Property Overview

Question 1

What are the two kinds of policies available?

Answer 1

Dwelling

Homeowners

Question 2

What type of homeowner policy can be used for owner-occupied, landlord, vacation or seasonal, and some mobile homes?

Answer 2

Dwelling (DP) policies

Question 3

What type of homeowner policies are designed only for owner-occupied homes, and are package policies that include liability coverage.

Answer 3

Homeowner (HO) policies

Question 4

Dwelling and homeowner policies are divided into coverage’s.

What coverage is it that Dwellings covers attached structures and outdoor personal property or equipment used on premises?

Answer 4

Coverage A

Question 5

Dwelling and homeowner policies are divided into coverage’s.

What coverage is it that other structures covers separate structures at the same location. This limit is usually 10% of the dwelling coverage?

Answer 5

Coverage B

Question 6

Dwelling and homeowner policies are divided into coverage’s.

What coverage is it that Personal Property covers 10% of the limit extends anywhere in the world (except property of guests or servants, which is only covered while on the described premises). Business property stored on premises, pets, and aircraft and motor vehicles are excluded from coverage?

Answer 6

Coverage C

Question 7

Dwelling and homeowner policies are divided into coverage’s.

What coverage is it that Fair rental value (also known as loss of use in homeownership policies) covers replacement of rental income if covered property is uninhabitable due to a loss caused by and insured peril. Up to 10% of the dwelling coverage applies?

Answer 7

Coverage D

Question 8

What are the 3 different coverage forms that apply to dwelling policies?

Answer 8

DP 00 01 - Covers named perils and offers extended perils at and additional premium;

DP 00 02 - Covers the named and extended Perils listed in DP 00 01, plus some additional perils;

DP 00 03 - All perils are covered on a replacement cost basis unless specifically excluded. Personal property coverage (if elected) is covered under broad named perils.

Question 9

Additional living expenses are expenses above and beyond normal living expenses during repair of insured premises

Answer 9

Coverage E

Question 10

Practice Question:

An insured’s Personal Property is damaged by a covered peril. Under a dwelling policy, this loss would be insured under?

A: Coverage A
B: Coverage B
C: Coverage C
D: Coverage D

Answer 10

C: Coverage C

In both dwelling and homeowners insurance, coverage C applies to personal property.

Question 11

Practice Question:

Medical payment coverage on a homeowners policy applies to medical costs incurred with in how many years of the accident?

A. 2
B. 5
C. 3
D. 4

Answer 11

C. 3 Years

For the medical payments to apply, the cost must be incurred within 3 years of the accident

Question 12

Practice Question:

Which of the following homeowners coverage forms applies to personal property and does not include structure coverage?

A: HO-2
B: HO-4
C: HO-6
D: HO-8

Answer 12

B: HO-4

HO-4 contents broad from protects only personal property with no structure coverage.

Question 13

Practice Question:

Which of the following homeowners coverage forms applies to condominium unit owners?

A: HO-2
B: HO-4
C: HO-6
D: HO-8

Answer 13

C: HO-6

HO-6 condominium unit owners provides broad coverage on the personal property of condominium owners with limited dwelling coverage.

Question 14

Practice Question:

Under the commercial property basic form, all of the following causes of loss will be covered EXCEPT

A: Vandalism
B: Fire
C: Windstorm/hail
D: Falling Objects

Answer 14

D: Falling Objects

The basic form covers these 11 causes of loss: Fire, lightning, explosion, windstorm/hail, smoke, aircraft/vehicles, riot/civil commotion, vandalism, sprinkler leakage, sinkhole collapse, and volcanic action.

Question 15

Practice Question:

Which of the following commercial property coverage forms is used to insure businesses that cannot afford to be closed for repairs?

A: Extra Expense
B: Business Income
C: Business Personal Property
D: Building and personal property

Answer 15

A: Extra Expense

Extra Expense coverage insures consequential loss and is used for businesses that cannot afford to be closed for repairs.

Question 16

Practice Question:

Regarding special causes of loss forms for commercial property coverage, which of the folloiwng causes of loss would most likely be excluded from coverage?

A: Lightning
B: Wear and Tear
C: Fire
D: Explosion

Answer 16

B. Wear and Tear

The special form covers open perils. Exclusions include wear and tear, trick/scheme or device, weather conditions and settling/cracking/shrinking or expansion.

Question 17

What is the purpose of “business income coverage” in a commercial property policy?

A. To protect against unforeseen loss of profits that exceeds a percentage of specified in the policy, provided that the loss is consistent with downturn in the industry itself.

B. To protect against the loss of profits and fixed expenses that must continue to be paid during restoration following a direct loss to the premises.

C. To protect against the loss of profits that occur when a business is moving to a new location, provided that the business must temporarily suspend all or part of its operations and move is not the result of damage to the property.

D. To protect against the loss of profit that are a direct result of death or disability of a key employee.

Answer 17

B. To protect against the loss of profits and fixed expenses that must continue to be paid during restoration following a direct loss to the premises.

Business income coverage insures against the loss of profits and fixed expenses that must continue to be paid during restoration following a direct loss to the premises.

Question 18

Which of the following is NOT among the 4 classes of inland marine risk?

A. Commercial property floater risks

B. Domestic Shipments

C. Foreign Shipments

D. Personal floater risks

Answer 18

C. Foreign Shipments

There are 4 classes of inland marine risk: Domestic shipments and transportation risks; bridges, tunnels and other instruments of transportation and communications; commercial property floater risk; and personal floater risks.

Question 19

Which of the following is not among the components that make up a commercial package policy (CPP)?

A. Farm
B. Dwelling
C. Crime
D. Auto

Answer 19

B. Dwelling

A CPP is made up of these components: commercial property coverage, general liability coverage, crime coverage, equipment breakdown coverage, auto coverage, inland marine coverage and farm coverage.

Question 20

In property and causality insurance, assignments of policies are valid.

A. Only if the insurer has given prior written consent.

B. Without insurer review if the policy has been in effect for for at least 2 years.

C. Under no circumstance.

D. Without insurer review, on the date of the insured’s request.

Answer 20

A. Only if the insurer has given prior written consent.

The assignment provision states that the legal right or interest in a policy may be transferred. In property and casualty insurance, assignments of policies are valid only with the prior written consent of the insurer.

Question 21

If more than one policy is in force and covering the same risk at the time of loss, which provision defines how each policy will respond?

A. Assignment
B. Proof of Loss
C. Pro Rata
D. Other Insurance

Answer 21

D. Other insurance

If more that one policy is in force and covering the same risk at the time of loss, the Other Insurance provision defines how each policy will respond.

Question 22

Which of the following must be received by the insurer before a claim will be paid?

A. A binder
B. Proof of Loss
C. Notice of Claim
D. Appraisal Notice

Answer 22

B. Proof of Loss

The insured is required to provide a proof of loss to the insurer before a loss can be paid.

Question 23

Which provision states that the legal right or interest in a policy may be transferred?

A. Duties of the Insured
B. Assignment
C. Notice of Claim
D. Pro rata

Answer 23

B. Assignment

The assignment provision states that the legal right or interest in a policy may be transferred. In property and casualty insurance, assignments of policies are valid only with prior written consent of the insurer.

Question 24

Which property policy provision states that if the insurer and the insured cannot agree on the value of the property, each party may choose and independent appraiser?

A. Insurance of value
B. Appraisal
C. Assignment
D. Proof of Loss

Answer 24

B. Appraisal.

The appraisal provision states that if the insurer and the insured cannot come to an agreement as to the value of the property lost or damaged in a claim, a written demand of an appraisal may be made. If this demand is made, each party chooses and pays for its own appraiser, and then agree together upon a third appraiser.

Question 25

Which of the following policy provisions states that the insured is required to notify the insurer in writing if events leading to a possible claim have occurred?

A. Duties of the Insured
B. Assignment
C. Notice of Claim
D. Proof of Loss

Answer 25

C. Notice of Claim

“Notice of claim” states that the insured is required to notify the insurer in writing if event leading to a possible claim have occurred. The form should include how, when, and where the loss took place.

Question 26

In the event that multiple policies cover the same loss, which provision that each policy will pay the same proportion of its limits to the overall coverage?

A. Notice of Claim.

B. Pro rata

C. Assignment

D. Appraisal

Answer 26

B. Pro rata

If more than one policy is in force and covering the same risk at the time of loss, the Other insurance provision defines how each policy will respond. Some policies will pay only in excess of what the primary insurance pays, but often there is a pro rata provision that states each policy will pay the same proportion of its limits to all overall coverage.

Question 27

Which policy provision outlines the specific responsibilities of the insured in the event of a loss?

A. Duties of the insured
B. Assignment
C. Proof of Loss
D. Notice of Claim

Answer 27

A. Duties of the Insured

“Duties of the insured” outlines the specific responsibilities of the insured in the event of a loss.

Question 28

An insured has two property insurance policies. The insured’s property damaged, and the damage is a covered loss under both policies. Which policy will explain how each policy will respond?

A. Notice of claim
B. Duties of the Insured
C. Appraisal
D. Other insurance

Answer 28

D. Other Insurance

If more that one policy is in force and covering the same risk at the time of loss, the Other insurance provision defines how each policy will respond. Some policies will pay only in excess of what the primary insurance pays, but often there is a pro rata provision that states each policy will pay the same proportion of its limits to the overall coverage.

Question 29

Which of the following terms is defined as the reduction of value of the person or property insured in a policy?

A. Peril
B. Loss
C. Risk
D. Liability

Answer 29

B. Loss

A loss is defined as the reduction, decrease, or disappearance of value of the person or property insured in a policy.

Question 30

Which section of a property policy outlines what or who will not be insured?

A. Declarations
B. Definitions
C. Conditions
D. Exclusions

Answer 30

D. Exclusions

Exclusions are perils that are not insured against or people that are not insured. The exclusions sections of a policy outlines what or who will be insured. Most commonly, insurance policies exclude losses caused by catastrophic events such as war, nuclear disasters, floods and earthquakes.

Question 31

A portion of a loss that must be covered by the insured is called a/an

A. Premium
B. Deductible
C. Exclusion
D. Commission

Answer 31

B. Deductible

A deductible is the portion of a loss that is considered the responsibility of the insured. The insurer is responsible for the balance of covered loss.

Question 32

A fire is an example of a

A. Loss
B. Peril
C. Risk
D. Liability

Answer 32

B. Peril

A peril is a specific cause of loss, such as a fire, hail, earthquake, or robbery. Property insurance policies can list specific perils that are covered - known as named peril policies, or cover all perils not specifically excluded - known as open peril policies.

Question 33

Which cars a loss would a standard property policy likely exclude?

A. Fire
B. Windstorm
C. War
D. Robbery

Answer 33

Exclusions are pearls that are not insured against or people that are not insured. The exclusion section of a policy outlines what or who will not be insured. Most common insurance policy exclude losses caused by catastrophic events such as war, nuclear disasters, floods and earthquakes

Question 34

Which of the following are pearls that are not insured against?

A. Liabilities
B. Losses
C. Exclusions
D. Limitations

Answer 34

Exclusions are perils that are not Insured against or people that are not insured. The exclusion section of a policy outlines what or who will not be insured. Most commonly insurance policies exclude losses caused by catastrophic events l such as war, nuclear disasters, floods and earthquakes.

Question 35

Which of the following terms is defined as the reduction of value of the person or property insured in a policy?

A. Peril
B. Loss
C. Risk
D. Liability

Answer 35

A loss is defined as the reduction, decrease, or disappearance of value of the person or property insured insured in a policy.

Question 36

Exclusions in insurance policies are

A. Premiums that do not need to be paid.

B. Policy deductibles and coinsurance

C. Perils that are not covered

D. Risks that are not specifically named

Answer 36

Exclusions are perils that are not insured against or people that are not insured.

Question 37

What are the 2 types of losses?

A. Pure and speculative
B. Insurance and uninsurable
C. Direct and consequential
D. Open peril and names peril

Answer 37

Losses can be direct and indirect, or consequential

Question 38

In which type of liability is one person responsible for the acts of another?

A. Vicarious
B. Strict
C. Absolute
D. Transferred

Answer 38

Vicarious liability is when someone is responsible for the acts of another. A parent can be held accountable for a child’s activities, or an employer may be liable for negligent acts of employees.

Question 39

Which of the following defines a peril?

A. Dangerous condition
B. Possibility of loss
C. Transfer of risk
D. Cause of loss

Answer 39

A peril is a specific cause of loss insured in a policy

Question 40

This type of liabilities to damage caused by defective products, even when the manufacturers fault or negligence cannot be proven.

A. Absolute
B. Vicarious
C. Strict
D. Speculative

Answer 40

Strict liability refers to damage caused by defective products, even when the manufacturers fault or negligence cannot be proven.