Unit 9: Miscellaneous Personal Insurance

Question 1

National Flood Insurance Program (NFIP)

Emergency Program

Answer 1

Emergency program: community applies to participate

• Maximum dwelling coverage - $35,000
• Maximum contents coverage - $10,000
• Maximum commercial building - $100,000
• Maximum commercial contents - $100,000

Question 2

National Flood Insurance Program (NFIP)

Regular Program

Answer 2

Regular program: after the community has been rate mapped

• Maximum dwelling coverage - $250,000
• Maximum contents coverage - $100,000
• Maximum commercial building - $500,000
• Maximum commercial contents - $500,000

Question 3

Flood

Answer 3

• Temporary water from a natural source
• Covers 2 or more acres that are usually dry
• Mudflow
• Water from inside the house is NOT a flood

Question 4

Flood Exclusions

Answer 4

• Accounts, bills, currency, deeds, evidences of debt, money, securities, bullion, and manuscripts
• Lawns, trees, shrubs, plants, growing crops, and livestock
• Aircraft, self-propelled vehicles, and motor vehicles
• Fences, retaining walls, outdoor swimming pools, bulkheads, wharves, piers, bridges, docks, and other open structures on or over water
• Underground structures and equipment, such as wells and septic tanks
• Newly constructed buildings that are in, on, or over water
• Structures that are primarily containers, such as gas or liquid storage tanks (does not apply to silos, grain storage buildings, or their containers)

Question 5

Value of Losses

Answer 5

• Replacement cost available: must be single-family dwelling, insured to 80%, and primary residence
• Everything else is actual cash value (ACV)

Question 6

Write Your Own Program

Answer 6

• Insurance company writes the policies using its name
• NFIP sets the rates and underwriting rules
• Insurance company is paid a fee for its expenses

Question 7

Applications

Answer 7

• Agent doesn’t have binding authority
• Initial premium paid in full
• 30-day waiting period (waived if bought when house has a mortgage; applies to requests to increase coverage on an existing policy)

Question 8

Mobile Homes

Answer 8

• Endorsement to a dwelling or homeowners policy
• Can be a separate policy
• Insures the home, other structures (10%) and contents
• Personal property - 40% of dwelling coverage
• Loss of use - 20%
• Permanent foundation

Question 9

Personal Articles Floater

Answer 9

• Provides coverage for nine specific categories
• Standard Loss Settlement and Agreed Value Loss Settlement

Question 10

Boatowners

Answer 10

• Less than 26’
• Covers boat, motor, and trailer
• Accessories can be added (skis, fishing rods, etc.)

Question 11

Yacht

Answer 11

• 26’ or more in length
• Includes coverage for the boat (hull), trailer, and protection and indemnity (liability)

Question 12

Personal Inland Marine Insurance

Answer 12

• Provides BROAD coverage for personal property
• Forms sometimes called ‘floaters’

Question 13

Umbrella

Answer 13

• Large dollar amount of excess liability - $1 million or higher
• Requires primary underlying policies to be in force (auto, homeowners, boat)
• Excess coverage: pays over and above base policy limits if they cover the loss
• If primary policy is not in effect, umbrella only pays the excess as if it was