Assignment: Policy Coverage Quiz

Assignment: Policy Coverage Quiz

Assignment: Policy Coverage Quiz

ORDER NOW FOR AN ORIGINAL PAPER ASSIGNMENT: Assignment: Policy Coverage Quiz

Week 5 Quiz

FIN 428 Week 5 Quiz

Under the Named Non-Owner Policy coverage applies for the operation of nonowned autos

• by the named insured and resident relatives.
• by the named insured and spouse only.
• by the named insured and anyone to whom the named insured grants permission.
• by the named insured only.

 

When a motorcycle is insured under the Miscellaneous Type Vehicles Endorsement

• coverage applies to the named insured for the use of any motorcycle.
• coverage applies to the named insured only and only for the insured vehicle.
• coverage applies to the named insured and resident relatives for the use of any motorcycle.
• coverage applies to the named insured, resident relatives and permissive users for the insured vehicle only.

 

The principal difference among the various Homeowners forms is

• with respect to the liability coverage under Section II.
• the definition of the dwelling in each form.
• the definition of personal property in each form.
• the property covered and perils insured against in Section I.

 

The Personal Auto Policy provides coverage under the liability section for

• nonowned snowmobiles, all-terrain vehicles, and motorcycles.
• the employer of the named insured if such employer is sued because of the operation of the covered auto by an insured person.
• all automobiles owned by the named insured.
• anyone operating the owned automobile.

 

Mr. Jones is insured under a Homeowners Broad Form (HO-2).  A sudden surge of power from the city’s power plant burns out the motor on his freezer and the meat in the freezer spoils before the loss is discovered.

• Loss of the meat is covered, but not the damage to the motor.
• Neither the meat nor the motor is covered.
• Damage to the motor is covered, but not the loss of the meat.
• Both the meat and the motor are covered.

 

The replacement cost coverage provision of the Homeowners forms applies

• to the dwelling, other structures, and personal property.
• only to the dwelling.
• to the dwelling and other structures only.
• to the dwelling and personal property only.

 

The definition of uninsured motorist under the Uninsured Motorist coverage of the Personal Auto Policy excludes

• an automobile insured by a company that becomes insolvent.
• a hit-and-run driver.
• an automobile being operated without liability insurance.

 

Which of the following losses would be payable under the comprehensive coverage of the Personal Auto Policy?

• Collision
• Losses to vehicles with less than four wheels
• Reimbursement to individuals not included in the named driver exclusion provision
• Flood damage

 

“Excess-of-loss” trade credit insurance policies:

• require the insurer to assign a credit rating to each account that is covered by the policy.
• are only used in domestic trade credit insurance.
• tend to have a large annual aggregate deductible.
• are designed to provide protection for a normal level of credit losses.

 

To which of the following persons are medical payments excluded from coverage in a Personal Auto Policy?

• Persons struck by the owned automobile
• Nonresidents while occupying the owned automobile
• Resident relatives struck by an automobile while pedestrians
• The named insured while occupying a nonowned automobile

 

Coverage under the theft peril of the Homeowners forms HO-2, HO-3, and HO-4

• excludes theft of money.
• excludes theft of jewelry, furs, silverware, and guns.
• is identical in all forms.
• excludes theft of intellectual property.

 

The Scheduled Personal Property endorsement

• is subject to the same deductible as the policy to which it is attached.
• provides open-peril coverage on scheduled property anywhere in the world.
• usually excludes damage by earthquake and flood.
• provides coverage on scheduled property for the same perils as the Homeowners to which it is attached.

 

The Personal Auto Policy provides coverage under the liability section for

• pleasure use of nonowned motorcycles by the named insured.
• nonresidents operating the owned auto with permission.
• the owner of a nonowned auto being used by the named insured.
• any automobile being operated by the named insured.

 

Under a surety bond, the third party to whom the bonding company is answerable for the acts of the person bonded is called the

 

Under a surety bond, the insurer or bonding company is called the

• vice-principal.

 

Under business interruption coverage, payment is made for the period

• that the business is actually interrupted.
• the period in which operations could be reasonably be resumed.
• the period from the date of loss to expiration of the policy.
• specified in the policy declarations.

 

Which of the following is a fiduciary bond?

• Bail bond
• Guardian bond
• Permit bond
• Replevin bond

 

Under the Personal Auto Policy, if the insured has two autos insured, one with collision and one without collision, an additionally acquired auto

• is covered for collision for 4 days, with a $500 deductible.
• is covered for collision for 14 days.
• is not covered for collision until it is reported to the insurer.
• is covered for collision until the end of the policy period.

 

Surety bonds

• hold the principal liable to the surety for any loss sustained.
• are more similar to insurance than are fidelity bonds.
• are usually written on a continuous basis with provision for cancellation by either party.
• cover failure of the principal to perform the specified obligation only if dishonesty can be proved.

 

The Modified Homeowners Form (HO-8) differs from the other forms with respect to

• the Other Structures extension.
• the requirements for the notarization of the form.
• the underwriting requirements for eligibility.
• the fair market value condition.

 

Trade credit insurance

• may only be written to cover individual accounts or on a portfolio of accounts.
• is a form of credit life insurance arranged by financial institutions.
• provides protection against a firm’s normal credit losses.
• is when a credit insurance policy, grouping of policies, are sold to a third-party creditor.

 

The liability coverage of the Homeowners policy coverage excludes

• liability assumed under contract.
• business liability exposures of the insured.
• a child’s vicarious liability.
• a parent’s vicarious liability.

 

The earth movement exclusion of the Homeowners policies

• applies only to the dwelling, but not to moveable property.
• excludes any property referenced in the Other Structures extension.
• does not appear in Homeowners form HO-3.
• excludes earthquake and volcanic eruption.

 

The Business Pursuits Endorsement to the Homeowners policy

• permits the use of the premises for business purposes.
• covers the insured’s liability as the owner of a business.
• protects eligible insureds against liability they incur as employees.
• is available to all insureds.

 

Mr. Jones owns a restaurant building valued at $100,000.  He carries $50,000 coverage with an 80% coinsurance clause.  He has a fire with damage to the building of $40,000.  How much will he collect for the loss?

• Nothing, since he has violated the coinsurance clause
• $32,000
• $25,000
• $40,000

 

Business interruption insurance provides coverage for

• the loss of net profit and expenses that continue during a period of interruption.
• damage to stock or merchandise.
• loss of profits resulting from an interruption at another business.
• loss of profits on finished goods that are damaged or destroyed.

 

A nonowned auto used while the insured’s auto is being repaired or serviced is a

• hired automobile.
• temporary substitute automobile.
• newly acquired automobile.
• replacement automobile.

 

The obligee under a completion bond is generally

• the individual for whom the work is being performed.
• a lender.
• the bonding company.
• the contractor performing the work.

 

In most states, Uninsured Motorists coverage provides coverage

 

• is automatically included as a part of Medical Payments coverage.
• for both bodily injury and property damage caused by an uninsured motorist.
• only for property damage caused by an uninsured motorist.
• only for bodily injury caused by an uninsured motorist.

 

The type of property insurance coverage which provides a definite amount for each item insured is

• blanket coverage.
• reporting coverage.
• unscheduled coverage.
• specific or scheduled coverage.

 

Jones built a home in 1955, which now has a replacement cost value of $100,000 and an actual cash value of $60,000.  He has it insured for $60,000 under a Homeowners Broad Form (HO-2).  The dwelling’s roof is damaged by a windstorm.  It is determined that the roof is 50% depreciated and that the cost of replacing the roof will be $8,000.  He will collect

• $4,000 minus the deductible.
• $8,000 minus the deductible.
• $6,000 minus the deductible.
• nothing, since he has violated the replacement cost provision.

 

Personal Injury liability coverage

• includes certain intentional torts such as libel, slander, and defamation and is available by endorsement to the Homeowners.
• is essentially the same thing as bodily injury coverage.
• is available to business firms but not to individuals.
• is automatically included in the Homeowners policy.

 

The Personal Fur Floater and the coverage on furs under the Homeowners Scheduled Personal Property Endorsement includes

 

• wear and tear.
• damage caused by insects and vermin.
• inherent vice.

 

Trade credit insurers may assist their insureds with the management of credit risk by

• assisting the insured with raising their debt to income ratio.
• extending the insured set credit limits for its customers.
• offering credit to insured’s with extended repayment terms.
• assessing the creditworthiness of the insured’s customers.

Assignment: Policy Coverage Quiz

Assignment: Policy Coverage Quiz

Assignment: Policy Coverage Quiz

One coverage automatically included in the Tenants Homeowners form (HO-4) that is excluded from the other forms is

• coverage for credit card forgery.
• Correct Answer building additions and alterations additional coverage.
• the Other Structures extension.
• loss assessment coverage.

 

Contingent business interruption covers loss sustained by an insured firm

• as a result of a boiler explosion.
• as a result of damage to property not owned or operated by the firm.
• as a result of the operation of building codes.
• which exceed the limits of its basic business interruption coverage.

 

When purchasing insurance on a dwelling

• Homeowners Form 8 is preferable to Homeowners Form 5.
• Homeowners Form 6 is preferable to Homeowners Form 4.
• Homeowners Form 3 is preferable to Homeowners Form 2.
• Homeowners Forms are equally preferable to one another.

 

When one person borrows another’s automobile

• the insurance on both cars applies on a pro-rata basis.
• the insurance of the operator is primary.
• the insurance on the car being driven is primary.
• coverage applies on a “contribution by equal shares” basis.

 

The Homeowners Comprehensive Form (HO-5) excludes loss to personal property caused by all but which of the following?

• Gradual deterioration
• Earthquake
• Smoke
• Wear and tear

 

The theft coverage of the Homeowners forms

• does not require forcible entry into the premises.
• does not require that the insured produce sales receipts for the property stolen.
• does not require that insured be present at the time of theft.
• does not require that the insured notify the police of the theft.

 

Which of the following losses is covered under the Homeowners Broad Form (HO-2) but might be covered under the Special Form (HO-3)?

• Damage caused by earthquake
• Damage caused normal wear and tear
• Damage caused by wild animals
• Damage to home outdoor landscaping

 

Extra expense insurance covers

• unusual expenses required to continue operations following damage to owned property caused by an insured peril.
• those normal expenses that continue during a period of shutdown or interruption.
• salaries of key employees.
• the loss of profits during a period of shutdown.

 

Under the Personal Auto Policy, coverage for liability arising out of the use of a nonowned auto

• is excess with respect to coverage on the nonowned auto.
• is not provided because of the care, custody, and control exclusion.
• prorates with the coverage on the nonowned auto.
• is primary with respect to coverage on the nonowned auto.

 

The Boatowners Policy

• is usually written with a $1,500 deductible to dovetail with the coverage on boats under the Homeowners policy.
• covers the boat on a replacement cost basis.
• is a package policy that includes both property and liability coverage.
• covers the boat for the same perils as Homeowners Form 4.

 

The definition of dwelling in the Homeowners forms includes

• any real property fixtures attached to the property.
• carpets and drapes.
• additions in contact with the dwelling.
• window air-conditioning units.

 

The ISO Commercial Property Coverage Forms

• cover both property and liability exposures.
• automatically include coverage for business interruption losses.
• cover neither property and liability exposures.
• are designed for different property types and to provide protection against different types of loss.

 

The basic purpose of the coinsurance provision is

 

• to reduce the cost of insurance by permitting insurers to collect from the negligent party causing the loss.
• to require the insured to purchase all of his insurance from one company.
• to reduce total losses by requiring the insured to bear a part of every loss.
• to induce the insured to insure a high percentage of the value of his property.

 

When the Homeowners policy is used to insure a mobile home

• the scope of the perils is greatly reduced.
• the definition of Coverage A, Buildings, is modified to include attached fuel tanks and built in furnishings.
• contents coverage does not apply.
• Coverage A is combined with Coverage C.

 

Which of the following losses would be paid under the collision coverage of the Personal Auto Policy?

• Bricks fall from a truck the insured is following and hit the car
• The insured misjudges a curve and rolls the car
• The car is stolen and the thief collides with a bridge
• The car collides with a deer

 

The two major classifications of judicial bonds are

• fiduciary bonds and litigation bonds.
• license bonds and permit bonds.
• performance bonds and litigation bonds.
• bail bonds and license bonds.

 

Fluctuating business inventories are usually written on what type of fire form?

• Blanket form
• Reporting form
• Gross earnings form
• Single item form

The Comprehensive Homeowners Form (HO-5) provides

• open-peril coverage on personal property.
• open-peril coverage on both the dwelling and contents.
• a higher limit on money and securities than other forms.
• a broader definition of personal property than other forms.

 

If a Personal Auto Policy is written without physical damage coverage on the covered auto and the insured acquires an additional auto

• physical damage coverage will not apply until the insurer is notified.
• there is no physical damage coverage on the additional auto.
• physical damage coverage applies to the new auto for 4 days.
• physical damage coverage applies to the new auto for 14 days.

 

The main difference in coverage under the monoline fire dwelling policies and Section I of the Homeowners policies is

• the broader coverage on the dwelling under the Homeowners forms.
• the more liberal definition of contents in the dwelling forms.
• the theft coverage that is included under the Homeowners forms.
• the absence of a building law exclusion in the dwelling forms.

 

The definition of personal property in the Homeowners forms includes

• property belonging to roomers and boarders.
• borrowed property which is being used by an insured.
• pets belonging to the insured.
• motorized vehicles as long as they are not licensed.

 

Mrs. Jones has a Homeowners policy.  Her dog bites the mailman while he is still about three blocks away from the premises.

• There is no coverage under the policy.
• Medical payments coverage applies, but not the liability coverage.
• The policy will pay only if Jones is found legally liable.
• The policy will pay medical costs under the medical payments coverage and will also pay under liability coverage if Jones is held legally liable.

 

Under the cancellation provision of the Federal Flood Insurance Policy, the insured

• may cancel the policy subject to 30 days’ notice.
• may cancel at any time, but if he or she retains title to the property, the premium for the current term is fully earned.
• has the same cancellation right as under the fire policy.
• may not cancel the policy.

 

The definition of persons insured Homeowners Section II includes

• the named insured and spouse and other resident relatives in the household.
• the entire family except children away from home at school.
• all persons living on the premises.
• only the named insured.

 

Coverage A of the Homeowners Policy would apply to

• a shed used to store tools and equipment.
• an unattached garage rented for private garage purposes.
• the insured’s summer home not listed in the declarations.
• lumber to be used to in remodeling the insured’s basement.

 

The Homeowners Special Form (HO-3) provides

• open-peril coverage on personal property, and named peril coverage on the dwelling.
• named peril coverage on both the dwelling and personal property.
• open-peril coverage on both the dwelling and personal property.
• open-peril coverage on the dwelling and named peril coverage on personal property.

 

An individual might purchase a monoline fire dwelling policy rather than a Homeowners form on a dwelling because

• the dwelling is not owner occupied.
• the Homeowners form is not available in the state in question.
• he or she does not need the liability coverage of the Homeowners.
• the monoline dwelling form will be substantially cheaper.

 

Under the Personal Auto Policy, an additionally acquired auto is

• automatically insured under the liability coverage for 4 days.
• automatically insured under the liability coverage for 14 days.
• never insured automatically.
• automatically insured under the liability coverage until expiration.

 

Coverage for liability arising out of a business owned by the insured is covered under

• the Business Pursuits endorsement to the homeowners policy.
• the homeowners policy without modification.
• the HOBIZ endorsement to the homeowners policy.
• the mandatory Home Day Care endorsement to the homeowners policy.

 

The medical payments coverage of the Homeowners policy agrees to pay medical expenses resulting from bodily injury to

• persons other than members of the insured’s household who reside on the premises.
• guests, regardless of the insured’s liability or lack thereof.
• residents of the household.
• only the policy holder.

 

Mrs. Jones has a Homeowners Broad Form (HO-2).  The bathtub overflows and causes $800 in damage to the kitchen ceiling.

• The loss is covered under this form, but would not have been covered under the Homeowners Modified Form (HO-8).
• Loss of this nature are inevitable and are therefore excluded.
• The loss is covered under this form and would also have been covered under the Homeowners Basic Form (HO-8).
• The loss is not covered under this form but would have been covered under the Homeowners Special Form (HO-3).

Assignment: Policy Coverage Quiz

Assignment: Policy Coverage Quiz

Assignment: Policy Coverage Quiz

For which of the following vehicles would the liability coverage under Section II of the Homeowners policy provide coverage?

• An owned snowmobile while used away from the insured premises
• A non-owned moped while used away from the premises
• A non-owned snowmobile while used away from the insured’s premises
• An owned moped while used away from the premises

 

The definition of personal property in the Homeowners forms excludes

• watercraft while away from the premises.
• money and securities.
• all motorized vehicles.

 

In most states, Underinsured Motorists coverage

• is a statutory coverage required of all drivers.
• is usually written with limits equal to the state’s minimum financial responsibility.
• essentially duplicates coverage of Uninsured Motorists coverage.
• is mutually exclusive with Uninsured Motorists coverage.

 

John Jones and his son Junior are insured under separate Personal Auto Policies, covering their respective autos, each as named insured.  Jones is using Junior’s car while his own auto is in the garage for repairs.  In case of accident

• only the father’s policy will apply.
• only Junior’s policy will apply.
• both policies will apply on a pro-rata basis.
• Junior’s policy will be primary and the father’s policy will apply on an excess basis.

 

In purchasing automobile insurance, which of the following coverages should be considered essential?

• They are all essential coverages
• Uninsured motorist coverage
• Medical payments coverage
• Liability coverage

Assignment: Policy Coverage Quiz

Assignment: Policy Coverage Quiz

Assignment: Policy Coverage Quiz

A bid bond

• guarantees that the bid has been checked carefully.
• protects against loss resulting from failure of the bidder to honor the bid.
• guarantees that the contractor will not raise the bid.
• guarantees that the contractor meets the specifications in the bid request.

 

The definition of flood in the Federal Flood Insurance policy

• specifically excludes mudslides.
• includes overflow of inland or tidal waters and rapid accumulation of surface water from other sources.
• includes water from sources on the insured’s own property.
• limits the peril to the overflow of bodies of water.

 

If a Personal Auto Policy is written without physical damage coverage on the covered auto and the insured acquires an additional auto

• physical damage coverage will not apply until the insurer is notified.
• physical damage coverage applies to the new auto for 14 days.
• physical damage coverage applies to the new auto for 4 days.
• there is no physical damage coverage on the additional auto.

 

The full value reporting clause in reporting form coverage

• is intended to provide blanket coverage.
• legally requires that the insured fully reports all capital gains received from insurance payouts.
• penalizes an insured who underreports values.
• legally requires that the insurer report all excluded coverages to the named insured(s).

 

Mr. Jones is insured under a Homeowners Tenants Form (HO-4).  While he is on vacation, burglars steal his television, $300 in cash, and a $12,000 Rolex watch.

• The entire loss is covered, subject to the deductible.
• A significant part of the loss will not be covered.
• Only the television and the wristwatch are covered.
• Only the television is covered.

 

Expenses incurred in defending a liability suit that is covered under Section II of the Homeowners policy

• are payable, with any judgment, up to the policy limit.
• are not payable under the policy.
• are payable in addition to the policy limit of liability.
• are not covered, but may be added to the policy by endorsement.

 

Coverage on money under the Homeowners forms

• is provided for the same perils as other property, but subject to a $200 limit which may be increased.
• is covered on the same basis as any other personal property.
• is limited to $100 and excludes loss by theft.
• applies only while on the insured premises.

 

In which of the following situations would the Personal Auto Policy exclude coverage under the liability section?

• the named insured borrows a truck for business use.
• a nonresident borrows the covered auto for business use.
• a resident relative borrows a truck for pleasure use.
• the named insured borrows a motorhome for a vacation.

 

The Damage to Property of Others coverage under Section II of the Homeowners policies provides limited coverage for

• damage arising out of motor vehicles.
• damage to the insured’s own property.
• intentional damage by some insureds.
• damage to property that is owned by members of the insured’s household.

 

The Lienholders Single Interest Coverage Endorsement used with the Mobile Home Endorsement to the Homeowners policy

• protects the lienholder but not the insured.
• includes coverage for both the insured and the lienholder.
• protects the insured against liens that may be placed against the mobile home.

is automatically included in the basic policy premium.