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Property and Casualty > Property > Flashcards

Property Flashcards

1
Q

The causes of loss insured against in an insurance policy are known as:

A. Risks
B. Hazards
C. Perils
D. Losses

A

C. Perils

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2
Q

All of the following are factors in the determination of actual cash value EXCEPT:

A. Replacement cost

B. Insurance premium paid

C. Type and quality of property

D. Age of the property

A

B Insurance premium paid

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3
Q

A policy condition that stipulates how the amount of damaged or lost property will be determined if he insured and the principal do not agree on the value of a property loss is known as:

A. Third-party provision
B. Appraisal
C. Coinsurance
D. Loss valuation

A

B. Appraisal

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4
Q

Which of the following statements best describes the abandonment clause of the standard fire policy?

A. The abandonment clause prohibits abandoning the property (vacant or unoccupied) for more than 60 days.

B. The abandonment clause prohibits abandoning the property to the insurer in order to claim a total loss.

C. Any loss occurring while a described building intended for occupancy is vacant or unoccupied for more than 60 days is not covered.

D. If the property is sold, the policy may not be abandoned to the new owner, expect with the written consent of the company.

A

B. The abandonment clause prohibits abandoning the property to the insurer in order to claim a total loss.

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5
Q

Which of the following is defined as the legal liability arising from physical damage to the belongings of others caused by the negligence of an insured?

A. Personal Liability]
B. Bodily Injury Liability
C. Property Damage Liability
D. Accident Liability

A

C. Property Damage Liability

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6
Q

In case of a loss, the indemnity provision in insurance policies:

A. Allows the insured to collect 20% more than the actual loss.

B. Pays the insured a percentage of the loss above and beyond the loss.

C. Pays the insured as much as 95% of the loss.

D. Restores an insured person to the same financial state as before the loss.

A

D. Restores an injured person to the same financial state as before the loss.

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7
Q

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

A. Indemnity
B. Representation
C. Warranty
D. Concealement

A

C. Warranty

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8
Q

In commercial policies, who has control of the policy?

A. Additional insured
B. Insured
C. Named Insured
D. First Named Insured

A

D. First named insured

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9
Q

Which of the following is defined as the cost to replace damaged property with less expensive and more modern construction or equipment?

A. Market value
B. Actual cash value
C. Replacement cost
D. Functional replacement cost

A

D. Functional replacement cost

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10
Q

In insurance, an offer is usually made when:

A. The agent hands the policy to the policy holder.

B. An agent explains a policy to a potential applicant.

C. An applicant submits an application to the insurer.

D. The insurer approves the application and receives the initial premium.

A

C. An applicant submits an application to the insurer.

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11
Q

What is a material misrepresentation?

A. Any misstatement made by an applicant for insurance

B. Any misstatement by the producer

C. Concealment

D. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company.

A

D. A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company.

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12
Q

What provision in a property policy applies when the insurer broadens coverage but does not increase the premium?

A. Insuring clause

B. Appraisal clause

C. Subrogation clause

D. Liberalization clause

A

D. Liberalization clause

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13
Q

All of the following are found in the declarations section of a policy EXCEPT the:

A. Limits of insurance

B. Exclusions

C. Policy premiums

D. Name of the insured

A

B. Exclusions

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14
Q

The insured owns an older home with lath and plaster walls. Following a kitchen fire, the insurance company pays to have the wall replaced with drywall that is just as functional, but costs less than lath and plaster. Which loss valuation allows the insurance company to have plaster replaced with drywall?

A. actual cash value

B. Functional replacement cost

C. Replacement cost

D. Market value

A

B. Functional replacement cost

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15
Q

An insured relocated to another state for work. However, she still owns and insures a house in this state, but has had no one living in it for 3 months. She is also storing some furniture and clothes in the house. From and insurance standpoint, the insured’s house is considered:

A. Condemned
B. Under repair
C. Vacant
D. Unoccupied

A

D. Unoccupied

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16
Q

An insured stated on her application for life insurance that she has never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit is denied?

A. Material misrepresentation
B. Waiver
C. Utmost Good faith
D. estoppel

A

A. Material misrepresentation

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17
Q

Which of these is defined as the maximum limit of coverage available under a liability policy during a policy year, regardless of the number of claims that may ne made or the number of accidents that may occur?

A. Per occurrence limit of liability

B. Split limit of liability

C. Combined single limit of liability

D. Aggregate limit of liability

A

D. Aggregate limit of liability

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18
Q

Replacement cost is defined as:

A. The market value of property of like kind and quality

B. Full replacement of property with like kind and quality, less an allowance for physical deterioration and depreciation.

C. Payment of the full policy limits in the event of a total loss.

D. Full replacement of property at its current cost, new and without reduction for depreciation.

A

D. Full replacement of property at its current cost, new and without reduction for depreciation.

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19
Q

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage, This is an example of:

A. Fraud
B. Breach of warranty
C. Concealment
D. Waiver

A

C. Concealment

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20
Q

Events of conditions that increase the chances of an insured loss occurring are referred to as:

A. Risks
B. Perils
C. Hazards
D. Exposures

A

C. Hazards

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21
Q

In terms of parties to a contract, which of the following does NOT describe a competent party?

A. The person must have at least completed secondary education

B. The person must not be under the influence of drugs or alcohol.

C. The person must be of legal age

D. The person must be mentally competent to understand the contract

A

A. The person must have at least completed secondary education

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22
Q

What fundamental principal in property insurance holds that when there is an unbroken connection between a occurrence and damage that grows out of the occurrence, then the resultant damage is all apart of the occurrence?

A. Proximate cause
B. Concurrent causation
C. Indemnity
D. Common cause

A

A. Proximate cause

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23
Q

Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?

A. Exclusions
B. Declarations
C. Insuring agreement
D. Additional coverage

A

D. Additional coverage

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24
Q

To purchase insurance, the policyowner must have financial interest in the property being insured. This is known as:

A. Loss valuation
B. Indemnity
C. Insurable interest
D. Pure loss

A

C. Insurable Interest

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25
Q

Which of the following would modify the original insurance contract by either adding or removing coverage?

A. Additional coverage form
B. Conditions
C. Flexible policy
D. Endorsements

A

D. Endorsements

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26
Q

An insured has a liability policy that sets the amount for all claims that arise from a single incident at $50,000. Which type of limit of liability does this insured’s policy have?

A. Per occurrence
B. Per person
C. Aggregate
D. Split

A

A. Per occurence

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27
Q

Which insurance principle stated that if a policy allows for greater compensation that the financial loss insured, the insured may only receive benefits for the amount lost?

A. Stop-loss
B. Consideration
C. Reasonable Expectations
D. Indemnity

A

D. Indemnity

28
Q

An insured’s business is damaged because of a fire, and he is forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this?

A. Additional
B. Consequential
C. Direct
D. Special

A

B. Consequential

29
Q

The Business Pursuits endorsement under Section II of a homeowners policy will cover all of the following EXECPT:

A. All business pursuits
B. Business liability
C. Insured’s activities
D. Bodily injury to the insured

A

B. Business liability

30
Q

All of the following are perils covered under the broad form dwelling policy EXCEPT:

A. Theft
B. Fire
C. Lightning
D. Collapse

A

A. Theft

31
Q

The major portion of the premium for an equipment breakdown policy pays:

A. for repairs after a loss
B. for coverage for bodily injury and property damage of others
C. for replacement parts
D. for inspections and examinations

A

D. For inspections and examinations

32
Q

Losses that result form the freezing of plumbing system while the dwelling is vacant would be EXCLUDED under a homeowners policy UNLESS:

A. the dwelling had been vacant for no more than 90 days
B. The insured purchased the water damage endorsement
C. the insured had drained the plumbing system
D. the insured purchased special form coverage

A

C. the insured had drained the plumbing system

33
Q

A business owners policy is:

A. a self-contained prepackaged policy
B. A special policy designed for large retail operations
C. Part of a commercial package policy
D. A monoline policy

A

A. A self contained prepackaged policy

34
Q

Under the dwelling policy, Coverage C - Personal Property is:

A. Automatically provided as 50% of coverage A
B. A prohibited coverage in the dwelling form
C. Limited to 50% of the amount of insurance that is written as Coverage A.
D. Limited to covering a servant’s property while at the insured location.

A

D. limited to covering a servant’s property while at the insured location.

35
Q

The contents coverage on a homeowners policy would pay how much after the loss of one of a pair of golden candlesticks?

A. The ACV of the pair
B. The difference in the ACV as a pair and as a single
C. The replacement cost of the pair
D. Nothing

A

B. The difference in the ACV as a pair and as a single

36
Q

The North Carolina Insurance Underwriting Association has all of the following powers EXCEPT:

A. To engage in writing policies of insurance for town and country mutual insurance associations
B. To cause policies of insurance to be written
C. To assume reinsurance from its members
D. To cede reinsurance to its members and to purchase reinsurance on behalf of its members

A

A. To engage in writing policies of insurance for town and country mutual insurance associations

37
Q

Which of the following dwelling coverage forms would pay replacement cost for the dwelling?

A. All dwelling property coverage forms
B. DP-1
C. DP-2 and DP-3
D. DP-3 only

A

C. DP-2 and DP-3

38
Q

Under which of the following circumstances would an insurer be allowed to cancel a dwelling policy midterm?

A. The insureds claims have exceeded the amount of coverage
B. The insured wants to make suspicious increases to his or her coverage
C. The insured reached his or her limit on the number of claims
D. The insured knowingly lied about the year the property was constructed.

A

D. The insured knowingly lied about the year the property was constructed

39
Q

Under a business policy, the inspections and surveys condition specifies all of the following EXCEPT:

A. The insurer does not make safety inspections for the insured.
C. The insurer does not guarantee that the conditions are safe or healthy.
B. The insurer does not guarantee that the insured is meeting all required safety regulations
D. The insurer does not have the right to inspect the insureds property and operations.

A

D. The insurer does not have the right to inspect the insureds property and operations.

40
Q

Unless exempt, individuals applying for an insurance agents license must first complete an approved course of study of

A. 60 hours
B. 15 hours
C. 20 hours
D. 40 hours

A

C. 20 hours

41
Q

In a dwelling policy, which of the following is true regarding personal liability coverage?

A. It does not cover medical payments to others
B. It is included in all dwelling policies
C. It is the same as in homeowners policies
D. It must be added as a supplement or written as a separate policy.

A

D. It must be added as a supplement or written as a separate policy.

42
Q

Which of the following policy forms primarily insurers a structure on an actual cash value basis?

A. DP-1
B. DP-2
C. DP-3
D. All DP forms

A

A. DP-1

43
Q

A licensee decided to terminate his resident in this state. Which of the following would be the appropriate action?

A. Allowing the license to expire
B. Notifying the NAIC
C. Notifying the commissioner
D. Delivering the license to the Commissioner within 30 days

A

D. Delivering the license to the Commissioner within 30 days

44
Q

Harolds building has a standard fire coverage, but Harold has purchased separate policies from three different companies. Each of the three companies policy limit is $100,000. According to the pro-rata clause, in the event of a loss how much will each company pay for the loss?

A. $100,000
B. Only the primary company will be liable
C. 33 1/3%
D. The primary company will pay 50% of the loss, and the remaining 50% will be shared equally between the other 2 companies

A

C. 33 1/3%

(Pro-rata, of course, prevents the insured from capitalizing on the loss. Pro rata limits the liability of the insurer to a portion of the loss no greater than the amount the insured bears to the whole insurance covering the property whether collected or not. This case 1 building, 3 insurers, the loss amount available to collect 1/3 share of the insurable interest.)

45
Q

When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

A. Contract of adhesion
B. Acceptance
C. Consideration
D. Legal purpose

A

C. Consideration

The Consideration part of the insured is the payment if premium and the representations make in the application.

46
Q

An insured has a personal property replacement cost endorsement under her homeowners policy. If and expensive painting and an antique chair are stolen from the insured’s home, what will the insured receive on the claim under that endorsement?

A. 70% of the replacement cost
B. 80% of the replacement cost
C. 100% of the actual cash value
D. Nothing

A

D. Nothing

Personal property excludes replacement cost endorsement excludes property such as art and antiques.

47
Q

The removal coverage included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long?

A. 5 days
B. 15 days
C. 30 days
D. 60 days

A

C. 30 days

48
Q

Which types of losses are covered by the standard fire policy?

A. Indirect losses only
B. Direct losses only
C. Both direct and indirect losses
D. Neither

A

B. Direct losses only

49
Q

The earthquake and Volcanic Eruption Endorsement added to Commercial Property policies consider all earthquake shocks as ne earthquake if they occur within what maximum time period?

A. 24 hours
B. 72 hours
C. 168 hours
D. 240 hours

A

C. 168 hours

50
Q

A building insured with commercial property insurance had been vacant 90 days. Which of the following is NOT true?

A. Payment for unnamed perils is reduced by 25%
B. The insured has no coverage for losses caused by theft
C. The insured has no coverage for losses caused by glass breakage
D. Payment for unnamed perils is reduced by 15%

A

A. Payment for unnamed perils is reduced by 25%

(If the building has been vacant for more tha n 60 consecutive days before the loss, the insurer will not pay for damage caused by vandalism, sprinkler leakage, glass breakage, water damage. theft, attempted theft. If the loss is caused by any other peril, the insurer will reduce the amount they would have otherwise paid by 15%.

51
Q

Under the examination of books and records condition, the insurance company has the right to examine and audit the insured’s books and records related to the policy during the policy period and for up to __ years after the termination of the policy.

A

3

52
Q

An individuals construction company leaves mobile equipment and construction machinery on the job site until the project is completed. what could this individual use to insure it?

A. Bailee’s customers form
B. Builders risk form
C. Contractors equipment floater
D. General property form

A

Contractors equipment floater

53
Q

Under businessowners policy Section I, if an insurer wants to nonrenew a policy for nonpayment of premium, how many days before the expiration date must the insurer notify the mortgageholder?

A. 10 days
B. 15 days
C. 20 days
D. 30 days

A

A. 10 days

54
Q

In a commercial policy, medical expenses are paid on a _____basis, subject to the limit on the declarations

A

per person

55
Q

The businessowners liability coverage will pay for necessary medical expenses of others incurred within what maximum time.

A. 90 days
B. 120 days
C. 1 year
D. 3 years

A

C. 1 year

56
Q

The extra expense coverage form provides:

A. Payment for unforseen expenses an insured may incur while the business is shut down following a property damage loss.

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

C. Extra money for an insured whose accounts receivable records have been damaged

D. Additional money to pay for property damage losses at a covered location

A

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

57
Q

A builders risk form is most often written as which of the following?

A. Completed value form
B. Scheduled for
C. reporting form
D. Specific value form

A

Completed value form

58
Q

The limit for business personal property will be automatically increased by ___ for seasonal fluctuations unless otherwise specified in the Declarations.

A

25%

59
Q

a major portion of the premium for an equipment breakdown policy pays:

A. For repairs after a loss
B. For coverage for bodily injury and property damage of others.
C. For replacement parts
D. For inspections and examinations

A

D. For inspections and examinations

60
Q

In commercial insurance, whish of the following is an additional coverage that is covered by the broad causes of loss form?

A. Lightning
B. Ordinance or law
C. Settling
D. Collapse

A

D. Collapse

61
Q

In the commercial package policy declarations page, if no premium amount is shown, there is ___ coverage for that part.

A

no

62
Q

What is the limit for forgery or alteration coverage in the businessowners policy?

A. 500
B. 1000
C. 2500
D. 5000

A

2500

63
Q

All of the following are options of the insurer in the loss settlement of a standard fire policy EXCEPT:

A. Pay replacement cost value
B. Take possession of the damaged property
C. Repair or replace the property
D. Rebuild the property with material of like kind or quality

A

A. Pay the replacement cost value

64
Q

All volcanic eruptions that occur within a ______ period will be considered one event.

A

72-hour

65
Q

All statements of the insured in any application for a policy of insurance are deemed _____________.

All statements of the insured in the insurance contract are deemed _____________.

A

Representations

Warranties

Property and Casualty (3 decks)

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