chapter seven - miscellaneous personal lines coverage

Question 1

Which of the following types of property are covered by the Personal Effects Floater?

Coin collections

Paintings, etchings, and pictures

Personal property carried by travelers

Golfer’s equipment

Answer 1

Personal property carried by travelers.

(This floater covers a traveler’s personal property on an open perils basis anywhere in the world EXCEPT at the insured’s house. The other answer choices would require the Personal Articles Floater)

Question 2

Section I of the Boatowners policy provides what type of coverage for the hull?

Actual cash value

Replacement cost

Open perils

Stated value

Answer 2

Open Perils.

The hull, motor, trailer, equipment, and marine accessories are covered on an open peril basis

Question 3

Which of the following is correct about Difference in Conditions (DIC) Insurance?

The Coinsurance Clause is included on all policies

It is written on a standard form similar to the property form

Fire and lightning are typical covered perils

Flood is a peril that can be covered by this policy

Answer 3

Flood is a peril that can be covered by this policy.

(This policy fills in insurance gaps and covers perils that are excluded under standard policy property policies, such as flood, and excludes perils that are covered under standard property policies)

Question 4

What Policy …
Insures large vessels and includes Hull insurance, Protection and Indemnity and Medical Payments coverage and a Lay Up Warranty

Answer 4

Yacht Policy

Question 5

What Floater …
Provides open perils coverage for personal property worn or carried by tourists and travelers anywhere in the world except the insured’s home.

Answer 5

Personal Effects Floater

Question 6

What Floater …

Insures individual personal property on a scheduled basis with open perils coverage worldwide.

Answer 6

Personal Articles Floater.

Question 7

What Policy …
Packaged policy for boats that can be towed by a car and provides open perils coverage for the hull, motor, trailer, and equipment as well as watercraft liability, medical payments, and uninsured boaters coverage.

Answer 7

Boatowners Policy

Question 8

What Insurance …
An open perils policy with a high deductible used to fill coverage gaps in a property policy for certain perils such as earthquakes, flood, collapse, and subsidence.

Answer 8

Difference in Conditions Insurance.

Question 9

In order to be considered a single occurrence, the Earthquake endorsement covers all earth movement that occurs within what time period?

36 Hours

72 Hours

12 Hours

48 Hours

Answer 9

72 hours.

(Earth movement includes earthquakes, land shock waves or tremors, landslides, mudslides, mudflows, sinkhole, and the rising, sinking, or shifting of the earth, and must occur within 72 hours)

Question 10

The National Flood Insurance Program (NFIP) sells flood insurance in which of the following types of communities?

Communities with a population less than 300,000

Farm communities

Participating communities

Communities that border a large body of water

Answer 10

Participating communities.

Communities in flood-prone areas must have an approved flood control program in order to benefit from the NFIP

Question 11

A single-family dwelling may purchase up to what amount of flood insurance in the NFIP’s Emergency program?

$250,000

$50,000

$35,000

$100,000

Answer 11

$35,000.

The Emergency NFIP program covers up to $35,000 on a single-family dwelling.

Question 12

What Program …
A federal program administered under FEMA that enables certain property owners to purchase flood insurance that is subsidized by the federal government.

Answer 12

National Flood Insurance Program

Question 13

What Program …

Insurance available from private insurers that write, issue, and service flood insurance under their own names.

Answer 13

Write Your Own Program

Question 14

What Program …

Protection for communities that have established an approved flood control program.

Answer 14

Regular program.

Question 15

What Program …

Protection for communities in the early stages of participation in the NFIP.

Answer 15

Emergency Program

Question 16

Which of the following is not eligible for coverage under a Fair Access to Insurance Requirements program?

Uninsured dwelling property

Rental dwelling

Homeowner

Farm property

Answer 16

Farm Property.

While farm property is not eligible, some incidental business use on the farm property is allowed

Question 17

All of the following are true regarding the Personal Umbrella Policy, except:

The policy requires underlying coverage for automobiles and homes

The Umbrella can provide broader coverage than the primary policy

The Umbrella acts as a contributory liability policy

The policy is written for higher liability limits

Answer 17

The Umbrella acts as a contributory liability policy.

The Umbrella acts as an excess liability policy over the limits of the underlying policies

Question 18

Which of the following perils is covered under the Personal Umbrella?

Aircraft

Intentional injury

Personal injury

Bailee

Answer 18

Personal Injury.

(Personal injury perils are covered under the Umbrella policy, and will drop down to cover from the first dollar if personal injury coverage is not covered on the primary policy)

Question 19

The self-insured retention in the Umbrella policy is described as which of the following?

A method of cost-sharing

An Endorsement

Excess coverage

Primary coverage

Answer 19

A method of cost-sharing

(Like a deductible, the insured pays the self-insured retention unless there is a primary policy available to pay its limit of insurance)

Question 20

All of the following are true of the Personal Jewelry Floater, except:

It can be written on a valued basis

Appraisal is usually mandatory

It has a 60-day automatic coverage for newly acquired items

It has a Pair and Sets Clause

Answer 20

It has 60 day automatic coverage for newly acquired items.

Automatic Coverage under the Personal Jewelry Floater is 30 days

Question 21

Choose the best answer regarding the details of the Yacht Policy.

The policy contains no navigational limits

The policy provides coverage only for damage to the yacht itself

It is an Ocean Marine Form and provides both property and liability coverage

Liability related exposure must be covered under a separate policy

Answer 21

It is an Ocean Marine Form and provides both property and liability coverage.

(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)

Question 22

Which of the following statements regarding flood insurance is not true?

No deductible applies to loss of contents

The Federal government is the reinsurer

In order to qualify for a federal loan, a property owner located in a recognized flood area must purchase flood Insurance

Under a Flood Policy, protection is provided to property that normally is on dry land

Answer 22

No deductibles applies to loss of contents.

A separate deductible applies to contents and building losses

Question 23

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?

It is written with a minimum of 80% co-insurance

It is generally written on an open perils basis, excluding losses by perils that are covered under standard property forms

It is written with a Standard Deductible of $1,000

The Standard DIC form is developed and filed by the NAIC

Answer 23

It is generally written on an open perils basis, excluding losses by perils that are covered under standard property forms.

(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).

Question 24

Which statement about the Personal Effects/Personal Articles Floater is TRUE?

There is no difference between the PEF and the PAF

Both floaters offer open-peril coverage worldwide with no exceptions

The Personal Effects Floater covers personal items carried by travelers, and the Personal Articles Floater covers high-value items of personal property

The Personal Effects Floater covers high-value items of personal property, and the Personal Articles Floater covers personal items carried by tourists

Answer 24

The Personal Effects Floater covers personal items carried by travelers, and the Personal Articles Floater covers high-value items of personal property.

Question 25

The Personal Articles Floater is similar to which of the following endorsements?

The Personal Property - Replacement Cost Endorsement

The Guaranteed Replacement Cost Endorsement

The Scheduled Personal Property Endorsement

The Special Personal Property Endorsement

Answer 25

The Scheduled Personal Property Endorsement.

The PAF and the Scheduled Personal Property Endorsement to the Homeowners Policy are nearly identical

Question 26

Choose the false statement about an Umbrella Liability Policy.

Certain losses excluded by the primary policy may be covered

Specific minimum limits for underlying coverage are required

Property in the care and custody of the insured is covered

After underlying coverage is exhausted, coverage is excess

Answer 26

Property in the care and custody of the insured is covered.

Umbrella policies exclude property in the care, custody, and control of the insured

Question 27

Which statement is true about Crop/Hail Insurance?

It is not subject to any deductible

It only covers the peril of hail

It is reinsured by federal government

It covers only one growing season

Answer 27

It covers only one growing season.

Crop/Hail Insurance coverage ceases when the crop is harvested.

Question 28

Which of the following is true regarding the Fine Arts Floater?

It covers such items as paintings, rare manuscripts and antiques

Coverage is limited to the United States, Canada, and Mexico

It has automatic coverage for only 30 days on newly acquired articles

Loss is paid on an actual cash value basis

Answer 28

It covers such items as paintings, rare manuscripts, and antiques.

Question 29

All of the following statements about the Musical Instrument Floater are true, except:

Claims are settled on an actual cash value

It may not be included in the scheduled personal property endorsement

Newly acquired items must be reported within 30 days

No additional premium is required if instruments are played for hire

Answer 29

No additional premium is required if instruments are played for hire.

(Playing for pay requires an endorsement and additional premium)

Question 30

After being rejected by an insurer due to underwriting guidelines an applicant may request homeowners coverage under which of the following?

An Umbrella policy

FAIR Plan

A DP-3 Special Dwelling Plan

Write Your Own Homeowners Program

Answer 30

FAIR Plan

(The Fair Access to Insurance requirements program writes homeowners who are uninsured or have been terminated in the voluntary market)

Question 31

For an antique insured under a Personal Articles Floater, coverage would not be provided for damage caused by:

Flood

Vandalism caused by a guest

Theft

Damage caused by the insured during a heated argument

Answer 31

Damage caused by the insured during a heated argument.

Question 32

What coverage is not included under the Yacht policy?

Protection and Indemnity

Towing

Personal Property coverage

Personal Injury Coverage

Answer 32

Personal Injury Coverage

Question 33

All of the following statements about the Fine Arts Floater are true, except:

Coverage is written on a replacement cost basis

It covers such items as paintings, rare manuscripts and antiques

It has a 90-day automatic coverage for newly acquired items

Coverage applies only to scheduled items

Answer 33

Coverage is written on a replacement cost basis.

It’s written on a valued basis

Question 34

Which of the following is not true about the FAIR plan?

Agents cannot bind FAIR plan coverage

It provides property coverage to both residential and farm dwellings

FAIR means Fair Access to Insurance Requirements

It provides basic property coverage to those who have been rejected in the standard market

Answer 34

It provides property coverage to both residential and farm dwellings.

(Farm property is not eligible for coverage under the FAIR plan)

Question 35

Choose the true statement regarding the National Flood Insurance Program.

Flood policies are available only from the National Flood Insurance Program

Coverage includes trees, shrubs, and plants

Agents may bind flood insurance for up to 15 days prior to submitting the final application

The federal government oversees and reinsures all flood insurance

Answer 35

The federal government oversees and reinsures all flood insurance.

Question 36

The Personal Umbrella Policy does not provide coverage for which of the following?

Homeowners liability

Personal automobile liability

Personal injury

Property damage liability to property in the insured’s care

Answer 36

Property damage liability to property in the insured’s care.

Question 37

Which description of the Personal Articles Floater is incorrect?

It is used to insure individual personal property

It is written on a scheduled basis

It covers losses on an open perils basis

It covers claims on a replacement cost basis

Answer 37

It covers claims on a replacement cost basis

Losses are settled on an Actual Cash Value or Valued basis

Question 38

The National Flood Policy would not cover which of the following losses?

Unusual and rapid accumulation or runoff of surface water

Leakage of underground water systems

Mudslide caused by accumulation of water

Overflow of inland or tidal waters

Answer 38

Leakage of underground water systems

Underground leakage is not considered a flood

Question 39

All of the following are false concerning the National Flood Insurance Program, except:

Agents may bind flood insurance for up to 15 days prior to submitting the final application

Dwelling coverage includes trees, shrubs, and plants

Payment for losses are made by the federal government

Flood policies are available only from the National Flood Insurance Program

Answer 39

Payment for losses are made by the federal government.

(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.)

Question 40

Which statement would not be included in a description of the National Flood Insurance Program?

For personal property to be covered, it must be inside a fully enclosed building

It will not provide coverage on buildings located on, or over water

It is administered by the Federal Emergency Management Agency (FEMA)

It provides unlimited coverage for qualified property owners

Answer 40

It provides unlimited coverage for qualified property owners.

(There are maximum limits for both the Regular and Emergency programs)

Question 41

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:

Commission

Copayment

Premium

Retention

Answer 41

Retention.

(Similar to a deductible, a retention is an amount paid by the insured before the insurer’s obligation to pay takes effect)

Question 42

Which of the following may be insured on a replacement cost basis under the National Flood Insurance Program?

Money and securities

Nonresidential or commercial buildings valued at less than $250,000

1- to 4-family residences and residential condominiums

Nonresidential or commercial buildings less than 3 stories high

Answer 42

1 to 4 family residences and residential condominiums

(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.)

Question 43

Which is a true statement about the Boatowners Policy?

Losses are always settled on a ACV basis

It provides named perils coverage for the hull and motor only

It provides both property and liability coverage, similar to a PAP

It can be used to insure any owned marine vessel

Answer 43

It provides both property and liability coverage, similar to a PAP

(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)

Question 44

Which of the following is true regarding Personal Inland Marine Insurance?

Since moveable property is also known as floating property, the policies are sometimes known as floater policies

It provides replacement cost coverage on personal property

It covers direct and indirect loss arising from damage to, or loss of, personal property

It is written in lieu of Coverage C of the Homeowners Policy

Answer 44

Since moveable property is also known as floating property, the policies are sometimes known as floater policies.

(For the Inland Marine underwriter the term property simply means property that moves about)