Insurance MCQ

The limit of liability under the dwelling under construction endorsement is provisional. If a loss occurs, the amount paid will be based on the: A) completion date. B) face amount of the policy. C) actual value of the property. D) actual amount of the loss. Answer: A

An insured purchased a dwelling policy with $40,000 of coverage. The insured also purchased an automatic increase in insurance endorsement that increases the face amount of the policy by 4% each year. If the insured suffers a total loss during the third year that the policy is in effect, what is the maximum amount (round numbers) the policy will pay? A) $44,995.00 B) $40,000.00 C) $41,200.00 D) $60,570.00 Answer: A

An insured has an unendorsed $50,000 special form (DP-3) dwelling policy. The insured's dog bites a child, and the parents sue the insured for $500 for the child's medical bills, $1,000 for rabies shots, and $5,000 for pain and suffering. How much will the policy pay? A) $6,500.00 B) $0.00 C) $500.00 D) $1,500.00 Answer: B

An insured lives in a house covered by an $80,000 special form (DP-3) policy. While the insured is on vacation, someone breaks into the house and steals $5,000 in electronic equipment. The damage to the door is estimated at $800. What coverage is provided by the DP-3 policy? A) $800.00 B) $0.00 C) $5,000.00 D) $5,800.00 Answer: A

How does the dwelling policy provide theft coverage? A) It must be added by endorsement. B) It is automatically included in the policy. C) It is only included in the DP-2 and DP-3. D) It is included in the DP-3 only. Answer: A

Coverage E in the dwelling policy provides coverage for: A) medical payments. B) additional living expense. C) fair rental value. D) personal liability. Answer: B

The special form (DP-3) covers the dwelling and other structures for: A) broad form perils only. B) extended coverage perils. C) all risks of direct physical loss. D) named perils only. Answer: C

A property owner wants to insure both the rental property and any of the tenant's belongings if they are stolen. Which policy would you recommend and why? A) DP-1 basic form because the property owner needs only named peril coverage. B) DP-2 broad form because it automatically provides the extended coverage endorsement (ECE). C) DP-3 special form because it includes coverage for personal property. D) DP-3 special form and a separate tenant's policy to cover personal property. Answer: D

Of the dwelling forms, which one of the following provides the broadest coverage? A) Standard. B) Special. C) Specific. D) Premier. Answer: B

The greatest difference between the dwelling basic form (DP-1) and the broad form (DP-2) is that the DP-2 automatically includes coverage for: A) vandalism and malicious mischief (VMM). B) fire and lightning. C) flood. D) earthquake. Answer: A

All of the following perils are covered under the DP-2 Broad Form EXCEPT: A) freezing of pipes. B) loss caused by fireplace smoke. C) earthquake. D) falling objects. Answer: C

A DP-2 policy would cover losses from all of the following perils EXCEPT: A) weight of ice, snow or sleet. B) damage by burglars. C) infestation of insects. D) falling objects. Answer: C

Damage caused by burglars is excluded under which of the dwelling forms? A) Basic Form. B) Broad Form. C) Special Form. D) All forms exclude damage caused by burglars. Answer: A

Wilson owns a 4-family apartment building. Which dwelling form(s) would provide coverage against building damage caused by the freezing of plumbing, heating, air conditioning, and sprinkler systems? A) DP-2 and DP-3. B) DP-1. C) DP-1 and DP-2. D) DP-3 only. Answer: A

The dwelling policy will provide how much additional coverage for a fire department service charge? A) $500.00 B) $250.00 C) $750.00 D) $1,000.00 Answer: A

In the dwelling forms, damage from vandalism is not covered if the building has been vacant for more than: A) 14 consecutive days. B) 30 consecutive days. C) 90 consecutive days. D) 60 consecutive days. Answer: D

The following perils may be insured against under a basic dwelling policy EXCEPT: A) lightning. B) vandalism and malicious mischief. C) flood. D) fire. Answer: C

An insured has a $70,000 dwelling policy (DP-1 basic) with a $500 deductible. While the insured is on vacation, burglars enter the house and steal several items. The total loss is estimated to be $5,000. How much of that loss will be paid under the policy? A) $5,500.00 B) $0.00 C) $4,500.00 D) $5,000.00 Answer: B

A dwelling policy can insure all of the following types of personal property EXCEPT: A) lawnmowers. B) furniture. C) sailboats. D) motorized wheelchairs. Answer: C

Which of the following statements about the dwelling basic form (DP-1) is CORRECT? A) The policy is designed to provide broad coverage for personal property. B) The DP-1 provides coverage for appurtenant structures. C) The DP-1 is an open-perils policy. D) The policy covers fire, lightning, and all types of explosion. Answer: B