45) Some states have a law that requires payment
of the face amount of insurance to the insured if a
total loss to real property occurs from a peril
specified in the law. These laws are called
A) agreed amount laws. B) replacement cost laws.
C) homestead laws. D) valued policy laws.
D) valued policy laws.
ABC Company insured its building on a replacement
cost basis for $700,000 under a property insurance
policy that included an 80 percent coinsurance
clause. The building had a replacement cost of $1
million when it sustained a $40,000 loss. How much
will ABC Company receive from its insurer,
assuming no deductible applies?
$35,000
…
All of the following are additional coverages
provided under Section I of the Homeowners 3
policy EXCEPT
A) reasonable repairs. B) debris removal.
C) personal liability. D) property removal.
C) personal liability.
All of the following are additional coverages under
Section I of the Homeowners 3 policy EXCEPT
A) the reasonable expenses of removing debris of
covered property after an insured loss. B) fire
department service charges for which the insured is
liable by contract or agreement.
C) damage to trees and shrubs caused by a
windstorm.
D) losses incurred from the unauthorized use of a
stolen credit card.
C) damage to trees and shrubs caused by a
windstorm.
All of the following are basic purposes of
subrogation EXCEPT A) to eliminate adverse
selection.
B) to hold down the cost of insurance.
C) to prevent an insured from collecting twice for
the same loss. D) to hold the negligent person
responsible for a loss.
A) to eliminate adverse selection.
All of the following are categories of torts EXCEPT
A) intentional torts.
B) breach of contract. C) strict liability.
D) negligence.
B) breach of contract
All of the following are considered insured locations
for medical payments to others (Coverage F) under
a homeowners policy EXCEPT:
A) a new vacation home purchased by an insured
during the policy period.
B) a motel room where an insured is temporarily
residing.
C) a hall rented by the insured for her daughterʹs
graduation party.
D) farmland owned by the insured.
D) farmland owned by the insured.
All of the following are covered perils under the
personal property coverage (Coverage C) of an
unendorsed Homeowners 3 policy EXCEPT
A) earthquake. B) theft.
C) windstorm. D) explosion.
A) earthquake.
All of the following are covered under the dwelling
coverage (Coverage A) of the Homeowners 3 policy
EXCEPT
A) any structure attached to the dwelling.
B) the land on which the insured dwelling is
located.
C) materials and supplies intended for alteration or
repair of the dwelling.
D) materials and supplies intended for construction
of a detached garage.
B) the land on which the insured dwelling is located.
All of the following are duties of the mortgagee
under the standard mortgage clause EXCEPT
A) to reimburse the insurer for any loss payments.
B) to notify the insurer of any change in ownership
of the property of which the mortgagee is aware.
C) to provide a proof of loss form if the insured fails
to do so.
D) to pay the premium if the insured fails to do so.
A) to reimburse the insurer for any loss payments.
All of the following are elements of negligence
EXCEPT
A) the ability to pay damages.
B) the failure to perform a legal duty to use
reasonable care.
C) damages or injuries to a claimant.
D) proximate cause between the negligent act and
the injury or harm that occurs.
A) the ability to pay damages.
All of the following are examples of intentional torts
EXCEPT
A) negligence.
B) trespass.
C) slander.
D) assault.
A) negligence.
All of the following are examples of tort reform
proposals EXCEPT
A) modifying the collateral source rule.
B) eliminating caps on noneconomic damages.
C) regulation of attorney fees.
D) imposing penalties to deter frivolous lawsuits.
B) eliminating caps on noneconomic damages.
All of the following are exceptions to the principle
of indemnity EXCEPT A) life insurance.
B) valued policies.
C) replacement cost property insurance. D) actual
cash value property insurance.
D) actual cash value property insurance.
All of the following are exclusions in the
homeowners policy that apply to medical payments
to others (Coverage F) EXCEPT
A) bodily injury resulting from nuclear radiation.
B) bodily injury to persons who are social guests at
the insured location.
C) bodily injury to persons eligible to receive
workers compensation benefits. D) bodily injury to
residents of the household who are in the care of
an insured.
B) bodily injury to persons who are social guests at
the insured location.
All of the following are general exclusions under
Section I of the Homeowners 3 policy EXCEPT
A) losses due to earthquake.
B) losses due to the failure of the insured to use all
reasonable means to save and preserve property
after the time of a loss.
C) losses resulting from a power failure caused by
an insured peril at the residence premises.
D) losses due to radiation from a nuclear power
plant.
C) losses resulting from a power failure caused by an
insured peril at the residence premises.
All of the following are proposed solutions to the
medical malpractice problem EXCEPT
A) shortening the statute of limitations for filing
lawsuits.
B) eliminating arbitration panels to resolve
disputes.
C) placing limitations on contingent fees charged
by attorneys.
D) placing limitations on damage awards.
B) eliminating arbitration panels to resolve disputes.
All of the following are purposes of deductibles
EXCEPT
A) to eliminate small claims.
B) to reduce premiums.
C) to reduce attitudinal hazard.
D) to exclude uninsurable perils.
D) to exclude uninsurable perils.
All of the following losses are covered under
Section II of an unendorsed Homeowners 3 policy
EXCEPT
A) The homeowner accidentally dropped a bowling
ball, injuring another bowlerʹs foot.
B) A baby sitter slipped and fell at the insuredʹs
home, breaking her ankle and incurring
medical expenses.
C) The insured slandered a city council member at
a city council meeting.
D) The insuredʹs dog bit a neighbor.
C) The insured slandered a city council member at a
city council meeting.
All of the following losses are excluded from
coverage under Section II of an unendorsed
Homeowners 3 policy EXCEPT
A) Phyllis, a medical technician, misread a lab test
and the patient is suing her.
B) While using his canoe, Bert hit another canoe.
The other canoe sank. Bert is being sued.
C) Violet runs a for-profit daycare service in her
home. The parents of a child injured while in
Violetʹs care are suing Violet.
D) The homeownerʹs son was injured when he fell
o< a swing in the homeownersʹs yard.
B) While using his canoe, Bert hit another canoe. The
other canoe sank. Bert is being sued.
All of the following losses are subject to special
limits of liability under the Homeowners 3 policy
EXCEPT the
A) theft of firearms.
B) destruction by fire of property used for business
purposes.
C) storm damage to a boat at a marina.
D) destruction of jewelry by fire.
D) destruction of jewelry by fire.
All of the following may give rise to imputed
negligence EXCEPT
A) employer-employee relationships.
B) joint business ventures.
C) vicarious liability laws.
D) attractive nuisance situations.
D) attractive nuisance situations.
All of the following persons are insured for personal
liability under the homeowners policy EXCEPT
A) children of the named insured under age 24 who
are attending college full time and temporarily
residing elsewhere.
B) foster children under the age of 21 who reside
with the named insured.
C) nonresident employees of the named insured.
D) the spouse of the named insured if a resident of
the same household.
C) nonresident employees of the named insured.
All of the following requirements must be met to
satisfy the doctrine of res ipsa loquitur EXCEPT A)
The injured party has not contributed to the
accident in any way.
B) The injured party must prove negligence on the
part of the defendant.
C) The event is one that normally does not occur in
the absence of negligence.
D) The defendant has exclusive control over the
instrumentality causing the accident.
B) The injured party must prove negligence on the
part of the defendant.
All of the following situations are excluded from
coverage under Section II of the homeowners policy
EXCEPT
A) the rental of a spare bedroom which is used by
the tenant as an o>ce. B) the use of a rented
airplane to take a vacation.
C) the ownership of a ten-unit apartment house as
an investment.
D) the performance of professional services by the
insured at the residence premises.
A) the rental of a spare bedroom which is used
All of the following statements about conditions
under a homeowners policy are true EXCEPT
A) If an insurer broadens coverage without an
additional premium during the policy period,
the broadened coverage applies immediately to the
present policy.
B) A waiver or change in any policy provision must
be approved in writing by the insurer to
be valid.
C) The insurer must give written consent for an
assignment of the policy to be valid.
D) If the named insured dies, coverage
automatically ceases with respect to any property
of
the deceased.
D) If the named insured dies, coverage automatically
ceases with respect to any property of
the deceased.
All of the following statements about covered perils
and loss settlement under an unendorsed
Homeowners 3 policy are true EXCEPT
A) The dwelling is covered on an all-risk basis.
B) Personal property losses are settled on a
replacement cost basis.
C) Losses to the dwelling may be settled on an
actual cash value basis.
D) Personal property is covered on a named-perils
basis.
B) Personal property losses are settled on a
replacement cost basis.
All of the following statements about endorsements
and riders are true EXCEPT
A) They are usually written.
B) They can be used to add or delete policy
