MISC PERSONAL LINES COVERAGE

Question 1

Personal Inland Marine Insurance

Answer 1

Personal Inland Marine insurance is a form of coverage used to insure moveable property against direct loss. This kind of property is especially at risk of loss, and other personal lines property policies may not provide coverage or may limit coverage to a specific amount or peril, like the special limits included in Coverage C of a Homeowners policy.

Question 2

Personal Articles Floater

Answer 2

is a separate policy, similar to the Scheduled Personal Property Endorsement available for Homeowners policies, that provides coverage for different classes of property, including jewelry, furs, cameras, musical instruments, silverware and goldware, golfer’s equipment, fine arts, and stamp and coin collections. Coverage may be applied to scheduled items for scheduled limits, or coverage may be provided to unscheduled items in the same class of property for a blanket limit of insurance.

Question 3

Available floaters

Answer 3

Personal Jewelry Floater, which insures scheduled jewelry and furs
Fine Arts Floater, which insures private collections of fine arts, which include paintings, pictures, etchings, tapestries, art glass windows, statuary, antiques, manuscripts, porcelains, and other works of rarity or artistic merit at scheduled locations
Cameras Floater, which insures personally used cameras, as well as any related projection equipment, sound equipment, discs, films, tapes, and other accessories
Personal Effects Floater, which insures items worn or carried by tourists and travelers while anywhere in the world, except for the insured’s home or while in storage

Question 4

Standard coverage

Answer 4

open perils basis with worldwide coverage. Common exclusions include war, nuclear hazard, governmental action, intentional loss, and neglect. Additional exclusions specific to the type of property being insured may be included as well.

As a standard, losses are valued at the property’s actual cash value, but an agreed value option is available. Further, insurers may require an appraisal of the insured property to calculate the property’s value at the time of policy issuance.

Personal Inland Marine policies may be attached to a Homeowners policy or written as stand-alone policies.

Question 5

Mobile Home Insurance

Answer 5

Mobile homes can be more difficult to insure because they have unique exposures, such as lacking the structural protection of traditional homes and being exposed to potential loss during transport. The insurance industry offers a few different options to provide insurance for these risks under a Basic Form Dwelling policy, by endorsement to certain Homeowners forms, or by separate insurance if the insurer does not allow an endorsement. Tenants of a mobile home may insure their personal property on the Contents Broad Form (HO–4) Homeowners policy, if the insurer’s underwriting guidelines permit

Question 6

Coverage A

Answer 6

installed property apploacnes floor coverings dressers cabinets attached structures utlitiyu tanks ouyfoot eq used to service residence and contruction material

Question 7

Coverages B, C, and D

Answer 7

nearly identical to the corresponding coverages under a Homeowners policy, except that the Coverage C – Personal Property limit is generally written at 40% of the Coverage A limit, and the Coverage D – Loss of Use limit is generally written at 20% of Coverage A.

Question 8

Property removed additional coverage

Answer 8

500$ for reasonable expenses threatened by a covered peril

Question 9

Transportation/Permission to Move Endorsement

Answer 9

is also available to protect the mobile home from collision losses during transport in the continental United States and Canada, for up to 30 days.

Question 10

Coverage A of a Mobile Home policy would cover all of the following, except:

Answer 10

Contents

Question 11

Earthquake Insurance

Answer 11

The stand-alone policies will only insure against the peril of earthquake, which refers to earth movement, shaking, or trembling caused by underground forces, including land shock waves before, during, or after a volcanic eruption. Landslides, mudslides, and mudflow are also included in the perils insured against. All earthquakes within a 72-hour period are considered a single earthquake.

Question 12

Coverage A-D

Answer 12

similar to the property coverages provided by a Homeowners policy, with Coverage A – Dwelling, Coverage B – Other Structures, Coverage C – Personal Property, and Coverage D – Loss of Use. Some policies may include limited coverage for building code upgrade costs. Underground structures, retaining walls, awnings, outdoor antennas, exterior masonry veneer, and trees are commonly excluded from coverage

Question 13

Deductibles for Earthquake policies are typically higher and represented as a percentage of the Coverage A limit, usually 5%–20%.

Question 14

National Flood Insurance Program (NFIP)

Answer 14

The NFIP is a federal program that enables property owners to purchase flood insurance. The Federal Insurance and Mitigation Administration administers the program under the Federal Emergency Management Agency (FEMA). The federal government makes payment for, or subsidizes, all flood losses.

Question 15

Federal Emergency Management Agency (FEMA)

Answer 15

Federal Insurance and Mitigation Administration administers the program under the program FEMA

Question 16

participating (eligible) communities

Answer 16

Communities in flood-prone areas must establish an approved flood control program in order to participate in the NFIP. Coverage becomes effective 30 calendar days after the applicant completes the application and pays the premium.

Question 17

NFIP Definition of Flood

Answer 17

Flood policies provide protection against direct loss to insured property (buildings and contents) from flood. For its policies, the NFIP defines flood as a general or temporary condition of partial or complete inundation of land that is normally dry land. The flood must involve 2 or more acres of the insured’s land, or both the insured’s property and an adjacent piece of property.

The inundation of land may be the result of:

Overflow of inland or tidal waters, such as a tidal wave generated by a hurricane
Unusual and rapid accumulation or runoff of surface waters
Mudslides or mudflow caused by accumulation of water
Collapse or destabilization of land along a shoreline resulting from erosion or the effect of waves or currents exceeding normal, cyclical levels

Question 18

Under the NFIP’s definition of flood, all of the following would be covered by an NFIP policy, except:

Answer 18

The insured’s basement floods after a sump pump overflows

Question 19

Coverage A – Building Property

Answer 19

must be walled, roofed, above ground, and affixed to a permanent site.

Question 20

Coverage B-personal property

Answer 20

Personal Property insures contents located in a fully enclosed building. Building and contents coverage for basements may be limited, if provided by the policy

Question 21

Emergency Program

Answer 21

is for communities in the earliest stages of participation, meaning the community is in the process of establishing floodplain management standards and the NFIP has not finalized the rating for the community’s flood zones.

Question 22

Regular Program

Answer 22

is for communities that have completed the process to adopt flood control measures. The maximum limits of insurance applicable to insured property are:

Question 23

Emergency program max coverage

Answer 23

Buildings: 1-4 family dwellings 35,000,other residential buildings ,100,000

Contents: 1-4 family dwellings 10,000 residential buildings , Nonresidential buildings 100,000

Question 24

Regular Program coverage

Answer 24

Buildings :250,000,Other residential buildings :500,000, Nonresidential buildings 500,000

Contents : 1-4 family dwellings -100,000 ,Other Residential buildings 500,000,Nonresidential buildings 500,000

Question 25

Coverage C

Answer 25

which includes coverages for debris removal expenses, expenses incurred to protect insured buildings from loss (such as the cost of sandbags), and reasonable expenses incurred to remove property to safety. Property removed to protect it from flood loss is covered for up to 45 days at other locations

Question 26

Coverage D – Increased Cost of Compliance.

Answer 26

provides up to $30,000 for costs incurred to comply with local floodplain management laws or ordinances. Property is insured on an actual cash value basis, except that 1- to 4-family residences and residential condominiums may be insured on a replacement cost basis.

Question 27

Deductibles

Answer 27

Each loss to the property is subject to a deductible, with the standard minimum being $1,000 per occurrence. The deductible applies separately to covered buildings and to personal property.

Question 28

Exclusions

Answer 28

The NFIP does not cover money, securities, lawns, trees, shrubs, plants, growing crops, livestock, wharves, piers, bridges, docks and other structures on or over water, wells, or septic tanks. Indirect losses, such as loss of use or business interruptions, are also not covered.

Question 29

The standard minimum deductible for an NFIP Flood policy is:

Answer 29

$1,000

Question 30

Write Your Own (WYO) Program

Answer 30

is a cooperative effort between FEMA and the private sector that allows existing property and casualty insurance companies to write, issue, and service flood insurance under their own names. Though WYO companies structure flood insurance business within their existing business, they are still subject to the NFIP’s guidelines, regulations, and rates. The program allows the NFIP to increase its policy base and the geographic distribution of policies, and it improves service to policyholders. It is estimated that over 90% of the flood insurance policies in force are maintained by WYO companies. The remaining policies are written and maintained directly by FEMA.

Question 31

Flood

Answer 31

Partial or complete inundation of normally dry land, involving at least 2 acres of one insured's property or the entirety of 2 adjacent properties. This occurs as a result of the overflow of tidal waters, rapid accumulation of surface waters, or similar events.

Question 32

Emergency Program

Answer 32

A coverage grouping for those in the earliest stages of NFIP participation

Question 33

Write Your Own (WYO) Program

Answer 33

A cooperative effort between FEMA and private insurers that allows private insurers to write, issue, and service flood insurance under their own names

Question 34

Participating communities

Answer 34

Those who are in flood-prone areas and eligible for NFIP coverage

Question 35

Regular Program

Answer 35

A coverage grouping for those who have completed the process to adopt flood control measures

Question 36

Federal Emergency Management Agency (FEMA)

Answer 36

The administrator of the National Flood Insurance Program

Question 37

Fair Access to Insurance Requirements (FAIR) Plan

Answer 37

FAIR Plans are utilized when existing Homeowners or Dwelling property coverage is being cancelled or nonrenewed due to loss history, or when the property owner or the property fails to meet an insurer’s underwriting guidelines. Insurance may also be purchased from a FAIR Plan when a dwelling is currently uninsured, and no carrier in the standard marketplace will write coverage. In some states, the insured must certify that they are not able to secure coverage in the standard market. Depending on the state, basic property insurance through a FAIR Plan may be available for commercial risks and farm risks as well. Risks insured through a FAIR Plan are distributed among the standard market insurers, and each insurer will write a proportion of policies relative to their total property insurance premiums collected in the state. Agents do not have binding authority, and coverage is usually bound only after the insurer has received the application and first premium payment from the insured.

Question 38

Difference in Conditions (DIC) Policy

Answer 38

fill coverage gaps seen in other policies. While most policies exclude or limit catastrophic perils like earthquake, flood, collapse, or subsidence, a DIC policy may be written to provide coverage for those perils. A DIC policy could also be written for someone with a FAIR Plan policy to provide more comprehensive coverage than that which is provided by the Plan’s policy. Though there is no standard DIC policy form, DIC coverage is generally written on an open perils basis and will exclude losses by perils that are already covered under standard policy forms, such as fire, lightning, windstorm, and hail. These policies typically do not have a coinsurance requirement. DIC policies normally carry a high deductible, such as $10,000 or more. Coverages provided by the policy can be written as primary or excess insurance.

Question 39

Watercraft Insurance

Answer 39

Homeowners policies offer limited coverage for watercraft, even with an endorsement, but owners of watercraft can obtain more effective property and liability coverage in a stand-alone Watercraft insurance policy.

Question 40

Boatowners Policy (Watercraft Policy)

Answer 40

A Boatowners policy is a package policy that provides both liability and property coverage, similar to that provided by a PAP. The policy is generally used to insure boats that can be towed by a car and that are no longer than 26 feet long, like fishing boats or small sailboats.

Question 41

Coverages

Answer 41

Boatowners policies will cover the insured’s liability for bodily injury and property damage, medical payments for injured insureds and passengers, and physical damage to covered watercraft. Physical damage coverage, also known as hull coverage, is generally provided on an open perils basis to cover the hull, motor, trailer, equipment, and accessories manufactured for marine use. Hull coverage may include towing and assistance expense coverage and limited coverage for personal effects, like clothes and coolers. Physical damage losses are settled on an actual cash value basis. Personal injury liability coverage is not included on a Boatowners policy, and uninsured boaters coverage is optional.

Question 42

Exclusions

Answer 42

The watercraft is not covered if it is being rented to others, used as a public or livery conveyance, or hired for charter. Other exclusions include wear and tear, failure to maintain, scratching or denting, freezing or overheating, ice damage while afloat or laid-up, latent defect, mechanical or electrical breakdown, losses from an organized race or stunting activity, war, and confiscation by governmen

Question 43

A Boatowners policy provides what type of coverage for the hull?

Answer 43

Open perils

Question 44

Conditions

Answer 44

Watercraft policies usually have a policy territory that can be customized. As a baseline, these policies cover the watercraft on land, in inland waters, and within certain distances of the shoreline in the United States, its territories and possessions, Puerto Rico, and Canada. The insured does not have coverage if the boat is navigated outside of the designated territory, which may be broadened by endorsement. Some watercraft may be subject to a lay-up period. A lay-up period applies when an insured watercraft is in storage and allows for a return of premium due to the reduced risk of the boat not being used during a specified period. If the Declarations indicate that watercraft is subject to a lay-up period, coverage is not provided for watercraft operated during the lay-up period or stored outside of the designated lay-up location. Exceptions are made for emergency uses of the watercraft.

Question 45

Yacht Policy

Answer 45

A Yacht policy is designed for larger vessels that are at least 26 feet long, many of which have crew members. The policy includes hull insurance for direct physical damage coverage, covered on an open perils basis and settled on a replacement cost basis, as well as medical payments coverage and liability coverage, which is known as Protection and Indemnity (P&I) insurance. Coverage is also offered for personal property on the yacht, fuel spills, commercial towing expenses, and dinghies. Each Yacht policy contains a navigation territory that states where the boat may be navigated, such as on inland lakes and waterways, for coverage to apply. A lay-up period may also apply to covered yachts.

Question 46

Watercraft Policy Deductible

Answer 46

Hull coverage on a Boatowners policy and Yacht policy is subject to a deductible, which may be written as a percentage of the limit of insurance applying to hull coverage, usually up to 5%, or as a flat specified amount, typically ranging from $250–$1,000. The deductible applies per occurrence.

Question 47

Personal Umbrella and Excess Liability Insurance

Answer 47

Excess Liability insurance will provide excess coverage over the liability limits of an underlying primary policy. Personal Umbrella Liability insurance, a type of excess coverage, has two main function It provides an additional layer of liability insurance after the limits of underlying primary policies are exhausted due to paid claims It provides coverage on a broader basis than the primary policies, so that when a primary policy does not cover a claim, the Umbrella policy drops down to provide first-dollar coverage, as though it is a primary policy Each Umbrella contract is unique and may contain provisions and language not found in other Umbrella policies, though a standardized version of a Personal Umbrella Liability policy exists.

Question 48

Underlying Limits Conditions

Answer 48

Before an insurer will offer Umbrella coverage, there must be underlying primary insurance for the risks covered by the Umbrella. Required underlying policies will be scheduled on the Personal Umbrella Liability policy. Underlying policies must meet certain minimum limit requirements, usually determined to be the highest limits offered by the primary insurer. This helps insulate the Umbrella insurer from most claims, which helps the insurer better handle catastrophic losses. Most Umbrella policyholders must also have Personal Auto and personal liability insurance (like that provided by a Homeowners policy) in place. If the insured owns RVs, watercraft, or rental property, those exposures must also be insured on underlying primary policies. A single Umbrella policy will apply to both Homeowners and Personal Auto liability losses when adequate primary insurance limits are maintained. If an underlying policy is cancelled or nonrenewed and not replaced, or if the underlying insurer becomes insolvent, the Umbrella acts as though the underlying policy was still in place.

Question 49

If an insured's Personal Umbrella Liability policy requires an underlying Homeowners policy and the Homeowners policy is cancelled, how does the Umbrella policy respond?

Answer 49

Coverage does not change and is provided as though the Homeowners policy was still in place

Question 50

Coverage

Answer 50

Coverage is usually written in increments of $1 million, with a single limit applying per occurrence and covering claims for bodily injury, property damage, and personal injury in excess of the insured’s underlying policy limits. Umbrella Liability policies usually cover losses worldwide, including auto losses.

Question 51

Defense Costs

Answer 51

If a claim or suit is brought against an insured for bodily injury, property damage, or personal injury covered by the Umbrella policy, the insurer will provide a defense at their expense, even if the suit is groundless, false, or fraudulent. The obligation to defend does not apply if the occurrence is covered by an underlying policy, meaning the underlying insurer would cover the defense, or if no applicable underlying insurance is in place. If suit is brought against the insured in another country and the Umbrella insurer is prevented from defending the insured for any reason, the Umbrella insurer will pay for defense expenses incurred. The Umbrella insurer may investigate and settle any claim or suit as it deems appropriate. The duty to defend or settle ends when the limit of liability has been exhausted. As Additional Coverages paid in addition to the limit of liability, the Umbrella policy will pay for: Expenses incurred against an insured that relate to the defense Premiums on bonds and postjudgment interest Reasonable expenses incurred by the insured for assisting in the defense, up to $250 per day

Question 52

Self-Insured Retention

Answer 52

Self insured retention method of cost sharing similar to a deductible The only time the insured must pay a self-insured retention is when the Umbrella drops down—if the Umbrella provides excess coverage after a primary policy pays its limit, the insured does not pay the retention.

Question 53

Personal umbrella liability policy

Answer 53

broader coverage not offered by underlying primary insurance Execess coverage over primary underlying insurance

Question 54

Liability coverage

Answer 54

provides liability insurance on an excess basis provides higher limits of coverage and may also provide coverage not afforded by primary policies requires underlying primary insurance self insured retention applies when umbrella drops down world wide coverage territory coverage written in 1,000,000 increments

Question 55

The self-insured retention of a Personal Umbrella Liability policy is described as which of the following?

Answer 55

A method of cost-sharing

Question 56

Exclusions

Answer 56

Intentional injury, except for injury or damage resulting from the use of reasonable force to protect people or property Damage to property in the care, custody, or control of an insured Damage to the insured’s own property Aircraft or hovercraft liability Liability resulting from the ownership or use of an auto while it is being used as a public or livery conveyance, or while engaging with a race, speed contest, or stunt activity Business pursuits Professional liability and Directors and Officers liability, which are commercial coverages with their own specialized policies. Liability for acts or omissions by an insured who is an officer or board member of a nonprofit is covered if the insured does not receive compensation. Discrimination Bodily injury covered by a Workers’ Compensation, non-occupational disability, or occupational disease law Injury arising out of the transmission of a communicable disease, any abuse, or the use or sale of controlled substances Injury or damage resulting from war or nuclear weapons Injury or damage caused by an offense involving fuel escaping from a fuel system Injury or damage caused by the ingestion or inhalation of lead, or from lead contamination Uninsured and underinsured motorists coverages are also excluded, unless added by endorsement.

Question 57

Most Boatowners policies will automatically provide all of the following coverages, except:

Answer 57

Uninsured boaters

Question 58

A Difference in Conditions policy could be used to do all of the following, except:

Answer 58

Provide standard fire policy coverages to high-risk insureds who are unable to obtain property insurance

Question 59

An NFIP flood policy would provide which of the following coverages?

Answer 59

Flood loss to appliances inside the dwelling Appliances would be covered by flood policies, either under building property coverage for permanently installed appliances or under personal property coverage for portable appliances. Indirect losses, such as additional living expenses and business income losses, are excluded from coverage, as are losses to money and securities.

Question 60

After being rejected by an insurer due to underwriting guidelines, an applicant may request Homeowners coverage through:

Answer 60

The FAIR Plan

Question 61

Under an Earthquake policy, covered losses to the insured's property are:

Answer 61

Subject to a high deductible equal to a percentage of the Coverage A limit Deductibles on Earthquake policies are usually higher and represented as a specified percentage of the Coverage A limit, usually 5%-20%. This higher deductible helps ensure that insurers are able to manage catastrophic earthquake losses.

Question 62

Tenants of mobile homes may obtain insurance on which form?

Answer 62

Contents Broad Form (HO-4) Homeowners policy

Question 63

A mobile home insured on a Mobile Homeowners policy is being transported between states. Coverage for collision losses is:

Answer 63

Provided for up to 30 days by endorsement

Question 64

The National Flood Insurance Program is administered by the:

Answer 64

Federal Emergency Management Agency

Question 65

Which of the following is true regarding coverage provided by a flood policy written by the National Flood Insurance Program?

Answer 65

Losses to buildings and losses to personal property are subject to separate deductibles

Question 66

On a Mobile Homeowners policy, Coverage A insures all of the following items, except:

Answer 66

Personal effects

Question 67

Under a Difference in Conditions policy, which of the following is correct?

Answer 67

A DIC policy carries a high deductible

Question 68

In which of the following circumstances would the insured be required to pay the self-insured retention of a Personal Umbrella Liability policy?

Answer 68

The Umbrella drops down to act as the primary policy

Question 69

Boatowners policies typically provide which of the following coverages?

Answer 69

Open perils coverage for physical damage to the hull and equipment

Question 70

Personal Umbrella Liability policies provide coverage on which basis?

Answer 70

Excess basis

Question 71

Which statement regarding the National Flood Insurance Program is incorrect?

Answer 71

It provides unlimited insurance coverage for qualified property owners

Question 72

Personal Umbrella Liability policies are subject to all of the following underlying limits conditions, except:

Answer 72

If an underlying policy is cancelled, the Umbrella policy will not provide coverage

Question 73

Which of the following describes the lay-up warranty under a Yacht policy?

Answer 73

It applies when the insured yacht is in storage and allows a return of premium due to the lower risk

Question 74

Insureds who have flood insurance through the NFIP may qualify for Coverage D, which provides up to $30,000 for:

Answer 74

Costs that result from compliance with local floodplain management laws or ordinances

Question 75

P has a Homeowners policy with a $100,000 personal liability limit and a Personal Umbrella Liability policy with a $1 million limit. After P's Homeowners policy was cancelled, a liability claim results in P being liable for $250,000 in damages for bodily injury. How does the Personal Umbrella Liability policy respond?

Answer 75

The Umbrella policy covers $150,000 of the claim, without P needing to pay a self-insured retention

Question 76

A Mobile Homeowners policy is most similar to:

Answer 76

A Homeowners policy Mobile Homeowners policies include Section I - Property and Section II - Liability, similar to the corresponding sections in a Homeowners policy.

Question 77

Which of the following flood losses would not be covered under an NFIP policy?

Answer 77

A water main in the street breaks, flooding the insured's basement

Question 78

What coverage is not included under a Yacht policy?

Answer 78

Personal injury coverage

Question 79

Which of the following is true regarding coverage provided by a flood policy written by the National Flood Insurance Program?

Question 80

smoke from agricultural smudging or industrial operations

Answer 80

Exclusions include: wind damage to outdoor TV antennas, deterioration, smog and rust, pollutants, _______, and cracking of foundations.

Question 81

open perils

Answer 81

It provides coverage on an _______ basis, which includes all of the Broad Form’s covered perils and any other peril that is not specifically excluded.

Question 82

The _______ is the Special Form.

Answer 82

DP–3

Question 83

replacement cost

Answer 83

Losses under Coverage A and B are settled on a(n) _______ basis.

Question 84

actual cash value

Answer 84

Losses under Coverage C are settled on a(n) _______ basis.

Question 85

The _______ condition qualifies replacement cost coverage for the Broad and Special forms.

Answer 85

Loss Settlement

Question 86

In order for the insurer to pay the replacement cost, the Coverage A limit must be maintained to value—at least _______ of the full replacement cost of the building immediately before the loss.

Answer 86

80%

Question 87

actual repair or replacement

Answer 87

Typically, these policies will only pay actual cash value until _______ is complete.

Question 88

This exclusion also removes coverage for losses caused by sewer backup, drain backup, or _______.

Answer 88

sump pump overflow

Question 89

The _______ exclusion excludes coverage if an off-premises utility service fails and causes a loss.

Answer 89

Power Failure

Question 90

Other exclusions include war, nuclear hazards, and _______.

Answer 90

intentional losses

Question 92

The _______ exclusion will not pay for losses caused by earthquake, landslide, mudflow, mudslide, or sinkhole.

Answer 92

Earth Movement