Chapter 11 Flashcards
All of the following coverages may be part of a commercial package policy EXCEPT:
A) inland marine.
B) farm.
C) personal auto.
D) crime.
Answer: C
A commercial package policy (CPP) is a means of providing property insurance for a larger business or organization. A businessowner can select from such coverages as commercial property, commercial general liability, crime, inland marine, boiler and machinery, commercial auto, and farm. Personal auto is not one of the available coverages.
Which one of the following coverages is NOT available under the commercial package policy?
A) Commercial property.
B) Inland marine.
C) Commercial auto.
D) Workers compensation.
Answer: D
A commercial package policy is a common way to provide property insurance for a large business organization. This policy may include coverage for liability, automobiles, crime, and other major lines of insurance. Workers compensation is not eligible for inclusion in the commercial package policy and must be issued separately.
Which of the following forms is NOT eligible to be written as part of a commercial package policy?
A) Commercial crime coverage forms.
B) Boiler and machinery coverage forms.
C) Dwelling property coverage forms.
D) Commercial property coverage forms.
Answer: C
Dwelling property coverage is a personal lines policy and, therefore, is not eligible for inclusion in a CPP.
All commercial package policies must include:
A) 5 or more coverage parts.
B) the common policy declarations and the common policy conditions.
C) commercial auto coverage.
D) commercial crime coverage.
Answer: B
Commercial package policies combine different commercial coverages into a simplified commercial package policy. Regardless of the coverages selected, the commercial package policy will have a common policy declarations page and common policy conditions.
The commercial property conditions form contains circumstances that apply to all commercial property coverage forms, unless a coverage form contains a condition to the contrary. Commercial endorsements that apply to more than one part of a commercial package policy (CPP) are called:
A) interline.
B) inclusion.
C) provisional.
D) interpolicy.
Answer: A
Interline endorsements are commercial endorsements that apply (or could apply) to more than one coverage as part of a package policy (e.g., the commercial property condition form in an interline form that contains circumstances that apply to all commercial property coverage forms, unless a coverage form contains a condition to the contrary).
The common policy declarations of the commercial package policy would provide which of the following information?
A) Insured’s business description.
B) Perils insured against.
C) Duties of both parties to the contract.
D) Modifications to coverage.
Answer: A
A description of the insured’s business is independent of the type of coverage selected and would be common to all lines of insurance. Therefore, its inclusion in the declarations page is appropriate.
Who is responsible for making the premium payments due under a commercial package policy?
A) Insurance company.
B) Agent.
C) First named insured.
D) All named insureds.
Answer: C
Under the common policy conditions, certain responsibilities and obligations are assigned to the first named insured. It is necessary to specify the first named insured because the CPP may be issued to more than one named insured, such as business partners.
The insurer has the right to examine the books and records under a commercial package policy for up to how many years after the policy expires?
A) Three.
B) One.
C) Two.
D) Four.
Answer: A
The insurer may examine and audit the books and records of the insured as they relate to the policy any time during the policy period and up to 3 years after the policy expires.
Which of the following statements about the FAIR Plan is NOT correct?
A) States may have specific requirements for owners seeking coverage.
B) No property can be denied coverage by a FAIR Plan.
C) The FAIR Plan provides property coverage for risks that are uninsurable through the private insurance market.
D) The FAIR Plan is underwritten by all companies writing property insurance in a given state
Answer: B
FAIR Plans are designed to help people obtain property insurance. They provide property coverage for risks that are uninsurable through the private insurance market. Property can be denied coverage by a FAIR Plan; applicants must meet certain underwriting standards.
Answer: B
FAIR Plans are designed to help people obtain property insurance. They provide property coverage for risks that are uninsurable through the private insurance market. Property can be denied coverage by a FAIR Plan; applicants must meet certain underwriting standards.
Answer: A
Fair Access to Insurance Requirements is designed to help people obtain property insurance. It provides property coverage for risks that are uninsurable through the private insurance market. Property can be denied coverage by a FAIR Plan. The risk must meet certain underwriting standards. States may have specific requirements for owners seeking coverage, but coverage cannot be denied solely on the basis of the location of the risk.
