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ExamFX P&C Insurance Exam Prep > Chapter 3. Types of Property Policies > Flashcards

Chapter 3. Types of Property Policies Flashcards

1
Q

What four types of businesses would qualify for a businessowners policy?

A

Small to medium business of the following kinds:

  • Retail or service businesses
  • Contractors
  • Fast-food restaurants
  • Convenience stores
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2
Q

What are the three types of Dwelling forms?

A
  • Form DP-1: Basic (named peril)
  • Form DP-2: Broad (named peril)
  • Form DP-3: Special (open peril)
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3
Q

What three perils are covered in Dwelling form DP-1?

A
  • Fire (not intentional and not contained within intended boundaries)
  • Lightening
  • Internal explosion
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4
Q

What six additional perils are covered in Dwelling form DP-1 extended coverage Option 1?

A

WHARVES
- Windstorm/hail
- Aircraft/vehicles
- Riot/civil commotion
- Volcanic eruption
- Explosion (inside and out)
- Smoke

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5
Q

What additional peril is covered in Dwelling form DP-1 extended coverage Option 2?

A

All of Option 1 + VMM (Vandalism/malicious mischief)

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6
Q

On what basis is DP-1 form coverage settled?

A

ACV (Actual Cost Value)

Replacement cost - depreciation

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7
Q

What does Dwelling form DP-2 cover?

A

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
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8
Q

What does Dwelling form DP-3 cover?

A

Everything not explicitly excluded (because it is an open peril policy)

Dwellings and other structures ONLY

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9
Q

What are the five DP coverages (A-E)?

A

DIRECT LOSSES
- Coverage A: Dwelling
- Coverage B: Other structures
- Coverage C: Personal property

INDIRECT LOSSES
- Coverage D: Fair rental value
- Coverage E: Additional living expenses

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10
Q

What is the key difference between homeowner’s and dwelling policies?

A

Homeowner’s includes both property and liability coverage in one policy

Liability is not available in Dwelling policies

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11
Q

What is the maximum number of units allowed in homeowner’s policies?

A

4

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12
Q

What is the maximum number of occupants allowed in homeowner’s policies?

A
  • 4 owner-occupied residences
  • 2 roomers/boarders per unit
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13
Q

In homeowner’s policies, what is meant by Residence Premises vs Insured Location?

A

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.)

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14
Q

What are the six homeowner’s coverage forms (HO-2 - HO-8)?

A

BSCCCM

Form HO-2: Broad
Form HO-3: Special
Form HO-4: Contents/Broad
Form HO-5: Comprehensive
Form HO-6: Condo unit owners
Form HO-8: Modified coverage

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15
Q

What are the seven HO (homeowner’s) coverages (A-F)?

A

SECTON I - PROPERTY
Coverage A - dwelling
Coverage B - other structures
Coverage C - personal property (contents)
Coverage D - loss of use

SECTION II - LIABILITY
Coverage E - personal liability
Coverage F - medical payments to others

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16
Q

What is the difference between a hired and a non-owned vehicle?

A

Hired - rental, taxi, etc.

Nonowned - e.g. employees cars

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17
Q

What federal program helps homeowners protect from flooding?

A

NFIP (National Flood Insurance Program)

It’s part of FEMA

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18
Q

What is the accepted definition of flooding according to the NFIP?

A

2-2-2

2 walls
2 acres
2 properties

All three must be present

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19
Q

In dwelling policies, within how many years of a loss may an insured bring a lawsuit against the insurer?

A

2 years

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20
Q

What nine components make up a Commercial Policy?

A
  • 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
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21
Q

What is mysterious disappearance?

A

Misplacement or loss of property without knowledge as to the location, time and cause of the loss

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22
Q

On what basis are the dwelling and other structures covered in an HO-3 policy form?

A

On an open-peril basis

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23
Q

Under what conditions can broad theft coverage be added to a dwelling policy?

A

If the insured is the owner-occupant of the dwelling

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24
Q

What are the 2 types of Utility Services endorsements available in
Businessowners policies?

A
  • Utility Services - Direct Damage
  • Utility Services - Time Element
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25
Q

Losses caused by vandalism and malicious mischief are excluded from coverage if a dwelling has been vacant for how many days?

A

60 days

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26
Q

In Commercial Inland Marine policies, what are the three types of carriers that transport the property and what’s the difference?

A
  • 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
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27
Q

What HO form insures a tenant living in an apartment

A

HO-4 (tenant broad form)

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28
Q

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?

A

The change will apply automatically

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29
Q

Which dwelling form provides open peril coverage on the building?

A

DP-3 (Special)

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30
Q

What are the 2 liability coverages included in Homeowners policy forms?

A
  • Coverage E - Personal Liability
  • Coverage F - Medical Payments to Others
31
Q

What is the purpose of the National Flood Insurance Program (NFIP)?

A

To fill the gap in flood coverage left by private insurers

32
Q

If 3 volcanic eruptions happen within 48 hours, and each contributes to property damage, how many deductibles will apply in the dwelling policy?

A

1 deductible (all instances of volcanic eruptions that occur within a 72-hour period are considered 1 occurrence)

33
Q

What are the seven extended covered perils (Option 1 and 2) on a basic Dwelling policy?

A

WHARVES + VMM

  • Windstorm or hail
  • Aircraft and vehicles
  • Explosion
  • Riot or civil commotion
  • Volcanic eruption
  • Smoke
  • Vandalism and malicious mischief
34
Q

Under Coverage C of an HO-3 policy, what is the amount of insurance provided for personal property?

A

At least 50% of the Coverage A limit (this applies to all policies except for HO-4 and HO-6)

35
Q

Commercial property coverage can be written with one of three causes of loss forms. What are they?

A

Basic, Broad, and Special

36
Q

What HO form covers a historic home with replacement cost more than the market value?

A

HO-8 (modified homeowners)
Did you

37
Q

When a dwelling policy is cancelled for nonpayment of premium, the insurer must give notice within how many days of the cancellation?

A

10 days

38
Q

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?

A

60 days

39
Q

What is the name for policy endorsements that may apply to more than one coverage part?

A

Interline endorsements

40
Q

What Homeowners policy form is known as a special form?

A

HO-3 special form

41
Q

What do dwelling policies insure?

A

Dwelling only, contents only, or both dwelling and contents

42
Q

When can an insured cancel a Businessowners policy and what is required?

A

Anytime

Written notice of cancellation

43
Q

What HO form covers condominium unit owners?

A

HO-6 (condominium unit owners)

44
Q

What would be considered a single accident in Equipment Breakdown coverage?

A

All accidents at a single location, at the same time, by the same cause

45
Q

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?

A

30 days

46
Q

What is the purpose of interline endorsements in Commercial Package Policies (CPPs)?

A

They eliminate redundancy and minimize the number of other policy endorsements

47
Q

Which dwelling coverage form (s) will pay for the replacement cost of a dwelling?

A

DP-2 (Broad) and DP-3 (Special)

48
Q

What type of policy is a Businessowners policy?

A

Prepackaged, stand-alone policy

49
Q

What areas can National Flood Insurance be issued to cover?

A

Only participating, flood-prone areas

50
Q

What is the limit that the insurer will pay for all losses that occur during a policy period?

A

Aggregate limit

51
Q

A businessowners policy is sold as a package. What does that mean?

A

Coverage includes both property and liability

52
Q

Which dwelling policy coverage will insure a garage not attached to the primary insured dwelling?

A

Coverage B - Other Structures

53
Q

What are some of the exclusions found in all 3 dwelling forms?

A

Earth movement, water damage, power failure, neglect, war, nuclear hazard, intentional loss, freezing of plumbing, ordinance or law, and government action

54
Q

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?

A

Coverage E - Additional Living Expenses

55
Q

Which dwelling form is called the Broad form?

A

DP-2

56
Q

What value is the coverage usually written for with HO-8 forms?

A

For the market value of the property

57
Q

A basic dwelling policy automatically provides coverage against what?

A

Fire, lightning, and internal explosion

58
Q

What businesses sizes qualify for coverage under a businessowners policy?

A

small to medium

59
Q

In Commercial Package Policies (Cs), who may cancel the policy in writing and make changes to the policy with the consent of the insurer?

A

The first-named insured

60
Q

What does form HO-5 cover?

A

The dwelling and other structures, as well as contents and personal property

61
Q

What are some of the exclusions from coverage in all of the Homeowners forms?

A

Land, structures used for business purposes, animals/birds/fish, aircraft, rented property, electronic data, and motor vehicles

62
Q

What type of property can be covered under Inland Marine insurance?

A

Any type of property that is portable on land, as well as means of transportation and communication

63
Q

What are some of the types of businesses that are excluded from coverage under a Businessowners policy?

A

Auto sales and servicing, large banks, bars and grills, places of amusement, and manufacturers

64
Q

What Homeowners policy form is known as contents broad form?

A

HO-4 contents broad form

65
Q

What are the coverage parts that may be included in a Commercial Package
Policy (CPP)?

A

Commercial property, general liability, crime, equipment breakdown, auto, inland marine, and
farm

66
Q

What are additional coverages available in Homeowners policies without additional premiums? (name several)

A

Debris removal, lawns/plants/ shrubs, and trees, removal, reasonable repairs, and fire department service charge

67
Q

Which dwelling policy coverage will provide protection for contents damaged by fire in an insured dwelling?

A

Coverage C - Personal Property

68
Q

Why does the HO-4 form not provide dwelling coverage?

A

HO-4 is written for a tenant residing in a rented dwelling; the tenant does not own the dwelling

69
Q

What type of policy consists of the declarations, conditions, endorsements, and other attachments applicable to a single line of insurance?

A

Monoline

70
Q

What type of policy consists of the declarations, conditions, endorsements, and other attachments applicable to a multiple lines of insurance?

A

CPP (Commercial Package Policy)

71
Q

When will damage to the interior of the building be covered under the falling objects peril in the broad form of the dwelling policy?

A

Only if the interior damage is a direct result of exterior damage from a falling object

72
Q

What type of property would be covered under the Builder’s Risk Coverage Form?

A

The building, temporary structures, foundations, fixtures, equipment, and materials and supplies within 100 feet of the premises

73
Q

When other insurance is written on the same basis as a Commercial Property policy, what is the insurer obligated to cover?

A

A share of the loss

ExamFX P&C Insurance Exam Prep (3 decks)

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