Lesson 2 - Fire

Question 1

Four major sections in fire insurance policies

Answer 1

1) Declarations
2) Insuring Agreement
3) Conditions
4) Exclusions

Question 2

How to get Actual Cash Value?

Answer 2

Building Year x Depreciation % – Replacement Cost

Question 3

Basic level fire policy perils include what?

Answer 3

1) Fire
2) Lightning
3) Removal

Question 4

Assignment/ Transfer of Rights & Duties

Answer 4

Transfer of legal right/interest in an insurance contract to another person

Question 5

Conditions

Answer 5

Obligations of insured and insurance company

Question 6

Standard Mortgagee Clause

Answer 6

No voidance act on the part of the insured will prevent a mortgagee from collecting a loss payment

Question 7

Pro-Rata Liability

Answer 7

Company will not be liable for greater portion of loss than amount insured shall bear to the whole sum of insurance

Question 8

Three conditions contained in most fire insurance policies that suspend coverage

Answer 8

1) Insured increases hazard intentionally
2) Coverage suspended while building vacant for period beyond 60 days
3) Coverage restricted if loss is result of explosion, unless fire ensues

Question 9

Five categories of forms with fire insurance contracts

Answer 9

1) Floater Form
2) Automatic/Reporting Form
3) Blanket Form
4) Specific Form
5) Schedule Form

Question 10

Three basic dwelling fire policies

Answer 10

1) Dwelling Property Basic Form (DP- 00 01)
2) Dwelling Property Broad Form (DP- 00 02)
3) Dwelling Property Special Form (DP- 00 03)

Question 11

DP- 00 01 policy facts

Answer 11

Named peril contract, building must be used as a dwelling that contains no more than 4 families, included against fire, lightning, removal & internal explosion

Question 12

4 coverage sections in DP- 00 01 policy

Answer 12

1) Coverage A/ Dwelling
2) Coverage B/ Other Structures
3) Coverage C/ Personal Property
4) Coverage D/ Fair Rental Value

Question 13

Added as an endorsement to DP- 00 01, IF there is an owner occupant

Answer 13

Additional Living Expense

Question 14

Coverage for additional premium against perils under DP-00 01 policy

Answer 14

1) Extended Coverage Perils

2) Vandalism and Malicious Mischief (V & MM)

Question 15

Extended coverage provides protection against what perils

Answer 15

1) Windstorm & Hail
2) Aircraft Damage
3) Riot & Civil Commotion
4) Vehicle Damage
5) Explosion
6) Volcanic Eruption
7) Smoke Damage

Question 16

Conditions to V & MM

Answer 16

Damage/loss to property is NOT covered if dwelling has been vacant for more than 30 days

Question 17

DP- 00 02 policy facts

Answer 17

Named peril contract with 5 sections of coverage, including Coverage E/ Additional Living Expense

Question 18

What does Coverage E do

Answer 18

Pays excess beyond normal monthly living expenses

Question 19

DP- 00 03 policy facts

Answer 19

Open peril dwelling fire contract

Question 20

DP- 04 11

Answer 20

Automatic increase in insurance provides automatic pro-rata increase in coverage (inflation guard endorsement)

Question 21

DP- 11 43

Answer 21

Dwelling under construction is attached when intended occupant of dwelling is name insured

Question 22

DP- 04 41

Answer 22

Additional Insured is a contractor that can be added to DP- 11 43

Question 23

DP- 04 73

Answer 23

Theft Coverage Limited Form endorsement

Question 24

DP- 04 72

Answer 24

Theft Coverage Broad Form endorsement

Question 25

Theft Coverage Broad Form endorsement

Answer 25

Covers owner occupied dwelling

Question 26

Theft Coverage Limited Form endorsement

Answer 26

Used for non-owner occupied properties

Question 27

DP- 04-71

Answer 27

Law Coverage provides coverage for loss caused by a covered peril to property

Question 28

DP- 02-03

Answer 28

Cancellation and Non-Renewal modifications

Question 29

DL- 24 01

Answer 29

Personal Liability Supplement that provides coverage similar to coverage appearing in liability section of Homeowners forms

Question 30

Commercial Package Policy (CPP) includes what coverage parts

Answer 30

Commercial

1) Property
2) Liability
3) Inland Marine
4) Crime
5) Boiler & Machinery
6) Farm Property

Question 31

Policy that provides protection for only one coverage area

Answer 31

Monoline Policy

Question 32

Policy that contains coverage for more than one line

Answer 32

Package/Multi-line Policy

Question 33

Only the named insured will benefit from coverage provided in commercial property conditions

Answer 33

No Benefit to Bailee

Question 34

Commercial Property Coverage Forms

Answer 34

Coverage for property used for business purposes and more than four dwelling units

Question 35

CP- 00 10

Answer 35

Building & Personal property form that provides coverage for physical loss/damage to property resulting from covered perils

Question 36

Builder’s Risk

Answer 36

Covers direct physical loss or damage to buildings under construction

Question 37

Business Income Form

Answer 37

Covers actual loss of business income including net income and continuing normal expenses

Question 38

Applies to personal property of the named insured in transit in or on a motor vehicle owned by the named insured

Answer 38

Transit extension

Question 39

Specifies that in the event of a water damage loss, open peril coverage will also apply to repair

Answer 39

Water damage extension

Question 40

Peak season endorsement

Answer 40

(CP–12 30) increases limit of insurance for business personal property which experience seasonal cycles in value

Question 41

Value reporting form

Answer 41

(CP– 13 10) Used when covering property with fluctuating values or business inventory

Question 42

Form to ensure against direct physical loss of scheduled perishable stock owned by the insured

Answer 42

Spoilage coverage

Question 43

Specific form

Answer 43

Provides coverage for one kind of property and one definite location

Question 44

Blanket form

Answer 44

Covers same kind of property in different locations or different types of property at a single location

Question 45

Floater form

Answer 45

Coverage is used to cover goods in different locations

Question 46

Automatic/reporting form

Answer 46

Used when it is difficult to provide accurate values because of fluctuations

Question 47

Schedule form

Answer 47

Coverage often used by large risks (e.g. specific coverage)

Question 48

DP 05 30

Answer 48

Functional replacement cost loss settlement