Insurance MCQ

Which one of the following established the National Flood Insurance Program (NFIP)? A. Federal Emergency Management Agency (FEMA) B. National Flood Insurance Act of 1968 C. Federal Insurance Administration (FIA) D. National Insurance Reform Act of 2004 Answer: B. National Flood Insurance Act of 1968

Personal property coverage for watercraft is A. Excluded by the homeowners and DP-3 policies. B. Provided by the homeowners policy and the DP-3 policy for watercraft under 25 horsepower. C. Excluded by the DP-3 policy but covered on a limited basis under the homeowners policy. D. Provided on a limited basis for rowboats and canoes under both the homeowners policy and the DP-3 policy. Answer: D. Provided on a limited basis for rowboats and canoes under both the homeowners policy and the DP-3 policy.

Brian owns a mobilehome at a permanent mobilehome park in Florida. He rents the residence to retirees during the winter months for $3,000 per month. Brian insures the property under a DP-3 dwelling form with limits of $40,000 for Coverage A, and $10,000 for Coverage B. A windstorm caused $10,000 in damage to the structure and Brian was unable to rent it for three months during his normal rental season while making repairs. Ignoring any deductible, how much will Brian recover from his insurer? A. $10,000 B. $11,000 C. $18,000 D. $19,000 Answer: C. $18,000

Which one of the following make a property ineligible for both FAIR plans and windstorm and beachfront plans? A. Vacancy B. Hazardous environmental conditions C. Difference in conditions coverage D. Unrepaired damage Answer: D. Unrepaired damage

The Jordans own a small ranch, and keep several ponies on the property for their personal use. Mr. and Mrs. Jordan are concerned that their children's friends and visiting relatives could be injured when riding the family's ponies. What coverage would the unendorsed DP-3 policy provide for this loss exposure? A. No coverage B. Full coverage, up to the policy limits C. Medical expenses only, up to $2,000 D. 20 percent of the Coverage A limit Answer: A. No coverage, DP3 does not offer liability coverage

Under the National Flood Insurance Program (NFIP), residential condominium building associations are A. Eligible for coverage under the dwelling form. B. Eligible for coverage under the residential condominium building association form. C. Eligible for coverage under the general property form. D. Not eligible for coverage. Answer: B. Eligible for coverage under the residential condominium building association form.

Which one of the following accurately describes the coverage modification created by the Mobilehome Endorsement (MH 04 01) when it is attached to the HO-3 policy? A. Section I loss settlement condition is changed to actual cash value (ACV) for all Coverage A items. B. Section II—Liability Coverages are limited to exclude coverage for all watercraft and motor vehicles. C. Coverage B—Other Structures is 50 percent of the limit that applies to Coverage A. D. It provides up to $500 for reasonable expenses incurred for the removal and return of the mobile home if it is endangered by an insured peril. Answer: D. It provides up to $500 for reasonable expenses incurred for the removal and return of the mobile home if it is endangered by an insured peril.

Policy provisions of the mobilehome policy A. Are the same as those of the homeowners form. B. Differ widely from those of the homeowners form. C. Revise those of the homeowners form. D. Form the basis for those of the homeowners form. Answer: C. Revise those of the homeowners form.

Under an ISO Mobilehome Endorsement, Section I, Coverage B—Other Structures is no less than A. 2 percent of Coverage A. B. $2,000. C. 10 percent of Coverage A. D. $1,000. Answer: B. $2,000.

Unlike in the HO-3 policy, the DP-3 conditions A. Are contained in a single section. B. Apply only to Coverage A C. Apply to both Section I and Section II. D. Are added by endorsement. Answer: A. Are contained in a single section.

Phil was unable to obtain homeowners insurance for his desert canyon home through his private insurer because the area is subject to brush fires, so he was forced to obtain it through the local FAIR plan. Will Phil's private insurer likely be willing to provide theft coverage for this property? A. Yes, most FAIR plans provide theft coverage, so any private coverage would be excess. B. No, If FAIR plan coverage is provided, private insurance is not available. C. Yes, because fire is the primary loss exposure, and coverage is provided by the FAIR plan. D. No, because the private insurer would be forced to provide fire coverage as well, which is unacceptable to the insurer. Answer: C. Yes, because fire is the primary loss exposure, and coverage is provided by the FAIR plan.

A homeowners policy differs significantly from the DP-3 policy in that the unendorsed DP-3 policy A. Only provides liability coverage for owner-occupied dwellings. B. Does not provide liability coverage. C. Provides liability coverage only for on-premises occurrences. D. Does not provide liability coverage for 'intentional acts.' Answer: B. The unendorsed DP-3 policy does not provide liability coverage.

Provisions of the Ordinance or Law Coverage endorsement available to a mobilehome policyholder A. Are virtually identical to the Ordinance or Law provisions of the homeowners policy. B. Provide 10 percent of Coverage A limits as additional coverage. C. Allow for the flexibility of selecting a desired dollar-value limit. D. Do not provide coverage for debris removal. Answer: A. Are virtually identical to the Ordinance or Law provisions of the homeowners policy.

Clarise owns a vacation home on a lake, and has insured it under an unendorsed DP-3 policy with a Coverage A limit of $120,000 and a Coverage C limit of $40,000. Clarise discovered that a rowboat she keeps tied to her dock on the lake has been stolen. She filed a claim under her dwelling policy for $700, the actual cash value of the rowboat. Would theft of the rowboat be a covered loss? A. No, watercraft are excluded property. B. No, theft is not a covered peril. C. No, theft of watercraft is covered only if the boat is within a fully enclosed building. D. No, 10 percent of the Coverage C limit is provided for rowboats and canoes while the property is away from the premises. Answer: B. No, theft is not a covered peril.

Alita owns a single-family home which she insures under a Dwelling Property 3—Special Form (DP-3) with a Coverage A limit of $150,000, a Coverage C limit of $10,000, no other limits or endorsements, and a $1,000 deductible. Alita had rented the partially-furnished property under a long-term lease, and her tenant added an attached screened-in porch at a cost of $8,000. Recently, the home suffered a loss by fire valued at $148,000. Contents belonging to Alita with an ACV of $15,000 were also destroyed. How much will Alita's insurer pay for the loss? A. $147,000 B. $148,000 C. $158,000 D. $159,000 Answer: C. $158,000

Vanessa insures her lakefront vacation cottage under a DP-3 dwelling policy with a Coverage A limit of $85,000, a Coverage C limit of $8,000, and no other limits or endorsements. Following a rash of burglaries at the lakefront, Vanessa removed a widescreen plasma TV worth $2,500 to protect it from the burglars. While being stored in her car the next day, the TV was stolen. Will Vanessa's DP-3 policy cover this loss? A. No. It was not endangered by a covered loss. B. Yes. Property removed is covered for any cause of loss. C. No. Personal property away from the premises is not covered. D. Yes. Personal property away from the premises is covered up to 10 percent worldwide. Answer: A. No. It was not endangered by a covered loss.

Under the Write-Your-Own (WYO) program of the National Flood Insurance Program (NFIP), which one of the following determines the rates? A. Federal Insurance Administration (FIA) B. Private insurers C. Federal Emergency Management Agency (FEMA) D. Flood Insurance Reform Act of 2004 Answer: A. Federal Insurance Administration (FIA)

Off-premises theft coverage is available under the ISO Dwelling Policy program A. On an ACV basis under Coverage C—Personal Property. B. Only if on-premises coverage is purchased. C. Up to the policy limits for money, jewelry, and firearms. D. Only under the Limited Theft Coverage endorsement. Answer: B. Only if on-premises coverage is purchased.

When is community participation in the National Flood Insurance Program (NFIP) required? A. When FEMA has determined that a community is flood-prone. B. When a community has unsuccessfully contested a flood-prone designation. C. When accepting a federal-related construction project. D. When required as part of a state's floodplain management program. Answer: D. When required as a part of a state's floodplain management program.

Jacob lives in a rural farmhouse which he insures under an unendorsed DP-3 policy because the lack of public fire protection makes it ineligible for homeowners coverage from his insurer. The dwelling policy includes the following limits and coverages: Limit Coverage A $125,000 Coverage C $10,000 Jacob recently took an extended tour of Europe, and while he was traveling on a train, luggage with all his clothing, personal effects, and souvenirs was destroyed in a baggage car fire. Jacob values the lost property at $2,000. Ignoring any deductible that may apply, how much of Jacob's loss will be covered by his DP-3 policy? A. $ 0 B. $ 200 C. $1,000 D. $2,000 Answer: C. $1000