Chapter 3. Types of Property Policies Flashcards
xWhat four types of businesses would qualify for a businessowners policy?
Small to medium business of the following kinds:
- Retail or service businesses
- Contractors
- Fast-food restaurants
- Convenience stores
What are the three types of Dwelling forms?
Form DP-1: Basic (named peril)
Form DP-2: Broad (named peril)
Form DP-3: Special (open peril)
What three perils are covered in Dwelling form DP-1?
- Fire (not intentional and not contained within intended boundaries)
- Lightening
- Internal explosion
What six additional perils are covered in Dwelling form DP-1 extended coverage Option 1?
WHARVES
- Windstorm/hail
- Aircraft/vehicles
- Riot/civil commotion
- Volcanic eruption
- Explosion (inside and out)
- Smoke
What additional peril is covered in Dwelling form DP-1 extended coverage Option 2?
All of Option 1 + VMM (Vandalism/malicious mischief)
On what basis is DP-1 form coverage settled?
ACV (Actual Cost Value)
Replacement cost - depreciation
What does Dwelling form DP-2 cover?
B.B. BICE-GOLF
All of DP-1 + DP-1 extended coverage + basic DP-2 coverage
- Burglary
- Bursting of heating systems
- Breaking of water heaters
- Ice, snow or sleet
- Collapse of building
- Electrical damage (artificially generated)
- Glass breakage
- Objects falling from outside
- Leakage of water or steam damage
- Freezing of plumbing
What does Dwelling form DP-3 cover?
Everything not explicitly excluded (because it is an open peril policy)
Dwellings and other structures ONLY
What are the five DP coverages (A-E)?
DIRECT LOSSES
- Coverage A: Dwelling
- Coverage B: Other structures
- Coverage C: Personal property
INDIRECT LOSSES
- Coverage D: Fair rental value
- Coverage E: Loss of use/Additional living expenses
What is the key difference between homeowner’s and dwelling policies?
Homeowner’s includes both property and liability coverage in one policy
Liability is not available in Dwelling policies
What is the maximum number of units allowed in homeowner’s policies?
4
What is the maximum number of occupants allowed in homeowner’s policies VS dwelling policies?
Homeowners:
- 4 owner-occupied residences
- 2 roomers/boarders per unit
Dwelling:
- 5 roomers/boarders
In homeowner’s policies, what is meant by Residence Premises vs Insured Location?
Residence Premises - (more restrictive) residence where the insured lives, other structures and grounds
Insured Location - (less restrictive) includes Residence Premises AND follows insured around (e.g. part of other premises used by insured residence, newly acquired residences, motel room, vacant land not used for farming, etc.)
What are the six homeowner’s coverage forms (HO-1 - HO-8)?
Form HO-1: Basic
Form HO-2: Broad
Form HO-3: Special
Form HO-4: Tenant contents/Broad
Form HO-5: Comprehensive
Form HO-6: Condo unit owners
Form HO-8: Modified coverage
What are the seven HO (homeowner’s) coverages (A-F)?
SECTON I - PROPERTY
Coverage A: Dwelling
Coverage B: Other structures
Coverage C: Personal property
Coverage D: Loss of use
SECTION II - LIABILITY
Coverage E: Personal liability
Coverage F: Medical payments to others
What is the difference between a hired and a non-owned vehicle?
Hired - rental, taxi, etc.
Nonowned - e.g. employees cars
What federal program helps homeowners protect from flooding?
NFIP (National Flood Insurance Program)
It’s part of FEMA
What is the accepted definition of flooding according to the NFIP?
2-2-2
2 walls
2 acres
2 properties
All three must be present
In dwelling policies, within how many years of a loss may an insured bring a lawsuit against the insurer?
2 years
What nine components make up a Commercial Policy?
- Policy cover
- Policy declarations
- Interlines endorsements
- Lines of insurance declaration pages
- Lines of insurance coverage forms
- Common policy conditions
- Lines of insurance conditions
- Causes of loss forms
- Endorsements
What is mysterious disappearance?
Misplacement or loss of property without knowledge as to the location, time and cause of the loss
On what basis are the dwelling and other structures covered in an HO-3 policy form?
On an open-peril basis
Under what conditions can broad theft coverage be added to a dwelling policy?
If the insured is the owner-occupant of the dwelling
What are the 2 types of Utility Services endorsements available in
Businessowners policies?
- Utility Services - Direct Damage
- Utility Services - Time Element
Losses caused by vandalism and malicious mischief are excluded from coverage if a dwelling has been vacant for how many days?
60 days
In Commercial Inland Marine policies, what are the three types of carriers that transport the property and what’s the difference?
- Common Carrier: general publica
- Contract Carrier: specific customers based on a contractual agreement
- Shipper of Owned Property:
A business that transports its own goods on its vehicles, essentially acting as both the shipper and the carrier
What HO form insures a tenant living in an apartment
HO-4 (tenant broad form)
According to the liberalization condition, if an insurer makes a change to broaden coverage in newly issued dwelling policies, how will that change affect policies already in force?
The change will apply automatically
Which dwelling form provides open peril coverage on the building?
DP-3 (Special)
What are the 2 liability coverages included in Homeowners policy forms?
- Coverage E - Personal Liability
- Coverage F - Medical Payments to Others
What is the purpose of the National Flood Insurance Program (NFIP)?
To fill the gap in flood coverage left by private insurers
If 3 volcanic eruptions happen within 48 hours, and each contributes to property damage, how many deductibles will apply in the dwelling policy?
1 deductible (all instances of volcanic eruptions that occur within a 72-hour period are considered 1 occurrence)
What are the seven extended covered perils (Option 1 and 2) on a basic Dwelling policy?
WHARVES + VMM
- Windstorm or hail
- Aircraft and vehicles
- Riot or civil commotion
- Volcanic eruption
- Explosion (inside and out)
- Smoke
- Vandalism and malicious mischief
Under Coverage C of an HO-3 policy, what is the amount of insurance provided for personal property?
At least 50% of the Coverage A limit (this applies to all policies except for HO-4 and HO-6)
Commercial property coverage can be written with one of three causes of loss FORMS. What are they?
Basic, Broad, and Special
What HO form covers a historic home with replacement cost more than the market value?
HO-8 (modified homeowners)
When a dwelling policy is cancelled for nonpayment of premium, the insurer must give notice within how many days of the cancellation?
10 days
Assuming the insurer and the insured agree on the amount payable for a loss covered under a dwelling policy, how soon after receiving the proof of loss must the insurer pay the claim?
60 days
What is the name for policy endorsements that may apply to more than one coverage part?
Interline endorsements
What Homeowners policy form is known as a special form?
HO-3 special form
What do dwelling policies insure?
Dwelling only, contents only, or both dwelling and contents
When can an insured cancel a Businessowners policy and what is required?
Anytime
Written notice of cancellation
What HO form covers condominium unit owners?
HO-6 (condominium unit owners)
What would be considered a single accident in Equipment Breakdown coverage?
All accidents at a single location, at the same time, by the same cause
An insured with a Homeowners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. The removal coverage applies for how many days?
30 days
What is the purpose of interline endorsements in Commercial Package Policies (CPPs)?
They eliminate redundancy and minimize the number of other policy endorsements
Which dwelling coverage form(s) will pay for the replacement cost of a dwelling?
DP-2 (Broad) and DP-3 (Special)
What type of policy is a businessowner’s policy?
Prepackaged, stand-alone policy
What areas can National Flood Insurance be issued to cover?
Only participating, flood-prone areas
What is the limit that the insurer will pay for all losses that occur during a policy period?
Aggregate limit
A businessowner’s policy is sold as a package. What does that mean?
Coverage includes both property and liability
Which dwelling policy coverage will insure a garage not attached to the primary insured dwelling?
Coverage B - Other Structures
What are some of the exclusions found in all 3 dwelling forms?
Earth movement, water damage, power failure, neglect, war, nuclear hazard, intentional loss, freezing of plumbing, ordinance or law, and government action
An insured’s house becomes uninhabitable due to damage by a fire. As a result, the insured has to rent an apartment until repairs are made. Which type of coverage under the dwelling policy will pay for the expense of renting the apartment?
Coverage D - Loss of Use/Additional Living Expenses
Which dwelling form is called the Broad form?
DP-2
For what value is the coverage usually written with HO-8 forms?
For the market value of the property
A basic dwelling policy automatically provides coverage against what?
Fire, lightning, and internal explosion
What business sizes qualify for coverage under a businessowner’s policy?
Small to medium
In Commercial Package Policies (CPPs), who may cancel the policy in writing and make changes to the policy with the consent of the insurer?
The first-named insured
What does form HO-5 cover?
Comprehensive - the dwelling and other structures, as well as contents and personal property
Are land and structures used for business purposes included coverage in all of the homeowner’s forms?
No
What type of property can be covered under Inland Marine insurance?
Any type of property that is portable on land, as well as means of transportation and communication
What are some of the types of businesses that are excluded from coverage under a businessowner’s policy?
Auto sales and servicing, financial institutions, bars and grills, places of amusement, and manufacturers
What Homeowners policy form is known as contents broad form?
HO-4 contents broad form
What are the seven coverage parts that may be included in a Commercial Package Policy (CPP)?
C.G.C.E.A.I.F.
- Commercial property
- General liability
- Crime
- Equipment breakdown
- Auto
- Inland marine
- Farm
What are additional coverages available in homeowner’s policies without additional premiums? (name several)
Debris removal, lawns/plants/shrubs/trees, reasonable repairs and fire department service charge
Which dwelling policy coverage will provide protection for contents damaged by fire in an insured dwelling?
Coverage C - Personal Property
Why does the HO-4 form not provide dwelling coverage?
HO-4 is written for a tenant residing in a rented dwelling; the tenant does not own the dwelling
What type of policy consists of the declarations, conditions, endorsements, and other attachments applicable to a single line of insurance?
Monoline
What type of policy consists of the declarations, conditions, endorsements, and other attachments applicable to a multiple lines of insurance?
CPP (Commercial Package Policy)
When will damage to the interior of the building be covered under the falling objects peril in the broad form of the dwelling policy?
Only if the interior damage is a direct result of exterior damage from a falling object
What type of property would be covered under the Builder’s Risk Coverage Form?
The building, temporary structures, foundations, fixtures, equipment, and materials and supplies within 100 feet of the premises
When other insurance is written on the same basis as a Commercial Property policy, what is the insurer obligated to cover?
A pro rata share of the loss
The limited theft endorsement is intended for which type of property?
A tenant-occupied building in which the owner does not reside
The limited theft endorsement is intended for property in which the owner does not reside
A policyholder has an equipment breakdown policy with a $200,000 limit. If a boiler explosion causes $100,000 damage to the boiler itself, $50,000 damage to the insured’s building, and $30,000 of expediting expenses, how much will the insured collect under the policy?
$175,000
The limit of the equipment breakdown policy applies to property of the insured, property of others, and expediting expenses in any combination as long as expediting expenses do not exceed $25 000
The business income coverage form covers consequential loss of business income that occurs when a business must suspend operations because of a direct loss. Which term best describes the nature of this type of coverage?
Time element
Additional coverages in the liability section of a homeowners policy cover all of the following EXCEPT
A. Damage to a third-party property for which the insured is legally liable.
B. Expenses the insured incurs rendering first aid for bodily injury to third parties.
C. Damage to the property of others.
D. Claims expense.
A. Damage to a third-party property for which the insured is legally liable.
Legal liability coverage is the primary liability coverage, not an additional coverage.
Under a dwelling policy, which clause applies if an insured has lost one of two matching silver candlesticks?
Pair or set
An insured suffers a windstorm loss in which the insured’s driveway is blocked by two of the insured’s trees and two of the neighbor’s trees. The total amount of the removal adds up to the following: three trees at $300 per tree, and one tree at $600. How much will the insurer pay for the loss?
$1000
This is the sublimit for the particular item of removal on standard policies
Under the businessowners policy, the coverage for the newly acquired property is limited to (amount and duration)
$100,000
The newly acquired or constructed property extension applies to business personal property with a limit of $100,000 at each location. Coverage will apply only for 30 days after the insured acquires the property or the end of the policy period, whichever comes first.
How is the fire department service charge covered under the Builders Risk form?
As an additional coverage, meaning it is paid without additional premium up to $1,000
How long is the waiting period after the application has been accepted before flood coverage goes into effect?
30 days
As required by the NFIP
According to the businessowners policy (BOP) definitions, which of the following does NOT mean valuable papers and records?
A. Securities
B. Inscribed deeds
C. Drawings and maps
D. Manuscripts
A. Securities (and money)
Valuable papers and records means inscribed, printed or written documents, manuscripts, and records (including abstracts, books, deeds, drawings, films, maps, or mortgages). The term does not mean money or securities.
What is homeowners Coverage D: Loss of Use?
Additional Living Expense (ALE) - e.g. temporary housing, moving costs, food, laundry, pet boarding
How must jewelry be mailed to be covered for damage in transit under a jewelers block extension?
By registered mail
An insured has a standard HO-4 policy with a $30,000 limit of coverage for personal property. While he was traveling, a fire in his hotel destroys clothes and luggage with a replacement value of $10,000 and jewelry with a replacement value of $10,000. Disregarding any deductible, and assuming a depreciation of 20% has occurred in both properties, what amount is the insurer obligated to pay?
$16,000
This loss would be settled on an actual cash value (ACV) basis: $20,000 total for the loss minus $4,000 for depreciation. Remember, the limitation on loss of jewelry applies to the peril of theft only.
A neighbor’s tree has fallen into the insured’s yard. How much will the insured’s homeowners policy pay and under what two conditions?
$1000
- If caused by covered peril
- If it blocked a driveway or handicap ramp, even if no damage to a covered structure has occurred
As it applies to homeowners policies, the term “business” means
A trade, profession, or occupation
The insured purchased a $200,000 extra expense policy. If the percentages applying to the limit of insurance are 40%, 80%, and 100%, what would be the maximum payable for a 47-day loss?
$160,000
0-30 days = first percentage
30-60 days = second percentage
60+ days = third percentage
Extra expense coverage is written with a minimum of 3 applicable percentages that apply to the limit of insurance in the declarations
What is the coinsurance requirement for a theatrical property floater under an Inland Marine policy?
80%
What three things are covered by electronic data processing coverage form under an inland marine policy?
- Computer hardware that is specifically scheduled
- Data processing media, including magnetic tapes or paper tapes, punch cards and discs
- Extra expense the insured incurs to continue the business following a loss
An insured covered under a mobile Homeowners Policy wants to move the location of the covered mobile home. What must the insured obtain from the insurer?
Transportation/Permission to Move Endorsement
Under the provisions of the business income coverage form, is the insured reimbursed for payroll that continues after the loss begins?
Yes
Under the provisions of the business income coverage form, is the insured reimbursed for the loss from the date of loss to date of restoration or policy expiration date, whichever comes first?
No
Insureds can be reimbursed for losses from the date of loss to the date of restoration even if the policy expires before the restoration period ends, as long as the physical damage occurred while the policy was active
With the fair rental value coverage provided in a dwelling policy, is the period of time to repair or replace limited by the expiration date of the policy?
No, as long as the policy was active at the time the covered cause rendered the property unlivable
With the fair rental value coverage provided in a dwelling policy, is the loss or expense caused by the cancellation of a lease covered?
No
What is the limit covered per stolen property by homeowners policies?
$2,500
What is the limit covered for boats destroyed by hurricane by homeowners policies?
$1,500
What is the limit covered for stolen pets by homeowners policies?
$0
Pets are not covered
What type of property does a personal floaters policy cover?
Movable personal property, wherever it may be located
Is earthquake overage commonly provided through a federally-funded program?
No
Is earthquake coverage excluded by most property forms?
Yes
Can earthquake coverage be added to property policies by endorsements?
Yes
Can earthquake coverage be written in a Difference of Conditions policy?
Yes
This policy is a specialized insurance policy that provides additional coverage for perils typically excluded from standard home or business insurance policies, particularly in high-risk areas prone to natural disasters like earthquakes, floods, landslides, or mudslides
Under the conditions of a Film Coverage Form, how long must the insured maintain records of each production?
3 years after the policy expires
Who is Physicians and Surgeons Equipment Floater not intended for?
Hospitals, schools or other institutions.
In the event of a covered loss, what will the business income coverage pay for?
Net income (i.e. profits that would have been realized if there had been no loss) plus continuing expenses of the business
Which inland marine form would provide the best protection for a dry cleaning company against loss or damage to their customer’s property while in the care, custody, and control of the dry cleaners?
Bailee’s customer policy, which does not cover property of the insured, but does cover their customer’s property while in the care of the insured
Are animals/birds/fish included coverage in all of the homeowner’s forms?
No
Are aircraft and rented property included coverage in all of the homeowner’s forms?
No
Are electronic data and motor vehicles included coverage in all the homeowners forms?
No
The extra expense coverage form provides
Money spent to minimize a business interruption after a direct property loss
What policy covers a carrier for liability for loss to cargo while it is being transported in a truck?
Motor truck cargo policy - carriers form
Would the following be covered by the basic Causes of Loss form under a commercial property policy?
Damage caused by flood waters rising and seeping into the restaurant..
No
Would the following be covered by the basic Causes of Loss form under a commercial property policy?
Automatic fire protective sprinkler system inside a store leaks, causing damage to the store…
Yes
Would the following be covered by the basic Causes of Loss form under a commercial property policy?
A store is damaged by the sudden sinking of land created by the action of water on limestone…
Yes
Would the following be covered by the basic Causes of Loss form under a commercial property policy?
A cafe has its door broken by vandals trying to get inside…
Yes
Other structures are covered for what amount under the Coverage B - Other Structures of a homeowners policy?
10% of Coverage A
Is the following coverage included in the BOP without requesting coverage extensions?
Pollutant cleanup and removal
Yes
Is the following coverage included in the BOP without requesting coverage extensions?
Debris removal
Yes
Is the following coverage included in the BOP without requesting coverage extensions?
Civil authority
Yes
Is the following coverage included in the BOP without requesting coverage extensions?
Newly acquired or constructed property
No
Under additional coverages for homeowners policies, what is the maximum amount that would be paid for fire department service charge?
$500
Under a businessowners policy, what is the time limit for loss of earnings coverage?
12 months
Under a businessowners policy, what is the time limit for ordinary payroll coverage?
60 days
Do first aid costs for others injured on the insured’s premises apply to people regularly at the location?
No
With the purchase of the water backup and sump pump overflow endorsement of a Dwelling Policy, what is the deductible for coverage up to $5,000?
$250
Under a dwelling policy, which of the following is NOT a factor in determining a loss?
A. The amount reflecting the insured’s interest in the property at the time of loss
B. The policy limit
C. The amount negotiated by the insured
D. The amount necessary to repair or replace the property
C. The amount negotiated by the insured
Loss is calculated on an ACV (Actual Cost Value = replacement cost - depreciation) basis, not a negotiated amount
How long after a building has been left vacant does CPP no longer cover damage caused by vandalism, sprinkler leakage, glass breakage, water damage, theft, or attempted theft?
60 days
After being left vacant for 60 days, CPP no longer covers damage caused by vandalism, sprinkler leakage, glass breakage, water damage, theft, or attempted theft. At what percentage will CPP continue to cover losses caused by any other peril?
15%
Which inland marine coverage condition states that payment of any claim will not reduce the limit of insurance, except in case of a total loss on a scheduled item?
Reinstatement of limit
How long after the building is occupied does coverage under the builders risk form end?
60 days
How long after the construction is completed does coverage under the builders risk form end?
90 days
What is the limit for the forgery or alteration coverage in the businessowners policy?
$2,500
Is fire department service under BOP coverage subject to any deductible?
No
Is fire department service under BOP coverage in addition to or in place of the limit of insurance shown in the declarations?
In addition to
What is the minimum amount of coverage that should be carried on an HO-2 on a home that was purchased four years ago for $75,000, which today has a replacement value of $100,000?
Coverage requires 80% of replacement cost AT THE TIME OF LOSS
On what basis is property insured under the equipment breakdown coverage form?
A replacement cost basis
Under what condition are relatives of the insured considered insureds under the liability section of a homeowners policy?
Only if they are residents of the household
What loss is NOT covered by the Dwelling Policy if the dwelling has been vacant for 60 days?
Vandalism
How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card?
$500
A dwelling policy has a standard deductible that applies to all property coverage, except fair rental value, additional living expense, and the fire department service charge. How much is this deductible?
$250
Who does the watercraft endorsement under their homeowners policy not cover?
Passengers for a fee or when rented to others
Professional photographers and musicians may insure their equipment with
A commercial articles floater
Several insureds have become liable because of a single loss. How will the policy’s limit of liability be affected?
No more than the per occurrence limit applies, no matter how many insureds are involved
How much is the premium for the dwelling under construction endorsement under the dwelling policy?
The average amount of insurance during construction
Under the dwelling policy, if an insurer chooses to repair or replace damaged or lost property, it must inform the insured within how many days of receiving proof of loss?
30 days
Which of the following would be covered under the Film Coverage Form?
A. Library stock
B. Soundtracks
C. Unused footage
D. Contraband
B. Soundtracks
Under the additional living expenses coverage, if a civil authority prohibits the insured from using the dwelling because of direct damage to a neighboring location from a peril covered in the insured’s policy, loss would be covered for up to
2 weeks
What floater would be used to insure personal effects carried or worn by the insured while traveling?
Personal effects floater
Which policy condition in HO policies states that insurance applies separately to each insured?
Severability of insurance
Johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. When would her coverage be effective?
12:01 am the day after the application and premium payment are mailed
A builder’s risk form is most often written as which type of form?
Completed value form
A building under construction could be insured on reporting forms, but the value of the building should only increase during the policy period. To prevent all the administrative work required for reporting forms, most often completed value forms are used.
Who would participate in a Write Your Own (WYO) flood insurance program?
Private insurers that write and service National Flood Insurance policies on a no risk-bearing basis
A WYO program is made up of private insurers that write and service National Flood Insurance policies on a no risk-bearing basis through a special arrangement with the Federal Insurance Administration. WYO programs retain part of the flood insurance premium to pay for commissions and administrative costs. The remaining premiums, plus investment, are used to cover losses.
The extension of coverage under the Commercial Fine Arts Floater includes coverage for newly acquired property for a maximum amount of
$10,000
An extension of coverage is included for newly acquired property for 30 days for up to 25% of the total limit of insurance, for a maximum of $10,000
What kind of property is covered under the Camera and Musical Instruments Dealers floater?
Covered property includes customer’s property left for repair, cleaning or service
How soon after a direct loss does the period of restoration for business income coverage under businessowners property insurance begin?
72 hours
The period of restoration for business income coverage begins 72 hours after the direct loss, or immediately for extra expense coverage. It ends on the date the property has been repaired or business has resumed.
Are loans required to offset uncollectible amounts covered under accounts receivable coverage form?
No
Which of the following will a businessowners property coverage form pay for?
A. Outdoor signs attached to buildings
B. Mysterious disappearance
C. Property transferred to others based on unauthorized instructions
D. Steam pipes, water boilers, or other water-heating equipment
A. Outdoor signs attached to buildings
For 1 occurrence, businessowners property coverage will pay up to $1,000 per sign attached to the outside of a building
Which of the following is an additional coverage that is covered by the broad causes of loss form?
A. Collapse
B. Lightning
C. Ordinance or law
D. Settling
A. Collapse
Collapse is an additional coverage found in the broad causes of loss form. Collapse does not include settling. Lightening is a named peril and ordinance or law is an exclusion
In Businessowners policies, which of the following additional coverages will require a deductible?
A. Extra expenses
B. Business income
C. Fire department service charge
D. Debris removal
D. Debris removal
The deductible does not apply to any of the following additional coverages: fire department service charge, fire extinguisher systems recharge expense, business income, extra expense, and civil authority coverages.
Losses that result from the freezing of a plumbing system while the dwelling is vacant would be EXCLUDED under a homeowners policy UNLESS
A. The insured had drained the plumbing system.
B. The insured purchased special form coverage.
C. The dwelling had been vacant for no more than 90 days.
D. The insured purchased the water damage endorsement.
A. The insured had drained the plumbing system.
The insured would need to have made reasonable efforts to maintain heat in the insured building or have drained the plumbing system.
According to the Insured Duties after a Loss provision in homeowners policies, if the insurer requires a signed, sworn proof of loss, the insured must provide within how many days?
60 days
The pollutant cleanup and removal coverage in the businessowners policy has a limit of
$10,000 in any 12-month period.
Is the property of a renter covered by an HO policy?
No
Homeowners contents coverage does not apply to animals, cars, or property of those who pay to be at your house.
An individual’s construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What could this individual use to insure it?
Contractors equipment floater
How much will the HO-3 form pay for living expenses after fire severely damages the home?
All of the expense up to the Coverage D limit
Coverage D will pay the expenses incurred to maintain the same lifestyle as before the loss
Which coverage form would provide coverage for all incoming and outgoing shipments?
Annual transit
How much will the Loss Assessment additional coverage of the insured’s homeowners liability policy pay?
Up to $1000
The HO-3 homeowners policy provides what type of coverage on dwelling vs personal property?
Open peril coverage on the dwelling and broad form coverage on personal property
The open peril coverage applies to property insured under Coverages A and B only
Which of the coverages (A-E) does DP-1 not include without endorsement?
Coverage E - Additional Living Expense
The Earthquake and Volcanic Eruption Endorsement added to Commercial Property policies considers all volcanic eruptions or earthquake shocks as one event if they occur within what maximum time period?
7 days (168 hours)
If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to
$500
Does any dwelling policy (DP-1 - DP-3) cover animals OR damage done by them?
No, neither animals nor the damage they cause is covered
A grave marker was damaged by vandals. It would cost $3,000 to have the damage repaired. Under these circumstances, how much would a homeowners policy pay?
$3,000
Coverage C pays up to $5,000 for damage to grave markers or mausoleums
DP-1 form, Coverage C - Personal Property is limited to covering what?
The insured’s, a guest’s or a servant’s property WHILE THE PROPERTY IS AT THE INSURED LOCATION
Homeowner’s Coverage C would cover the property whether it was on or off the premises.
The broad theft coverage endorsement on the dwelling form specifies all of the following limitations EXCEPT
A. $200 on money.
B. $1,500 on jewelry.
C. $1,500 on securities.
D. $1,000 on silverware.
D. $1,000 on silverware.
The limit on silverware is $2,500
The difference in the contents coverage on an HO-3 and HO-5 is which of the following?
A. Contents are covered for replacement cost on HO-5, and ACV on HO-3.
B. Contents are covered open peril on HO-3, and named peril on HO-5.
C. Contents are covered open peril on HO-5, and named peril on HO-3.
D. Contents are covered for replacement cost on HO-3, and ACV on HO-5.
C. Contents are covered open peril on HO-5, and named peril on HO-3.
HO-5 provides open peril coverage for contents; HO-3 is named peril coverage for contents.
Replacement cost coverage is available only by endorsement to either form.
A commercial property special form covers property in transit up to
A. $5,000.
B. $500.
C. ACV.
D. Full replacement cost.
A. $5,000
A commercial property special form covers property in transit up to $5,000. This extension of coverage may be added to the special form. It is additional insurance (in addition to the coverage limit), and coinsurance does not apply.
When is a hired and nonowned auto liability endorsement available in a businessowners policy (BOP)?
A. Only if the insured has 4 or more employees.
B. Only if the insured does not have commercial auto coverage
C. Only in addition to commercial auto coverage.
D. Never
B. Only if the insured does not have commercial auto coverage
This endorsement can be added to the BOP only if the insured does not have commercial auto insurance
A Mobile Homeowners Policy is structured the same as
A homeowners policy
Which of the following is eligible for a businessowners policy (BOP)?
A. A retail business with gross sales of $10 million
B. A convenience store with gas pumps with 60% of gross sales from gasoline sales
C. A 5-story office building with less than 100,000 square feet in total area
D. An 8-story office building
C. A 5-story office building with less than 100,000 square feet in total area
The following are eligible:
- office buildings up to 6 stories high and up to 100,000 square feet,
- retail or service businesses (mercantile) up to $6 million gross sales and up to 35,000 square feet
- convenience stores with gas pumps with no more than 50% of gross sales from gasoline sales
- fast-food restaurants up to 7,500 square feet (beer and wine sales are permitted subject to 25% of gross sales)
Which inland marine coverage condition says that an insurer will settle with the actual owners of property involved in a loss?
Privilege to adjust with the owner
Because inland marine coverages can cover property of others in the insured’s care, custody, or control, the privilege to adjust with the owner condition says that the insurer will settle with the actual owners of the property in the event of a loss.
When does the coverage begin under the builders risk form?
On the date construction starts
Which of the following is NOT settled on an actual cash value basis while covered under the business property coverage form?
A. Manuscripts
B. Property of others
C. Works of art or antiques
D. Valuable papers and records
D. Valuable papers and records
Valuable papers and records are valued at the cost of blank materials for reproducing the records and labor to copy the records.
Coverage under a Floor Plan Merchandise form is written on a reporting form basis that requires the insured to file reports with the insurer. What is the time frame for those reports?
Within 30 days after the end of each month
All of the following are other coverages included in both the broad and special form dwelling policy EXCEPT
A. Collapse.
B. Theft of personal property.
C. Lawns, trees, shrubs, and plants.
D. Breakage of glass.
B. Theft of personal property.
Theft of personal property can only be included by endorsement
How long is the policy period for NFIP flood insurance?
1 year
Homeowners policies provide coverage for (and how much)?
A. Business property while on the residence premises.
B. The land under the residence.
C. Losses caused by off-premises power failure.
D. Property of tenants, roomers, or boarders not related to any insured.
A. Business property while on the residence premises.
“Your Contents” coverage will cover up to $2,500 for loss of business property on premises.
Under businessowners policy Section I, if an insurer wants to cancel a policy for any reason except nonpayment of premium, how many days before the effective cancellation date must the insurer notify the mortgageholder?
30 days
For any reason EXCEPT nonpayment
All of the following are excluded in the equipment breakdown basic policy EXCEPT
A. Ordinance or law coverage.
B. Business interruption.
C. Explosion of steam boilers.
D. Loss of power, lights, heat, steam, or refrigeration.
C. Explosion of steam boilers.
Which of the following statements is true concerning the special form dwelling policy?
A. Both Coverage A and Coverage C are provided for the broad form perils.
B. Coverage A is for all-risk perils, and Coverage C is for basic perils only.
C. Both Coverage A and Coverage C are provided on an all-risk basis.
D. Coverage A is for all-risk perils, and Coverage C is for the broad form perils.
D. Coverage A is for all-risk perils, and Coverage C is for the broad form perils.
The all-risk coverage applies to property insured under Coverages A and B only.
Theft coverage under an HO-8 is on what basis and with what limits?
An ACV basis with limits for certain classes of property
Property is replacement or market value, contents is ACV
Which of the following would be covered under the Broad Form (DP-2) policy’s falling object peril?
A. Interior building damage if the exterior was damaged first
B. Damage to outdoor television antennas if there is no interior damage
C. Exterior pavement and patio damage
D. Damage to the building’s awnings
A. Interior building damage if the exterior was damaged first
In DP-1 and DP-2 policy forms, loss or damage resulting from falling objects is covered, except for damage to awnings, fences, outdoor equipment, outdoor radio and television antennas or aerials, masts, or towers. Damage to the interior of the building is covered only if the exterior has been damaged first.
Which of the following is an example of a protective safeguard in a businessowners policy?
A. Recordkeeping
B. Automatic sprinkler system
C. Professional liability endorsement
D. Errors and omissions insurance
B. Automatic sprinkler system
The protective safeguards endorsement adds a policy condition requiring the insured to maintain protective safeguards (automatic sprinkler system, fire alarm, etc.) as a condition for coverage.
How does the mobilehome endorsement affect the other coverage of law or ordinance in a homeowners policy?
A. It removes the coverage.
B. It has no effect on this coverage.
C. It limits the coverage.
D. It broadens the coverage.
A. It removes the coverage.
Which of the following other coverages is NOT included in the basic form dwelling policy?
A. Breakage of glass
B. Tenant’s improvements, alterations, and additions
C. Removal coverage
D. Personal property temporarily away from the insured premises
A. Breakage of glass
Breakage of glass is included in the DP-2 and DP-3 only.
An installation floater is used to insure
A. Appliances intended to become a permanent part of the building.
B. Buildings under construction.
C. All types of for-sale merchandise.
D. Dams, power plants, water plants, and other such installations.
A. Appliances intended to become a permanent part of the building.
The installation floater covers the interest of the owner, seller, or contractor of refrigeration systems, elevators, or other pieces of large equipment intended to become a permanent part of the building on location awaiting or in the process of being installed or tested.
What is the maximum dollar amount an insurer will pay for the increased cost of construction additional coverage under a businessowners policy?
A. $5,000
B. $50,000
C. $25,000
D. $10,000
D. $10,000
The most the insurer will pay for this additional coverage is $10,000 for each building.
The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to
$250,000
The insured was mowing the lawn in his yard with a lawnmower borrowed from his brother. The fuel line ruptured, and the lawnmower was destroyed in the fire. How will the insured’s homeowners liability policy respond?
It will cover the damage
The HO Liability policy will cover damage to property of others even if the insured is not liable
According to the common policy conditions for a commercial package policy, if the insured dies, the policy rights and duties transfer to…
Automatically transfer to a legal representative
The Insurance Services Office, Inc. (ISO) common policy conditions for the commercial package policy states that in the event of the insured’s death, rights and duties are automatically transferred to the insured’s legal representative
All of the following are essential elements of a commercial package policy (CPP) EXCEPT
A. Policy conditions
B. Declarations page
C. Interline endorsements
D. Valuations and/or settlement provisions
D. Valuations and/or settlement provisions
Regardless of how the policy is written, it will be comprised of the following essential elements:
- declarations page
- conditions
- interline endorsements
- coverage parts
Which of the following is covered under the Mail floater of a Commercial Inland Marine policy ONLY if it is sent by registered mail?
A. Bonds, stocks, stock certificates, coupons attached to bonds
B. Postage and revenue stamps
C. Money orders, checks, drafts, notes
D. Currency and unsold travelers checks
D. Currency and unsold travelers checks
Property covered only when sent by registered mail includes the following: bullion; platinum and other precious metals; currency and unsold travelers checks; or jewelry, watches, precious and semiprecious stones and similar property.
The homeowners policy covers collapse caused by all of the following EXCEPT
A. Foundation cracks.
B. Weight of too many people attending an event hosted in the house.
C. Weight of snow.
D. Hidden insect or vermin damage.
A. Foundation cracks.
Collapse must be caused by some sudden, unexpected reason. The foundation cracks would take years to cause collapse, meaning there would be plenty of time to find and repair them.
The major portion of the premium for an equipment breakdown policy pays
A. For repairs after a loss.
B. For inspections and examinations.
C. For coverage for bodily injury and property damage of others.
D. For replacement parts.
B. For inspections and examinations.
Inspecting the machinery to be insured is critical to the underwriting of equipment breakdown coverage. Finding flaws that could lead to losses and requiring corrective action is the purpose.
In a dwelling policy, which of the following other structures would be covered?
A. Rented to a neighbor for use as a private garage
B. Used by the insured in which to operate a retail business
C. Used as part of a farming operation
D. Used by the insured to house a manufacturing operation
A. Rented to a neighbor for use as a private garage
Under Coverage B of dwelling policies, there is no coverage for other structures used for business purposes. Also, other structures may not be rented to anyone except a tenant of the main dwelling. However, a garage that is used for a private garage does not come under this exclusion of rented property and is covered even if it is rented to someone other than the occupant of the dwelling.
In businessowners insurance, the insurer will pay up to what additional amount for debris removal expense if the debris removal expense exceeds the 25% limitation?
A. $1,000
B. $20,000
C. $10,000
D. $5,000
C. $10,000
How many hours does the BOP insured have to restore the protective safeguard system (e.g. sprinkler system) before being required to notify the insurer?
48 hours
Which of the following IS covered under the theatrical property floater of an Inland Marine policy?
A. Vehicles used on stage
B. Admission tickets
C. Animals
D. Jewelry made with precious stones
A. Vehicles used on stage
Covered property includes the following: scenery; costumes; theatrical property; and similar property of others. Vehicles are also covered if they are actually used on stage.
A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean?
There is no coverage
If no premium amount is shown, there is no coverage for that coverage part
All of the following types of property are covered by a standard builders risk form EXCEPT
A. Machinery that will be permanently attached to the building.
B. The building itself.
C. Tools 50 feet away from the building.
D. Temporary structures.
C. Tools 50 feet away from the building
Machinery and equipment within 100 feet of the premises are covered only if intended to become a permanent part of the building
A commercial property special form covers property in transit up to what amount?
$5000
This extension of coverage may be added to the special form. It is additional insurance (in addition to the coverage limit), and coinsurance does not apply.
