?
A
Coverage is automatic on newly acquired items for 90 days
B
Coverage is written on an actual cash value basis
C
Losses due to restoration are covered
D
Coverage is only provided while the items are on loan to any museum or gallery worldwide
A
A (This policy, covering paintings, statuary, carvings, other works of art, rare manuscripts, and antiques, has automatic coverage on newly acquired items for 90 days from the date of their acquisition.)
4
Q
An insurance agent would recommend which of the following floaters to his client who is traveling to Europe for a month’s vacation?
A
Camera Floater
B
Personal Effects Floater
C
Personal Articles Floater
D
Scheduled Personal Property Floater
A
B (The Personal Effects Floater provides worldwide open-peril coverage with one crucial exception: it does NOT apply at the insured’s home. For this reason, it is meant to cover the personal property of travelers and tourists.)
5
Q
Which of the following is true regarding the Fine Arts Floater?
A
Coverage is limited to the United States, Canada, and Mexico
B
It settles losses on an ACV basis
C
Coverage is primarily for stamps and coins
D
It provides automatic coverage on newly acquired items for 90 days
A
D (This policy, covering paintings, statuary, carvings, other works of art, rare manuscripts, and antiques, has automatic coverage on newly acquired items for 90 days from the date of their acquisition.)
6
Q
A personal umbrella policy will not provide coverage for which of the following?
A
Property damage liability to property in the insured’s care
B
Personal Injury
C
Bodily injury
D
Automobile liability
A
A (Damage to property in the care, custody, or control of an insured is excluded under the personal umbrella policy.)
7
Q
Which Statement is true regarding a Difference In Conditions Policy?
A
There is always a coinsurance clause
B
The standard deductible is $250
C
There is no standard form
D
There is a pro rata clause
A
C (There is no coinsurance or pro rata clause and the standard deductible is in the range of $10,000.)
8
Q
Which of the following is true regarding the Musical Instrument Floater?
A
It provides blanket coverage on musical instruments owned by the insured
B
The insured must report newly acquired items within 120 days
C
The insured must report newly acquired items immediately
D
Insured instruments may not be played for remuneration during the policy term
A
D (If coverage is desired for musical instruments played for hire, the policy must be endorsed for such usage and an additional premium paid.)
9
Q
All of the following are true of the Fine Arts Floater, except:
A
It has a 90-day automatic coverage for newly acquired items
B
It covers such items as paintings, rare manuscripts and antiques
C
Coverage applies only to scheduled items
D
Coverage is written on a replacement cost basis
A
D (Coverage is written on a ‘valued’ basis.)
10
Q
Which of the following may be insured on a replacement cost basis under the National Flood Insurance Program?
A
Money and securities
B
1- to 4-family residences and residential condominiums
C
Nonresidential or commercial buildings valued at less than $250,000
D
Nonresidential or commercial buildings less than 3 stories high
A
B (Under the National Flood Insurance Program, property is insured on an actual cash value basis, except one- to four- family residences and residential condominiums may be insured on a replacement cost basis.)
11
Q
In which of the following circumstances would the insured be required to pay a self-insured retention on an umbrella policy?
A
The limits of the underlying policy have been exhausted
B
The insurance carrier is declared insolvent
C
The umbrella drops down to act as the primary policy
D
There is a substantial change in the risk
A
C (The insured is only required to pay a self-insured retention when the umbrella drops down to serve as the primary policy–which happens when the underlying policy doesn’t cover a loss.)
12
Q
The Personal Articles Floater is used to do which of the following?
A
Insure individual personal property on a scheduled basis
B
Replace Coverage B of the Homeowners Policy
C
Insure personal property on a blanket basis
D
Provide replacement cost coverage on personal property
A
A (The Personal Articles Floater is used to insure personal property on a scheduled (or itemized) basis. Articles covered under this floater are no longer covered under Coverage C of the Homeowners Policy.)
13
Q
Which of the following is not covered by the Earthquake endorsement?
A
Mudslide
B
Flood
C
Sinkhole
D
Tremors
A
B (The earthquake endorsement covers earth movement, land shock waves, landslide, mudflow, and the rising, sinking, or shifting of the earth.)
14
Q
Crop/Hail Insurance is a specialized policy that:
A
Guarantees there will be an abundant yield
B
Will replace any lost yield with like produce when reduced by a covered loss
C
Protects against reduced yield because of a covered loss before crops are harvested
D
Protects against reduced yield because of conditions after harvesting
A
C (Crop insurance is a specialized policy that protects the insured against reduced yield because of a covered loss to crops before they are harvested.)
15
Q
All of the following statements regarding flood insurance are true, except:
A
Protection is provided to property that is on normally dry land
B
The policy applies a deductible only to loss of contents
C
Coverage is available from participating private insurers and directly from the NFIP
D
Communities in the earliest stage of participation in the NFIP are in the Emergency Program
A
B (A separate deductible applies to contents and building losses.)
16
Q
The Boatowners Policy does not cover which of the following?
A
Hull
B
Medical Payments
C
Personal Property
D
Property
A
C (Section I of the policy provides open perils coverage for the hull, motor, trailer, equipment, and accessories manufactured for marine use. Section II provides Watercraft Liability, Medical Payments for passengers, and Uninsured Boaters coverages.)
17
Q
All of the following are true of the Personal Jewelry Floater, except:
A
Appraisal is usually mandatory
B
It has a Pair and Sets Clause
C
It can be written on a valued basis
D
It has a 60-day automatic coverage for newly acquired items
A
D (Automatic Coverage under the Personal Jewelry Floater is 30 days.)
18
Q
All of the following are true of a Yacht Policy, except:
A
Includes both property and liability coverage
B
A yacht is covered regardless of its location
C
Includes coverage for fuel spills and commercial towing
D
Lay up warranties are permitted
A
B (A yacht is not covered if it is navigated outside the territory.)
19
Q
The Lay Up Warranty under the Yacht Policy is best described by which of the following?
A
It is a limitation of coverage on the yacht that applies when the yacht is outside its navigational limits
B
It states that coverage is suspended while the yacht is laid up
C
It applies when the insured yacht is in storage and allows a return of premium due to the lower risk
D
It is an additional coverage that applies when the yacht is being repaired or serviced
A
C (The Lay Up Warranty allows a reduction of premium for the period during which the yacht is in storage. This reduction of premium reflects the reduced risk during lay up.)
20
Q
Which is a TRUE statement about the Boatowners Policy?
A
It can be used to insure any owned marine vessel
B
Losses are always settled on a ACV basis
C
It provides named perils coverage for the hull and motor only
D
It provides both property and liability coverage, similar to a PAP
A
D (Similar to a PAP, the Boatowners policy provides both property and liability coverage. It is generally used to insure boats under 26 feet that can be towed by a car.)
21
Q
The Personal Articles Floater is used to do which of the following?
A
Insure personal property on a blanket basis
B
Replace Coverage B of the Homeowners Policy
C
Insure individual personal property on a scheduled basis
D
Provide replacement cost coverage on personal property
A
C (The Personal Articles Floater is used to insure personal property on a scheduled (or itemized) basis. Articles covered under this floater are no longer covered under Coverage C of the Homeowners Policy.)
22
Q
Which of the following coverage statements is correct about the Fine Arts Floater?
A
Coverage is automatic on newly acquired items for 90 days
B
Losses due to restoration are covered
C
Coverage is written on an actual cash value basis
D
Coverage is only provided while the items are on loan to any museum or gallery worldwide
A
A (This policy, covering paintings, statuary, carvings, other works of art, rare manuscripts, and antiques, has automatic coverage on newly acquired items for 90 days from the date of their acquisition.)
23
Q
When an insured’s boat is in storage, which warranty allows for a return on premium?
A
Dry Dock
B
Lay Up
C
Houseboat
D
Storage
A
B (A ‘Lay Up Warranty’ applies when the insured boat is in storage and allows for a return of premium due to the reduced risk of the boat not being used when laid up. If the insured operates the yacht during the lay-up period (or lives on it), no coverage is provided.)
24
Q
Some flood policies are written in the voluntary property market as a result of which program?
A
Standard
B
Write Your Own
C
Emergency
D
National Flood Cooperative
A
B (A Write Your Own (WYO) company may structure its flood business according to guidelines and regulations of the NFIP and within its existing personal lines business.)
25
Which of the following may be insured on a replacement cost basis under the National Flood Insurance Program?
A
Money and securities
B
Nonresidential or commercial buildings valued at less than $250,000
C
1- to 4-family residences and residential condominiums
D
Nonresidential or commercial buildings less than 3 stories high
C (Under the National Flood Insurance Program, property is insured on an actual cash value basis, except one- to four- family residences and residential condominiums may be insured on a replacement cost basis.)
26
A personal umbrella policy will not provide coverage for which of the following?
A
Automobile liability
B
Personal Injury
C
Property damage liability to property in the insured's care
D
Bodily injury
C (Damage to property in the care, custody, or control of an insured is excluded under the personal umbrella policy.)
27
Which of the following is true regarding the Musical Instrument Floater?
A
Insured instruments may not be played for remuneration during the policy term
B
It provides blanket coverage on musical instruments owned by the insured
C
The insured must report newly acquired items immediately
D
The insured must report newly acquired items within 120 days
A (If coverage is desired for musical instruments played for hire, the policy must be endorsed for such usage and an additional premium paid.)
28
Mobile Home Insurance includes all of the following, except:
A
Coverage A Dwelling coverage
B
Property Removal up to $500
C
Coverage C with a limit of 50% of Coverage A
D
Coverage B with a limit of 10% of Coverage A
C (The Personal Property coverage limit is written at 40% of Coverage A for the Mobile Home policy, instead of at 50%.)
29
The Difference in Conditions Policy is a special form used to fill in gaps of a property policy. Which of the following is true regarding this policy?
A
It is written with a minimum of 80% co-insurance
B
It is generally written on an open perils basis, excluding losses by perils that are covered under standard property forms
C
It is written with a Standard Deductible of $1,000
D
The Standard DIC form is developed and filed by the NAIC
B (The Difference in Conditions Policy is designed to provide coverage for all perils not covered under standard property forms. Because of the very broad coverage at the DIC, each insurer writing this form develops its own policy form.)
30
For an antique insured under a Personal Articles Floater, coverage would not be provided for damage caused by:
A
Vandalism caused by a guest
B
Damage caused by the insured during a heated argument
C
Flood
D
Theft
B (Losses caused by the insured (intentional losses) are not covered.)
31
The Personal Articles Floater is written:
A
Only on a replacement cost basis
B
Only on moveable property
C
Only on a named perils basis
D
Only as an endorsement on the Dwelling policy
B (The Personal Articles Floater is typically used to provide rare or high-value items higher levels of coverage than are offered by standard policies. As with all Personal Inland Marine coverage, the PAF can either be added as an endorsement to a Homeowner's or Dwelling policy or written as a stand-alone policy.)
32
A Mobile Home Insurance Policy is most similar to:
A
A Tenants policy
B
A Homeowners Policy
C
An Auto policy
D
A Travel Trailer policy
B (Mobile Home policies include Section I - Property and Section II - Liability, which are similar to the corresponding sections in a Homeowners policy.)
33
Which of the following is not true of the National Flood Insurance Program?
A
Property moved to another location to protect it from flood at the insured location is covered for 45 days at the other location.
B
The deductible applies separately to the building and personal property
C
Personal property in basements is not covered
D
Coverage becomes effective 24 hours after the applicant completes the application and pays the premium.
D (Coverage becomes effective on the 30th calendar day after the applicant completes the application and pays the premium. This is to avoid insuring property that might already be in imminent or existing flooding conditions.)
34
Which statement is true about Crop/Hail Insurance?
A
It covers only one growing season
B
It is reinsured by federal government
C
It is not subject to any deductible
D
It only covers the peril of hail
A (Crop/Hail Insurance coverage ceases when the crop is harvested.)
35
B is traveling to Europe for a month's vacation. Which of the following coverages might her agent recommend to cover personal items?
A
Scheduled personal property
B
Personal articles floater
C
Personal effects floater
D
Camera floater
C (The Personal Effects floater provides worldwide coverage for items worn or carried by tourists.)
36
All of the following are true of the Personal Articles Floater, except:
A
It is written on an itemized or scheduled basis
B
It insures against open perils
C
It is used to insure individual personal property
D
Claims are settled on a replacement cost basis
D (Losses are settled on an Actual Cash Value or Valued basis.)
37
Which of the following is not true about the FAIR plan?
A
Agents cannot bind FAIR plan coverage
B
FAIR means Fair Access to Insurance Requirements
C
It provides property coverage to both residential and farm dwellings
D
It provides basic property coverage to those who have been rejected in the standard market
C (Farm property is not eligible for coverage under the FAIR plan.)
38
A flood damages a home that is in a community in early stages of participation in NFIP, but are not yet considered a participating community. What is the maximum a resident may receive for damages to personal property?
A
Coverage C on the homeowners policy
B
$100,000
C
$10,000
D
Nothing since they are not participating yet
C (The home is covered under the Emergency Program and is eligible for contents coverage for up to $10,000.)
39
The Personal Umbrella Policy does not provide coverage for which of the following?
A
Homeowners liability
B
Personal injury
C
Personal automobile liability
D
Property damage liability to property in the insured's care
D (Damage to property in the insured's care, custody, or control is excluded under the policy.)
40
What coverage is not included under the Boatowners Policy?
A
Medical Payments
B
Property Coverage
C
Hull
D
Personal Property Coverage
D (Like the PAP, a boatowners policy does not cover loss or damage to personal property.)
41
Which of the following is true regarding the Boatowners Policy?
A
It provides open perils coverage, and losses are settled on an actual cash value basis
B
It has a standard deductible of $250
C
It provides open perils coverage, and losses are settled on a replacement cost basis
D
It provides named perils coverage, and losses are settled on an actual cash value basis
A (The Boatowners policy provides Liability and Physical Damage coverage on Inboard and Outboard-Inboard boats of the size that can be towed by an automobile.)
42
Which of the following coverage statements is correct about the Fine Arts Floater?
A
Coverage is written on an actual cash value basis
B
Losses due to restoration are covered
C
Coverage is only provided while the items are on loan to any museum or gallery worldwide
D
Coverage is automatic on newly acquired items for 90 days
D (This policy, covering paintings, statuary, carvings, other works of art, rare manuscripts, and antiques, has automatic coverage on newly acquired items for 90 days from the date of their acquisition.)
43
All of the following are false concerning the National Flood Insurance Program, except:
A
Dwelling coverage includes trees, shrubs, and plants
B
Flood policies are available only from the National Flood Insurance Program
C
Payment for losses are made by the federal government
D
Agents may bind flood insurance for up to 15 days prior to submitting the final application
C (Although private insurers sell and service flood insurance in addition to that provided by the National Flood Insurance Program, the federal government reinsures all flood insurance.)
44
When his client's homeowners policy application is rejected by an insurance company due to underwriting rules, an insurance agent may request coverage under which of the following?
A
Write Your Own Homeowners Program
B
Assigned Risk Plan
C
Joint Underwriting Association
D
FAIR Plan
D (The Fair Access to Insurance Requirements program writes coverage for homeowners who cannot obtain coverage in the standard market or have been terminated in the voluntary market.)
45
Which statement about the Personal Effects/Personal Articles Floater is TRUE?
A
Both floaters offer open-peril coverage worldwide with no exceptions
B
The Personal Effects Floater covers high-value items of personal property, and the Personal Articles Floater covers personal items carried by tourists
C
The Personal Effects Floater covers personal items carried by travelers, and the Personal Articles Floater covers high-value items of personal property
D
There is no difference between the PEF and the PAF
C (The Personal Effects Floater covers personal items carried by travelers. It does not provide coverage for items at the insured's home. The Personal Articles Floater is typically used to provide rare or high-value items higher levels of coverage than are offered by standard policies.)
46
A boat and trailer worth $20,000 is damaged at a lake when the insured drove over a log. The physical damage is covered under which of the following policies?
A
Boatowners
B
Homeowners
C
Dwelling
D
Umbrella
A (Physical damage to the boat will only be covered under the Boatowners policy.)
47
An insurance agent would recommend which of the following floaters to his client who is traveling to Europe for a month's vacation?
A
Personal Articles Floater
B
Personal Effects Floater
C
Camera Floater
D
Scheduled Personal Property Floater
B (The Personal Effects Floater provides worldwide open-peril coverage with one crucial exception: it does NOT apply at the insured's home. For this reason, it is meant to cover the personal property of travelers and tourists.)
48
Which of the following statements regarding flood insurance is not true?
A
Under a Flood Policy, protection is provided to property that normally is on dry land
B
No deductible applies to loss of contents
C
The Federal government is the reinsurer
D
In order to qualify for a federal loan, a property owner located in a recognized flood area must purchase flood Insurance
B (A separate deductible applies to contents and building losses.)
49
Mobile Home Insurance includes all of the following, except:
A
Property Removal up to $500
B
Coverage A Dwelling coverage
C
Coverage B with a limit of 10% of Coverage A
D
Coverage C with a limit of 50% of Coverage A
D (The Personal Property coverage limit is written at 40% of Coverage A for the Mobile Home policy, instead of at 50%.)
50
Multi-Peril crop insurance covered causes of loss include all of the following, except:
A
Insects
B
Pollution
C
Earthquake or volcanic eruption
D
Fire
B (Multi-Peril causes of loss include: adverse weather conditions, fire, insects, plant disease, wildlife, earthquake, and volcanic eruption.)
51
A personal umbrella policy will not provide coverage for which of the following?
A
Personal Injury
B
Property damage liability to property in the insured's care
C
Automobile liability
D
Bodily injury
B (Damage to property in the care, custody, or control of an insured is excluded under the personal umbrella policy.)
52
All of the following are true of the Personal Articles Floater, except:
A
Claims are settled on a replacement cost basis
B
It is used to insure individual personal property
C
It insures against open perils
D
It is written on an itemized or scheduled basis
A (Losses are settled on an Actual Cash Value or Valued basis.)
53
Under a Mobile Home policy, if the mobile home is insured under Coverage A for $70,000, how much coverage would ordinarily apply to personal property under Coverage C?
A
$30,000
B
$42,000
C
$35,000
D
$28,000
D (Under the Mobile Homeowners Policy, Coverage C (Personal Property) is generally written at 40% of Coverage A, instead of 50% under the Homeowners Policy. 40% of $70,000 = $28,000.)
54
Which of the following is true regarding the Fine Arts Floater?
A
Loss is paid on an actual cash value basis
B
It has automatic coverage for only 30 days on newly acquired articles
C
It covers such items as paintings, rare manuscripts and antiques
D
Coverage is limited to the United States, Canada, and Mexico
C (The Fine Arts Floater is designed for works of art, antiques, and works of craftsmanship of high value.)
55
When his client's homeowners policy application is rejected by an insurance company due to underwriting rules, an insurance agent may request coverage under which of the following?
A
Joint Underwriting Association
B
Write Your Own Homeowners Program
C
FAIR Plan
D
Assigned Risk Plan
C (The Fair Access to Insurance Requirements program writes coverage for homeowners who cannot obtain coverage in the standard market or have been terminated in the voluntary market.)
56
Which statement would not be included in a description of the National Flood Insurance Program?
A
It is administered by the Federal Emergency Management Agency (FEMA)
B
For personal property to be covered, it must be inside a fully enclosed building
C
It will not provide coverage on buildings located on, or over water
D
It provides unlimited coverage for qualified property owners
D (There are maximum limits for both the Regular and Emergency programs.)
57
# Choose the best answer regarding the details of the Yacht Policy.
A
The policy contains no navigational limits
B
It is an Ocean Marine Form and provides both property and liability coverage
C
The policy provides coverage only for damage to the yacht itself
D
Liability related exposure must be covered under a separate policy
B (As an Ocean Marine Form designed for large, ocean-going vessels within a specific territory, a Yacht Policy includes Hull, Protection and Indemnity, Medical Payments, and Jones Act coverages.)
58
Which of the following is true about the National Flood Insurance Program?
A
Coverage on trees, shrubs, and plants is limited to $500 for any one tree, shrub, or plant
B
Property removed to protect it from flood is covered for 45 days at other locations
C
For dwelling structures, coverage includes direct and indirect loss
D
Coverage is available for above ground buildings, wharves, piers, and docks
B (Property removed to protect it from flood is covered at other locations for 45 days, but only for the peril of flood.)
59
All earth movements within what period of time are considered a single occurrence of earth movement?
A
60 hours
B
48 hours
C
24 hours
D
72 hours
D (All earth movements occurring within a 72-hour period are considered a single occurrence of earth movement.)
60
Which statement is false regarding the National Flood Insurance Program (NFIP)?
A
The Emergency Program applies after a community has agreed to, but has not yet completed, the process to adopt flood control measures
B
Coverage includes the increased cost of compliance with flood plain management ordinances
C
The Regular Program allows coverage on a single family dwelling up to $250,000
D
It provides coverage for direct and indirect loss to covered property as the result of flooding
D (The National Flood Insurance Program does not provide any indirect financial loss coverage. It covers direct loss only to the insured property from those conditions that constitute the definition of flood under the Program.)
61
Which of the following statements about the National Flood Insurance Program is false?
A
Property removed to protect it from flood is covered for 45 days at other locations
B
Two deductibles apply separately to the building and contents
C
Mudflow is covered; mudslide is not covered
D
Coverage becomes effective after a 24-hour waiting period
D (Coverage usually become effective after a 30-day waiting period; some exceptions apply.)
62
All of the following statements regarding flood insurance are true, except:
A
Communities in the earliest stage of participation in the NFIP are in the Emergency Program
B
Coverage is available from participating private insurers and directly from the NFIP
C
The policy applies a deductible only to loss of contents
D
Protection is provided to property that is on normally dry land
C (A separate deductible applies to contents and building losses.)
63
All of the following are true of the Personal Jewelry Floater, except:
A
It has a 60-day automatic coverage for newly acquired items
B
Appraisal is usually mandatory
C
It can be written on a valued basis
D
It has a Pair and Sets Clause
A (Automatic Coverage under the Personal Jewelry Floater is 30 days.)
64
If property under a Personal Floater risk is insured at a $5,000 valued basis, how much would the insured receive if the item is a total loss, the actual cash value is $4,000, and an auction is selling the same item for $3,500?
A
$4,000
B
$4,000 less the deductible
C
$5,000
D
$3,500
C (If an item is insured on a valued basis, that is how much the policy will pay for a loss.)
65
How is Mobile Home insurance written?
A
By writing a separate Mobile Homeowners Policy only
B
Mobile homes cannot be covered
C
Either by writing a separate Mobile Homeowners Policy or by adding an endorsement to a Homeowners Policy
D
By adding a Mobile Home Endorsement to a Homeowners Policy only
C (Insurance on mobile homes may be written by adding a Mobile Home Endorsement to a Homeowners Policy, or by writing a separate Mobile Homeowners Policy.)
66
Which of the following is true regarding the Difference in Conditions Policy?
A
The DIC policy provides excess amounts of insurance above the primary property policies
B
The minimum coinsurance allowed under the DIC form is 90% coinsurance
C
The DIC usually carries a very low deductible
D
There is no coinsurance clause or pro rata clause and it may be written for a different amount from the policy it complements
D (The DIC policy is not an excess layer of insurance. Rather, it provides coverage for perils not insured against under standard property policy forms.)
67
The Personal Umbrella Policy does not provide coverage for which of the following?
A
Personal automobile liability
B
Property damage liability to property in the insured's care
C
Personal injury
D
Homeowners liability
B (Damage to property in the insured's care, custody, or control is excluded under the policy.)
68
All of the following are true of an Umbrella Liability Policy, except:
A
Specific minimum limits for underlying coverage are required
B
Coverage is worldwide
C
Damage to property in the care and custody of the insured is covered
D
Coverage is excess over the underlying policy
C (Damage to property in the care, custody and control of the insured is excluded from coverage.)
69
Section I of the Boatowners policy provides which type of coverage and settlement option?
A
It provides open perils coverage, and losses are settled on an actual cash value basis
B
It provides open perils coverage, and losses are settled on a replacement cost basis
C
It provides named perils coverage, and losses are settled on a replacement cost basis
D
It provides named perils coverage, and losses are settled on an actual cash value basis
A (Section I of the policy provides open perils coverage for the hull, motor, trailer, equipment, and accessories manufactured for marine use. Losses are settled on an actual cash value (ACV) basis.)
70
If personal injury coverage is not provided by an insured's homeowners policy, but is provided by the insured's umbrella policy, and the insured is sued for slander, which of the following statements is correct?
A
The homeowners policy will pay the entire claim
B
The insured must pay 5% of the total claim
C
The insured's homeowners policy will pay defense costs
D
The insured must pay the umbrella policy's self-insured retention
D (The insured is required to pay the umbrella policy's self-insured retention when the umbrella policy responds to a claim on a primary basis because the underlying primary coverage does not apply.)
71
Which of the following is true about the National Flood Insurance Program?
A
Coverage on trees, shrubs, and plants is limited to $500 for any one tree, shrub, or plant
B
Coverage is available for above ground buildings, wharves, piers, and docks
C
Property removed to protect it from flood is covered for 45 days at other locations
D
For dwelling structures, coverage includes direct and indirect loss
C (Property removed to protect it from flood is covered at other locations for 45 days, but only for the peril of flood.)
72
Which of the following is not true of the National Flood Insurance Program?
A
The deductible applies separately to the building and personal property
B
Property moved to another location to protect it from flood at the insured location is covered for 45 days at the other location.
C
Personal property in basements is not covered
D
Coverage becomes effective 24 hours after the applicant completes the application and pays the premium.
D (Coverage becomes effective on the 30th calendar day after the applicant completes the application and pays the premium. This is to avoid insuring property that might already be in imminent or existing flooding conditions.)
73
Which statement is true about Crop/Hail Insurance?
A
It is not subject to any deductible
B
It is reinsured by federal government
C
It only covers the peril of hail
D
It covers only one growing season
D (Crop/Hail Insurance coverage ceases when the crop is harvested.)
74
Which of the following statements regarding Multi-Peril Crop Insurance is correct:
A
Multi-peril crop insurance is reinsured by the federal government by FCIC
B
Insects and plant disease are excluded from coverage
C
Multi-peril crop insurance is not reinsured by the federal government, but through CHIAA
D
Multi-peril crop insurance protects against the perils of lightning, wind, and pollution
A (The coverage is written by private insurers and is reinsured by the Federal Crop Insurance Corporation (FCIC).)
75
Mobile Home Insurance includes all of the following, except:
A
Coverage C with a limit of 50% of Coverage A
B
Coverage A Dwelling coverage
C
Property Removal up to $500
D
Coverage B with a limit of 10% of Coverage A
A (The Personal Property coverage limit is written at 40% of Coverage A for the Mobile Home policy, instead of at 50%.)
76
All of the following statements regarding flood insurance are true, except:
A
Protection is provided to property that is on normally dry land
B
Coverage is available from participating private insurers and directly from the NFIP
C
The policy applies a deductible only to loss of contents
D
Communities in the earliest stage of participation in the NFIP are in the Emergency Program
C (A separate deductible applies to contents and building losses.)
77
All of the following are true of the Personal Articles Floater, except:
A
Claims are settled on a replacement cost basis
B
It is written on an itemized or scheduled basis
C
It insures against open perils
D
It is used to insure individual personal property
A (Losses are settled on an Actual Cash Value or Valued basis.)
78
All of the following are true of the Personal Jewelry Floater, except:
A
It has a 60-day automatic coverage for newly acquired items
B
It can be written on a valued basis
C
Appraisal is usually mandatory
D
It has a Pair and Sets Clause
A (Automatic Coverage under the Personal Jewelry Floater is 30 days.)
79
Crop/Hail Insurance is a specialized policy that:
A
Will replace any lost yield with like produce when reduced by a covered loss
B
Protects against reduced yield because of a covered loss before crops are harvested
C
Guarantees there will be an abundant yield
D
Protects against reduced yield because of conditions after harvesting
B (Crop insurance is a specialized policy that protects the insured against reduced yield because of a covered loss to crops before they are harvested.)
80
Which of the following is true regarding the Yacht Policy?
A
It has navigational limits that describe the area where the yacht is allowed to operate
B
It is designed for boats that can be towed by automobiles
C
It is written on an Inland Marine form
D
It covers damage to the hull and fittings. Liability coverage may be attached by endorsement
A (The Yacht policy is designed for larger vessels such as yachts, excursion vessels, etc. It is written on an Ocean Marine Form and includes Hull, Protection and Indemnity, Medical Payments and Jones Act coverages.)
81
Section I of the Boatowners policy provides which type of coverage and settlement option?
A
It provides open perils coverage, and losses are settled on a replacement cost basis
B
It provides named perils coverage, and losses are settled on an actual cash value basis
C
It provides open perils coverage, and losses are settled on an actual cash value basis
D
It provides named perils coverage, and losses are settled on a replacement cost basis
C (Section I of the policy provides open perils coverage for the hull, motor, trailer, equipment, and accessories manufactured for marine use. Losses are settled on an actual cash value (ACV) basis.)
82
Which statement is false regarding the National Flood Insurance Program (NFIP)?
A
It provides coverage for direct and indirect loss to covered property as the result of flooding
B
The Regular Program allows coverage on a single family dwelling up to $250,000
C
Coverage includes the increased cost of compliance with flood plain management ordinances
D
The Emergency Program applies after a community has agreed to, but has not yet completed, the process to adopt flood control measures
A (The National Flood Insurance Program does not provide any indirect financial loss coverage. It covers direct loss only to the insured property from those conditions that constitute the definition of flood under the Program.)
83
Which of the following is a false statement about the National Flood Insurance Program?
A
The federal government administers the program
B
It covers direct loss from overflow of inland or tidal waters
C
It covers direct loss from mudslides caused by the accumulation of water
D
There is no deductible
D (The policy applies separate deductibles to losses to the building and to the contents.)
84
When an underlying policy doesn't cover a particular loss, the umbrella will drop down and cover the entire loss, after payment by the insured of a:
A
Copayment
B
Premium
C
Retention
D
Commission
C (Similar to a deductible, a retention is an amount paid by the insured before the insurer's obligation to pay takes effect.)
85
Which of the following describes the Lay Up Warranty under the Yacht Policy?
A
It is an additional coverage that applies when the yacht is being repaired or serviced
B
It states that coverage is suspended while the yacht is laid up
C
It applies when the insured yacht is in storage and allows a return of premium due to the lower risk
D
It is a limitation of coverage on the yacht that applies when the yacht is outside its navigational limits
C (The Lay Up Warranty allows a reduction of premium for the period during which the yacht is in storage. This reduction of premium reflects the reduced risk during lay up.)
86
Which of the following is covered by Crop Hail insurance?
A
Non-visible crops
B
Non owned property (shared crop)
C
Failure to harvest a mature crop
D
Damage caused by freezing, drought, insects and disease
D (Crop Hail covers hail, fire, lightning, wind, freezing, drought, insects and disease.)
87
Which of the following coverage statements is correct about the Fine Arts Floater?
A
Losses due to restoration are covered
B
Coverage is written on an actual cash value basis
C
Coverage is only provided while the items are on loan to any museum or gallery worldwide
D
Coverage is automatic on newly acquired items for 90 days
D (This policy, covering paintings, statuary, carvings, other works of art, rare manuscripts, and antiques, has automatic coverage on newly acquired items for 90 days from the date of their acquisition)
88
Which statement would not be included in a description of the National Flood Insurance Program?
A
It will not provide coverage on buildings located on, or over water
B
It provides unlimited coverage for qualified property owners
C
It is administered by the Federal Emergency Management Agency (FEMA)
D
For personal property to be covered, it must be inside a fully enclosed building
B (There are maximum limits for both the Regular and Emergency programs.)
89
All of the following are true of the Fine Arts Floater, except:
A
It has a 90-day automatic coverage for newly acquired items
B
Coverage applies only to scheduled items
C
It covers such items as paintings, rare manuscripts and antiques
D
Coverage is written on a replacement cost basis
D (Coverage is written on a 'valued' basis.)
90
Which description of the Personal Articles Floater is incorrect?
A
It is used to insure individual personal property
B
It is written on a scheduled basis
C
It covers claims on a replacement cost basis
D
It covers losses on an open perils basis
C (Losses are settled on an actual cash value or valued basis.)
91
Which of the following is true regarding Personal Inland Marine Insurance?
A
It covers direct and indirect loss arising from damage to, or loss of, personal property
B
It is written in lieu of Coverage C of the Homeowners Policy
C
Since moveable property is also known as floating property, the policies are sometimes known as floater policies
D
It provides replacement cost coverage on personal property
C (For the Inland Marine underwriter the term floating property simply means property that moves about.)
92
Section I of the Boatowners policy provides which type of coverage and settlement option?
A
It provides open perils coverage, and losses are settled on a replacement cost basis
B
It provides named perils coverage, and losses are settled on an actual cash value basis
C
It provides open perils coverage, and losses are settled on an actual cash value basis
D
It provides named perils coverage, and losses are settled on a replacement cost basis
C (Section I of the policy provides open perils coverage for the hull, motor, trailer, equipment, and accessories manufactured for marine use. Losses are settled on an actual cash value (ACV) basis.)
93
The Difference in Conditions Policy is a special form used to fill in gaps of a property policy. Which of the following is true regarding this policy?
A
It is written with a Standard Deductible of $1,000
B
The Standard DIC form is developed and filed by the NAIC
C
It is generally written on an open perils basis, excluding losses by perils that are covered under standard property forms
D
It is written with a minimum of 80% co-insurance
C (The Difference in Conditions Policy is designed to provide coverage for all perils not covered under standard property forms. Because of the very broad coverage at the DIC, each insurer writing this form develops its own policy form.)
94
All of the following are true of an Umbrella Liability Policy, except:
A
Coverage is worldwide
B
Damage to property in the care and custody of the insured is covered
C
Coverage is excess over the underlying policy
D
Specific minimum limits for underlying coverage are required
B (Damage to property in the care, custody and control of the insured is excluded from coverage.)
95
A flood damages a single-family dwelling that is in a community in the early stages of participation in the NFIP, but they are not yet considered participating. What is the maximum a resident may receive for damages to their personal property?
A
There is no coverage
B
$10,000
C
$35,000
D
$100,000
B (The dwelling is covered under the Emergency program. The maximum amount of coverage for contents in a single-family dwelling is $10,000.)
96
All of the following are false concerning the National Flood Insurance Program, except:
A
Agents may bind flood insurance for up to 15 days prior to submitting the final application
B
Flood policies are available only from the National Flood Insurance Program
C
Dwelling coverage includes trees, shrubs, and plants
D
Payment for losses are made by the federal government
D (Although private insurers sell and service flood insurance in addition to that provided by the National Flood Insurance Program, the federal government reinsures all flood insurance.)
97
Which of the following is true regarding the Musical Instrument Floater?
A
Insured instruments may not be played for remuneration during the policy term
B
The insured must report newly acquired items within 120 days
C
The insured must report newly acquired items immediately
D
It provides blanket coverage on musical instruments owned by the insured
A (If coverage is desired for musical instruments played for hire, the policy must be endorsed for such usage and an additional premium paid.)
98
The Difference in Conditions Policy is a special form used to fill in gaps of a property policy. Which of the following is true regarding this policy?
A
It is written with a minimum of 80% co-insurance
B
It is written with a Standard Deductible of $1,000
C
It is generally written on an open perils basis, excluding losses by perils that are covered under standard property forms
D
The Standard DIC form is developed and filed by the NAIC
C (The Difference in Conditions Policy is designed to provide coverage for all perils not covered under standard property forms. Because of the very broad coverage at the DIC, each insurer writing this form develops its own policy form.)
99
Which statement about the Umbrella Liability Policy is false?
A
It provides coverage for catastrophic liability losses
B
The standard deductible on an umbrella policy is $100,000
C
Policies are usually written in increments of one million
D
Specific minimum limits for underlying coverage are required
B (Umbrella policies pay as soon as the primary policy is exhausted. There is no deductible.)
100
When an insured's boat is in storage, which warranty allows for a return on premium?
A
Lay Up
B
Houseboat
C
Storage
D
Dry Dock
A (A 'Lay Up Warranty' applies when the insured boat is in storage and allows for a return of premium due to the reduced risk of the boat not being used when laid up. If the insured operates the yacht during the lay-up period (or lives on it), no coverage is provided.)
101
Under a Mobile Home policy, if the mobile home is insured under Coverage A for $70,000, how much coverage would ordinarily apply to personal property under Coverage C?
A
$42,000
B
$35,000
C
$30,000
D
$28,000
D (Under the Mobile Homeowners Policy, Coverage C (Personal Property) is generally written at 40% of Coverage A, instead of 50% under the Homeowners Policy. 40% of $70,000 = $28,000.)
102
Which of the following coverage statements is correct about the Fine Arts Floater?
A
Losses due to restoration are covered
B
Coverage is automatic on newly acquired items for 90 days
C
Coverage is written on an actual cash value basis
D
Coverage is only provided while the items are on loan to any museum or gallery worldwide
B (This policy, covering paintings, statuary, carvings, other works of art, rare manuscripts, and antiques, has automatic coverage on newly acquired items for 90 days from the date of their acquisition.)
103
All of the following are true of the Fine Arts Floater, except:
A
Coverage applies only to scheduled items
B
It has a 90-day automatic coverage for newly acquired items
C
It covers such items as paintings, rare manuscripts and antiques
D
Coverage is written on a replacement cost basis
D (Coverage is written on a 'valued' basis.)
104
Which of the following losses would not be covered under a NFIP policy?
A
Mudslides cover a garage on the banks of a major river following torrential rains
B
Tidal waters flood a coastal home following a hurricane
C
A home on a seaside cliff falls to the beach resulting from swift erosion
D
A water main in the street breaks, flooding the insured's basement
D (A water main break does not meet the definition of a covered flood.)
105
All of the following are true of the Personal Jewelry Floater, except:
A
It can be written on a valued basis
B
It has a 60-day automatic coverage for newly acquired items
C
Appraisal is usually mandatory
D
It has a Pair and Sets Clause
B (Automatic Coverage under the Personal Jewelry Floater is 30 days.)
106
Fine arts and antiques are classes of property insured on a:
A
Replacement cost basis
B
Actual cash basis
C
Market value basis
D
Valued basis
D (Fine arts are typically insured on a valued basis, whereby the insured and insurer agree, at time of insuring, on an amount of insurance to be paid in the event of a loss.)
107
Which statement about the Personal Effects/Personal Articles Floater is TRUE?
A
There is no difference between the PEF and the PAF
B
The Personal Effects Floater covers personal items carried by travelers, and the Personal Articles Floater covers high-value items of personal property
C
Both floaters offer open-peril coverage worldwide with no exceptions
D
The Personal Effects Floater covers high-value items of personal property, and the Personal Articles Floater covers personal items carried by tourists
B (The Personal Effects Floater covers personal items carried by travelers. It does not provide coverage for items at the insured's home. The Personal Articles Floater is typically used to provide rare or high-value items higher levels of coverage than are offered by standard policies.)
108
Coverage B with a limit of 10% of Coverage A
B
Property Removal up to $500
C
Coverage C with a limit of 50% of Coverage A
D
Coverage A Dwelling coverage
C (The Personal Property coverage limit is written at 40% of Coverage A for the Mobile Home policy, instead of at 50%.)
109
Which description of the Personal Articles Floater is incorrect?
A
It is used to insure individual personal property
B
It covers losses on an open perils basis
C
It covers claims on a replacement cost basis
D
It is written on a scheduled basis
C (Losses are settled on an actual cash value or valued basis.)
110
Which statement is true about Crop/Hail Insurance?
A
It is reinsured by federal government
B
It only covers the peril of hail
C
It covers only one growing season
D
It is not subject to any deductible
C (Crop/Hail Insurance coverage ceases when the crop is harvested.)
111
All of the following are true of a Yacht Policy, except:
A
A yacht is covered regardless of its location
B
Includes coverage for fuel spills and commercial towing
C
Includes both property and liability coverage
D
Lay up warranties are permitted
A (A yacht is not covered if it is navigated outside the territory.)
112
Section I of the Boatowners policy provides which type of coverage and settlement option?
A
It provides named perils coverage, and losses are settled on an actual cash value basis
B
It provides open perils coverage, and losses are settled on an actual cash value basis
C
It provides named perils coverage, and losses are settled on a replacement cost basis
D
It provides open perils coverage, and losses are settled on a replacement cost basis
B (Section I of the policy provides open perils coverage for the hull, motor, trailer, equipment, and accessories manufactured for marine use. Losses are settled on an actual cash value (ACV) basis.)
113
The National Flood Policy defines all of the following as floods, except:
A
Mudflow caused by accumulation of water
B
Leakage of underground water systems
C
Unusual and rapid accumulation or runoff of surface water
D
Overflow of inland or tidal waters
B (Underground leakage is not considered a flood under the policy.)
114
Which of the following is true regarding the Difference in Conditions Policy?
A
There is no coinsurance clause or pro rata clause and it may be written for a different amount from the policy it complements
B
The DIC usually carries a very low deductible
C
The minimum coinsurance allowed under the DIC form is 90% coinsurance
D
The DIC policy provides excess amounts of insurance above the primary property policies
A (The DIC policy is not an excess layer of insurance. Rather, it provides coverage for perils not insured against under standard property policy forms.)
115
The intent of the Personal Effects Floater is:
A
To insure hard-to-value property like fine art or heirlooms
B
To provide coverage worldwide for travelers
C
To provide coverage for property kept at the home
D
To insure personal property on a scheduled basis
B (The Personal Effects Floater provides worldwide open-peril coverage for items carried by travelers and tourists. The other three answer choices would be covered by a Personal Articles Floater instead.)
116
A boat and trailer worth $20,000 is damaged at a lake when the insured drove over a log. The physical damage is covered under which of the following policies?
A
Homeowners
B
Dwelling
C
Boatowners
D
Umbrella
C (Physical damage to the boat will only be covered under the Boatowners policy.)
117
Which statement is false regarding the National Flood Insurance Program (NFIP)?
A
It provides coverage for direct and indirect loss to covered property as the result of flooding
B
Coverage includes the increased cost of compliance with flood plain management ordinances
C
The Regular Program allows coverage on a single family dwelling up to $250,000
D
The Emergency Program applies after a community has agreed to, but has not yet completed, the process to adopt flood control measures
A (The National Flood Insurance Program does not provide any indirect financial loss coverage. It covers direct loss only to the insured property from those conditions that constitute the definition of flood under the Program.)
118
Which of the following is true regarding the Yacht Policy?
A
It is designed for boats that can be towed by automobiles
B
It covers damage to the hull and fittings. Liability coverage may be attached by endorsement
C
It has navigational limits that describe the area where the yacht is allowed to operate
D
It is written on an Inland Marine form
C (The Yacht policy is designed for larger vessels such as yachts, excursion vessels, etc. It is written on an Ocean Marine Form and includes Hull, Protection and Indemnity, Medical Payments and Jones Act coverages.)
119
Crop/Hail Insurance is a specialized policy that:
A
Protects against reduced yield because of a covered loss before crops are harvested
B
Will replace any lost yield with like produce when reduced by a covered loss
C
Guarantees there will be an abundant yield
D
Protects against reduced yield because of conditions after harvesting
A (Crop insurance is a specialized policy that protects the insured against reduced yield because of a covered loss to crops before they are harvested.)
