Week 2 Exam Flashcards
A commercial property insured suffers a substantial fire loss. As a result, the local building code requires that he install more up-to-date wiring. Where under the commercial property policy would the insured look for coverage for this expense?
a. Preservation of Property
b. Code Enforcement Coverage
c. Increased Cost of Construction
d. The policy provides no coverage for this expense
C. Increased Cost of Construction
A CP insured with Causes of Loss - Special Form, CP 10 30, suffers from a total fire loss. The debris of his building settles below the ground, into the foundation. Should the property insurer cover the cost of removing that debris?
a. No - because digging below the surface of the ground is an excavation and excavations are not covered
b. Yes - because the operation is simply “debris removal” and any expense to remove debris is covered
c. No - bc the loss is “indirect” and not covered by the CP policy
d. Yes - bc the expense to remove debris is a direct loss
B. Yes - because the operation is simply “debris removal” and any expense to remove debris is covered
How much is the commercial policy’s limit based on the “coverage extension” for personal property of others in the insured’s care, custody, or control?
a. $1,000
b. $2,000
c. $2,500
d. $5,000
C. $2,500
Losses from things such as rot, mold, mechanical breakdown, and inherent vice are examples of:
a. losses covered only by the special form
b. losses covered only by named perils forms
c. sudden and accidental losses
d. losses that happen over time that are excluded by the Special Form
D. losses that happen over time that are excluded by the Special Form
Which optional coverage automatically increases the limit of insurance each day of the policy year?
a. Inflation guard
b. Property of others
c. Agreed value
d. Ordinance or Law coverage
A. Inflation Guard
Which of the following is an example of an outdoor “fixture”?
a. a light mounted into a brick wall on the patio
b. a table lamp on a pool side table attached via its electrical cord
c. a portable gas barbeque
d. an outdoor grill chained to a lamppost
A. A light mounted into a brick wall on a patio
The “concealment, misrepresentation, or fraud” condition provides that the policy is void if:
a. any party with legal custody of the insured’s property engages in fraud or misrepresentation of material facts concerning the property
b. any insured engages in fraud or misrepresentation of material facts concerning the property
c. any person engages in fraud or misrepresentation of material facts concerning the property
d. the property is used for any illegal purpose
B. Any insured engages in fraud or misrepresentation of material facts concerning the property
A commercial property “coverage part” is made up of:
a. a coverage form and any applicable endorsements
b. two conditions forms, a coverage form, and a cause of loss form
c. declarations form, two conditions forms, and any endorsements
d. coverage form declarations form, causes of loss form, two conditions forms, and applicable endorsements
d. Coverage form, declarations form, causes of loss form, two conditions forms, and applicable endorsements
Which of the following is an example of a consequential loss?
a. damage by lightening to an on-premises power source
b. damage by fire to production equipment
c. damage by power failure to electronic media
d. Spoilage of food following fire damage to a freezer
D. Spoilage of food following fire damage to a freezer
An insured’s building is covered for $1 million on a commercial property policy. The insured has chosen the “agreed value” option. In the event of a total loss, how much does the insurer owe the insured?
a. The actual cash value of the property
b. The replacement cost of the building
c. The market value of the value
d. The policy limit of $1 million
D. The policy limit of $1 million
Which of the following is not one of the “specified causes of loss”?
a. Fire
b. Nuclear Hazard
c. Sinkhole collapse
d. Volcanic action
b. Nuclear Hazard
The coverage extension for newly acquired or constructed property automatically covers buildings that:
a. are being constructed away from the described premises
b. cost no more than the existing building
c. are not intended for use as a warehouse
d. are acquired and intended for similar use as the building described in the declarations
D. are acquired and intended for similar use as the building described in the declarations
Fire extinguishing equipment, floor coverings, outdoor furniture, and dishwashing equipment are all specifically mentioned in the commercial property policy as examples of:
a. property not covered
b. business personal property
c. personal property used to maintain the building
d. property with specific internal sub-limits
c. personal property used to maintain the building
What type of coverage should an insured purchase that has a true “care, custody, or control” exposure?
a. consequential coverage
b. additional coverage
c. bailees coverage
d. liability coverage
c. bailees coverage
The coverage territory for the Commercial Property policy is worldwide.
A. True
B. False
B. False
