Property

Question 1

Part B - Medical Payments Coverage under the personal auto policy

Answer 1

Covers reasonable medical expenses incurred within three years of date of injury.

Question 2

The primary purpose of the business income coverage forms is to reimburse the insured for…

Answer 2

Loss of income resulting from property damage at the insured’s property.

Question 3

The tendency for people with a greater-than-average exposer to loss to purchase insurance is called…

Answer 3

Adverse selection.

Question 4

An additional loss that results from a direct loss to property is called…

Answer 4

An indirect/consequential loss.

Question 5

Widget enterprises wants property insurance for a new warehouse it is building. Widget also wants the policy’s limit of insurance to gradually increase as the value of the building under construction increases. Which commercial property coverage form would best fit Widget’s needs?

Answer 5

Builders risk reporting form.

Question 6

The principle that states that an insured should be restored to approximately the same financial position after loss as before is known as

Answer 6

Indemnity.

Question 7

Which of the following losses to covered equipment would be covered under the equipment breakdown protection coverage form?

Answer 7

Damage from an explosion caused by the centrifugal force of moving parts.

Question 8

Which of the elements of a legal contract does an insurance premium payment represent?

Answer 8

Consideration.

Question 9

All of the following must be included in a commercial property policy written under the commercial package policy program EXCEPT

Answer 9

Value reporting form.

Question 10

Under the commercial package policy, who may cancel the policy in writing and making changes to the policy with the consent of the insurer?

Answer 10

First-named insured.

Question 11

Which of the following describes an insurance company doing business in a state other than the one where it is incorporated?

Answer 11

Foreign.

Question 12

It will cost Gary $5,000 to put a new roof on his home to replace a roof destroyed in a windstorm. Assume that the original roof, which Gary paid $3,500 for 10 years ago, depreciated $300 per year. What was the ACV of the roof that was destroyed?

Answer 12

$2,000.

Question 13

In ocean marine insurance, a general average loss is…

Answer 13

A partial loss arising from a sacrifice of cargo to save remaining property.

Question 14

Assume the following items were stolen from the insured’s home. Which one of these losses would be fully covered under Coverage C of the homeowners policy, assuming the loss was for the full value of the property described?

Answer 14

A $2,000 laptop computer the insured uses for her in-home accounting business.

Question 15

Which one of the following statements concerning the farm coverage part is NOT correct?

Answer 15

It covers the farmer’s growing crops.

Question 16

Of the 4 coverages provided under Section I of the homeowners policy, which one provides coverage against an indirect loss?

Answer 16

Coverage D - Loss of use

Question 17

The builders risk reporting form insures a building under construction for…

Answer 17

An amount that increases at intervals to correspond with the increasing value of the building.

Question 18

Which one of the following is NOT one of the required elements of a legal contact ?

Answer 18

Written instrument

Question 19

Which of the following businesses could be eligible for a business-owners policy?

Answer 19

Rest Easy Motel.

Question 20

Each of the following kinds of property may be covered under a building and personal property coverage form EXCEPT

Answer 20

Account records and evidence of debt.

Question 21

Which one of the following is NOT an element of insurability?

Answer 21

A. RISK OF LOSS IS A SPECULATIVE RISK
B. Loss must be calculable
C. Risk of loss must represent a financial hardship
D. Cost of insurance must be affordable

Question 22

The insureds home is covered by a DP-3. Two years ago, the insured bought the home for $58,000. Today, its replacement value is $60,000. How much Coverage A does the insured need to qualify for replacement cost coverage?

Answer 22

A. $60,000
B. $48,000✅
C. $46,000
D. $58,000

Question 23

The action that, in a natural and continuous sequence, produces a loss is know as…

Answer 23

The proximate cause

Question 24

Which commercial property coverage form covers damage to the property of others in the insureds care, custody , or control for which the insured is legally liable?

Answer 24

Legal liability coverage form.

Question 25

The extra expense coverage form provides

Answer 25

Coverage that will permit the insured to continue in business without interruption following a property damage loss.

Question 26

A hardware store is insured under a business income coverage form with the special causes of loss form. Which of the following losses would be covered?

Answer 26

Income lost when the store closes for a week while damage from a burst water pipe is repaired.

Question 27

In prior approval states, the rates and policy forms insurance companies use must be approved by…

Answer 27

The insurance department of the state where they will be used

Question 28

Who of the following would have a need for the personal inland marine personal property form

Answer 28

A condominium or apartment dweller who cannot obtain open peril coverage for personal property under the HO-4 or HO-6.

Question 29

Which of the following losses would be covered by flood policy?

Answer 29

Heavy rains cause a lake to overflow and flood the basement and first floor of a house.

Question 30

The purpose of a binder is to…

Answer 30

Provide temporary protection for the insured between the time the application is made and the policy is issued or the binder expires.

Question 31

Which of the following perils is covered by the HO-2 and HO-3?

Answer 31

Sudden and accidental rupture of a heating system

Question 32

According to the nationwide definition, imports and exports are…

Answer 32

Eligible for ocean marine insurance

Question 33

Coverage for which of the following is excluded by the dwelling policy?

Answer 33

Coin collection

Question 34

Which one of these commercial inland marine forms CANNOT be included in the commercial inland marine coverage part of the commercial package policy?

Answer 34

Parcel post policy

Question 35

A basic dwelling policy automatically provides coverage against fire, lighting, and…?

Answer 35

Internal explosion

Question 36

The condition that provides a means to settle the amount of a loss when the insured and the insurance company cannot agree is…

Answer 36

The appraisal condition

Question 37

What is a hazard ?

Answer 37

An increase in the possibility that a loss might occur

Question 38

The homeowners form that provides open peril coverage on the dwelling and broad coverage on personal property is…

Answer 38

HO-3

Question 39

A morale hazard is?

Answer 39

Arises through an individual’s carelessness or irresponsible actions

Question 40

The purpose of insurance is to…?

Answer 40

Transfer risk from a person , business , or organization to an insurance company that agrees to pay for losses in exchange for premium

Question 41

If a building insured under the building and personal property coverage form was vacant for 3 months

Answer 41

A vandalism loss would not be covered; a fire loss would be covered, subject to a 15% penalty

Question 42

Each of the following business occupancies would be permitted in a dwelling insured under a dwelling form EXCEPT

Answer 42

A small shop carrying merchandise for sale

Question 43

The authority specifically given to an agent , either orally or in writing , by the principal is called

Answer 43

Express authority

Question 44

Furniture that is destroyed when a building burns down is an example of what kind of loss

Answer 44

Direct

Question 45

The insured has $20,000 insurance with Company A and $40,000 with Company B. Assume both policies contain another insurance clause specifying pro rata. What would Company A pay if there was a $24,000 loss.

Answer 45

A. $12,000
B. $0
C. $8,000✅
D. $20,000