Chapter 5. Introduction To Property Insurance

10 Questions | Total Attempts: 259

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Chapter 5. Introduction To Property Insurance

In this chapter we'll review some of the basic features of property insurance, including some of the concepts that apply to property insurance coverages and standard policy provisions.


Questions and Answers
  • 1. 
    Walt and Joanna are co-owners of a bagel shop. Both Walt and Joanna are listed in the declarations of the policy that insures the business, with Joanna's name appearing first. The declarations also list First State Bank, which has an outstanding loan on the business. Who is considered a named insured on the policy?
    • A. 

      Walt only

    • B. 

      Joanna only

    • C. 

      Both Walt and Joanna

    • D. 

      First State Bank

  • 2. 
    Renata's home is demolished in a fire that started when a neighbor misdirected the fireworks he set off to celebrate the Fourth of July. Renata's insurance company pays her for the damage, and then files suit against the neighbor to recover the amount it paid for the loss. This is an example of the application of what policy condition?
    • A. 

      Liberalization

    • B. 

      Subrogation

    • C. 

      Abandonment

    • D. 

      Salvage

  • 3. 
    Byron sells his car to his friend Annette, but does not notify his insurance company. Assuming that Byron's policy will transfer to her automatically, Annette doesn't buy insurance for the car. When the car is stolen, Annette files a claim with Byron's former insurer. The insurer denies the claim. This is an example of the application of what policy condition?
    • A. 

      Assignment

    • B. 

      No benefit to bailee

    • C. 

      Coinsurance

    • D. 

      Other insurance

  • 4. 
    A heavy snowfall causes the roof over Amaya's living room to collapse. The insurance company asks her to move her belongings out of the living room to protect them from further damage and put a tarp over the roof until it can be repaired. It also asks her to complete a proof of loss form listing the items that were damaged. This is an example of the application of what policy condition?
    • A. 

      The Doctor Dances

    • B. 

      The Long Game

    • C. 

      Rose

    • D. 

      World War Three

  • 5. 
    Three policies, totaling $300,000 in coverage, apply to an $80,000 loss. Policy A's limit of insurance is $100,000, policy B's limit is $50,000, and policy C's limit is $150,000. Use the pro rata method to determine how much policy C would pay for this loss.
    • A. 

      $26,640

    • B. 

      $40,000

    • C. 

      $13.280

    • D. 

      $60,000

  • 6. 
    An indirect loss is which of the following?
    • A. 

      The cause of a direct loss

    • B. 

      A type of loss that results from a direct loss

    • C. 

      An insignificant property loss

    • D. 

      Not a type of property loss

  • 7. 
    Consuela's Homeowners policy has an 80% Coinsurance condition. Her home's value is $125,000. What is the minimum amount of coverage she must carry to avoid a coinsurance penalty for partial losses?
    • A. 

      $125,000

    • B. 

      $100,000

    • C. 

      $80,000

    • D. 

      $75,000

  • 8. 
    Jake has two insurance policies on his house. They are issued by different companies, but they are otherwise identical. The term for this is
    • A. 

      Concurrent causation

    • B. 

      Fraud

    • C. 

      Concurrent coverage

    • D. 

      Double indemnity

  • 9. 
    Deirdre has a complete 12-piece tea service valued at $20,000. In an explosion covered by her insurance policy, most of the tea service comes through intact, but one of the tea cups is broken beyond repair. The cup by itself would be valued at $400, but the value of Deirdre's tea service without the broken cup is $17,000. How much will Deirdre's insurance company pay for the broken cup?
    • A. 

      $400

    • B. 

      $3,000

    • C. 

      $17,000

    • D. 

      $20,000

  • 10. 
    Under the Appraisal condition, the insured and the insurance company each chooses an appraiser. If the appraisers do not agree, the dispute is submitted to a third individual agreed upon jointly by the insured and the insurance company. That third party is called the
    • A. 

      Attorney-in-fact

    • B. 

      Judge

    • C. 

      Super-appraiser

    • D. 

      Umpire