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Insurance Policies and Coverages: An Overview, Exams of Property Law

University of WestminsterProperty Law

Answers to various questions related to different types of insurance policies and coverages. Topics include personal property coverage, authority policies, surety bonds, professional liability, commercial auto policies, workers compensation, and more.

Typology: Exams

2023/2024

Available from 03/27/2024

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Page | 1
Fx property and casualty Exam 2024
1. In dwelling policies, automatic increase in insurance is
(Choose from the following options)
1. Coverage for newly acquired property.
2. Coverage by endorsement.
3. Automatic coverage.
4. Coverage without additional premium. - ANS>> 2. Coverage by endorsement.
2. Personal business property out in the open is covered under Commercial Property
Policy only while
(Choose from the following options)
1. Within 150 feet of the described premises.
2. Within 100 feet of the described premises.
3. Located on the described premises.
4. Specifically described on the declarations. - ANS>> 2. Within 100 feet of the
described premises.
3. Under a Commercial Crime Coverage Part, following a covered loss, the insured
must submit a written proof of loss within
(Choose from the following options)
1. 60 days.
2. 90 days.
3. 120 days.
4. One year. - ANS>> 3. 120 days.
4. Which of the following provisions requires an insurer to document all
correspondence with an insured?
(Choose from the following options)
1. Claims settlement
2. Entire contract
3. Errors and omissions
4. Unfair trade practices - ANS>> 3. Errors and omissions
5. Which statement is true regarding Workers Compensation law in California?
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Download Insurance Policies and Coverages: An Overview and more Exams Property Law in PDF only on Docsity!

Page | 1

Fx property and casualty Exam 2024

  1. In dwelling policies, automatic increase in insurance is (Choose from the following options)
  2. Coverage for newly acquired property.
  3. Coverage by endorsement.
  4. Automatic coverage.
  5. Coverage without additional premium. - ANS>> 2. Coverage by endorsement.
    1. Personal business property out in the open is covered under Commercial Property Policy only while (Choose from the following options)
  6. Within 150 feet of the described premises.
  7. Within 100 feet of the described premises.
  8. Located on the described premises.
  9. Specifically described on the declarations. - ANS>> 2. Within 100 feet of the described premises.
    1. Under a Commercial Crime Coverage Part, following a covered loss, the insured must submit a written proof of loss within (Choose from the following options)
  10. 60 days.
  11. 90 days.
  12. 120 days.
  13. One year. - ANS>> 3. 120 days.
    1. Which of the following provisions requires an insurer to document all correspondence with an insured? (Choose from the following options)
  14. Claims settlement
  15. Entire contract
  16. Errors and omissions
  17. Unfair trade practices - ANS>> 3. Errors and omissions
    1. Which statement is true regarding Workers Compensation law in California?

Page | 2 (Choose from the following options)

  1. Injured workers may sue an employer for negligence only when fault is clearly established against the employer.
  2. Injured workers may always sue an employer for negligence regardless of the degree of fault against the employer.
  3. Injured workers cannot sue an employer for negligence.
  4. Injured workers may sue an employer for negligence when any degree of fault is established against the employer. - ANS>> 3. Injured workers cannot sue an employer for negligence.
    1. In order to determine whether to test a life insurance applicant for HIV or AIDS, the insurer may do which of the following: I. Base its decision to test on the incidence of AIDS in the person's ZIP code; II. Test only persons who are single and under age 30; III. Establish minimum uniform standards for testing all applicants for insurance; or IV. Not test anyone for HIV or AIDS, because it is discriminatory. (Choose from the following options)
  5. III only.
  6. I and II.
  7. IV only.
  8. I, II, III and IV. - ANS>> 1. III only.
    1. A provision found in most claims-made liability policy forms that provide a specified period of time following the policy expiration, during which claims arising out of occurrences during the policy period may be made against the policy at no extra cost, is called (Choose from the following options)
  9. Extension of coverage.
  10. Supplemental extended reporting period.
  11. Grace period.
  12. Basic extended reporting period. - ANS>> 4. Basic extended reporting period.
    1. The personal injury liability endorsement to an HO policy applies to all the following EXCEPT (Choose from the following options)
  13. False arrest.
  14. A third party breaks a leg when the insured knocks him down.
  15. Slander.
  16. Invasion of privacy. - ANS>> 2. A third party breaks a leg when the insured knocks him down.

Page | 4

3. HO- 3

4. HO- 4 - ANS>> 1. HO- 6

  1. Under the dwelling policy, Coverage C - Personal Property is (Choose from the following options)
  2. A prohibited coverage in the dwelling form.
  3. Limited to 50% of the amount of insurance that is written as Coverage A.
  4. Limited to covering a servant's property while at the insured location.
  5. Automatically provided as 50% of Coverage A. - ANS>> 3. Limited to covering a servant's property while at the insured location.
  6. If a claimant contacts an agent regarding her life insurance policy and clearly expects a response, within what span of time must a complete response be issued? (Choose from the following options)
  7. 15 days
  8. 21 days
  9. 31 days
  10. 90 days - ANS>> 1. 15 days
  11. While cutting grass in your yard with your brother's borrowed lawnmower, the fuel line ruptures and the lawnmower is destroyed in the fire. How will your HO liability react? (Choose from the following options)
  12. It will pay your brother's property insurance deductible.
  13. Your HO liability and your brother's property coverage will share on a prorated basis.
  14. It will cover the damage.
  15. It will not cover the damage because you are not liable. - ANS>> 3. It will cover the damage.
  16. According to the standard mortgage clause, who has the right to bring a suit in their own name to recover damages, pay policy premiums, and submit a proof of loss? (Choose from the following options)
  17. Insurance company
  18. Governor
  19. Policyholder
  20. Mortgagee - ANS>> 4. Mortgagee

Page | 5

  1. Which of the following defenses attests that if a person recognizes and understands that there is danger involved in an activity and voluntarily chooses to encounter it, he or she may be barred from seeking recovery for injuries due to negligence? (Choose from the following options)
  2. Assumption of risk
  3. Proximate cause
  4. Comparative negligence
  5. Intervening clause - ANS>> 1. Assumption of risk
  6. The homeowners policy covers collapse caused by all of the following EXCEPT (Choose from the following options)
  7. Weight of snow.
  8. Hidden insect or vermin damage.
  9. Weight of too many people attending en event hosted in the house.
  10. Foundation cracks. - ANS>> 4. Foundation cracks.
  11. Which of the following best describes liberalization clause in a policy? (Choose from the following options)
  12. Changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium.
  13. The insurer is relieved of its contractual obligations to the insured.
  14. The insured may assign the policy to any person without their written consent.
  15. The policy cannot be cancelled. - ANS>> 1. Changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium.
  16. The other insurances clause of an ocean marine policy allows coverage for which reasons? (Choose from the following options)
  17. To obtain coverage for war, strikes, and related risks not covered by the policy
  18. To replace an existing policy
  19. To add endorsements
  20. To expand existing coverages such as earthquake, fire, and hail - ANS>> 1. To obtain coverage for war, strikes, and related risks not covered by the policy
  21. There are over 200 different crops that may be insured under crop insurance policies; however, the eligibility list varies

Page | 7

  1. If permission is granted by the department of insurance
  2. Broad theft coverage cannot be added to a dwelling policy.
  3. If the policy has been in effect for 60 days
  4. If the insured is owner-occupant of the dwelling - ANS>> 4. If the insured is owner- occupant of the dwelling
    1. All of the following are supplemental payments found in liability policies EXCEPT (Choose from the following options)
  5. Costs the insured incurred in hiring an attorney.
  6. All expenses and defense costs incurred by the insurer.
  7. Reasonable expenses incurred by the insured.
  8. Limited amounts for bail bonds and other bonds related to a claim. - ANS>> 1. Costs the insured incurred in hiring an attorney.
    1. Which of the following organizations has the primary responsibility forms for the standard market? (Choose from the following options)
  9. Insurance Services Office
  10. Office of Financial Services
  11. National Association of Insurance Commissioners
  12. Governor's Office - ANS>> 1. Insurance Services Office
    1. Which of the following is a statutory defense? (Choose from the following options)
  13. Intervening cause
  14. Contributory negligence
  15. Comparative negligence
  16. Assumption of risk - ANS>>
    1. Monica had a spotless medical record until she was rushed to the emergency room for a gallbladder attack in December. Her major medical provider allowed her to apply her gallbladder-related expenses to the next year so that she could apply them to the new year's deductible. What provision allowed her to do this? (Choose from the following options)
  17. Carryover
  18. Deductible Transfer
  19. Deductible Extension
  20. Common accident - ANS>> 1. Carryover

Page | 8

  1. An insurance policy specifies that it will pay $600 for a specific loss. The policyowner suffers a loss of $535. How much will the policy pay? (Choose from the following options)
  2. $
  3. $
  4. $
  5. $600 - ANS>> 3. $
  6. The standard provision that allows the coverage, which is afforded by the policy, to be applied separately to each insured who is seeking coverage or against whom a claim is being made is known as (Choose from the following options)
  7. Limited liability clause.
  8. Separation clause.
  9. Severability clause.
  10. Stop loss clause. - ANS>> 3. Severability clause.
  11. How does the mobilehome endorsement affect the other coverage of law or ordinance in a homeowners policy? (Choose from the following options)
  12. It has no effect on this coverage
  13. It removes the coverage
  14. It broadens the coverage
  15. It limits the coverage - ANS>>
  16. What is the basic limit for costs incurred at the place a vehicle is disabled provided by the towing and labor costs endorsement? (Choose from the following options)
  17. $
  18. $
  19. $
  20. $100 - ANS>> 1. $
  21. Assuming the insurer and the insured agree to the amount payable for a loss covered under a dwelling policy, how soon after the insurer has received proof of loss must it make payment?

Page | 10

  1. Farm liability coverage applies. - ANS>> 1. Business auto coverage form may apply.
    1. An insurance company receives an application with some information missing and issues the policy anyway. What is this called? (Choose from the following options)
  2. Subrogation
  3. Aleatory
  4. Waiver
  5. Estoppel - ANS>> 3. Waiver
    1. In a Commercial Property, Business Income policy, which section would explain which losses are covered? (Choose from the following options)
  6. Provisions
  7. Insuring Agreement
  8. Declarations
  9. Exclusions - ANS>> 3. Declarations
    1. What is the limit for the forgery or alteration coverage in the businessowners policy? (Choose from the following options)
  10. $1,
  11. $2,
  12. $
  13. $5,000 - ANS>>
    1. The additional living expense coverage on homeowners policies (Choose from the following options)
  14. Automatically paid after any loss to the covered house.
  15. Does not begin to pay until the family has been out of the house for at least 7 days.
  16. Is intended to allow the family to stay in the least expensive accommodations available.
  17. Is intended to allow the family to maintain its normal standard of living. - ANS>> 4. Is intended to allow the family to maintain its normal standard of living.
    1. All of the following are parts of a personal auto policy EXCEPT

Page | 11 (Choose from the following options)

  1. Physical damage coverage
  2. Medical payments coverage
  3. Duties after an accident or loss
  4. Liability coverage - ANS>> 1. Physical damage coverage
    1. Who are the parties to a bond? (Choose from the following options)
  5. Principal - obligor
  6. Principal - obligee - surety - obligation
  7. Principal - obligee - surety
  8. Obligee - surety - obligation - ANS>>
    1. All of the following statements regarding a Boatowners policy are true EXCEPT (Choose from the following options)
  9. Automatic coverage is provided on replacements for the boat listed in the declarations provided the insured notifies the insurer within 60 days of purchase and pays any additional premium required.
  10. Watercraft liability coverage provides protection up to specified limits, for claims against a "covered person" for damages because of bodily injury caused by a watercraft occurrence.
  11. Physical damage coverage is provided on an actual cash value (ACV) basis.
  12. The perils insured against is on an open-peril basis, providing that the insurer will pay for direct and accidental loss to the property insured. - ANS>> 1. Automatic coverage is provided on replacements for the boat listed in the declarations provided the insured notifies the insurer within 60 days of purchase and pays any additional premium required.
    1. What is the primary difference between a surety and a guaranty? (Choose from the following options)
  13. A guarantee pays only after the obligee tries to obtain restitution from the principal.
  14. A surety bond is issued by an insurance company.
  15. A guaranty bond is issued on behalf of the obligee to cover the performance of the principal.
  16. A surety pays only if the principal's performance fails to comply contractually. - ANS>> 1. A guarantee pays only after the obligee tries to obtain restitution from the principal.
    1. Which of the following is NOT a requirement for purchasing a Good Driver Discount policy?

Page | 13 (Choose from the following options)

  1. The principal's obligations end.
  2. The surety will attempt to seek reimbursement from the contractor for any amounts it pays.
  3. The surety may cancel the bond so as to avoid having to pay losses and expenses.
  4. The obligee may hire another contractor to complete the job and have the surety repay the obligee. - ANS>>
    1. All of the following are special personal property limits under a homeowners policy EXCEPT (Choose from the following options)
  5. $2,500 for theft of firearms.
  6. $500 for business personal property on the insured premises.
  7. $1,500 for securities, accounts, deeds, and evidences of debt.
  8. $1,500 for trailers not used with watercraft. - ANS>>
    1. A businessowners policy is (Choose from the following options)
  9. A monoline policy.
  10. A self-contained prepackaged policy.
  11. A special policy designed for large and small retail operations.
  12. Part of a commercial package policy. - ANS>>
    1. What is the purpose of increased value and excess liability (IVEL) clauses? (Choose from the following options)
  13. To protect an assured from the errors and omissions of his or her insurance agent
  14. To protect the insurer from inflation
  15. To protect the master and crew of a vessel from being sued
  16. To provide extra coverage for the same losses covered by an underlining policy - ANS>> 4. To provide extra coverage for the same losses covered by an underlining policy
    1. An insured with a homeowners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. The removal coverage applies for (Choose from the following options)
  17. 5 days.
  18. 30 days.

Page | 14

  1. 60 days.
  2. 90 days. - ANS>> 2. 30 days.
    1. A married couple is insured under a major medical policy. They are both injured in a house fire. Their medical expenses, however, are applied to a common deductible, as opposed to two separate deductibles. What provision most likely allowed for this? (Choose from the following options)
  3. Combined Accident
  4. Common Accident
  5. Comprehensive Accident
  6. Family Accident - ANS>> 2. Common Accident
    1. What type of coverage do umbrella policies provide? (Choose from the following options)
  7. Excess coverage over an underlying or primary policy
  8. Property coverage for those who do not qualify for homeowners insurance
  9. Property coverage for the basic perils of fire, wind, and hail
  10. Primary coverage for risks that are difficult to insure - ANS>> 1. Excess coverage over an underlying or primary policy
    1. All of the following statements describe the concept of strict liability EXCEPT (Choose from the following options)
  11. It is imposed on defendants engaged in hazardous activities.
  12. Claimants may need to provide proof that a product defect caused an injury.
  13. It is imposed regardless of fault.
  14. It is applied in product liability cases. - ANS>> 1. It is imposed on defendants engaged in hazardous activities.
    1. Which of the following would the livestock coverage form NOT insure against? (Choose from the following options)
  15. Death of livestock caused by accidental drowning
  16. Death of livestock caused by a tornado
  17. The euthanasia of livestock after being hit by a vehicle
  18. The euthanasia of livestock suspected of carrying mad cow disease - ANS>> 3. The euthanasia of livestock after being hit by a vehicle
    1. Under the HO-4 and HO-6 homeowners policy forms, property is insured against

Page | 16 (Choose from the following options)

  1. $50,
  2. $75,
  3. $100,
  4. $25,000 - ANS>> 1. $50,
    1. The rate charged for a Good Driver Discount policy should be at least what percent below the rate the insured would otherwise have been charged for the same coverage? (Choose from the following options)
  5. 15%
  6. 20%
  7. 30%
  8. 10% - ANS>>
    1. All of the following are examples of insurable interest in property insurance EXCEPT (Choose from the following options)
  9. Harry who is waiting for his distant cousin's beach-front property as part of his inheritance.
  10. Fred and Ethel's personally owned vacation home.
  11. Sally's own personal automobile.
  12. Joe who is a partner in a thriving business - ANS>> 1. Harry who is waiting for his distant cousin's beach-front property as part of his inheritance.
    1. With respect to commercial auto policies, the Garage Coverage Form provides liability protection for all of the following EXCEPT (Choose from the following options)
  13. The insured's business autos.
  14. The insured's business products and work performed.
  15. The insured's business income losses due to personal injury.
  16. The insured's business premises. - ANS>> 3. The insured's business income losses due to personal injury.
    1. The Individual Named Insured endorsement under a Commercial Auto Policy provides coverage for which of the following? (Choose from the following options)
  17. The sole proprietor of the business and his/her spouse, only
  18. The sole proprietor of the business and his/her family members

Page | 17

  1. The sole proprietor of the business, only
  2. The sole proprietor of the business and his/her employees - ANS>>
    1. The maximum penalty for failure to print an individual agent's license number on printed documents is (Choose from the following options)
  3. $5,000.
  4. $500.
  5. $200.
  6. $1,000. - ANS>>
    1. When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays (Choose from the following options)
  7. The excess over the self-insured retention.
  8. The amount specified in the policy under the additional coverage provisions.
  9. The amount in excess of the underlying policy deductible.
  10. A percentage of the loss as described on the declarations. - ANS>> 1. The excess over the self-insured retention.
    1. Under Additional Coverages for homeowners policies, what is the maximum amount that can be charged to the insured for fire department services? (Choose from the following options)
  11. $
  12. $1,
  13. $5,
  14. Fire department service charges are not allowed. - ANS>> 1. $
    1. A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss? (Choose from the following options)
  15. $20,
  16. $30,
  17. $40,
  18. $60,000 - ANS>> 2. $30,

Page | 19

  1. Are deducted from the liability limit. - ANS>> 1. Are paid in addition to the liability limit.
    1. If more than one person has an insurable interest in the property covered under a dwelling policy, (Choose from the following options)
  2. All involved insurers must decide which one will be liable for the loss.
  3. All insureds must decide which one will be liable for the loss.
  4. The insurer will be liable for only the insured's interest in the damaged property.
  5. Liability will be split evenly among all people who have insurable interest. - ANS>>
    1. Local sportscaster Fred Fillmore states on the air during a news telecast that the local pro football coach has a lousy record, which is untrue. This is an example of (Choose from the following options)
  6. Slander.
  7. No tort at all - freedom of speech.
  8. Invasion of privacy.
  9. Libel. - ANS>>
    1. When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as (Choose from the following options)
  10. Specific insurance.
  11. Stated amount.
  12. Replacement cost.
  13. Actual cash value. - ANS>> 2. Stated amount.
    1. A basic dwelling policy automatically provides coverage against fire, lightning, and (Choose from the following options)
  14. Smoke.
  15. Riot.
  16. Windstorm.
  17. Internal explosion. - ANS>> 4. Internal explosion.
    1. Which of the following would NOT be an insured under the Business Auto Coverage Form?

Page | 20 (Choose from the following options)

  1. The policyholder using a borrowed, covered auto with permission
  2. An employee using his own car for another business
  3. The policyholder in a covered auto
  4. An employee using a covered auto with permission - ANS>>
    1. If a person wants to include a newly-acquired auto in a policy that is already established for another vehicle, the insurer must be notified within (Choose from the following options)
  5. 35 days.
  6. 14 days.
  7. 21 days.
  8. 28 days. - ANS>> 2. 14 days.
    1. Events or conditions that increase the chances of an insured loss occurring are referred to as (Choose from the following options)
  9. Exposures.
  10. Risks.
  11. Perils.
  12. Hazards. - ANS>>
    1. Leo, an employee of the local "Shop A Lot" grocery store, suspects Betty of shoplifting. Leo escorts Betty through the crowded store to the back office and calls the local police. It is later determined that the Betty has not stolen any merchandise. Leo is guilty of (Choose from the following options)
  13. Assault.
  14. Battery.
  15. False Arrest.
  16. Invasion of Privacy. - ANS>>
    1. Which situation would NOT be covered by the Basic Causes of Loss Form under a Commercial Property Policy? (Choose from the following options)
  17. Gordon's Motorcycle Heaven is damaged by the sudden sinking of land created by the action of water on limestone