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Alabama Insurance Exam Prep CH 7
Comprehensive Questions (Frequently
Tested) with Verified Answers Graded A+
Which of the following types of property are covered by the Personal Effects Floater? A Golfer's equipment B Personal property carried by travelers C Paintings, etchings, and pictures D Coin collections - Answer: BThis floater covers traveler's personal property on an open perils basis anywhere in the world except on the insured's premises. Which of the following statements about the Personal Jewelry Floater is correct? A An appraisal of the item is optional B
The Pair and Sets Clause does not apply C Automatic coverage for newly acquired items is only provided for 30 days D Coverage is written on a replacement cost basis - Answer: C Which of the following types of property are covered by the Personal Effects Floater? A Golfer's equipment B Personal property carried by travelers C Paintings, etchings, and pictures D Coin collections - Answer: B Which of the following is correct about Difference in Conditions (DIC) Insurance? A It is written on a standard form similar to the property form
A
36 Hours B 12 Hours C 72 Hours D 48 Hours - Answer: C The National Flood Insurance Program (NFIP) sells flood insurance in which of the following types of communities? A Communities that border a large body of water B Communities with a population less than 300, C Participating communities D
Farm communities - Answer: C A single-family dwelling may purchase up to what amount of flood insurance in the NFIP's Emergency program? A $100, B $50, C $250, D $35,000 - Answer: D Which of the following is not eligible for coverage under a Fair Access to Insurance Requirements program? A Rental dwelling B Uninsured dwelling property C
C
Intentional injury D Personal injury - Answer: D The self-insured retention in the Umbrella policy is described as which of the following? A A method of cost-sharing B Excess coverage C An Endorsement D Primary coverage - Answer: ALike a deductible, the insured pays the self-insured retention unless there is a primary policy available to pay its limit of insurance. A flood damages a home that is in a community in early stages of participation in NFIP, but are not yet considered a participating community. What is the maximum a resident may receive for damages to personal property? A
Coverage C on the homeowners policy B $10, C Nothing since they are not participating yet D $100,000 - Answer: B Which of the following statements is true regarding the eligibility of flood insurance? A Industrial buildings are not eligible for flood insurance B Banks and Savings and Loan Associations may exempt an individual from purchasing the flood insurance that is required for a federal loan C All property located in a flood area must be insured against flood by law D In order to qualify for a federal loan, the property owner must purchase flood insurance if the property is located in a flood area - Answer: D
D
Dwelling coverage includes trees, shrubs, and plants - Answer: A Which of the following statements about the National Flood Insurance Program is false? A Property removed to protect it from flood is covered for 45 days at other locations B Coverage becomes effective after a 24-hour waiting period C Mudflow is covered; mudslide is not covered D Two deductibles apply separately to the building and contents - Answer: B Coverage usually become effective after a 30-day waiting period; some exceptions apply. Which Personal Inland Marine form provides open peril coverage on a blanket basis for most kinds of property found in a typical home? A Personal Effects floater B Personal Property floater
C
Personal Articles floater D Personal Jewelry floater - Answer: B Which of the following is true regarding the Fine Arts Floater? A It covers such items as paintings, rare manuscripts and antiques B Coverage is limited to the United States, Canada, and Mexico C Loss is paid on an actual cash value basis D It has automatic coverage for only 30 days on newly acquired articles - Answer: A The Personal Articles Floater is similar to which Homeowners endorsement? A Personal Property - Replacement Cost
A
Used to insure individual personal property on an itemized or scheduled basis B Used to replace Coverage C of the Homeowners Policy C Used to provide replacement cost coverage on personal property D Used to insure personal property on a blanket basis - Answer: A A flood damages a single-family dwelling that is in a community in the early stages of participation in the NFIP, but they are not yet considered participating. What is the maximum a resident may receive for damages to their personal property? A $10, B $35, C $100, D There is no coverage - Answer: A
Flood insurance: A Is a state funded and state administered program B Is reinsured by the state government emergency management agencies C All of the answers listed D Is available from the federal government or private companies who are reimbursed for losses by the government - Answer: D Most Flood insurance coverage is provided by: A Reciprocal insurance companies B A federal government program C Non-admitted companies
C
Open perils D Excess - Answer: FAIR Plans prohibit the insurance company from: A Inspecting the property before issuing a policy B None of the answers listed C Rejecting a risk solely because of environmental hazards D Denying insurance coverage to individual's located in a flood prone area - Answer: C After being rejected by an insurer due to underwriting guidelines an applicant may request homeowners coverage under which of the following? A FAIR Plan
B
A DP-3 Special Dwelling Plan C An Umbrella policy D Write Your Own Homeowners Program - Answer: A Which description of the Personal Articles Floater is incorrect? A It covers losses on an open perils basis B It is used to insure individual personal property C It covers claims on a replacement cost basis D It is written on a scheduled basis - Answer: C Losses are settled on an actual cash value or valued basis. The insured has a $1,000,000 Personal Umbrella policy with a retention limit of $1,000. The insured suffers a $15,000 loss that is excluded by the underlying policy, but not the Umbrella. How much of this loss would be paid under the umbrella?
Scheduled personal property floater - Answer: C Some flood policies are written in the voluntary property market as a result of which program? A National Flood Cooperative B Emergency C Write Your Own D Standard - Answer: C K has a 10-piece antique fountain pen set that is insured with a pair and sets clause and is valued at $10,000. Each pen alone is only worth $500. If one pen is destroyed in a covered loss, how much will the policy pay? A $9, B $10, C
D
$4,500 - Answer: C The remaining value of the 9 pens is $4,500 ($500 X 9). The loss of 1 pen has reduced the value of the set from $10,000 down to $4,500. Therefore, the policy will pay the difference of $5,500.
