PSI Premium Property Flashcards
What is an example of replacement cost valuation?
Fair market value of item at time of loss
True or False: Lightning is covered under a DP-1 form without extended coverage.
True - Without endorsement DP-1 only insures against perils of fire, lightning and internal explosion.
What principle holds that the insurer relies on the truthfulness of the applicant and in return promises to pay claims?
Good faith
What is not found on the declarations page?
Policy exclusions
Under flood insurance program, how long till coverage becomes effective?
30th Day
What is the standard limit for Coverage-D Fair Rental Value on dwelling policy forms?
20% or .2
What is the property valuation method of paying the full policy amount listed on the dec page regardless of the ACV?
Valued policy
What is the waiting period included in the definition of period of restoration in the business income coverage form?
72 hours
What is the standard amount of Coverage A - Dwelling provided by the HO-6 unit-owners policy?
$1000
Under a farm policy is voluntary parting with property a covered cause of loss under a special form?
Yes - often by trickery is covered under the special form where livestock is under a broad form.
What is the valuation basis for Coverage B - BPP under the businessowners policy?
Replacement Cost
True or False: Modern construction is subject to functional replacement cost.
False - Easy to determine by replacement cost.
Coverage F - Medical payment to others includes coverage for what?
Dental Services
What type of insurance do insurers use to transfer risk among themselves?
Reinsurance
True or False: Grave markers are covered for named perils under Coverage B.
False
True or False: After a car crash you have to rent a replacement vehicle is a direct loss.
True - they are physical losses to property by perils that result in damage.
What should the insured do following a loss for most property insurance contracts?
PPC / MSC = Prompt, protect complete & make submit cooperate.
What part of a legal contract refers to an exchange of value?
Consideration
True or False: Homeowners Coverage E - Personal Liability applies to liability or property arising from acreage the insured is renting for cash crop farming.
False
True or False: Choosing a $1000 deductible is an example of risk retention.
True - Involves the insured personally assuming all or a portion of a loss.
The property coverage of a BOP includes what?
Carpeting that is permanently installed
True or False: Less depreciation losses are settled on an actual cash value basis?
True - Defined as ACV minus depreciation.
As a general rule inland marine insurance doesn’t cover what?
Merchandise that is being manufactured.
Which of the following HO forms provide the most comprehensive coverage?
HO-5 - Coverages on A, B, C and D are insured on special form open perils unless excluded.
What is the special limit of coverage on the HO policy form for property damage to personal watercraft?
$1500
What characterizes a policy requiring a deductible for a loss?
Risk sharing
What is the chance or uncertainty of loss?
Risk
Policy A covers a building for $50k. Policy B covers for $100k. If Company A pays $3k and Company B $6k what is the principle of indemnity for this action?
Pro Rata
Under a CPP policy the common policy dec page shows the who, what, when, where and ?
How much
True or False: A lightning strike on a home’s chimney is a covered loss for Coverage A Dwelling?
True - Coverage A applies only to the dwelling itself.
Who may bring a civil action in the United States district court against any person engaging in conduct constituting an offense?
The Attorney General
What is the principle coverage provided under the HO-4 policy?
Coverage C
Under the Fair Credit Reporting act a licensee must give notice no later than how many days after a request?
3 Days
True or False: Under the equipment breakdown coverage damage to a vacuum tube, glass tube or brush is covered.
False since glass is fragile
What defines a loss which is consequential and comes as a result of an original loss?
Indirect loss
What is a criteria to determine an insurable risk?
Calculable loss
What type of authority is in writing and allows a producer to act on behalf of the insurer?
Express
What is the difference between misrepresentation and fraud?
Misrepresentation is a representation that is actually false, but fraud is an intentional act designed to deceive.
Who is not authorized to transact insurance in a state?
Non-admitted insurer
What is the valuation basis for Coverage B - BPP under the business owners policy?
Replacement Cost
A morale hazard is an example of what?
Indifference to loss
True or False: A personal injury endorsement added to a HO Policy providies coverage for intermittently enterting his tenant’s apt which violates the lease.
True - Covers injuries from false arrest, libel, slander, defamation of character and invasion of privacy.
What does an application for insurance by the insured contractually represent?
An offer
What is excluded as a covered loss under the DP-3 coverage?
Damage by ice to outdoor radio and television antennas and aerials.
Why is the insuring agreement the heart of an insurance policy?
It describes property for covered and perils insured.
What is a type of personal property is not covered under Coverage C of personal property?
Motor Vehicles
Insurance contracts are what type of contracts?
Unilateral
What forms the basis of a loss under an insurance policy?
Loss
What is the waiting period for restoration in the business income form?
72 hours
What policy condition states the terms under which property losses are settled?
Loss Settlement
What is not a covered cause of loss under the HO-2 Broad Form coverage?
Discharge or overflow of water from a sump
True or False: Breakage of glass is covered by the HO-2 Broad form coverage?
True - Includes breakage of glass or safety glazing materials.
The causes of loss form lists what?
Perils the property is insured against
What is the maximum amount reimbursable for tree debris removal for one occurrence under all homeowner forms?
$1000
Who is the principle in a bond arrangement?
Person needing the bond
Who is the oblige in a bond arrangement?
Entity requiring a bond
What is required to get flood insurance certification?
A one time 3-hour course.
On Farm Property what is Schedule E cover?
Scheduled Farm Personal Property - Does not provide coverage for growing crops, trees or personal property
On Farm Property what is Schedule F cover
Unscheduled Farm Personal Property - Subject to 80% Coinsurance and up to $100k
On Farm Property what is Schedule G cover?
Barns, outbuildings and other farm structures - Silos, farm buildings, fences, building materials, television antennas
On Farm Property what is Schedule A cover?
Dwellings - Limit of $1,000 in any one occurrence
On Farm Property what is Schedule B cover?
Other private structures - Automatic 10% limit of Coverage A as an additional limit of insurance
On Farm Property what is Schedule D cover?
Loss of use - Includes the fair rental value in the even the dwelling becomes uninhabitable
What is the livestock coverage form based upon?
Named peril coverage by basic causes of loss except vehicles.
What is custom farming?
Specific planting or cultivating operations
What farm forms are set up on basic causes of loss?
Coverages E & F
What does farm broad form of loss include?
Electrocution of livestock, attack by dogs, accidental shooting, drowning of livestock
What does special form farm loss include?
Open peril exclusions except for fire
On a farm policy what happens to coverage if building/structure is left vacant or unoccupied for more than 120 consecutive days?
Limits of insurance are reduced by 50%
What are farm property coverage exclusions?
Earth movement, flood, power failure off premise
Why was the National Flood Insurance Program created?
To combat rising cost of taxpayer funded disaster relief for flood victims.
Which valuation method is used by the insurer to specify value of a property before it is issued?
Agreed value
What does inland marine insurance not cover?
Merchandise while being manufactured
What policy condition states the terms under how covered property losses are settled?
Loss settlement
What defines the term peril?
Cause of loss
What authority is NOT written and allows a producer to conduct the business of the insurer?
Implied
A BOP policy has two separate Aggregate limits. How many times the limit shown in the declarations for liability and medical are these?
Two Times
What is a type of personal property not covered under Coverage C?
Motor Vehicles
Which homeowner form provides the most comprehensive coverage?
HO-5
Which type of coverage is appropriate for a detached garage in a DP-1 policy?
Coverage B
Under a farm policy what is a covered loss that is covered under special form?
Voluntary parting with property
Determining adequate indemnification after a loss is a principle duty of the who?
Insurer
Coverage F - Medical Payments to Others includes coverage for what?
Dental Services
What defines the chance or uncertainty of a loss?
Risk
Which type of a hazard is a person who intentionally increases the chance of loss?
Morale Hazard - involves the attitude of the insured
What describes an insurers status that meets the insurance department’s standards and is authorized to do business in the state?
Admitted
What is the purpose of a homeowner’s policy?
A package policy that reduces the need for multiple policies.
What is a type of insurance the government may step in to provide that is NOT readily available from private insurers?
Residual Market - means remaining after & flood insurance is an example.
What is something covered under a commercial articles floater?
Theft
The BOP policy covers the medical expenses for what?
Anyone without regard to who is at fault
Which type of authority holds that a producer may have whatever authority a reasonable person would assume the producer has?
Apparent
Under the equipment breakdown coverage form, what does the term breakdown NOT cover?
Damage to any vacuum tube or brush
What is included under the equipment breakdown coverage form?
Failure of pressure or vacuum equipment
Electrical Failure
Mechanical Failure
True or False: A mobile home can be insured with a HO-8 modified coverage form?
False - Only under an HO-2 or HO-3
Which type of insurer is a unincorporated group of people agreeing to insure each other’s losses under a contract?
Reciprocal
