Insurance MCQ

Which one of the following is a true statement regarding Coverage E—Personal Liability and Coverage F—Medical Payments to Others of the HO-3—Special Form (HO-3)? A. Coverages E and F exclude coverage for the insured's rendering or failure to render professional services. B. Loss that results from the transmission of a communicable disease by an insured is specifically covered under Section II of the homeowners policy. C. Corporal punishment is specifically defined in the homeowners policy as "spanking, slapping, hitting, and similar disciplinary actions." D. The controlled substance exclusion applies to the legitimate use of prescription drugs by a person following the orders of a licensed physician. Answer: A. Coverages E and F exclude coverage for the insured's rendering or failure to render professional services, as this business loss exposure should be addressed by a professional liability policy.

One of the effects of the Personal Injury Coverage endorsement on an HO-3—Special Form (HO-3) is to A. Add the definition of personal injury. B. Add definitions for bodily injury and property damage. C. Add liability coverage for medical payments. D. Add liability coverage for bodily injury. Answer: A. Add the definition of personal injury

All of the following are policy conditions that apply to both Sections I and II of the HO-3—Special Form (HO-3), EXCEPT: A. Suit Against Us B. Liberalization C. Nonrenewal D. Death Answer: A. Suit against us

The Claim Expenses additional coverage under Section II of a homeowners policy covers A. Premiums on bonds exceeding the personal liability limit. B. The insured's reasonable expenses at the insurer's request. C. Medical payments incurred by others. D. The insured's personal liability. Answer: B. The insured's reasonable expenses at the insurer's request.

Sammy is the named insured on an HO-3—Special Form (HO-3) covering his family's home. Sammy and his wife, Sally, have a young daughter, Suzie, and a grown-up son, Steve, who lives with them, and they own a cocker spaniel puppy. While a neighboring couple and their five-year-old son, Jay, were visiting, the puppy bit Jay. Jay suffered a serious wound and his parents sued Sammy and Sally. All of the following are insureds under the HO-3 policy, EXCEPT: A. Sally B. Jay C. Steve D. Suzie Answer: B. Jay

Doris owns jewelry appraised at $10,000. She would like insurance coverage that will protect her jewelry for its appraised value. Doris also would like broad coverage for her jewelry in case she accidentally loses a piece or a stone falls out of a ring. Assuming that she purchased an HO-3—Special Form (HO-3), which one of the following will provide the coverage she wants? A. The unendorsed HO-3 B. An HO-3 with a Supplemental Loss Assessment Coverage endorsement with a $10,000 limit C. An HO-3 with a Scheduled Personal Property endorsement scheduling $9,000 of the jewelry, on top of the $1,000 coverage limit provided by the HO-3 D. An HO-3 with a Scheduled Personal Property endorsement scheduling all of the jewelry Answer: D. An HO-3 with a Scheduled Personal Property endorsement scheduling all of the jewelry

All of the following statements about the HO-5—Comprehensive Form (HO-5) policy are correct, EXCEPT: A. The HO-5 Coverage D provides broader coverage than the HO-3 Coverage D. B. The HO-5 covers water damage for personal property away from a premises owned by an insured. C. The HO-5 generally covers personal property damaged by rain through an open window even if the building itself is not damaged. D. The HO-5 special limits for jewelry and furs apply to items that are lost. Answer: A. The HO-5 Coverage D provides broader coverage than the HO-3 Coverage D.

An HO-4—Contents Broad Form (HO-4) includes building additions and alterations coverage up to 10 percent of the limit of Coverage C—Personal Property. Which one of the following individuals would typically benefit from this coverage? A. An owner of an older house with obsolete construction B. An owner of a single family home who has installed wheelchair ramps at the doors of her home to accommodate her wheelchair C. A condominium unit owner who renovates the kitchen and installs more expensive cabinets than were originally in the unit D. An apartment dweller who has installed a power-lift chair at the stairway inside his two-story unit Answer: D. An apartment dweller who has installed a power-lift chair at the stairway inside his two-story unit

Under which one of the following conditions of a homeowners policy is each insured seeking protection treated as if he or she has separate liability coverage under the policy? A. Limits of Liability condition B. Voluntary Payment condition C. Singularity of Coverage condition D. Severability of Insurance condition Answer: D. Severability of Insurance condition

Under which one of the following conditions of a homeowners policy is each insured seeking protection treated as if he or she has separate liability coverage under the policy? A. Limits of Liability condition B. Voluntary Payment condition C. Singularity of Coverage condition D. Severability of Insurance condition Answer: D. Severability of Insurance condition

All of the following are included as insureds for the Section II—Liability Coverages of a homeowners policy, EXCEPT: A. The named insured's 17-year-old foster child B. The 19-year-old exchange student who temporarily lives with and under the care of the named insured and his spouse C. The homeowners association that sends a loss assessment bill to the named insured D. The named insured's neighbor while caring for the insured's dog if the dog causes injury while in the neighbor's care Answer: C. All are insureds under the policy except for the homeowners association.

Marta insured her home with an HO-3—Special Form (HO-3) that includes a Personal Property Replacement Cost Loss Settlement endorsement. Her large screen television fell off the wall and was damaged beyond repair. She had paid $2,000 for it. At the time of loss it had an actual cash value of $800 and a replacement cost of $1,500. Because she found that she had little time to watch television, she decided not to replace the TV. How much did her insurer pay on the claim? A. $0 B. $800 C. $1,500 D. $2,000 Answer: The insurer will pay $0 since falling off the wall is not a covered peril.

The HO-3—Special Form (HO-3) excludes coverage for liability assumed under contract or agreement. However, exceptions apply, provided the loss exposures do not involve coverage excluded elsewhere in the policy. Which one of the following describes an exception? A. Agreements intending to injure a third party B. Written contracts relating to the ownership of an insured location C. Liability assumed after an accident occurs D. First-party liability Answer: B. Written contracts relating to the ownership of an insured location

The HO-3—Special Form (HO-3) Sections I and II—Conditions contain a liberalization clause that A. Broadens the definition section in accordance with state regulations. B. Specifies how coverage may be cancelled by the insured. C. Increases the limit of liability when there are multiple insureds involved in a claim. D. Specifies how coverage is broadened for insureds when the insurer changes a current edition of a policy. Answer: D. Specifies how coverage is broadened for insureds when the insurer changes a current edition of a policy.

The Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money Coverage—Increased Limit endorsement may be appropriate for A. Insureds who pay their bills online. B. Insureds who use automated teller machines. C. Insureds who hold credit cards. D. Insureds who tend to overspend because of credit availability. Answer: C. Insureds who hold credit cards.

The Inflation Guard endorsement gradually and automatically increases limits throughout the policy period in homeowners policies for Coverage(s) A. A only. B. A and B only. C. A, B, and C only. D. A, B, C, and D. Answer: D. A, B, C, and D.

One aspect of good-faith claim handling is the fair evaluation of the claim. A fair approach to evaluating liability claims is for the claim representative to evaluate them A. As if no coverage limit existed. B. From the claimant's perspective. C. As they relate to similar claims with similar coverage and limits. D. By forming a claim committee for the purpose of achieving greater impartiality. Answer: A

In liability claims, the claimant is referred to as the A. Primary party. B. First party. C. Second party. D. Third party. Answer: D

A liability adjuster must be concerned with specific, out-of-pocket expenses when evaluating the damages being claimed. The technical term for such expenses is A. Special damages. B. Punitive damages. C. General damages. D. Measurable damages. Answer: A

Jorgen is a claim supervisor who is devising a new response plan for his employer so that it can handle catastrophe claims more effectively. All of the following are factors he should consider, EXCEPT: A. Retaining independent adjuster firms B. Requesting that personnel staff temporary claim offices without pay. C. Increasing the role of producers through increased settlement authority D. Giving the policyholder the benefit of any doubt as to the valuation of property Answer: B