Insurance MCQ

Which of the following statements regarding the FAIR Plan is TRUE? A) The primary purpose of the FAIR Plan is to provide property coverage. B) The FAIR Plan provides property and liability coverage. C) It is primarily concerned with property owners in rural areas. D) Risks can be rejected if they are located in a high-risk area. Answer: The primary purpose of the FAIR Plan is to provide property coverage.

Which of the following statements about the FAIR Plan is NOT correct? A) The FAIR Plan is underwritten by all companies writing property insurance in a given state. B) States may have specific requirements for owners seeking coverage. C) No property can be denied coverage by a FAIR Plan. D) The FAIR Plan provides property coverage for risks that are uninsurable through the private insurance market. Answer: No property can be denied coverage by a FAIR Plan.

The insured has a homeowners policy (HO-3) with a $100,000 liability limit and a $1 million personal umbrella policy with a self-insured retention of $1,000. When a child is seriously injured on the insured's property, a jury awards the plaintiff $2 million. Given only these facts, for what amount is the insured personally responsible? Answer: $900,000.00

Which of the following statements about umbrella policies is NOT correct? A) If the insured fails to keep the underlying coverage in force, the umbrella policy will not cover the amount of loss that would have been paid by the underlying policy. B) They are written only for commercial risks. C) They provide coverage above the limits of underlying policies. D) Losses that are excluded by the underlying policy but covered by the umbrella are subject to the umbrella's retention limit. Answer: They are written only for commercial risks.

Sue has a personal articles floater with $20,000 worth of jewelry coverage. She purchases a ring worth $6,000. The ring is stolen from her the following week. How much can she collect from her insurance carrier? Answer: $5,000.00

Premium credits for all of the following will lower the insurance premiums for the owner of a mobile home EXCEPT: A) reducing Coverage C limit to 40% of Coverage A. B) installing insurer-approved alarm system, fire system, or both. C) installing an automatic sprinkler system. D) tie-down credit. Answer: reducing Coverage C limit to 40% of Coverage A.

When does flood insurance take effect? Answer: 30 days after the date of application and payment of premium.

Which of the following property may be insured under a flood policy issued by the NFIP? A) Automobile. B) Fence surrounding insured's property. C) Trees. D) Silo. Answer: Silo

What is the minimum deductible for a single-family dwelling insured as a preferred risk in the regular flood program? Answer: $1000 each for building and contents.

What is the most coverage available for a single-family dwelling covered under the regular flood program? Answer: Building $250,000 and contents $100,000.

What are the two flood insurance programs that are available? Answer: Emergency program and the regular program.

In a flood policy issued by the NFIP, all of the following would be considered a flood EXCEPT: A) overflow of inland waters. B) mudslide. C) collapse of land as a result of excessive erosion due to flood. D) sewer backup into a home. Answer: sewer backup into a home.

Which of the following is NOT one of the requirements for a building to be eligible for coverage under a flood insurance policy? A) Building is owner-occupied. B) Building has walls and a roof. C) Building is principally above the ground. D) Building is fixed to a permanent site. Answer: Building is owner-occupied.