NC Property Insurance Basics Flashcards
A seller asks her agent to strike through the due diligence period on the offer to purchase because she is selling her home in as-is condition. What should the listing agent advise?
A)
Any and all changes the parties agree to will be legally binding on all parties.
B)
Any changes to the standard form should be initialed and dated by all parties.
C)
The changes may be made by deleting the applicable part of the contract with whiteout or a black marker.
D)
The seller should speak with an attorney regarding the legal ramifications.
D)
The seller should speak with an attorney regarding the legal ramifications.
Explanation
A change of this type should always be referred to an attorney. Any broker who attempts to modify a standard form is practicing law. However, if the seller modifies the form and the buyer agrees, it is legally binding on the parties.
Reference: Property Insurance Basics
In relation to property insurance, who is the insurer?
A)
Policy holder
B)
Insurance company
C)
Mortgage company
D)
Tax office
B)
Insurance company
Explanation
Reference: Property Insurance Basics
Which clause provides that if the insured collects for damage from the insurance company, any rights the insured may have to sue the person who caused the damage are assigned to the insurance company?
A)
Coinsurance clause
B)
Attornment clause
C)
Quiet enjoyment clause
D)
Subrogation clause
D)
Subrogation clause
Explanation
Subrogation clause provides that if the insured collects for damage from the insurance company, any rights the insured may have to sue the person who caused the damage are assigned to the insurance company. Coinsurance clause refers to the minimal amount of coverage a policyholder must maintain in order for the insurance company to pay the loss.
Reference: Property Insurance Basics
Policies insuring personal or financial integrity are called
A)
multiperil bonds.
B)
performance bonds.
C)
municipal bonds.
D)
surety bonds.
D)
surety bonds.
Explanation
Surety bonds are policies that insure one’s personal or financial integrity. A multiperil policy offers the property manager an insurance package that includes such standard types of commercial coverage as fire, hazard, and public liability.
Reference: Property Insurance Basics
How many days would a property need to be vacant to be excluded from vacancy?
A)
60
B)
180
C)
90
D)
30
A)
60
Explanation
Reference: Property Insurance Basics
Which is the most commonly used residential insurance policy that provides the insurer with a greater amount of protection?
A)
HO-2
B)
HO-6
C)
HO-4
D)
HO-3
D)
HO-3
Explanation
Reference: Property Insurance Basics
A broker receives multiple offers on a listing. Which of the following statements is TRUE ? The existence of multiple offers
A)
requires a counteroffer from the seller to all the buyers.
B)
is a material fact that must be disclosed to all parties.
C)
would require that all offerors be given the terms of the other offers, to give everyone fair and equal opportunity to bid on the house.
D)
is confidential unless the seller gives the agent permission to disclose the existence of other offers.
D)
is confidential unless the seller gives the agent permission to disclose the existence of other offers.
Explanation
Agents are specifically prohibited from disclosing the terms of an offer to any competing party. A seller may only counteroffer to one buyer or runs the risk of being under contract to multiple parties.
Reference: Property Insurance Basics
HO-4 is commonly known as
A)
termite policy.
B)
flood policy.
C)
mortgagee policy.
D)
tenant policy.
D)
tenant policy.
Explanation
Reference: Property Insurance Basics
A listing agent has received multiple offers on a home and has been advised that another offer is forthcoming. How should the listing broker present the offers?
A)
All the current offers at the same time, advising the seller that another buyer’s offer is expected
B)
In the order of receipt, for the seller’s consideration; first in, first presented
C)
All the current offers at the same time; however, because the other offer is not yet in hand, there is no obligation to tell the seller of a potential offer
D)
Hold the existing offers for at least 24 hours to allow the other buyer the opportunity to get an offer in on the listing
A)
All the current offers at the same time, advising the seller that another buyer’s offer is expected
Explanation
All offers must be presented at the same time, in no particular order. The existence of a potential offer, as well as a verbal offer, must also be disclosed to the owner.
Reference: Property Insurance Basics
Which clause in an insurance policy covering real property requires the policyholder to maintain fire insurance coverage generally equal to or at least 80% of the property’s actual replacement cost?
A)
Attornment clause
B)
Coinsurance clause
C)
Subrogation clause
D)
Quiet enjoyment clause
B)
Coinsurance clause
Explanation
The coinsurance clause requires that the policyholder maintain fire insurance coverage generally equal to or at least 80% of the property’s actual replacement cost. Subrogation clause assigns any rights the insured may have to sue the person who caused the damage to the insurance company.
Reference: Property Insurance Basics
Regarding flood zones, in North Carolina, a licensee must
A)
disclose if a property s in a flood zone.
B)
engage an insurance agent to advise buyers and sellers.
C)
hire a surveyor before listing a property to determine if the property is in a flood zone.
D)
all of these.
A)
disclose if a property s in a flood zone.
Explanation
The licensee should also advise the buyer or seller to consult their insurance agent for further information.
Reference: Property Insurance Basics
