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Property and Casualty Exam Questions
and Answers Already Passed
Bailee ✔✔An individual or organization who has taken into its care, custody, and/or control the property of another for servicing, repair, or storage
Hazard ✔✔Something that increases the chance or likelihood of a loss occuring.
(physical or moral or morale)
Market Value ✔✔A property policy provision that changes the valuation method otherwise applicable (ACV or RV) to a valuation method that allows reimbursement to the insured, according to the price a willing buyer would pay for the property purches from a willing seller
Insurable Interest (limit of liability) ✔✔Specifies that the insurer will not be responsible for an amount which is greater than the financial interest of an insured person or more that the limit of liability stated on the Declarations Page
Actual Cash Value (ACV) ✔✔The policy pays for the cost to repair or replace the damaged property at the time of loss, less depreciation
Deductible ✔✔The amount of money which the insured party must pay before the insurance company's own coverage plan begins.
Vacancy ✔✔A property that has neither occupants nor personal property is described as vacant.
Right of Salvage ✔✔The right of the insurer to take possession of damaged property after the loss to the property has been paid. The salvage belongs to the insurer.
Inherent Vice ✔✔A condition or defect that exists within property itself that causes the property to spoil, break, become defective, or destroy itself. Insurance policies typically exclude inherent vice. Example: The quality of materials used in a painting allows the painting to fade or lose luster with time.
Aircraft Hull Insurance ✔✔Provides coverage on an open peril basis for physical loss or damage to the insured aircraft, on ground, or in flight.
In flight is from the moment it moves forward for takeoff until it completes its landing run.
Motor Carrier Act of 1980 ✔✔Department of Transportaion (DOT) requires:
-Motor carrier must carry an insurance policy of certain minimum limits, or -Post a surety bond representing certain financial stability criteria when transporting passengers or cargo.
- Imports
- Exports
- Domestic Shipments
- Instrumentalities of Transportation or Communication (i.e. bridges, tunnels, antenna towers)
- Personal Property Floater Risks (as discussed in Chapters 3 and 9)
- Commercial Property Floater Risks
Homeowners (liability) Endorsements (for additional premium) ✔✔-Business Pursuits - Extends liability coverage for involvement in business not owned or controlled. -Home Day Care- Extends Section II coverage. -Limited Fungi, Wet or Dry Rot, or Bacteria Coverage- covers insured's liability exposure from claims of others. -Permitted Incidental Occupancies - Necessary and incidental use of premises. -Personal Injury- Defines and adds personal injury to the policy. -Watercraft Liability -Home Business -Worker's Compensation Residence Employee
Homeowners Policies ✔✔HO Forms: 2,3,5,8 are for owner-occupant of a dwelling that is used principally for private residential purposes HO Forms: 4(tenant) and 6(condominium unit-owner) are written to insure the personal property and liability of occupants, but do not cover the structure
Homeowners (property) Endorsements (for additional premium) ✔✔Earthquake Home Day Care (children) Personal Property Replacement Cost (increase coverage for full recovery) Scheduled Personal Property (for scheduled property with a specific amount of coverage) Limited Fungi, Wet or Dry Rot, Bacteria Coverage (testing and removal) Permitted Incidental Occupancies (additional coverage when residence used for business)
Declarations Page ✔✔The basic information about a policy: Who - names of insurer and insured What - description of insured property Where - address and legal description of insured property When - effective and expiration dates. How Much - limits of coverage, deductible, premium
Homeowners (property) Exclusions ✔✔Ordinance or Law (loss caused during enforsement) Earth Movement (earthquake, landslides, mine substinence, sinking) Water Damage (flood, tidal water, overflow, or back up of sewer/drains/sump)
Section V- Truckers Conditions Section VI- Definitions
Personal Watercraft Insurance ✔✔Boatowners Policy - similar to HO, covers boats that can be towed, property & liability Outboard Motorboat Policy - inland marine form, covers outboard motors and boats, direct property loss only Yacht Policy - ocean marine form, larger vessels, property & liability
Ocean Marine Insurance ✔✔Protect against losses to property while being chipped by ocean, or inland waterways.
Unregulated in regard to forms and rates
Abandonment of Property ✔✔Specifies that the insured may not abandon or relinquish ownership of damaged property to the insurer for disposal or repair
Unoccupancy ✔✔A property that contains personal property or contents but has no occupants is described as unoccupied.
Premises ✔✔The interior of that portion of a building occupied by the insured to conduct business
Endorsements ✔✔Written amendments attached to the policy to broaden or restrict coverage, or to further define certain policy provisions.
Assumed Name ✔✔An insurance agent doing business under any name other than the agent's legal name
Aircraft Hull Insurance (two deductibles) ✔✔An in-motion deductible and a not-in-motion deductible.
Aircraft is considered in motion whenever it is moving on the ground or in flight as a result of engine power
Inland Marine Insurance ✔✔Protects against losses to preoperty that is mobile in nature (across land), primarily while property is away from the owner's premises
Personal Inland Marine Insurance ✔✔Used to insure moveable personal property against direct loss
Personal Umbrella Policy ✔✔A policy covering (BI &PD) and Personal Injury Liability in excess of the insured's underlying policy limits.
This provides excess coverage over the limits of an underlying policy
Bonds (2 types) ✔✔Surety Bonds (performance bonds) - guarantee that specific obligations will be fulfilled Fidelity Bonds (honesty bonds) - cover employers from direct loss due to fraudulent or dishonest acts (theft) by their employees
Ocean Marine Policy ✔✔Written "full value" ad will become void if certain implied warranties are violated: Legality- legal goods Seaworthiness - seaworthy ship/competent crew No Deviation in Voyage - sail the course filed with the insurer.
Ocean Marine Policy Coverages ✔✔Hull Insurance (ship itself) Cargo Insurange (goods being shipped) Freight Insurance (freight charges and import duties) General Average (loss is apportioned or shared among all) Particular Average (loss affects only a particular interest) Collision/Running Down Clause (collision with another vessel) Inchmaree Clause (burst boiler, broken propeller, crew navigation errors)
Aircraft Liability Insurance ✔✔Aircraft Liability - covers claims arising from the ownership, maintenence, or use of an aircraft Airport Liability - coverage for private, municipal, or commercial airports.
Hangarkeepers Liability - coverage for liability arising out of damage to non-owned aircraft in the care, custody, or control of the insured.
Motor Carrier Coverage Form ✔✔Variation of the Truckers Coverage Form: Trucker - engaged in the business of transporting property for hire Motor Carrier - engaged in transporting property or passengers
Garagekeepers Coverage ✔✔The insured may elect one of the following: Legal Liability Basis - coverage applied only if the garage is legally liable Direct Excess Basis - coverage applies regardless of liability, but only if customer has no physical damage coverage of their own Direct Primary Basis - coverage applies regardless of liability, and regardless if customer has any physical damage coverage of their own
Terrorism Risk Insurance Act Exclusions ✔✔TRIA covers all commercial lines of property & casualty insurance except: Federal and private crop and livestock Private mortgage Financial Guaranty Medical Malpractice Federal Flood Reinsurance
Form F - Computer Theft and Fund Transfer Fraud Form G - Extortion Form H - Premises Theft/Outside - other than Money/Securities Form I - Lessee's Safe Deposit Box Form J - Securities Deposited with Others Form K&L - Guest's Property Form M&N - Safe Depository Form O&P - Public Employee Dishonesty Form Q - Robbery and Safe Burglary Money/Securities Form R - Money Order and Counterfeit Paper Currency
Pollution Liability Coverage ✔✔Three options to adding pollution coverage back to a CGL policy: Pollution Liability Coverage Form Limited Pollution Liability Coverage Form - identical to above, but does not include clean up costs. Pollution Extension Endorsement - deletes pollution exclusion, but continues to exclude cleanup costs
Motor Truck Cargo Forms (U) ✔✔Truckers Form - insures public truckers for legal liability arising out of loss/damage to cargo belonging to others Shippers Form - Covers shipper's own goods Owners Form - covers business that owns the trucks in which it transports its own goods
Garage Coverage Form ✔✔Auto liability/physical damage coverage, plus general liability protection for businesses that are engaged in the sale, service or storage of autos Section I - Covered Autos Section II - Liability Coverage Section III - Garagekeepers Coverage Section IV - Physical Damage Coverage Section V - Garage Conditions Sections VI - Definitions
Transit Coverage Forms (U) ✔✔Annual Transit - used to protect all property/shipments being shipped or received from other shippers during the year via any common carrier Trip Transit - used for irregular shipments, wish to insure a single shipment
Homeowners Coverage Forms ✔✔HO-2 (broad form) HO-3 (special form) HO-4 (contents broad form; renters or tenants form) HO-5 (comprehensive form) HO-6 (condominium unit-owners form) HO-8 (modified form for older homes)
Homeowners (additional) Property Coverages ✔✔Debris Removal (remove debris left from loss) Reasonable Repairs (protect from further loss) Trees, Shrubs and Plants (damage up to $500)
Pro Rata ✔✔A proportional share.
Business Auto Coverage Form ✔✔Section I - Covered Autos Section II - Liability Coverage Section III - Physical Damage Coverage Section IV - Business Auto Conditions Section V - Definitions
Apportionment (pro rata liability/other insurance) ✔✔Specifies the process to be followed when more than one policy covers the same loss.
Commercial General Liability ✔✔Section I - Coverages Coverage A - BI and PD liability Coverage B - Personal and Advertising Injury Coverage C - Medical Expense Section II - Who is an Insured Section III - Limits of Insurance Section IV - Conditions Section V - Definitions
Liability Policies (misc types) ✔✔Excess Liability Policy Personal Umbrella Commercial Umbrella
Medical Professional Insurance Errors and Omissions Fiduciary Liability Liquor Liability Employment Practices Liability Insurance
Claims-Made Form ✔✔This form provides for the defense and payment of claims, for which the insured is legally liable.
Same coverage as an Occurrence Form, but is of particular significance to risks that have the potential to generate claims years after an occurrence that caused injury or damage.
Commercial Property Causes of Loss ✔✔4 causes of loss forms: Basic Broad Special Earthquake (only when used with one of the above)
Boiler and Machinery Equipment Breakdown Protection Coverage (Form) ✔✔Property Damage Expediting Expenses Business Income and Extra Expense Spoilage Damage Utility Interruption
Worker's Compensation Selected Endorsements ✔✔Voluntary Compensation Endorsement - extends Worker's Comp coverage to employees even if the law doesnt require the employer to provide coverage.
Foreign Coverage Endorsement - around the clock, continuous for those employed in foreign operations
Worker's Compensation Assigned Risk Plan ✔✔Aka: Residual Market Plan or State Insurance Fund Insurers who write Workers' Comp in states voluntary market must participate
Offers Workers' Comp coverage for employers who are unable to purchase Workers Comp in voluntary market
Workers' Compensation Disability Income Benefits ✔✔Temporary Total - expected to recover and return to work, but unable to work while recovering
Permanent Total - unable to do any work for the res of life
Temporary Partial - able to do some work, but is unable to earn usual wage until full recovery.
Permanent Partial - able to do some work, but will never fully recover
Scheduled Injuries - listing of benefits that apply for each specific permanent partial injury (loss of eye, hand etc)
Workers' Compensation types of laws ✔✔Compulsory - employers required to provide Workers' Comp benefits to employees or demonstrate the ability to provide Elective - employers have choice to accept or reject workers comp laws Monopolistic-workers comp insurance only available through state fund Competitive - workers comp insurance abailable through private insurance
Commercial Property Basic Loss (form) ✔✔Coverage includes: firem lightning, windstorm, hail, aircraft riot or civil commotion, vehicles, vandalism, volcanic action (above ground) explosion, smoke, sprinkler leakage, sinkhole collapse
Commercial Property Building and Personal Property Coverage Form (extensions of coverage) ✔✔If coinsurance threshold of 80% or more is met: Newly Acquired or Constructed Property Personal Effects and Property of Others Valuable Papers and Records Property Off Premises Outdoor Property Non-Owned Detached Trailers
