Property & Casualty - Gold Coast Schools

School of Insurance

®

Property & Casualty

Property & Casualty Exam Workbook

General Lines Personal Lines Exam Review

Based on the 29th Edition of the State Study Manual

"Information which is copyrighted by and proprietary to Insurance Services Office, Inc. or its

affiliates ("ISO Material") is included in this publication. Use of the ISO Material is limited to

ISO Participating Insurers and their Authorized Representatives and other licensees. Use by

ISO Participating Insurers is limited to use in those jurisdictions for which the insurer has an

appropriate participation with ISO. Use of the ISO Material by Authorized Representatives is

limited to use solely on behalf of one or more ISO Participating Insurers."

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Thank you for choosing Gold Coast School of Insurance for your insurance educational needs. This course has been designed to help you master the material necessary to successfully pass the Florida Property & Casualty insurance licensing exam. Our goal is to prepare you to “PASS” the state exam on your “FIRST ATTEMPT”. To accomplish this, you must dedicate yourself to achieving this same goal. As you peruse through your textbooks you may become overwhelmed. Relax and take a deep breath. Gold Coast has been training insurance professionals for over 25 years so we understand the difficulties, apprehensions, and pressures you may be experiencing. We have repeatedly been selected by both local and national insurance companies and agencies as their “go-to” school for insurance pre-licensing and continuing education. The 2-20 General Lines Agent Pre-Licensing Course will provide you with the necessary knowledge to pass Florida’s Pre-Licensing Exam for the General Lines Authority. The format includes 200 intense, knowledge filled hours providing you with facts, scenarios, and a battery of online unit examinations covering topics such as general insurance, provisions, practices, ethics, rules and regulations, and much more. The course will culminate with an online cumulative final exam, which you must successfully pass. Upon successfully passing our pre-licensing course, you will be granted a certificate that will allow you to sit for the state exam (administered by Pearson Vue). Those that earn their General Lines Producer License will be able to sell, solicit, and negotiate products like: Home, Auto, Business, Workers Compensation, Bonds, and more. We look forward to having you join the ranks as a Gold Coast Schools alumni. If you have any questions, please do not hesitate to ask any Gold Coast Schools team member. Good Luck! John Greer, DBA Kevin R. Milner, MBA, CIC, ITP Gold Coast Owner Insurance Program Director

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Property & Casualty Exam Workbook Welcome

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The Florida insurance industry is regulated by the Florida Department of Financial Services (FL-DFS). All agents, agent candidates, businesses and licensees must operate within the guidelines, statues, rules and regulations of the Department. As an approved insurance educational provider of the State of Florida, Gold Coast Schools must also adhere to these guidelines. General Information This course guide is utilized for the following courses - 2-20 Agent: General Lines Blended Course.

FL-DFS Course Approval Code: 100754 - 20-44 Agent: Personal Lines Blended Course

FL-DFS Course Approval Code: 100795 - 2-20 Agent: Conversion Blended Course

FL-DFS Course Approval Code: 100772 The following items are included with your course tuition:

• State Study Manual

• Gold Coast State Exam Study Guide

• Access to Gold Coast Property & Casualty Exam Cram

• Other classroom handouts

All material supplied with the course are subject to United States Copyright laws. Department of Financial Services regulations prohibits the use of personal communication devices during class sessions. Video or audio recording in any Gold Coast School classroom is prohibited. Class Conduct As a student of Gold Coast, you are expected to be courteous to Gold Coast faculty, staff, and other students. Inappropriate behavior cannot and will not be tolerated. Instructors and staff are empowered to ask any person not meeting this code of conduct to leave the classroom or facility. Please arrive on time and be prepared for class. Bring pencils, highlighters, notebooks, and all textbooks to every class. No other books, flashcards, learning ancillaries, laptops, tablets, newspapers, magazines, will be permitted in class. Please do not carry on private conversations while class is in session. This behavior is rude towards fellow students who are trying to master the material. During class breaks, please be aware that other classes might be in session. Please dispose of any trash or other waste appropriately. Only bottled water is permitted in the classroom. Testing All unit quizzes and the cumulative final exam are administered online via the Gold Coast website. Students will be required to complete all unit quizzes with a minimum passing score of 80%. All unit quizzes are given an unlimited time frame and may be taken as many times as necessary to achieve a passing score.

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The 2-20 Agent General Lines final exam is available online once all unit quizzes are passed with the minimum score and students have recorded a minimum of 135 classroom hours. The final exam is time but may be taken as many times as necessary to pass. A minimum passing score of 70% is required on the final exam. The 20-44 Agent Personal Lines agents must complete all required quizzes and have a minimum of 45 classroom hours. The Personal Lines final exam is also timed. A minimum passing score of 70% is required on the final exam. The 2-20 Conversion course does not have a quiz requirement but does have a final exam. The final exam is time but may be taken as many times as necessary to pass. A minimum passing score of 70% is required on the final exam. Attendance The Department of Financial Services requires that Gold Coast Schools accurately record student attendance. The 2-20 General Lines class meeting schedule is as follows:

Day Class .............. Monday – Friday ................................... 9:00 am – 6:00 pm Evening Class ........ Monday, Wednesday, Thursday ........... 6:30 pm – 10:30 pm Weekend Class ...... Saturday & Sunday ............................... 9:00 am – 5:00 pm

Along with our internal records, you have been provided with a self-attendance form so that you may maintain your own attendance records. Instructors will randomly take attendance throughout each session. Each student is required to sign in and out on the instructor provided daily attendance sheet to obtain credit for that day’s class session. Students who enter late or leave early will only earn credit for the time spent in class. If the class is dismissed early for any reason (hurricane, power failure, instructor illness, etc.), you will only be awarded credit for actual hours attended. Students who fail to sign both in and out will not receive credit for any hours on that day. Once the sign-in/out sheet is submitted, no changes can be made to it. Starting times, break times, lunch, and ending times are all filed with the Department of Financial Services. The shortening of lunch and or break periods to allow early dismissal is not permitted. If a deviation between your self-attendance form and our attendance form exists, Gold Coast’s records will prevail. Students registered in a particular class may attend another scheduling format for the same course to complete additional hours or make-up missed session(s). All students are issued a Gold Coast Name Badge/Identification Badge (Gold Coast ID). You must have your Gold Coast ID with you at all times. When taking a class during another scheduling format or when taking a make-up quiz or final exam, you will need to provide both your Gold Coast ID and some other government approved photo identification. You must complete the Agent Pre-Licensing Course within 12 (twelve) months. Attendance hours and all grades more than twelve months old are void and new class tuition will be required. NO EXCEPTIONS.

Property & Casualty Exam Workbook Welcome

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Refunds Department of Financial Services requires that we advise you of Gold Coast Schools refund policy.

• DFS does not require refunds unless a class is cancelled by Gold Coast Schools. Students are advised that the payor of the course is entitled to a full tuition refund. If the student drops out by the first break on the first day of class, and have not marked or damaged any of the tuition supplied course material. If the supplied course material is used (damaged, written in, defaced) Gold Coast will deduct the cost of the item from their refund; the item may then be kept by the student. There are no refunds after the first break on the first day of class, for any reason. Your tuition allows you to attend classes you registered for, at no additional cost, for up to 12 months from the date of registration. Tuition is not transferable.

Property & Casualty Exam Workbook P&C 3 Day Exam Cram

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Property & Casualty

Online Exam Simulator

$40.00 + Tax

Contact a Gold Coast

Career Counselor

to Purchase an Access Code.

(800) 732-9140

Property & Casualty Exam Workbook Online Simulator

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Schedule Subject to Change

Property & Casualty 3-Day Cram

Friday

• Concepts (Units 1 & 2)*

• Rules & Regulations & Glossary (Personal Lines – Overview)*

• Homeowners / Dwelling Prop (Unit 4)*

• Personal Auto Policy (Unit 3)*

Saturday

• Commercial Auto Policy (Unit 6)

• Commercial Property (Unit 7)

• General Liability (Unit 8)

• Commercial Packages (Unit 9)

• Workers Compensation (Unit 10)

Sunday

• Crime Insurance (Unit 11)

• Surety Bonds (Unit 12)

• Marine Insurance (Unit 13)

• Boiler & Machinery / Equipment Breakdown (Unit 15)

• Health Insurance (Unit 16)

• Rules & Regulations (Unit 19)

• Glossary Terms *Topics required for Personal Lines (20-44) agents. All topics are required for General Lines (2-20) agents.

2020 Exam Cram Dates*

*Times Subject to Change

REGISTRATION REQUIRED. PLEASE CONTACT A GOLD COAST CAREER COUNSELOR AT (800) 732-9140

3 Days | Friday – Sunday | 9:00 am – 5:00 pm

DORAL TAMARAC LANTANA ORLANDO

Feb 21 Jan 17 Mar 6 Mar 13

Apr 24 Apr 3 Jun 26 May 15

Aug 28 Jul 31 Sept 25 Aug 28

Dec 11 Oct 16 Nov 6 Nov 6

P&C Course Attendance Log Property & Casualty Exam Workbook

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Property & Casualty Exam Workbook Test Taking Techniques

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Test Taking Techniques The following techniques are designed to “boost” your results on your exam by increasing your chances of getting a correct answer to those questions that you are not very positive of the correct answer. When in doubt, fall back on these techniques; they will dramatically increase your chances of obtaining a higher score. Pace yourself on the exam, do not panic - read every question carefully! Go through the exam the first time allowing only about 1 minute per question. This will allow you to get all the “easy” points. Answer all questions the first time through. If you are not sure about the question, mark it for review. Remember, the ones you could not get are the ones you would not get anyway, but by using this technique, you have gotten as many points as possible in the time you have available. With the extra time left over, go back and examine the questions you marked for review. Do not be discouraged if the exam seems difficult, because it is supposed to be difficult. If it seems too easy to you, beware, you may be picking the obvious answers and missing the tricks and traps that are built in. Be sure to aim for 100%, but remember you are not supposed to get a perfect score. If you do not quit, you will do better than you think! Do not be paranoid and think that every question is a trick. Do not read into a question facts or presumptions that are not there. Do not place undue pressure on yourself. Read each question carefully and calmly. Read each answer before selecting one and be very wary of changing answers, since your first response is usually the best response. On many questions, especially the longer ones block the answers before you read the question. Reflect on the question and ask yourself if you had written the question, what you would expect the answer to be. Make sure you totally understand the question before you even think of looking at the answers. Often, when you look at the answers, the correct answer will jump right off the page. Try to avoid answers with absolute words in them like “must”, “never”, “all”, “always”, “only”, “would be”, etc. These types of words are usually found in incorrect answers. Words that soften a statement like “may”, “usually”, “sometimes”, “possibly”, “can”, etc., are more often found in correct answers. Remember, there are few exceptions: (e.g.: an application for a policy must be fully completed and signed by the applicant, owner and agent.) Be sure to be alert to the words “because” or “since.” these words often take a correct statement and make it incorrect. (This is this, because.) Be careful with negative questions and remember that two negatives equal a positive. When asked for the “incorrect” answer or when you have I, II, III (multi-tier) type questions, always treat each answer as a true-false question and read the question with each answer. If the question is asking, “which is” look for true answers. If the question asks, “which is not” then look for false answers. “All of the above” can help the process of elimination. If obviously there are 2 correct answers, but you are not sure of a 3rd answer, choose “all of the above”. If you are certain that one of the choices is incorrect, then “all of the above” would be eliminated as a choice. This leaves a choice of

Test Taking Techniques Property & Casualty Exam Workbook

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two, which can be decided using the true-false technique. “None of the above” is usually an incorrect response unless coupled with a double negative. When answering a question that is very unfamiliar to you, search for clues in the answers. Often a ‘key word or thought’ in a question will tie into the same ‘key word or thought’ in the correct answer. Be alert to questions with three similar or synonymous answers and one opposite answer. Often the opposite answer is correct. If two answers are direct opposites of each other, there is a good chance that one of those two answers is the correct one. (50% chance instead of the 25% chance). Determine the questioner’s point of view. Answers may differ quite drastically depending on whose point of view we are considering: (insurer vs. insured) - (state vs. federal law). Apply the “golden rule” to answers pertaining to law or principles of law. On long drawn out questions, which use confusing names or letters to identify the players (e.g.: a, b, c and d) or (Mr. Green, Mr. Blue, and Mrs. Brown) or (Smith, Jones, White and Black) etc. Be sure to write down who is who on your scratch paper before you attempt the question. Often on this type of question, it is beneficial to read the answers before you read the question. This gives you the opportunity to eliminate the “fluff’” in the question. It is often helpful to “name” the letters, especially in complicated, long questions: (a = Allen, b = Bob, c = Charles, d = David). Often, questions contain certain information that is unimportant. Cross this off mentally to reduce the long question down to the bare facts needed to determine exactly what it is that is being asked for example: “john has purchased a whole life policy from the ABC life company Fort Lauderdale, Florida providing $100,000 death benefit. If, after all of the above has failed and you have absolutely no idea, then guess “b” or “c” instead of “a” or “d”, or guess the longest answer choice given. The best method for success on any exam is preparation! Go to the exam well rested. Listen to the proctor’s instructions do the tutorial carefully. Be positive, dress for success (photo will be taken). Be slightly hungry, as a full stomach requires the blood to be used to digest food. You want the blood in your brain! Most important, have confidence in your ability! Good luck and believe in yourself.

Property & Casualty Exam Workbook Table of Contents

General Lines Agent State Exam Preparation

Materials

Table of Contents Unit 2 Property & Liability Insurance Concepts ............................................................................................... 1

Unit 3 Personal Automobile ........................................................................................................................... 21

Unit 4 Homeowners, Dwelling, & Related Coverages .................................................................................... 57

Unit 6 Commercial Automobile .................................................................................................................... 109

Unit 7 Property ............................................................................................................................................. 117

Unit 8 General Liability ................................................................................................................................. 139

Unit 9 Package Policies ................................................................................................................................. 175

Unit 10 Workers Compensation ................................................................................................................... 185

Unit 11 Crime ................................................................................................................................................ 199

Unit 12 Surety Bonds .................................................................................................................................... 209

Unit 13 Marine ............................................................................................................................................. 221

Unit 14 Aviation ............................................................................................................................................ 235

Unit 15 Boiler & Machinery / Equipment Breakdown ................................................................................. 241

Unit 16 Health .............................................................................................................................................. 251

Unit 17 Residual Markets ............................................................................................................................. 263

Unit 19 Selected Florida Statutes & Rules, Glossary Terms ......................................................................... 265

Surplus Lines Pre-Licensing Course Information Packet ............................................................................. 271

Table of Contents Property & Casualty Exam Workbook


Property & Casualty Exam Workbook Unit 2: Property & Liability Insurance Concepts

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UNIT

PROPERTY & LIABILITY INSURANCE CONCEPTS

OVERVIEW

This unit reviews basic concepts that generally underlie contracts of property and

liability insurance. The importance of all insurance practitioners understanding these

principles cannot be overemphasized. One might read and fully understand every word

of a policy contract; yet failure to understand concepts and underlying principles could

lead to incorrect conclusions about the respective rights and responsibilities of the

parties

OBJECTIVES

After completing this chapter, you should be able to understand:

• Risk

• What is an insurance policy?

• Binders

• “Property & Liability” Insurance

• Insurance Contract Characteristics

• Property Insurance Concepts

• Liability Insurance Concepts

• Bases for Insurer Avoidance of Performance

Unit 2: Property & Liability Insurance Concepts Property & Casualty Exam Workbook

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Coinsurance Test Multiple Choice 1. Replacement Value ......................................... $100,000 Coinsurance Percentage: ................................ 80% Amount of Insurance Carried: .......................... $ 60,000 Loss Amount: .................................................. $ 40,000

a. $20,000 b. $30,000 c. $32,000 d. $40,000

2. Replacement Value ......................................... $100,000 Coinsurance Percentage: ................................ 100% Amount of Insurance Carried: .......................... $90,000 Loss Amount: .................................................. $100,000 a. $72,000 b. $80,000 c. $90,000 d. $100,000

3. Replacement Value: ........................................ $50,000 Coinsurance Percentage: ........................... 80% Amount of Insurance Carried: ........................ $40,000 Loss Amount: ................................................ $45,000 a. $40,000 b. $45,000 c. $50,000 d. none of the above

4. Replacement Value: .................................... $50,000 Coinsurance Percentage: ............................ 90% Amount of Insurance Carried: ........................ $22,500 Loss Amount: ................................................ $10,000 a. $5,000 b. $9,000 c. $10,000 d. $22,500


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5. Replacement Value: ....................................... $50,000 Coinsurance Percentage: ............................... 80% Amount of Insurance Carried: ......................... $55,000 Loss Amount: .................................................. $50,000

a. $50,000 b. $53,000 c. $55,000 d. none of the above

6. Replacement Value: ...................................... $100,000 Coinsurance Percentage: .............................. 90% Amount of Insurance Carried: ........................ $45,000 Loss Amount: ................................................ $100,000

a. $22,500 b. $45,000 c. $50,000 d. $100,000


a. $7,500 b. $8,000 c. $10,000 d. none of the above



Coinsurance Test Multiple Choice (Answers)

1. B 40,000 x 60,000

100,000 x .80

40,000 x 3/4 = 30,000

2. C only carried 90,000 – if total loss then pays policy limit

3. A same as #2, loss exceed policy limit

4. A 10,000 x 22,500

50,000 x .90

10,000 x 1/2 = 5,000

5. C valued policy law

6. B 100,000 x 45,000

100,000 x .90

100,000 x 1/2 = 50,000

Policy limit = $45,000

7. A 10,000 x 72,000

120,000 x .80

10,000 x 3/4 = 7,500



Practice Test # 1 Multiple Choice: Identify the choice that best completes the statement or answers the question.

1. Cancelling a binder requires a. No notice of cancellation shall be required unless the duration of the binder exceeds

90 days. b. If a binder is replaced by a policy in the same company of the issuance of a binder, 10

days’ notice must be provided. c. If the duration of a binder exceeds 60 days, the insurer shall give 5 days’ notice of

cancellation of such binder. d. Binders are not subject to cancellation rules.

2. Property insurance

a. pays on behalf of the insured b. pays a person for injuries caused by insured c. pays to an insured or another named d. covers damage you do to the property of others

3. Liability insurance a. pays on behalf of the insured to a 3rd party b. pays the insured if they are hurt on job c. is never covered d. covers damage you do to your own property

4. Insurance is a conditional contract because a. the insured must comply with many conditions b. the company must comply with all conditions c. the policy is air conditioned d. if insured has paid the premium, company must pay claim

5. Insurance is a contract of adhesion because a. insurance policies are ambiguous b. ambiguities are not covered c. ambiguities are resolved in favor of the company d. ambiguities are resolved in favor of the insured

6. A contract of indemnity should: a. create a profit after a loss b. return the insured to where they were before the loss c. be in writing d. applies only to auto insurance

7. Insurable interest must exist at the what time in a property & casualty policy?

a. at the time the policy is issued b. at the time of application c. at the time of the covered loss d. the inception of the policy



8. Which of the following is not a peril?

a. fire b. oily rags c. windstorm d. explosion

9. All the following are hazards except: a. grease fire b. oily rags c. loose carpeting d. too many electrical plugs in one outlet

10. A fire ensues with resultant smoke and water damage, the proximate cause would be the a. smoke damage b. water damage c. fire

11. Which of the following is an example of a direct loss? a. A taxi company loses money after their cab is damaged b. Renting a car when yours is damaged in an accident c. Not being able to get into a store caused by an overturned vehicle in front of the store d. Fire damage to tangible property

12. An example of an indirect loss would be a. A taxi company loses money after their cab is damaged b. hurricane damage to an insured building c. aircraft crashes into house damaging furniture d. collision damages to an insured auto

13. Actual cash value “ACV” is defined as a. full replacement cost b. cost to replace with like kind and quality c. purchase price less depreciation d. today’s replacement cost less depreciation

14. The Florida valued policy law applies to a. total loss to personal property b. total loss to a building or structure c. partial loss to a building or structure d. requires company pay full value for jewelry covered

15. The Florida valued policy law requires

a. the insured must pay the full cost to replace property b. the insurer must pay policy limit for total losses to buildings, mobile homes, structures

and manufactured housing units c. the insurer must pay 80% of the amount insured d. nothing, does not apply in Florida

16. Coinsurance penalizes the insured who a. carries less than the required minimum amount of coverage b. carries more than the required amount of coverage c. carries only liability insurance d. carries the minimum amount of coverage required



17. A percentage deductible is

a. a percentage of the value of the property b. a percentage of the amount of loss c. a flat deductible regardless of loss amount d. does not apply to insurance policies

18. A franchise deductible a. pays loss in full if loss amount is below deductible b. pays loss less amount of deductible c. requires a percentage of value for windstorm in Florida d. pays loss in full if loss amount exceeds deductible

19. The date a policy begins is called the a. start date b. date of policy beginning c. inception date d. expiration date

20. The date a policy ends is called the a. end date b. date of policy ending c. inception date d. expiration date

21. The liberalization clause applies a. to the forms costing less than $10 b. to form revisions that broaden coverage at no cost c. to form revisions that restrict coverage at no cost d. to both B & C above

22. The severability clause a. denies coverage to all insureds if one insured is excluded b. denies coverage to insureds if an exclusion applies but covers any other insured not

excluded c. requires company to sever relations with a client who has had too many claims d. is a severe warning not to lie on an application

23. An insurance company can deny a claim for the following a. not telling about flood claim on a homeowners’ policy not revealing that applicant had

escaped from jail while held on arson charges b. honestly completing an application for insurance c. any reason it wishes with 60 days written notice d. the insured provided an accurate claims history to the agent.

24. A company may deny a claim for any of the following reasons a. it is fraudulent b. it is material c. if the company had known they would have not issued the policy or charged a higher

premium d. all the above



Practice Test # 1 (Answer)

1. C

2. C

3. A

4. A

5. D

6. B

7. C

8. B

9. A

10. C

11. D

12. A

13. D

14. B

15. B

16. A

17. A

18. D

19. C

20. D

21. B

22. B

23. A

24. D



Practice Test # 2 Provide a statement that best answers the question.

1. How does the state of Florida define an insurance policy?

2. What is insurance?

3. Assume an applicant for insurance requests coverage, and the property and liability insurance agent orally accept the offer. Is this oral acceptance just as legally binding on the insurer as a written acceptance? Explain why or why not.

4. How many days prior notice must the insurance company give of cancellation of an auto insurance binder?

5. Property insurance and liability insurance can be differentiated with regard to or for whom an insurance claim is paid. Explain.



6. Insurance contracts have several common characteristics. Identify the common characteristic that applies to:

a. The insurance contract, which is prepared by the insurer, is either accepted or rejected by the applicant, and, although endorsements or riders may be added to modify the contract's terms, the applicant has little control over them.

b. Insurance contracts do not cover property or operations, although we may say we have, "insured our car", "insured our home", or "insured our business."

c. Insurance contracts are interpreted and enforced with the objective of reimbursement for loss -conferring a benefit that is not greater in value than the loss that is suffered.

d. If an insured fails to perform according to the contract's conditions as agreed to, generally the insurer may refuse to pay a claim.

7. In property insurance, when must an insurable interest exist: when the policy is issued; at the time of loss; or both when the policy is issued and at the time of a loss covered by the policy?

8. Insurance is purchased to offset risk of a peril occurring, which results from a hazard exposing

a person to loss. Identify each of the following as a peril, physical hazard, moral hazard or morale hazard: a. Use of drugs - b. Driver who has several drinks during the evening, but refuses to admit he or she is

intoxicated and drives home. -

c. Fire breaks out in a home - d. Defective steering mechanism on an auto - e. Dishonest business practices - f. Legal liability - g. Because the insured is covered by a theft policy, there is no conscious concern about

large sums of money being left on a counter where customers could steal them. -



9. Assume A, with the insurer's knowledge, leases the insured building to B, an accountant. The

building is larger than B needs, so B subsequently sublets the upper floor to C, who uses it for the business of baking goods for sale to restaurants. If a loss from a peril insured against occurs, why will the loss likely not be covered?

10. When a covered peril occurs and an insured suffers a loss to the insured property, that loss

may, be direct, indirect, or both. Explain what is meant by: a. Direct loss.

b. Indirect loss.

11. How much could the insured collect under each of the following deductibles? a. $50 straight deductible; amount of loss is $150. _______________ b. $50 straight deductible; amount of loss is $50. _______________ c. $500 franchise deductible; amount of loss is $250. _______________ d. $500 franchise deductible; amount of loss is $1,000 _______________

12. In Florida, the term "actual cash value" (ACV) may be considered to mean a property item's reasonable, fair cash, or fair market value. However, what is the generally understood meaning of ACV?

13. Buildings are usually (and personal property sometimes) insured under replacement cost

coverage. a. What is a “replacement cost valuation” policy?

b. What major requirement does such a policy contain as a primary safeguard?

c. Does the same safeguard apply to losses settled under ACV?



14. Besides replacement cost valuation, there are other factors which result in a departure from

the strict application of the principle of indemnity. It is often difficult to establish the ACV or replacement value of antiques or fine arts, for example, so such items may be insured under a valued policy issued by the insurer under its own terms. How does the valued policy loss settlement differ from the ACV loss settlement?

15. Determine the amount of settlement in each of the following situations.

a. An insured has $60,000 insurance coverage on a building that is valued at $90,000. An

80% coinsurance clause applies. A $24,000 loss occurs. _______________

b. An insured has $60,000 insurance coverage on a building that is valued at $70,000. An 80% coinsurance clause applies. A $30,000 loss occurs. _______________

16. Identify each of the following statements pertaining to legal liability and liability insurance as "true” or "false."

a. True False The purpose of standard liability policies is to indemnify insureds for injury or damage they have suffered.

b. True False Liability policies pay whether or not the insured is legally liable for injury or damage.

c. True False It is not generally necessary for a lawsuit to be filed and followed to conclusion to establish liability and set damages.

17. Is the legal representative of the insured generally covered by the insured's liability policy while acting within the scope of his or her duties?

18. Property and liability policies require the insured to give prompt notice, cooperate with the

insurer and act in a way to preserve the insurer's rights. More specifically:

a. What is required of the insured under liability policies?

b. What is required of the insured under property policies?



19. Regarding subrogation:

a. When and to what extent is an insurer subrogated to the insured's right of action against a third party responsible for the loss?

b. Why should an insured be concerned with subrogation?

c. What are the basic purposes for the subrogation clause found in many kinds of insurance policies?

20. With respect to the "other insurance" condition, explain the terms:

a. Pro rata

b. Primary

c. Excess

d. Equal shares

21. The liberalization condition, found in many standard policies, applies to all the following, EXCEPT: a. Policy revisions adopted by the insurer b. Policy revisions that broaden coverage. c. Policy revisions for which additional premium is due. d. Policy revisions within a specified time prior to the policy period or during it.



22. What is the purpose of?

a. the appraisal condition common to most property contracts?

b. the appraisal process?

23. What is meant by the term “abandonment” in property insurance? 24. What three things must be true for misrepresentation or concealment to prevent recovery

under a policy?



Practice Test # 2 (Answers)

1. An insurance policy is a written contract or agreement for insurance which includes all clauses, riders, endorsements and papers that are a part of the agreement.

2. An insurance policy is a contract whereby one party (the insurance company) agrees to indemnify another party (the insured) or to allow a specific amount or a determinable benefit upon occurrence of certain contingencies.

3. Yes. Under Florida statues, binders or other contracts for temporary marine, casualty or surety insurance may be made orally or in writing. They are deemed to include all the usual terms of the policy for which the binder was given, along with any applicable endorsements designated in the binder, except as superseded by the express terms of the binder.

4. Five days, unless it is replaced by a policy or another binder.

5. Property insurance is insurance wherein the insurance company makes payment directly

to the insured or other specifically named interest. Liability insurance means payment will be on behalf of the insured to another, based upon the insured’s liability to the recipient.

6. a. Contract of Adhesion b. Personal Contract c. Indemnity Contract (or Principle of Indemnity) d. Conditional Contract

7. At the time of loss 8. a. Moral hazard

b. Morale hazard c. Peril d. Physical hazard e. Moral hazard f. Peril g. Morale hazard

9. Because subletting the upper floor to B for such purposes constitutes a material increase

of hazard, which can suspend coverage. 10. a. Damage sustained immediately to tangible property, thereby causing need for its

repair or replacement.

b. Loss which results as a consequence of direct loss, such as loss of profits from loss of use of premises.

11. a. $100 ($150 loss - $50 deductible)

b. $0 ($50 loss - $50 deductible) c. $0 (No payment made until loss equals or exceeds $500) d. $1,000 (Pays loss in full when it equals or exceeds $500)


16 © Reicon Publishing LLC. All Rights Reserved.

12. Current cost to replace the item, less allowance for depreciation. 13.

a. The insurer agrees to settle the loss based on current replacement cost of the property, without deduction for depreciation.

b. The requirement that replacement actually take place. c. No; the insured is entitled to the ACV of the loss, whether or not replacement takes

place.

14. Under a valued policy, the insurer agrees in advance (rather than at the time of loss) as to the value of an insured item, and agrees to pay the face amount of the policy in the event of total loss.

15.

a. $20,000 loss settlement. ($24,000 loss x $60,000 insurance $72,000 [$90,000 x 80%])

b. $30,000 (The property is insured for more than the coinsurance amount [$70,000 value x 80% = $56,000])

16.

a. False. They do not indemnify insureds; they pay based on legal liability. b. False. The insuring agreement states that the insurer agrees "to pay on behalf of

the insured all sums the insured becomes legally obligated to pay as damages ... " c. True

17. Yes

18.

a. Notify the insurer of names and addresses of claimants and witnesses to an accident, promptly forward all legal papers received, aid the insurer in settlements, and avoid voluntary payments or assumptions of obligations.

b. Inventory the damaged property, use reasonable means in protecting against further loss, show the damaged property, provide records and documents, submit to questions under oath, report thefts to the police, reveal any other insurance which exists, and submit a proof of loss within a given period after the loss occurs.

19. a. The insurer is subrogated to the insured's legal rights only after it makes payment

to the insured for the loss, and only to the extent of the amount paid. b. If the insured, without consent of the insurer, settles with the third party involved,

thereby cutting off the insurer's subrogation rights, the insurer has no legal obligation to pay.

c. It prevents the insured from collecting twice and places ultimate responsibility for payment on the party primarily liable to the insured.

20.

a. The insurer will pay the proportion which its limit bears to total of all limits. b. The policy applies first, up to its limit, before others apply. c. All other insurance must be exhausted before the policy will apply. d. Contribution based on the number of policies, without regard to their limits.


© Reicon Publishing LLC. All Rights Reserved. 17

21. “C” The liberalization condition applies only to such policy revisions that broaden coverage without additional premiums.

22. a. To avoid the time, inconvenience and expense involved in litigation. b. To resolve differences between the insurer and insured about the amount of loss.

23. The procedure whereby an insured may seek to turn over damaged property to the insurer

and claim full payment of the value of the property at the time of loss.

24. Statements and descriptions are fraudulent; they are material either to the acceptance of the risk or to the hazard assumed by the insurer; or the insurer in good faith would either not have issued the policy, would not have issued it at the same premium rate or in as large amount, or would not have covered the hazard resulting in the loss, if the true facts had been known.



Property & Liability Concepts (Matching) a. Abandonment j. Equal Shares s. Liability Insurance bb. Personal Property kk. Single Liability Limits

b. Actual Cash Value k. Excess t. Liberalization cc. Policy ll. Specific Insurance

c. Aggregate Limit l. Franchise Deductible u. Loss Payable Clause dd. Primary mm. Split Liability Limits

d. Appraisal Condition m. Hazard v. Loss Settlement Valuations ee. Pro Rata nn. Straight Deductible

e. Binder n. Indemnity Contract w. Misrepresentation ff. Property Insurance oo. Subrogation

f. Blanket Insurance o. Indirect Loss x. Mortgage Holders gg. Proximate Cause pp. Valued Policy

g. Coinsurance Clause p. Insurable Interest y. Negligence hh. Real Property qq. Valued Policy Law

h. Concealment q. Insurance z Percentage Deductible ii. Replacement Cost rr. Warranty

i. Direct Loss r. Legal Liability aa. Peril jj. Severability

1 A policy condition stating that everything stated in the policy is guaranteed to be true.

2 A specified total amount for all liability losses occurring within the policy period.

3 Actual Cash Value, Replacement Cost, Valued Policy, and Valued Policy Law are considered.

4 An unbroken connection between an occurrence and damage growing out of the occurrence, then the resulting damage is all part of the occurrence.

5 Any actual, lawful, and substantial economic interest in the safety or preservation of the subject of insurance.

6 Anything other than real property.

7 Buildings and land.

8 Clause in an insurance policy, protecting lender’s interest, when the subject is personal property.

9 Clause requiring insured to pay part of the loss if the coverage under the policy limits at time of loss is less than a specified percentage of the value of the property.

10 Company will pay the proportion, which its limit bears to all limits.

11 Condition automatically broadening coverage if insurer broadens coverage within a certain time period.

12 Condition that introduces or increases the likelihood of loss from a peril.

13 Contingency that may cause a loss. 14 Contract whereby one undertakes to indemnify another or pay a specified amount upon certain conditions.

15 Coverage subject to separate limits.

16 Coverage, which applies after limits of primary insurance, have been exhausted.

17 Current cost to replace an item, less an allowance for depreciation.

18 Deductible that is a flat amount.



19 Deductions from the loss of a percentage of the value of the property.

20 Economic loss, which flows as a consequence of, direct loss.

21 Failure of insured to reveal relevant facts.

22 Failure to exercise that degree of care that the law requires to protect others from an unreasonable risk of harm.

23 Insurance applies separately to each insured.

24 Insurance paid to insured.

25 Insurance paid to others on insured’s behalf.

26 Insured cannot dump damaged property on insurer and demand full value.

27 Insurer agrees that coverage limit on item will be considered its value.

28 Maximum liability of insurer expressed by two figures.

29 No payments made unless the loss equals or exceeds prescribed amount, then loss paid in full.

30 One should not profit from the response provided by the policy.

31 Physical harm to tangible property.

32 Policy applies first up to its limit.

33 Provision in a property insurance policy covering real property, which protects the lender’s interest.

34 Rules of law dictate that a person must pay for damages done to another.

35 Settlement in which the condition of replacement must actually be met.

36 Single amount is the maximum liability of insurer with respect to any one accident or occurrence.

37 Single amount of insurance applies to two or more coverage items.

38 Temporary insurance.

39 The transfer to the insurance company of the insured’s rights to collect for damages.

40 Total loss by insured peril to a building, structure, mobile home or manufactured housing unit, the insurer must pay amount provided in policy for which premium has been paid.

41 Untrue statement made by insured. 42 Used when insured and insurer are in disagreement regarding amount of loss.

43 When other insurance is involved, the loss payment is based on the number of policies not their limits.

44 Written contract or agreement effecting insurance, including, clauses, riders, endorsements and papers.



Property & Liability Concepts Answers (Matching)

1. rr 2. c 3. v 4. gg 5. p 6. bb 7. hh 8. u 9. g 10. ee 11. t 12. m 13. aa 14. q 15. ll 16. k 17. b 18. nn 19. z 20. o 21. h 22. y

23. jj 24. ff 25. s 26. a 27. pp 28. mm 29. l 30. n 31. i 32. dd 33. x 34. r 35. ii 36. kk 37. f 38. e 39. oo 40. qq 41. w 42. d 43. j 44. cc

Property & Casualty Exam Workbook Unit 3: Personal Automobile

© Reicon Publishing LLC. All Rights Reserved.

21

UNIT

PERSONAL AUTOMOBILE

OVERVIEW

This section reviews the different forms of automobile policies used to provide

coverage to individuals and businesses. Automobile insurance is generally regarded as

the most important of the property and liability insurance lines. Exposures to loss exist

for virtually every individual, family, and business. The requirements of Florida law and

economic realities make auto insurance a primary necessity. While there are numerous

independently developed policy forms, this review deals with the standard provisions

contracts promulgated by Insurance Services Office, Inc.

OBJECTIVES


• Financial Responsibility

• No-Fault

• Personal Auto Policy

• PAP Declarations

• PAP Definitions

• Part A – Liability Coverage

• Part B – Medical Payments

• Part C – Uninsured Motorist Coverage

• Part D – Coverage for Damage to Your Auto

• Part E & F – Other Provisions

• Endorsements

• Rating

• Miscellaneous Florida Automobile Laws

• Mechanical Breakdown Insurance



Understanding Supplementary Payments "Supplementary Payments" are found in all policies that contain liability coverage. Although some of the coverages vary per policy, many are similar. A thorough understanding of these is necessary. Supplementary payments are paid over and above (in addition to) the policy limits (except as otherwise noted).

1. Defense Costs: Under a liability claim, the insurance company provides for the “insured’s” defense representation. Attorneys are selected based on the interest of the insurance company. Fees classified as defense costs (filing fees, subpoena, court costs and alike) are covered under supplementary payments and are in addition to the policy limits. Payments for lawyer professional liability are excluded.

2. Premium on Appeal Bonds:

In some instances, if improper evidence is allowed to be seen or heard by the jury, or if improper courtroom procedure occurs, an appeal may be granted. If the insurance company wishes to appeal an unfavorable decision, a (surety) APPEAL BOND must be filed as part of the appellate process. The premium cost for this bond is covered.

3. Premium on Release of Attachment Bonds: After an accident involving a vehicle (auto or mobile equipment), the sheriff or highway patrol allow the owner a certain amount of time to have their vehicle towed, unless the vehicle is blocking traffic. After the time allowed by law, or when the presence of the vehicle creates a traffic hazard, the vehicle will be towed and stored (ATTACHED), usually by a company under contract with the municipality. Towing and storage charges must be paid, or the vehicle will-be sold at public auction after a predetermined time. To get the vehicle back, the owner must either pay the towing/storage charges or obtains a (surety) RELEASE OF ATTACHMENT BOND. The premium cost for this bond is covered.

4. Premium on Bail Bonds – Limited To $250 If the operator of a vehicle (auto or mobile equipment) is arrested for causing an accident wherein someone else is hurt (BI) or the property of someone else is damaged (PD), they may be arrested or detained. The premium for the (surety) BAIL BOND is covered but is limited to $250. The insurance company is under no obligation to furnish the bond.

5. Reasonable Expenses Incurred by the Insured If the "insured" must incur travel at attending hearings and trials at the company’s request, reasonable expenses are covered for lodging and other expenses.

6. Insured’s Loss of Income Sometimes the "insured" is not paid a salary or payroll while attending hearings and trials at the company's request. PERSONAL POLICIES (PAP pay UP TO $200 daily. COMMERCIAL POLICIES (BAP, TAP, BOP, CGL, WC) pay UP TO $ 250 daily. As a basic policy condition REQUIRES that the "insured" cooperate with the company, failure to appear at these hearings or trials results in coverage denial. Note that other income that might be lost (commissions) is not covered.


© Reicon Publishing LLC. All Rights Reserved.

23

7. Pre-Judgment Interest

It often takes several years from the occurrence before the civil trial takes place and a judgment is made in favor of the plaintiff. The theory of pre-judgment interest provides for the plaintiff's right to collect interest from a "reasonable time" after the occurrence. Policies address this interest in different manners. Some policies (CGL, CPL & *HOMEOWNER) consider pre-judgment interest as a "Supplementary Payment" while others (PAP, BAP & TAP) consider it, instead as a part of (not in addition to) the Liability limit. Further complicating the scenario is the fact that "real life" and "state Exam" differ as well. Here's how it works: EXAMPLE #1 (AUTO): Insured carries CSL - $100,000. Jury awards full limit plus $30,000 pre-judgment 'interest. Policy limits total payable to $100,000 as pre-judgment is A PART OF AND INCLUDED INSIDE THE LIMIT. EXAMPLE #2 (AUTO): Insured carries CSL - $100,000. Jury awards $50,000 plus $15,000 pre-judgment interest. Company pays full $65,000 as limit exceeds the combination of award plus pre-judgment interest. EXAMPLE #3 (CGL): Same info as Example #1 - $130,000 payable EXAMPLE #4 (CGL): Same info as Example #2 - $ 65,000 payable

*HO SECTION II ("real life"), Homeowner policies written today now consider pre-judgment interest as a part of (included within) the limit, but the state exam has not yet changed to reflect this.

8. Post-Judgment Interest (Interest After Judgments) All policies cover the interest accrued between the time the court judgment is awarded and until the insurance company pays the judgment OVER AND ABOVE THE LIMIT as a Supplementary Payment.

Unit 3: Personal Automobile Property & Casualty Exam Workbook


Personal Auto Policy

Business Use

Coverage

Owned

Private Passenger Car

Covered Except:

1. When used as a taxi

cab

2. When used for delivery

Non-Owned

Private Passenger Car

Covered Except:

1. When used in the auto

business

2. When used as a taxicab


Owned

Pickup or Van

Covered Except:



Non-Owned

Pickup or Van

Covered Except:

4. When used in the auto

business




© Reicon Publishing LLC. All Rights Reserved. Page 25

Owned Auto

at Fault

Non-Owned

Auto at Fault

Non-Owned

Auto NOT

at Fault

Owned Auto

NOT at Fault

Your Part B

Your P.I.P.

P.I.P. Deductible

Your Part B

Owners Part B

Your P.I.P.

P.I.P. Deductible

Your U.M

Sue “At Fault”

Driver and collect

up to their BI limit

Your Part B

Your P.I.P.

P.I.P. Deductible

Your U.M.

Owners U.M.

Sue “At Fault”

Driver and collect

up to their BI limit

Your Part B

Owners Part B

Your P.I.P.

P.I.P. Deductible

Benefits Available to an Insured

for Bodily Injuries

(in order from bottom to top)



AUTO/PIP

WHO’S COVERED UNDER YOUR POLICY

IN FLORIDA OUTSIDE FLORIDA

Named Insured

(Residing Spouse)

1. Any Motor Vehicle

2. Pedestrian

1. Must be in Insured

Vehicle.

2. Resident Relative

vehicle with FLA/PIP

Residing

Relative

1. Any Motor Vehicle

2. Pedestrian

1. Insured Car

All Others

1. In your Motor Vehicle

(not owner of motor vehicle)

or

(not eligible for other’s PIP)

2. FLA Resident Pedestrian

(not owner of motor vehicle)

or

(not eligible for other’s PIP)

NO COVERAGE



Personal Auto Policy (PAP)

Present Coverages on Declarations

Replacement Vehicle for VEH #1 & 2 on

Declarations

Replacement VEH Time Limit on

Coverage

Additional VEH /

(Broadest on Policy)

Temporary substitute

(no time limit)

Non-Owned VEH

VEH #1 VEH #2

VEH #1 VEH #2

VEH #1 VEH #2 VEH #3 Time Limit Temp for

#1 Temp for

#2 Non-Owned

BI

PIP

UM

MEDPAY

BI

PIP

UM

BI

PIP

UM

MEDPAY

BI

PIP

UM

Endorse on to Policy

Endorse on to Policy

BI

PIP

UM

MEDPAY

14 Days

BI

PIP

UM

MEDPAY

BI

PIP

UM

BI

PIP

UM

MEDPAY

COLL

OTC

COLL

OTC

COLL

OTC 14 Days 14 Days

COLL

OTC

Only 4 days if

…

No COLL/OTC on any other

vehicle on the policy

COLL

OTC

COLL

OTC

Collision OTC



Present Coverages The current limits as stated on the current policy declarations page.

Replacement Vehicle The deletion of one vehicle from the current policy to add another vehicle in its place.

Replacement Vehicle Time Limit on Coverage

The maximum number of days (14 days from acquisition) that automatic coverage will apply to a vehicle. If the replacement vehicle is not endorsed onto the policy at the end of this time period, no coverage exists for the replacement vehicle. (PD only)

Additional Vehicle This is a newly acquired vehicle that will be endorsed as an additional vehicle onto the current policy.

Temporary Substitute

A loaner car from a mechanic while your car in being repaired would be an example of a temp substitute. Your insurance policy is primary over any other insurance. The broadest coverage of any covered vehicle on your policy is extended to the temp substitute.

Non-owned Vehicle A rental car would be an example of a non-owned vehicle. The broadest coverage of any vehicle on your policy is extended to the non-owned vehicle.



PIP – Solve the Claim Problems

Multiple Choice 1. Medical: $5,000

Loss of earnings: $5,000 Replacement SVCS: $2,000

a. $10,000 b. $ 9,000 c. $ 8,000 d. None of the above

2. Medical: $10,000 a. $10,000 b. $ 9,000 c. $ 8,000 d. $6,000

3. Death expenses: $5,000 Deductible: $1,000

a. $10,000 b. $ 4,000 c. $ 5,000 d. $ 3,000

4. Medical: $9,000 Death expense: $1,000

a. $10,000 b. $ 9,700 c. $ 9,200 d. $ 12,200

5. Medical: $4,000 Death expenses: $2,500 Deductible: $1,000

a. $ 7,200 b. $ 7,400 c. $ 3,700 d. None of the above



6. Medical: $2,000 Loss of earnings: $1,000 Deductible: $1,000

a. $ 3,000 b. $ 1,200 c. $ 1,000 d. $ 1,400

7. Medical: $ 5,000 Replacement SVCS: $ 4,500 Deductible: $ 1,000

a. $ 9,500 b. $ 7,500 c. $ 7,700 d. $ 5,200

8. Medical: $12,000 Deductible: $ 1,000

a. $10,000 b. $ 9,000 c. $ 8,800 d. $ 8,600

9. Medical: $ 3,000 Loss of earnings: $15,000


10. Medical: $ 1,000 Loss of earnings: $ 3,000 Replacement SVCS: $ 1,000 Death expenses: $ 1,000




11. Death expenses: $ 1,000 Deductible: $ 1,000

a. $ 5,000 b. $ 4,000 c. $ 1,000 d. -0-

12. Medical: $10,000 Replacement SVCS: $ 2,000 Deductible: $ 1,000

a. $12,000 b. $10,000 c. $ 9,200 d. $ 6,400

13. Loss of earnings: $10,000 Replacement SVCS: $ 4,500

a. $10,000 b. $ 9,900 c. $ 7,600 d. $ 7,400

14. Medical: $ 4,000 Death expenses: $ 4,000 Deductible: $ 1,000


15. Medical: $ 6,000 Loss of earnings: $ 5,000 Replacement SVCS: $ 3,000 Deductible: $ 1,000

a. $ 9,000 b. $ 9,800 c. $10,000 d. None of the above



16. Death expenses: $ 7,000 Deductible: $ 1,000

a. $ 7,000 b. $ 6,000 c. $ 5,000 d. $ 4,000

17. Replacement SVCS: $ 1,000 Death expenses: $ 2,000




PIP – Solve the Claim (Answers)

1. B

2. C

3. C

4. D

5. B

6. D

7. C

8. C

9. A

10. B

11. A

12. C

13. A

14. B

15. C

16. C

17. A



Auto Review Quiz-Personal Auto Policy

1. By definition, the Named Insured includes the _____________________________________.

2. Family member includes relatives up to age ______________________________________.

3. Your covered auto includes 4 categories. Name & Describe:

a. ______________________________________________________

b. ______________________________________________________

c. ______________________________________________________

d. ______________________________________________________

4. Define “Bodily Injury”

5. Define “Property Damage”

6. Medical Payments pays for expenses incurred within ____ years from the date of accident. Must legal liability exist for the Company to be required to pay? _______________

7. Assume an auto accident where "B” is at fault. “A" carries $50,000 Liability, $1,000 Med Pay, PIP and $50,000 UM. “B” carries $30,000 Liability and PIP. "A" sues and is awarded $100,000. Show in what order either “A”’s or “B”’s policy will respond.

8. How much UM coverage MUST be offered to all purchasers of Bodily Injury Liability in the State of Florida? _____________________________________________. What 2 options are available under the UM coverage? (Not stacking!)



9. What is “stacking?”

What options can be offered?

10. When your car is being repaired and you rent one while yours is in the shop this replacement vehicle is called a _______________________________________. What coverages apply to it?

11. What 3 uses does the Extended Non-Owned coverage endorsement have?

a. ______________________________________________________

b. ______________________________________________________

c. ______________________________________________________

12. Describe Transportation Expense benefit under Part D.

13. What does the Named Non-Owner coverage endorsement provide?

14. Define "Motor Vehicle” under Fla. No-Fault Law.



15. What 4 benefits are provided in statutory PIP?

a. ______________________________________________________

b. ______________________________________________________

c. ______________________________________________________

d. ______________________________________________________

16. What are the penalties for non-compliance with the No Fault law?

17. What is “Extended PIP?”

18. What is “Additional PIP” and what is required for purchasing it?

19. What are the 4 “thresholds” under PIP?

a. ______________________________________________________

b. ______________________________________________________

c. ______________________________________________________

d. ______________________________________________________



20. Assume “A" purchases PIP with $1,000 deductible and incurs costs as follows:

$7,000 Medical

$5,000 Wage Loss

$2,000 Replacement Services

How much can “A” collect? _______________

21. “A” carries $30,000 Liability, PIP with a $1,000 Deductible, $1,000 Medical Payments and $30,000 UM. “A” causes an accident and injures himself only. There are no other injuries or damage. If his injuries are $30,000 how much can he collect? Be specific.

22. Who is eligible for PIP benefits under the policy?

23. What type of damages can be sued for without "piercing the tort threshold?"

24. When will Florida Financial Responsibility Law be invoked?

25. What must someone do to comply with the Florida Financial Responsibility Law?

26. What is the Cancellation/Non-Renewal requirements under PAP Florida Statue?

27. What deductibles apply to glass breakage of a windshield?

28. What coverages are available under the FJUA for Private Passenger Vehicles (liability)?



29. What coverages are available under the FJUA, for Commercial Vehicles (liability)?



Auto Review Quiz-Personal Auto Policy (Answers)

1. Residing spouse

2. Any age

3. a. Cars on declaration pages b. Newly acquired auto c. Any trailer you own d. Any vehicle or trailer being used as a temporary substitute

4. Physical harm including sickness and disease

5. Physical injury to tangible property (not your property) and/or loss of use

6. 3 years, no

7. “A” wins. “A” receives the following payments:

PIP - $10,000 – A policy

MP - $1,000 – A policy

L - $30,000 – B policy

UM - $50,000 – A policy

8. Amount equal to liability limits 1. Reject 2. Lower limits

9. Coverages on two or more vehicles are added together

1. Reject 2. Lower limits

10. Temporary substitute vehicle; the best you have

11. a. Non-owned autos used in business b. Non-owned autos used to carry persons or property for a fee c. Non-owned autos furnished or available for use on a regular basis

12. $20 per day - $600 maximum

13. Liability, medical payments, uninsured motorist – for those who do not own a vehicle 14. Self-propelled 4-wheel vehicle and designed for use on Florida highways

15. Medical – household services – loss of income – death



16. Loss of tort exemption, owner becomes personally responsible and loss of license and registration

17. 80% increased to 100% medical, 60% increased to 80% for lost income

18. Increase PIP coverage of $10,000 by $10,000, $25,000, $40,000 or $90,000, extended PIP is required

19. a. Significant scaring and disfigurement b. Loss of bodily function c. Permanent injury other than scaring and disfigurement. d. Death

20. $9,800.

21. $10,000 PIP + $1,000 medical pay = $11,000 total

22. Insured, family members and those Florida residents without owned autos

23. Any amount above $10,000 that is an economic loss

24. When there is bodily injury or property damage, when vehicle is rendered inoperative and any serious crime takes place like DUI or felony.

25. Carry at least 10/20/10

26. 45-day notice and 10-day for non-payment if not subject to PIP

27. None

28. 100/300/50

29. 100/300/50



Personal Auto Policy Multiple Choice 1. Which of the following triggers the financial responsibility law?

a. an accident

b. an accident involving BI or PD that renders a vehicle inoperative, certain serious traffic offenses

c. running your car into a building

2. Which are the minimum limits required by Florida

a. 10,000/20,000/10,000

b. 10,000 PIP /10,000 PD

3. Which are the alternate ways to satisfy the FR law?

a. Live outside of Florida and only drive your car in Florida

b. Drive somebody else's car

c. Cash, bond, qualified self-insured

d. Obtain a PIP endorsement

4. What is the purpose of an SR22?

a. Similar to a vehicle title, which shows ownership of a vehicle

b. It is mandatory insurance for ownership of a SUV pulling a trailer

c. Provides proof of financial ability for future accidents

5. What is required for an operator who does not own an auto but needs an SR22? a. Obtain a personal auto policy b. Exercise the death benefit of PIP c. Purchase a Named Non-Owner Policy

6. Violations of the law such as making misstatements, committing forgery, filing false

affidavits are punishable as...? a. Loss of drivers’ license b. 1st degree misdemeanor c. 2nd degree misdemeanor

7. Which of the following entities administers the Financial Responsibility Law?

a. NCCI b. Florida Department of Financial Services c. Florida Department of Highway Safety and Motor Vehicles d. Florida State Police

8. Which coverage is "No Fault"?

a. Bodily Injury/Property Damage b. Personal Injury Protection

9. Which is the definition of a Motor Vehicle?

a. All motorized vehicles both designed and licensed for highway use b. Motorized vehicles with 4 or more wheels both designed and licensed for highway use c. Taxis, limousines, buses, motorcycles, trucks, cars, SUVs



10. Which is most accurate as to how PIP applies to nonresidents? a. They are nonresidents, they don't live here so it doesn't apply b. It only applies if they live here c. It only applies if the vehicle has been here for 90 days out of 365 days

11. What are the penalties for noncompliance?

a. None b. The bank will repossess your car c. Driver’s license and registration are suspended, and you are personally liability for

BI/PD d. 3rd Degree Felony

12. What is the standard PIP deductible?

a. $500 b. $1,000 c. None

13. What is the death benefit payable under PIP?

a. $10,000 b. $2,000 c. $5,000

14. Which of the following do not pierce the tort threshold?

a. Pain and suffering in excess of $1,000,000 b. Significant and permanent loss of a bodily function c. Permanent injury other than scarring and disfigurement

15. What does the tort threshold refer to?

a. The ability to sue an at fault party for economic loss b. The ability to sue when losses exceed $10,000 c. The ability to sue for non-economic loss

16. A personal auto policy may not be issued for what type of risk?

a. An underage male/female without parents’ consent b. Someone with a suspended driver’s license c. A business entity

17. For a newly acquired additional vehicle what is the time limit for reporting to the carrier?

a. 30 days b. 10 days c. 14 days

18. For physical damage on a newly acquired auto, when there is no physical damage on the policy, what is the time limit for reporting? a. Not necessary, coverage is automatic b. 7 days c. 4 days

19. What coverage is provided under Uninsured Motorists? a. Bodily Injury b. BI/PD c. BI/PD Medical Payments



20. To who does UM apply?

a. Named insured only b. Named insured and family members

21. When does UM apply? a. When the accident is hit and run b. When insureds injuries exceed the at fault driver’s liability limits c. All the above

22. What is the minimum single limit of UM available? a. $50,000 b. $20,000

23. What is the minimum split limit of UM available? a. $10,000/20,000/10,000 b. $10,000/20,000

24. How does FL law say UM will be written if no elections are made by the insured? a. Stacked with limits same as BI b. Un-stacked with limits same as BI

25. Which of the following are not UM elections? a. Stacked with limits same as BI b. Un-stacked with limits same as BI c. Stacked with limits above BI

26. What does OTC provide?

a. Collision b. Everything not covered by Collision except exclusions

27. What are the limits for transportation expense?

a. $20 per day/$600 Maximum b. $20 per day/$750 Maximum

28. What are the time limits for transportation expense to begin? a. 24 hours / 48 hours total theft b. 48 hours / 0 hours total theft

29. How are losses paid for physical damage? a. Replacement cost b. ACV or the cost to repair or replace, whichever is less c. RC or the cost to repair or replace, whichever is less

30. What is the dollar limit for a non-owned Trailer? a. $250 b. No coverage c. $1,500



31. What is the policy territory?

a. US, it's territories or possessions, Puerto Rico, Canada, Mexico and while being transported between these ports

b. US, it's territories or possessions, Puerto Rico, Mexico and while being transported between these ports

c. US, it's territories or possessions, Puerto Rico, Canada and while being transported between these ports

32. The Towing and Labor endorsement cover the cost of labor at which location?

a. The place of disablement b. The “insured’s” residence c. An automobile dealership for the make of automobile disabled.

33. Which of the following endorsements cover for Liability/Medical expenses for a non-owned auto furnished or available for regular use, using the vehicle in business, or when carrying persons or property for a fee? a. No endorsement available. Must have business auto policy b. Hired/Non-owned endorsement c. Extended Non-owned endorsement

34. Which endorsement provides, liability, med pay and UM for a named individual who does not own an auto, for the operation of autos of others? a. Hired/Non-Owned Auto endorsement b. Extended Liability Endorsement c. Named Non-Owner Endorsement

35. Which endorsement covers Motor Homes, Motorcycles, and Golf Carts ATVs? a. None. Must purchase a separate policy b. None, Automatic coverage provided in the policy c. Miscellaneous Type Vehicle Endorsement

36. Which endorsement increases PIP from 80% to 100% and work loss from 60% to 80%? a. No such endorsement b. Extended PIP c. Additional PIP

37. Which endorsement increases the Dollar Limit of PIP? a. Cannot be increased. Maximum payable is $10,000 b. Extended c. Additional PIP



Personal Auto Policy Multiple Choice (Answers)

1. B

2. B

3. C

4. C

5. C

6. C

7. C

8. B

9. B

10. C

11. C

12. C

13. C

14. A

15. C

16. C

17. C

18. C

19. A

20. B

21. C

22. B

23. B

24. A

25. C

26. B

27. A

28. A

29. B

30. C

31. C

32. A

33. C

34. C

35. C

36. B

37. C



Automobile Questions Personal Auto Policy

1. Answer “TRUE” or “FALSE” for each of the following statements.

a True False Liability insurance protects only those who are classified as “insureds” in the policy.

b True False Supplementary payments are payable in addition to the policy limits.

c True False The insurer may not settle a liability, claim without the consent of the insured.

d True False The maximum amount payable under supplementary payments is $250.

e True False After policy limits have been exhausted by payment of claims, there is no further duty for the insurer to defend against other claims from the same accident.

f True False If the insured is traveling in a state that requires lower liability limits than those in the insured's policy, the insured's coverage is limited to those required limits.

g True False Generally, if one borrows the automobile of another and is the operator in an accident, the owner's policy provides primary coverage and the borrower's policy is excess.

2. If Martha has liability insurance with 10/20/10 limits, and Susan has a policy with $30,000 single limit, how much would be payable under each policy for the following liability claims in one accident?

a. Two bodily injury claimants - one awarded $15,000, the other, $5,000.

b. Property damage claim only - $12,000.

c. Claim is from one person for $25,000 in bodily injuries and $10,000 property damage.

3. Hal is the named insured under a Personal Auto policy, which includes only Liability and PIP coverages. His wife, Linda, and his son, Hal Jr., reside with him. The only motorized vehicle Hal owns is a Ford which is listed in the declarations.

For each following accident or loss situation, all occurring during the policy period and with no coverage issues other than specified, state "covered" or "not covered" when claim is presented under Hal's policy and, if not covered, explain.

a. Hal traded in the Ford for a Dodge and did not report the change to the agent or company. 45 days after the trade, he injured Joel in an accident. Joel sued Hal.



b. Hal had, for several years, owned a travel trailer. When towing it, it came unhitched and

injured Chris, who sued Hal for his injuries.

c. Hal left the Ford at Gil's Garage for repairs, and Gil rented a car to Hal for use during the repair period. Hal injured Carl in an accident. Carl sued Gil's Garage.

d. In the preceding c. situation, Gil's Garage was road testing Hal's Ford after repairs and had an accident, injuring Donna. She sued Gil's Garage.

e. Hal loaned the Ford to Sid who used it to run an errand for Carol. Sid injured Debra in an accident. Debra sued Carol.

f. Jose loaned his car to Hal Jr. to run an errand for Jose. Hal Jr. injured Sandy in an accident. Sandy sued Jose.

g. Hal Jr., driving Hal's Ford, lost his temper and intentionally rammed into a car owned by Mike. Mike sued Hal for the damage.

h. Hal Jr. found Mary's car parked, with keys left in it, and decided to have a joyride. Hal Jr. injured Dottie in an accident. Dottie sued Hal.

i. Linda was operating a car owned by Hal Jr. and injured Mark in an accident. Mark sued Linda.



4. What part, if any, of the following statement is incorrect:

Auto physical damage insurance, in general, usually covers a vehicle for its actual cash value, is usually issued as two or more separate coverages and subject to a deductible, and applies only when the other party to an accident is at fault.

5. Ivan is the named insured under a Personal Auto policy. Ivan's policy includes Part D with $200 deductible Collision coverage and $100 deductible other than Collision coverage. How much (if any) is payable in the following loss situations, assuming no other insurance is available from any source?

a. Ivan’s Ford was damaged to the extent of $300 when he hit a deer on the highway.

b. Ivan borrowed a friend's travel trailer; while towing it with the Ford, it was struck by another auto and had $800 damage.

c. On a business trip, Ivan rented a Cadillac to make some calls. In a collision, the Cadillac was a total loss. It had an ACV of $18,000 (whereas the ACV of Ivan's Ford was $10,000).

d. Ivan's Ford was stolen on 7/12. He rented a substitute car on the same day at $25 per day. On 7/18 the Ford was found in another state. It was brought back on 7/21 at a cost of $150 and required mechanical repairs at a cost of $400 due to the theft, and was returned to Ivan's use on 7/26.



Uninsured Motorists

6. What are the options available for UM coverage under Florida law?

7. Which (if any) of the following situations would rule out recovery of UM benefits for one who received bodily injuries in an accident?

a. Person injured by a hit-and-run motorist.

b. Person who caused injury had liability insurance with limits higher than the injured person's UM limits.

c. Person injured did not pierce the no-fault tort threshold.

d. Person injured collected both PIP and Medical Payments.

No-Fault

8. For this question assume:

Alice is a resident of Florida, owns an auto, and is insured for PIP.

Bob is a resident of Florida, owns and auto, and is insured for PIP.

Carol is a resident of Florida, owns an auto, has not insured for PIP.

Debbie is a resident of Florida, does not own an auto.

Ed is a resident of another state, in Florida for two weeks with his auto.

For each of the following situations, whose PIP coverage (if any) applies? Assume all the accidents occurred in Florida. Explain each answer.

a. Alice is injured occupying Bob’s auto.

b. Debbie is injured occupying Alice’s auto.

c. Bob is injured as a pedestrian by Carol’s auto.



d. Bob is injured occupying Ed’s auto.

e. Ed is injured occupying Alice’s auto.

f. Ed is injured as a pedestrian by Bob’s auto.

g. Carol is injured as a pedestrian by Bob’s auto.

h. Debbie is riding a bicycle, struck by Bob’s auto.

9. With all the same assumptions as in Question #8, but with the accidents occurring outside of Florida, whose PIP coverage (if any) applies?

a. Alice is injured occupying Bob’s auto.

b. Bob is injured as a pedestrian by Carol’s auto.

c. Debbie is injured occupying Alice’s auto.

d. Bob is injured occupying owned auto.

e. Ed is injured occupying Alice’s auto.



10. Assuming a covered PIP situation, how much would be payable under PIP to an injured

person who incurred economic losses as described?

a. $4,000 in medical bills, $7,000 in lost income.

b. $9,000 in medical bills, $2,500 in funeral expense.

c. $12,000 in medical bills, if insured has PIP with $1,000 deductible.

d. $15,000 in medical bills, if insured has PIP with $1,000 deductible.

11. Refer again to the persons and their vehicles in Question 8. In each following situation, assume the accident occurred in Florida and the injured person was occupying his or her own auto. Could the injured person sue for pain and suffering, assuming the person did not have a permanent injury or otherwise "pierce the threshold?"

a. Alice, driving Carol’s car, injured Bob. Can Bob sue Alice? Can Bob sue Carol?

b. Alice, driving Ed’s car, injured Bob. Can Bob sue Alice? Can Bob sue Ed?

c. Carol, driving Alice’s car, injured Bob. Can Bob sue Alice? Can Bob sue Carol?

d. Alice, driving Bob’s car, injured Ed. Can Ed sue Alice? Can Ed sue Bob?

12. State “true” or “false” for each of the following statements.

a True False Under the Financial Responsibility law, if one did not have liability

insurance in effect at the time of an accident, the law's conditions are satisfied by securing liability insurance and having it certified to the state.

b True False For those who do not comply, the FR law's penalties are suspension

of both driver's license and vehicle registration.

c True False A policy with a liability single limit of $30,000, in effect at the time of

an accident, satisfies FR law requirements.

d True False FR law penalties may apply to both the owner and the operator of

an automobile.

e True False Residents of other states are subject to the FR law when operating

their autos in Florida.

13. What requirements of Florida law are satisfied through purchase of motor vehicle physical damage and mechanical breakdown insurance?



14. Based on typical policy provisions, as described in the text, state the amount payable by the

insurer for each following situation, on a policy issued on a used car when purchased by the insured, containing a $25 deductible clause. If the loss is not fully payable, explain.

a. The transmission broke down 8 months after purchase, with 14,000 miles having been driven since purchase. Repair cost was $350.

b. The car's engine broke down. It had to be towed in (cost $60) repair cost was $275 and required three days, during which the insured rented a car from the repairing dealer at a cost of $20 per day.

c. During a vacation in Mexico, the vehicle's air conditioning system broke down; cost of repairs was $150.

d. The vehicle became inundated in a flood, which required reconditioning of the engine at a cost of $400.

15. After a loss which the insurer agrees is covered, the insurer offers to pay $400. The insured disagrees; believing $600 is payable. Other than having to sue the insurer, is any alternative available to the insured to resolve this difference?

16. If the repair of a covered loss will cost more than the actual value of the vehicle, is the insurer required to pay the repair costs?

17. After issuance of the policy and payment of the premium, the insurer decided it wished to cancel the policy and issued a cancellation notice which the insured received on June 1. What is the earliest date on which coverage terminates?

18. How can an insured counter an insurer's refusal to pay a claim, based on the insurer's belief that the insured has not followed manufacturer recommendations for routine maintenance?



19. What is the effect on policy coverage if?

a. Breakdown occurs during a time when the insured loaned the vehicle to a friend?

b. It is found the insured has set back the odometer?

c. The insured affects repairs without insurer authorization?

20. What does Florida law say about glass breakage deductibles?

a. There is no law

b. Deductibles apply to all glass

c. Deductibles do not apply to windshield glass

21. What is the rental reimbursement provision in Mechanical Breakdown Coverage?

a. It must be endorsed onto the policy

b. $25 per day $75 Maximum

c. $15 per day $75 Maximum

22. What is the policy territory in Mechanical Breakdown Coverage? a. US, its territories or possessions, Puerto Rico, Canada and while being transported

between these points b. US, its territories or possession, Puerto Rico, Canada and Mexico c. US, its territories or possessions, and Canada

23. How may an insured prove he has complied with the provision for proper maintenance of the vehicle? a. By having someone verify they saw him service the auto b. A written statement from a witness c. Receipts for the work done

24. What policy terms are available for Mechanical Breakdown? a. Terms are selected by the insured up to 5 years and 50,000 miles b. 3 years/36,000 miles used and 4 years/48,000 miles new c. 12 months/12,000 miles used and 36 months/36,000 miles new



Automobile Questions (Answers) 1. a. True

b. True c. False – the insurer may settle based on its own judgment. d. False – there is no limit. e. True f. False – the insured’s limits may be raised, but not lowered. g. True

2. a. Martha's - $15,000. Susan's - $20,000. b. Martha's ~ $10,000. Susan's - $12,000. c. Martha's - $20,000. Susan's - $30,000.

3. a. Covered. A replacement auto is a "your covered auto" for liability for the balance of the policy period. b. Covered. "Your- covered auto" includes an owned trailer, without being declared. c. Covered. Gil's Garage is an insured when liable for acts of the named insured arising

from use of a "your covered auto." The rented car is a "your covered auto" because it is a "temporary substitute" for the Ford, being repaired:

d. Not covered. The exclusion denies coverage to those in the business of repairing auto.

e. Covered. Carol is an insured when liable for acts of one using the "your covered auto" with permission.

f. Not covered. The owner of an auto that is not a “your covered auto” is not an insured. g. Covered. The exclusion denies coverage to one who intentionally causes damage, but

it was Hal, Jr., not Hal, who did the intentional act. h. Covered. The exclusion denies coverage to one who uses an auto without permission,

but it was not Hal who used it without permission. i. Covered. The exclusion for autos owned by family members does not apply to the

named Insured.

4. The statement is true except for the last part. Coverage applies without regard to fault.

5. a. $200 is payable. Damage from striking an animal is an Other Than Collision loss, $100 deductible. b. $600 is payable. ACV less $200 deductible applies, but the policy contains a limit 'of

$1,500 for non-owned trailers. c. $17,800 is payable ($200 deductible). Value of the "your covered auto" does not limit

recovery for full ACV of a non-owned auto. d. $710 is payable - ($400 damage and $150 cost to return - $100 deductible) + (13 days

@ $20 per day). Transportation expense reimbursement limited to $20 per day, begins 48 hours after theft, ends when auto returned to insured).

6. UM (stacked or non-stacked) equal to liability, limits, or by election (stacked or non-

stacked) at lower limits, or rejection of the coverage.

7. None of these situations rule out recovery of UM benefits. 8.

a. Alice's PIP - Alice's covers her while occupying any motor vehicle; Bob's PIP excludes other owners.

b. Alice’s PIP – covers occupants who do not own a motor vehicle.



c. Bob’s PIP – covers Bob when not occupying a motor vehicle. d. Bob’s PIP – covers him when occupying any motor vehicle. e. Alice's PIP - covers an occupant who is not responsible for having his or her own PIP. f. No PIP - Bob's PIP covers pedestrian only if he or she is a Florida resident. g. No PIP - Bob's PIP excludes other owners. h. Bob's PIP - Debbie is not responsible for having her own PIP; Bob's covers

pedestrians if they are Florida residents.

9. a. No PIP - Alice's PIP covers her only in own or family member's car outside Florida; Bob's PIP on occupants covers only Bob and family members. b. No PIP – see a. c. No PIP – see a. d. Bob’s PIP – covers out-of-state in own auto. e. No PIP – see a.

10. a. $7,400 ($4,000 x 80% = $3,200) + ($7,000 x 60% = $4,200).

b. $10,200 ($9,000 x 80% = $7,200) + (death benefit - $5,000 always). c. $8,800 ($12,000 - $1,000 = $11,000 x .8 = $8,800) d. $10,000 ($15,000 -$1,000 = $14,000 x .8 = $11,200) subject to $10,000 limit, minus

deductible

11. a. Bob can sue both Alice and Carol – vehicle not in compliance with law. b. Bob can sure both Alice and Ed – Ed’s car not subject to law so is not granted

exemption. c. Bob cannot sue Alice or Carol. Alice's car in compliance with law grants exemption to

both owner and operator. d. Ed can sue both Alice and Bob. Ed cannot get PIP and therefore has full rights.

12. a. False – legal liabilities to others must also be satisfied. b. True c. True d. True e. True

13. None. Florida laws speak only to No-Fault and Liability coverages, neither of which are provided by mechanical breakdown.

14. a. Nothing payable. For used cars, coverage expires after 12,000 miles. b. $295 payable: $275 repair cost less $25 deductible, plus three days rental

reimbursement at $15 per day. Towing cost is excluded. c. Nothing payable. Breakdown was outside of policy territory. d. Nothing payable. Flood is an excluded peril.

15. An arbitration clause in the policy enables resolution of a difference over the amount payable for a covered claim.

16. No. the actual cash value of the vehicle, if less than the cost of repairs, is the maximum responsibility of the insurer.

17. July 15 - 45 days’ notice is required under Florida law.



18. The insured may submit receipts for work done to prove compliance with maintenance recommendations.

19. a. No effect – this is not excluded. b. Coverage denied – this is excluded. c. Coverage denied. A condition requires insurer authorization.

20. C 21. C 22. C 23. C 24. C

Property & Casualty Exam Workbook Unit 4: Homeowners, Dwelling & Related Coverage


UNIT

HOMEOWNERS, DWELLING, AND

RELATED COVERAGES

OVERVIEW

Homeowners is a package policy designed to protect against economic loss to

residences and household personal property, and legal liabilities for injuries and

damage arising from residences and personal activities. The Homeowners program is

designed for the personal, nonbusiness risk, and eligibility is limited.

OBJECTIVES


• Homeowners Insurance

• Section I – Property Coverage

• Section II – Liability Coverage

• General Conditions

• Endorsements

• Rating

• Dwelling Program

• Flood

• Personal Liability

• Inland Marine

• Personal Inland Marine

• Excess Liability / Umbrella

Unit 4: Homeowners, Dwelling & Related Coverage Property & Casualty Exam Workbook


THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.

SCHEDULED PERSONAL PROPERTY ENDORSEMENT (COPY OF PAGE 1 OF HO 04 61)

SCHEDULE

Class of Personal Property

Amount Of Insurance Premium

1. Jewelry, as scheduled below. $ $

2. Furs and garments trimmed with fur or consisting principally of fur, as scheduled below.

$ $

3. Cameras, projection machines, films and related articles of equipment, as listed below.

$ $

4. Musical Instruments and related articles of equipment, as listed below. $ $

You agree not to perform with these instruments for pay unless specifically provided under this policy.

5. Silverware, silver-plated ware, goldware, gold-plated ware and pewterware, but excluding pens, pencils, flasks, smoking implements or jewelry.

$ $

6. Golfer's Equipment, meaning golf clubs, golf clothing and golf equipment.

$ $

7.a. Fine Arts, as scheduled below. This premium is based on your statement that the property insured is located at the following address:

Total Fine Arts Amount

$

at $

at

7.b. For an additional premium, Paragraph 5.b. under C. Perils Insured Against is deleted only for the articles marked with a double asterisk (**) in the Schedule below.

Amount of 7.b. only

$

$

8. Postage Stamps $ $

9. Rare and Current Coins $ $

Article or Property Description Amount of Insurance

$

THE AMOUNTS SHOWN FOR EACH ITEM IN THIS SCHEDULE ARE LIMITED BY THE LOSS SETTLEMENT CONDITION IN PARAGRAPH F.2.

Information required to complete this Schedule, if not shown above, will be shown in the Declarations.

We cover the classes of personal property which are indicated in the Schedule above by an amount of insurance. This coverage is subject to the:

1. Definitions; 2. Section I – Conditions; and 3. Sections I and II – Conditions; in the policy and all provisions of this endorsement. Any deductible stated in this policy does not apply to this coverage.

: HOMEOWNERS POLICY NUMBER

HO 04 62 05 11

HO 04 62 05 11 © Insurance Services Office, Inc., 2010 Page 1 of 1



Coinsurance Test Multiple Choice 1. Replacement Value: ....................................... $80,000 Coinsurance Percentage: ............................... 80% Amount of Insurance Carried: ......................... $64,000 Loss Amount: .................................................. $70,000

a. $56,000 b. $64,000 c. $70,000 d. $80,000

2. Replacement Value: ......................................... $100,000 Coinsurance Percentage: ................................. 100% Amount of Insurance Carried: ........................... $110,000 Loss Amount: ................................................... $10,000

a. $10,000 b. $11,000 c. $100,000 d. $110,000


a. $32,000 b. $30,000 c. $20,000 d. $16,000


a. $22,500 b. $20,000 c. $16,000 d. $90,000



5. Replacement Value: ........................................ $100,000 Coinsurance Percentage: ................................ 80% Amount of Insurance Carried: .......................... $80,000 Loss Amount: .................................................. $20,000 a. $20,000 b. $16,000 c. $10,000 d. $8,000

6. Replacement Value: ........................................ $100,000 Coinsurance Percentage: ................................. 80% Amount of Insurance Carried: .......................... $60,000 Loss Amount: .................................................. $20,000 a. $20,000 b. $16,000 c. $15,000 d. $10,000

7. Replacement Value: ........................................ $100,000 Coinsurance Percentage: ................................ 80% Amount of Insurance Carried: .......................... $105,000 Loss Amount: .................................................. $100,000 a. $ 80,000 b. $100,000 c. $102,500 d. $105,000

8. Replacement Value: ........................................ $250,000 Coinsurance Percentage: ................................ 80% Amount of Insurance Carried: ......................... $100,000 Loss Amount: .................................................. $50,000 a. $100,000 b. $ 50,000 c. $ 40,000 d. $ 25,000



Coinsurance Test Multiple Choice (Answers)

1. B Not going to pay more than the limit.

2. A pays loss in full

3. C valued policy law – pay policy limit

4. B loss paid in full

5. A loss paid in full

6. C 20,000 x 60,000

100,000 x .80

20,000 x 3/4 = 15,000

7. D valued policy law – pays loss in full

8. D 50,000 x 100,000

250,000 x .80

50,000 x 1/2= 25,000



Homeowners (Perils)

FORM PERILS INSURED AGAINST

BASIC HO8

FIRE, LIGHTNING, EXPLOSION, RIOT/CIVIL COMMOTION, SMOKE, VANDALISM, WINDSTORM & HAIL, DAMAGE CAUSED BY AIRCRAFT OR VEHICLE, VOLCANIC ACTION, CATASTROPHIC GROUND COLLAPSE AND THEFT ($1,000 LIMIT ON THEFT – PREMISES ONLY) NO COVERAGE FOR: WATER DAMAGE (EXCEPT AUTOMATIC FIRE SPRINKLER SYSTEM), COLLAPSE (EXCEPT FOR SPRINKLER SYSTEM’S TANK), GLASS BREAKAGE ($100 FOR ALL GLASS IN ANY ONE LOSS), FALLING OBJECTS, WEIGHT OF ICE, SLEET OR SNOW.

BROAD HO2 HO4 HO6

SAME AS BASIC, PLUS: WATER DAMAGE, GLASS BREAKAGE, FALLING OBJECTS, COLLAPSE, WEIGHT OF ICE, SLEET, SNOW AND THEFT, ARTIFICALLY GENERATED CURRENT, AND BURGLAR DAMAGE

SPECIAL (STRUCTURE ONLY) HO3

OPEN PERIL – COVERS FOR ALL RISKS OF DIRECT PHYSICAL LOSSES, UNLESS EXCLUDED OR LIMITED. EXAMPLES OF COVERED PERILS: SPILLAGE, SONIC SHOCK WAVES FROM AIRCRAFT, ACCIDENTAL BREAKAGE, DAMAGE BY ANIMALS NOT OWNED OR KEPT BY THE INSURED, INTERIOR DAMAGE FROM RAIN (WINDSTORM) WITHOUT EXTERIOR DAMAGE.

HO5

OPEN PERILS OPEN PERIL FOR STRUCTURE & CONTENTS (UNLESS LIMITED OR EXCLUDED).

Open Peril / All Risk = Included unless limited or excluded



Dwelling Properties (Perils)

CAUSES OF LOSS FORM PERILS INSURED AGAINST

BASIC DP1

FIRE, LIGHTNING, INTERNAL EXPLOSION, RIOT/CIVIL COMMOTION SMOKE, VANDALISM & MALICIOUS MISCHEIF, WINDSTORM & HAIL, DAMAGE CAUSED BY AIRCRAFT OR VEHICLE, VOLCANIC ACTION AND CATASTROPHIC GROUND COLLAPSE. NO COVERAGE FOR: WATER DAMAGE (EXCEPT AUTOMATIC FIRE SPRINKLER SYSTEM), COLLAPSE (EXCEPT FOR SPRINKLER SYSTEM’S TANK), GLASS BREAKAGE, FALLING OBJECTS, WEIGHT OF ICE, SLEET OR SNOW, BUILDING ORDINANCE. TREE, SHRUBS, AND PLANTS

BROAD DP2

SAME AS BASIC, PLUS: INTERNAL EXPLOSION CHANGED TO EXPLOSION. WATER DAMAGE, GLASS BREAKAGE, FALLING OBJECTS, COLLAPSE, WEIGHT OF ICE, SLEET OR SNOW, BURGLAR DAMAGE, BUILDING ORDINANCE (10% COVERAGE A), ARTIFICALLY GENERATED CURRENT; UNLESS TENANT THAN 10% OF B

SPECIAL

(STRUCTURE ONLY)

DP3

OPEN PERILS – COVERS FOR ALL RISKS OF DIRECT PHYSICAL LOSSES, UNLESS EXCLUDED OR LIMITED. EXAMPLES OF COVERED PERILS: THEFT, SPILLAGE, SONIC SHOCK WAVES FROM AIRCRAFT, ACCIDENTAL BREAKAGE, DAMAGE BY ANIMALS NOT OWNED OR KEPT BY THE INSURED, INTERIOR DAMAGE FROM RAIN (WINDSTORM) WITHOUT EXTERIOR DAMAGE, BUILDING ORDINANCE

Open Peril / All Risk = Included unless limited or excluded



Perils Covered

DP1 DP2 DP3

Fire or Fire & EC or Fire & EC & VMM

Broad Form Special Form

Amount of Coverage “A” (Dwelling is selected)

$30,000 $30,000 $30,000 Special form

applies

Automatic Coverage “B” may be needed

10% of “A” ($3,000) NOT an additional

amount of coverage

10% of “A” provided as an additional amount of

coverage ← Same Special form

Additional Coverage “B” may be needed

If “A” is total loss nothing is left for “B”

Amount over the 10% of “A” if value of “B” is

greater ← Same

Automatic Coverage “C” may be needed

None-limit must be selected, and perils selected as above

Non-limit must be selected – Broad form

applies ← Same Broad form

Automatic Coverage “D” (Fair Rental Value)

20% of “A” ($3,000) not an additional amount of coverage limited to 1/12

monthly

20% of “A” provided as an additional amount of coverage. Applies to the combination of “D” and “E” additional amounts

available. 1/12 limit does not apply

← Same Special form

Automatic Coverage “E” (additional living expense)

None, but may be added by endorsement

Loss Settlement ACV Only RC on “A” & “B” ACV

on “C” ← Same



COVERAGE DP1 DP2 & DP3 HO2, HO3,

HO5 HO4 HO6 HO8

“A” Dwelling $30,000 $30,000 $30,000 $5,000 $30,000

“B” Other Structure 10% of “A”

$3,000 Not Additional

$3,000 Additional

$3,000 Additional

(included in definition of Coverage A)

$3,000 Additional

“C” Pers. Property HO – Automatic 50% of “A” DP: Not Automatic

Selected Amount 10% of C=I & B

Not Additional

Selected Amount 10% of C=I & B

Additional

50% of “A” $15,000

Additional

Renter (Tenant) $15,000

Condo or Co-op Apt

Dweller $15,000

50% of “A” $15,000

Additional

DP: “D” Fair Rental Value

$6,000 Not Additional 1/12

monthly $6,000

Additional Included above

DP: “E” Additional Living Expense

Not Automatic

HO: “D” Loss of Use

30% of “A”

$9,000 Additional

30% of “C” $4,500 Additional

50% of “C” $7,500

Additional

10% of “A” $3,000

Additional

MAXIMUM TOTAL LOSS PAYABLE

$30,000 $39,000 $57,000 $19,500 $27,500 $51,000



OTHER DIFFERENCES COMPARED

COVERAGE DP1 DP2 & DP3 HO2 & HO3

HO5 HO4 HO6 HO8

Debris Removal Included

in “A” 5% of “A” Additional

5% of “A” Additional

5% of “C” Additional

5% of “C” Additional


Property Removal 5 Days 30 Days 30 Days 30 Days 30 Days 30 Days

Trees-Shrubs-Plants Lawns: Limited Perils: $500 per plant

Not included



N/A N/A 5% of “A” Additional

Fire Department Charge NO DEDUCTIBLE APPLIES

$500 Additional

$500 Additional

$500 Additional

$500 Additional

$500 Additional

$500 Additional

Loss Settlement: “A & B” ACV RC ACV N/A HO6 ACV RC

Loss Settlement: “C” ACV ACV ACV ACV ACV ACV

Loss Assessment Not

included Not

included $1000 Excluded $2,000 N/A

Building Glass Breakage Not

included Included Included N/A Included

Included up to $100



HOMEOWNER POLICY (CAUSES OF LOSS) PERILS

IMPORTANT!! ALL HOMEOWNERS POLICIES COVER

FORM HO2 HO3 HO4 HO6 HO8

DWELLING “A”

BROAD

FIRE+EC+VMM+

BIG FAT BOATS

SPECIAL

FIRE+EC+VMM+

BIG FAT BOATS

N/A

BROAD

FIRE+EC+VMM+

BIG FAT BOATS

LIMITED

FIRE+EC+

VMM+TB

OTHER STRUCTURES “B”

BROAD SPECIAL N/A N/A LIMITED

PERSONAL

PROPERTY “C” BROAD BROAD BROAD BROAD LIMITED

LOSS OF USE “D” BROAD SPECIAL BROAD BROAD LIMITED

HO POLICIES ARE VERY SIMILAR!

ALL HO2,4 6 Coverage A-D Perils & HO3 Coverage C Perils are the same!

FIRE + EC+ VMM + BIG FAT BOATS (The “T” is for Theft)

HO-3 “Special” Perils – Apply to Coverages A + B+ D FIRE + EC + VMM + BIG FAT BOATS +

PLUS, ALL OTHER PERILS NOT EXCLUDED

HO8 IS SIMILAR TO DP1 BUT INCLUDES FIRE + EC + VMM + TB

T – Theft (Limited to $1,000 on premises only) & B – Breakage of Glass (Limited to $100)



How to Insure a Duplex

(Duplex = two family dwelling = twin Home)

The example applies when each side is owned separately

A duplex has a separate entrances and addresses

One Policy for $100,000 Issued as Shown Below

EXTENDED

COVERAGES BIG FAT BOATS BIG FAT BOATS + on A-B-D

W Windstorm B Burglary damage (no theft) Direct Risk of Physical Loss

C Civil Commotion I Ice, snow, sleet (weight of) Covers all perils not excluded

G Glass Breakage

EXAMPLES INCLUDE:

Theft of part of dwelling – AC

Accidental discharge of firearms

Spillage

Scorching with no fire

Water damage to interior of the dwelling without break to exterior

S Smoke F Freezing of plumbing, heating, AC system

H Hail A Artificially generated electric current

A Aircraft T Tearing apart of heating, hot water, AC

V Vehicles B Building collapse

E Explosion (external) O Objects falling on property

R Riot A Accidental discharge from appliances

T Theft

Ṽ Volcanic Explosion S Sprinkler leakage Coverage C: BIG FAT BOATS



COVERAGE A

Dwelling COVERAGE B

Other Structures COVERAGE C

Contents* COVERAGE D Loss of Use

HO2

Named Perils

Broad Form Select Limit

RC

Broad Form 10% of

Coverage A RC

Broad Form 50% of

Coverage A ACV

Broad Form 30% of

Coverage A + Theft

HO3 Open Perils

Special Form Select Limit

RC

Special Form 10% of

Coverage A RC

Broad Form 50% of

Coverage A ACV

Special Form 30% of

Coverage A + Theft

HO4 Named Perils

N/A N/A Broad Form Select Limit

ACV

Broad Form 30% of

Coverage C + Theft

HO5 Open Perils

Open Perils Select Limit

RC

Open Perils 10% of

Coverage A RC

Open Perils 50% of

Coverage A ACV

Open Perils 30% of

Coverage A + Theft

HO6 Named Perils

Broad Form Limit $5,000

ACV Can endorse with

special form & RC

Included in definition of Coverage A

Broad Form Select Limit

ACV

Broad Form 50% of

Coverage C + Theft

HO8 Limited Named Perils

Modified Form Select Limit

RC

Modified Form 10% of

Coverage A RC


Coverage A ACV


Coverage A

+ Theft (On- Premises Only)

$1,000

RC = Replacement Cost

ACV = Actual Cash Value = (Replacement Cost – Depreciation)



Per Occurrence Limits Endorsements Increased

Limits

1 Property of insured anywhere away from the main dwelling 10% of Coverage C, not less

than $1,000 Any amount

2 Loss of money, regardless of sizes of claim: fire or theft $200 $1,000

3 Securities: stocks and bonds $1,500 $2,000

4 Watercraft, including trailers, accessories and equipment $1,500 N/A

5 Trailers not used for watercraft $1,500 N/A

6 Theft of: loss of jewelry, watches, fur, precious and semiprecious stones

$1,500 $5,000 ($1,000 limit per item

limit)

7 Theft of: Silverware, Goldware, Pewterware $2,500 $10,000

8 Theft of: Firearms $2,500 $6,500

9 Business property on premises: Business property away from residence

$2,500 $500

$10,000 N/A

10

Portable Electronic Equipment (1) Electronic Apparatus (cell phones, radios, etc.) in a motorized vehicle (2) Apparatus is equipped to operate from a power source other than vehicles

$1,500 $6,000

11

Media (1) (1) Used with electronic equipment that reproduces,

receives, or transmits audio, visual, or data signals (2) (2) In or upon a motor vehicle

$250 N/A

Coverage B is set at 10% of Coverage A – Cannot increase or decrease. Additional Coverage is acquired through endorsements



Excluded Watercrafts – HO Liability

INBOARD MOTORS OWNED BY INSURED RENTED TO INSURED OVER 50 HP

SAILBOATS OWNED OR RENTED TO INSURED 26’ OR MORE

OUTBOARD MOTORS OWNED BY INSURED AT INCEPTION OVER 25 HP (COVERED IF ACQUIRED DURING POLICY PERIOD)

JET SKIS OWNED OR RENTED EXLCUDED

Covered Watercrafts

BORROWED WATERCRAFTS STORED WATERCRAFTS



Dwelling Test

1. Under the dwelling policy, which causes of loss form would cover "cargo falling from an

aircraft”?

2. Under the dwelling policy, which causes of loss form would cover "water damage"?

3. An insured with a house insured for $60,000 rents to a tenant at $400 per month. Under the DP1, if the house burns down and is a total loss, how much will be paid for the Fair Rental Value (Coverage D) if dwelling is uninhabitable for 2 months?

4. Same info as #3, except, it is a DP3.



5. If the insured has a dwelling policy (DP2), and accidentally spills a can of paint on the

carpeting, would this loss be covered?

6. Under dwelling policy DP3. What limit applies to Coverage C?

7. If the insured has a dwelling policy (DP3) insured for $80,000 and valued at $80,000. How much will be paid for a $50,000 loss resulting from flood damage?



Dwelling Test (Answers)

1. Broad and Special forms.

2. Broad and Special forms.

3. Nothing payable.

4. 20% applies to rental value and additional living expense. No monthly limit, therefore $800.

5. No.

6. Selected amount

7. Flood is excluded, therefore $0 is paid.



Marine: Inland Questions 1. Define a controlled line (not examples):

2. Define an uncontrolled line:

3. The policy territory for PAF is _______________________ 4. Define All Risk Coverage. 5. Define inherent vice: 6. Is inherent vice covered or excluded? 7. Define the special condition of “pairs, sets & parts:”

What are the company’s obligations under this condition?

8. To which class under PAF does the pairs, sets & parts clause not apply? 9. What is the standard deductible under the PF?

10. Give 5 examples of eligible property under the jewelry class:



11. What is the automatic coverage applicable to jewelry if any? 12. Must each item under the jewelry class be scheduled? 13. Is blanketing of items permitted under the jewelry class?

If so, give an example:

14. Give 3 examples of eligible property under the furs class? 15. What is the automatic coverage applicable to furs if any? 16. Must each item under the fur class be scheduled? 17. Is blanketing of items permitted under the furs class?


18. Give 4 examples of eligible property under the cameras class:



19. What is the automatic coverage applicable to cameras if any? 20. Must each item under the cameras class be scheduled? 21. Is blanketing of items permitted under the cameras class? If so, give an example: 22. What is the automatic coverage applicable to musical instruments if any? 23. Must each item under the musical instrument class be scheduled? 24. Is blanketing of items permitted under the musical instruments class?


25. Additional exclusions apply to one type of musical instrument.

Name that type _______________. What are the exclusions? What are the exceptions to the exclusion?



26. What types of property may be covered under the silverware class? 27. Is blanketing of items permitted under the silverware class? 28. What is the automatic coverage applicable to silverware if any? 29. Must each item under the silverware class be scheduled? 30. What type of property is included for golfer’s equipment? 31. What coverage are provided for golf balls? 32. Name at least 7 items that would be covered under the fine arts class: 33. What automatic coverages, if any, apply to fine arts? 34. How is breakage handled under fine arts?



35. How does the pairs/sets and parts clause apply to fine arts? 36. How is a loss settled when part of a set is lost or destroyed?

Under the fine arts class?

37. Under fine arts if an item is scheduled with a value of $10,000 but can be repaired for $5,000 and has an ACV of $4,000, how much will be paid assuming a covered loss occurs?

38. What is the maximum coverage provided for a coin collection that has unscheduled blanket coverage?

39. What is the maximum coverage provided for one strip of stamps in a collection that has unscheduled blanket coverage?

40. Identify at least 5 additional exclusions applicable to stamp or coin collections:



Marine: Inland (Answers)

1. One wherein a standard provision form is promulgated by the Bureau and filed for individual use.

2. One wherein the individual company may use its own form and vary it for the individual risk.

3. Worldwide 4. All risks of direct physical loss except as excluded or limited 5. A quality within an object that tends to have the ability to destroy itself 6. Excluded 7. Company may elect to repair or replace, restore to original value, pay the difference

between ACV before and after the loss, responsibility is only for parts lost or damaged 8. Fine Arts 9. None

10. Articles of personal adornment, pens, flasks, smoking equipment, trophies 11. 25% of the amount provided for jewelry maximum 30 days and $10,000 12. Yes 13. No, individually scheduled / specific limit on each item 14. Garments, real or imitation fur, rugs 15. 25% of present amount $10,000 max in 30 days 16. Yes 17. for an ensemble, hat, coat, muff 18. Personal photographic equipment, binoculars, telescopes, microscopes 19. 25% of amount for cameras, 30 days $10,000 maximum 20. Yes 21. Lower valued equipment and misc. items, i.e. camera bag, film, filters, etc. 22. 25% of amount for musical instruments 30 days, $10,000 maximum 23. Yes 24. Yes, instruments, case, reeds, mouthpieces, straps, sheet music, accessories 25. Non-mobile organs, mechanical or electrical breakdown or failure, repairing, adjusting

servicing or maintenance. Exceptions are fire or explosion resulting from fire. 26. Silverware, silver plated ware, gold ware, gold plated ware, pewter ware 27. Yes 28. None 29. No 30. Golf clubs, equipment, clothing, balls 31. Fire or burglary in a building, room or locker with evidence of forcible entry 32. Rugs, antiques, bric-a-brac, paintings, statues, private collections of tapestries or

porcelains 33. 90 days, 25% of total amounts, ACV only 34. Excluded but can be endorsed 35. Does not apply 36. Company pays full scheduled amount and insured surrenders article of set to company 37. $10,000 38. $1,000 39. $250. 40. Fading, transfer of colors, being handled or worked on, disappearance of individual items,

unattended autos, theft, property not part of the collection.



Inland Marine Test

1. What is a “controlled” line of coverage?

2. What is the principle inland marine specific personal coverage forms?

3. What is the difference in coverage between writing personal inland marine on a homeowners’ form versus a stand along policy?

4. The personal coverage form is written on which basis, basic, broad or all risk?

5. What does “inherent vice” mean?

6. What is the territory for the PAF?

7. How is loss valued under the PAF?



8. What are the pairs, set and part condition under the PAF?

9. What does the definition of Jewelry include?

10. What is the automatic coverage provision?

11. What does the definition of Furs include?

12. What does the definition of Cameras include?

13. How is professional use covered under Musical Instruments?



14. What is the additional exclusion for organs that are not mobile?

15. How are golf balls covered under Golfers Equipment?

16. How is loss valued under Fine Arts?

17. What is the automatic coverage provision for Fine Arts?

18. How does coverage apply to Fine Arts on exhibition away from the premises?

19. How does the pair’s sets and parts provision apply to Fine Arts?



20. What do Postage Stamps include?

21. What does Rate and Current Coins include?

22. When coverage is blanket, what is the limitation for unscheduled coin collections, any one stamp, coin or individual article or one pair, strip, block, series sheet, cover, frame or card?



Inland Marine Test (Answers)

1. Classes of I/M coverage for which standardized forms have been prepared. 2. Cameras, fine arts, golfer’s equipment, jewelry and furs, musical instruments, stamp and

coin collections, silverware. 3. None 4. Scheduled personal property – all risk 5. A quality within an object that results in the object tending damage or destroying itself. 6. Worldwide 7. Lesser of ACV or cost to repair or replace or the limit for specified coverage. 8. If there is a loss to a pair or set, the company may elect to repair or replace in a way to

restore it to original value, or pay the difference between before and after the loss. 9. Articles of personal adornment containing precious metals, whether or not containing

jewels, pearls or semi-precious stones. Also pens, flasks, smoking equipment, trophies and similar items may be insured as jewelry.

10. 30 days – 25% of value – max $10,000 11. Genuine or imitation, or trimmed in fur and fur rugs. 12. All types of personal photographic equipment such as binoculars, telescopes and

microscopes. 13. Requires an endorsement. 14. Mechanical or electrical breakdown or failure and loss caused by repairing, adjusting,

servicing or maintenance except for resultant damage from a fire or explosion. 15. Fire or burglary by forcible entry into a building, room or locker. 16. Valued coverage applies automatically. 17. 90 days – 25% of limit for ACV max 18. No coverage 19. Basic policy condition does not apply – agreement is for company to pay for the full

scheduled amount on the pair or set, and for the insured to surrender the remaining articles of the set to the company.

20. Due, envelope, official, revenue, match, and medical stamps; covers locals, reprints, essays, proofs and other philatelic property; books, pages and mountings of such items.

21. Medals, paper money, book notes; tokens of money and other numismatic property; coin albums, containers, frames, cards, display cabinets in use with the collection.

22. Policy limits recovery to $1,000 for any unscheduled coin collection and $250 for any one stamp, coin or individual article or any due pair, strip, block, series sheet, cover, frame or card.



Automatic Coverage for Newly Acquired Property

Class Days Percentage of

present amount Maximum Territory

Pairs and Sets

Scheduling Valuation

Jewelry 30 25 $10,000 Worldwide Yes Required Lesser of: scheduled

amount, repair, replace, or ACV

Furs 30 25 $10,000 Worldwide Yes Required (ensemble) Lesser of

Cameras 30 25 $10,000 Worldwide Yes Schedule or blanket

(misc.) Lesser of

Musical Instruments

30 25 $10,000 Worldwide Yes Schedule or blanket

(misc.) Lesser of

Silverware N/A N/A N/A Worldwide Yes Schedule or blanket Lesser of

Golfer’s Equipment

N/A N/A N/A Worldwide Yes Blanket Lesser of

Fine Arts 90 25 No limit but ACV

Worldwide NO Schedule or blanket Policy limit scheduled

Stamps & Coins

N/A N/A N/A Worldwide Yes Schedule or blanket

Lesser of: (if scheduled) $1,000 max: (if blanket)



Homeowners Coverage Questions 1. What are the program eligibility requirements for the Homeowners program?

2. What incidental non-dwelling occupancy is allowed?

3. What types of occupancies are specifically excluded under the Homeowners?

4. How is a dwelling under constructed treated under the Homeowners?

5. Who are considered insureds under a Homeowners.?



6. What is the standard deductible under the Homeowners for all other perils - hurricane?

7. What is the definition of dwelling in Coverage A?

8. What is coverage a under the HO6?

9. What is the territory limitation under Coverage C-Personal Property?

10. How are animals, birds or fish covered under Coverage C?



11. Under the HO6 what is the basic limit for Coverage A?

12. What is the limit for money, precious metals & medals under Homeowners?

13. What is the limit for securities?

14. What is the limit for watercraft, trailers, accessories, etc.?

15. What is the limit for theft of silverware, goldware, and pewterware?

16. What is the limit for theft of firearms?

17. Under additional coverages what is the limit for debris removal?

18. What is the limit for fire department service charges?



19. What is the limit for unauthorized use of credit cards, forgery, and counterfeit money?

20. What is the limitation for building ordinances or laws? 21. What are the named perils under HO2?

22. Under the HO8 what is the limitation for theft? 23. Under conditions, which properties are ACV in lieu of RC? 24. Under Section II (Liability) what is the covered territory? 25. Under Section II what are the allowed business pursuits that will be covered?



26. Under Section II how are golf carts covered? 27. What are the supplementary coverages under Section II? 28. What is the limit for vicarious parental liability? 29. What is the cancellation/non-renewal provision?

30. What is inflation guard endorsement?

31. What are the increased limits available on?

a. money d. silverware, etc.

b. securities e. firearms

c. jewelry/furs f. electronic apparatus



Homeowners Coverage Questions (Answers) 1. Owner -occupant of 1 – 4 family dwelling, renter who maintains residential occupancy in any

type of building, condo unit owners and coop apartment occupants.

2. Office, studio, professional

3. Commercial (business pursuits) and if insured does not live there.

4. Covered

5. Named insured, residing spouse, residing relatives of either, any person under 21 in the care of any such person.

6. $500 for all perils other than hurricane. Hurricane minimum: $500.

7. Dwelling, building and structures attached; also, construction materials and supplies on or adjacent to the premises.

8. Unit owners form

9. No limitation

10. Excluded

11. $5,000

12. $ 200

13. $1,500

14. $1,500

15. $2,500

16. $2,500

17. Up to 5% of Coverage A limit

18. $500

19. $500

20. 10% of Coverage A

21. Basic perils plus water damage, collapse, glass breakage, falling objects, weight of ice sleet or snow, artificially generated current.

22. On premises only $1,000

23. Section I losses – Coverages under A & B may receive R/C if limit of insurance at least 80% of R/C.

24. Worldwide

25. Activities which are usual to non-business pursuits, occasional rental of dwelling to others as a residence, partial rental of residence, use in part as office, studio, school or private garage.

26. On insured location, while on a golfing facility being used for golf or other permitted activity and within a private residential community which contains the insured’s residence as long as community has authority over roadways and has authorized use of golf carts on the roads.

27. Claims expense, cost of defense, lawyers, premium on appeal bonds, interests on judgments, bail bonds, etc.

28. $10,000



29. Cancellation - 100 days advance written notice, 10 days non-payment of premium, 20 days during the first 90 days. Non-renewal – 100 days advance written notice, 45-day notice of renewal premium in writing with a reason.

30. Species a percentage by which the limit for each Section I coverage will increase annually, pro-rated through the year.

31. a. Money - $200 to $1,000

b. Securities - $1,500 to $2,000

c. Jewelry/furs - $1,500 to $5,000

d. Silverware etc. - $2,500 to $10,000

e. Firearms - $2,500 to $6,500

f. Electronic apparatus - $1,500 to $6,000



H.O. Dwelling & Related Concepts

Section I H.O. Property Coverage Questions

1. Assuming loss from a covered peril, which of the following would be covered property

under a HO3 with no coverage options applying? State "covered" or "not covered" for each.

a. A garage apartment on the residence premises, half used by insured for private garage, half rented to a tenant. __________________________

b. Table and chairs borrowed from a neighbor for a party. __________________________

c. Insured’s luggage, while on vacation in Europe. __________________________

d. Insured's furniture, located in a residence owned by insured in Mexico, while insured is residing there. _________________________

e. Insured's furniture, located in a residence owned by insured in Mexico, at a time when insured is not residing there. __________________________

f. Property of the insured's guest, located in a residence owned by the insured in Mexico, while the insured is residing there. __________________________

g. A personal computer owned by the insured’s employer and located in the insured’s residence. __________________________

h. A “go-cart” used only on the insured’s premises for recreational purposes by the insured’s child. _________________________



Section II

H.O. Liability Coverage Questions 2. Under a basic Homeowners policy with no optional endorsements, state "covered" or "not

covered" under Section II as to each following occurrence, and explain.

a. The insured rented a vacation cottage and negligently caused it to be damaged by fire. The owner of the cottage sued the insured for the damage.

b. The insured's son while playing golf, fell out of golf cart owned by insured and was injured. Insured presented claim under Medical Payments for resultant medical bills.

c. The claimant was injured by a boat, powered by an outboard motor while being operated by insured, and:

i. The outboard was 75HP and was borrowed from its owner.

ii. The outboard was 75HP and was purchased six months ago, during the term of the HO policy, by the insured.

iii. The outboard was 25HP and had been owned for several years by the insured.

d. The insured borrowed a portable TV from a neighbor and dropped it while carrying it back to his house. The TV was damaged, but the neighbor did not make any liability claim against the insured.

e. The insured was sued by a guest injured in a hotel ballroom which insured had rented for his daughter's wedding reception.

f. The insured borrowed a neighbor's lawn mower. Through the insured's carelessness with gasoline, a fire occurred, damaging the mower.



H.O. Optional Coverages Questions 3. For each of the following situations, state: (1) “covered" if an HO3 covers without any

amendments, or (2) "endorsement needed" if the situation could be resolved with an optional coverage endorsement (and describe the option), or (3) "can't cover under HO" if the basic HO-3 does not cover and there is no available HO optional coverage endorsement.

a. The insured, going on vacation in Europe, is carrying personal property with a value that exceeds. 10% of the policy Coverage C limit.

b. The insured is going to borrow a friend’s 30-foot sailboat.

c. The insured's private garage is valued at more than 10% of the amount of insurance on the main dwelling.

d. The insured needs property protection for a dwelling located in another part of town, which the insured rents to others.

e. The insured is a schoolteacher and wishes to be covered if sued by a student or another person while performing occupational duties.

f. The insured wants to be sure the dwelling is covered for 100% of its replacement value throughout the policy term.

g. The insured has purchased a large tract of vacant land as an investment and wants to be covered for liability in case someone walking on the property is injured.



Causes of Loss Forms Questions 4. Under the Basic form, what limitations of coverage (if any) apply as to each of the

following:

a. Insured property struck by a motor vehicle.

b. In a windstorm, interior of building damaged by rain.

c. Smoke damage caused by an accidental fire in adjoining building.

d. Damage resulting from power loss, caused by lightning damage to facilities providing electrical power.

5. State the most limited Causes of Loss form (Basic, Broad or Special) needed to cover each of the following occurrences, or state "None" if the occurrence would not be covered by any of these forms.

a. Loss from looting in connection with a riot. __________________________

b. Theft of personal property. __________________________

c. Smog. __________________________

d. Damage to building roof caused by falling tree which fell due to rot. _________________

e. Sonic shock wave from aircraft. __________________________

f. Accidental spill of paint on carpet. __________________________

g. Fire caused by earthquake rupturing gas line. __________________________

h. Floor collapse from weight of personal property placed thereon. ___________________



Dwelling and Theft Questions Each of the following questions is based on an insured having the following coverages:

Dwelling policy - Coverage A - $30,000

Coverage B - $ 5,000

Coverage C - $ 10,000

6. The insured's coverage form is Basic form DP1 with "'Fire and EC." A windstorm caused damage to the insured's roof valued at $3,500. It was found the insured had later purchased another policy which was in effect on the dwelling with Form DP1, covering for "Fire" only, with Coverage “A” limit of $10,000. How much is payable under the insured's first policy? __________________________

7. Burglars broke into the insured's residence and stole $2,500 worth of jewelry, a TV set worth $300; and caused damage valued at $400 to various items of personal property. The "insured has Broad form DP2 with the Broad Theft coverage added. How much, if any, payable? __________________________

8. Assuming loss from a covered peril, which of the following would be covered property under a Form DP2 or DP3 with no coverage options applying? State "covered" or "not covered" for each.

a. A garage apartment on the residence premises, half used by insured for private garage, half rented to a tenant

b. Table and chairs borrowed from a neighbor for a party.

c. Insured’s luggage, while on vacation in Europe.

d. Insured's furniture, located in a residence owned by insured in Mexico, while insured is residing there.

e. Insured's furniture, located in a residence owned by insured in Mexico, at a time when insured is not residing there.

f. Property of insured's guest, located in a residence owned by insured in, Mexico, while insured is residing there.

g. Personal computer owned by insured’s employer, located in insured’s residence.

h. A "go-cart" used only on insured's premises for recreational purposes by insured's child.



9. The insured has a DP3, no endorsements, with the following limits: A - $70,000, B -

$7,000, C - $35,000, D - $14,000. The policy has a $500 deductible. State the amount payable (if any) in each following loss, and explain.

a. In a fire, the insured's fur coat valued at $2,000 was destroyed.

b. Due to a flood, the insured had to move out of the residence for two weeks, and incurred $600 in additional living expenses.

c. A vacation residence in North Carolina owned by the insured burned down. All the furniture, with an ACV of $5,000, was destroyed.

d. A windstorm caused extensive damage to the roof of the insured's residence, requiring replacement of a portion. Cost to replace was $5,000. Taking depreciation into account, the actual cash value was $3,000. At the time of loss, the replacement value of the dwelling was $125,000.

e. $300 in cash was stolen from the insured's motel room, while on vacation.

f. The insured accidentally dropped an antique punch bowl, breaking it. The value was $700.

g. The insured, who was repainting walls, accidentally knocked over a full can of paint. It ruined an oriental rug valued at $1,200 and required refinishing, of a wooden floor at a cost of $200.



Flood Questions 10. Which of the following is not a requirement for a building to be "eligible" for national flood

insurance? " a. must have walls and a roof b. be affixed to a permanent site c. at least 60% of values above ground d. anchored if a mobile home

11. Often hurricanes are accompanied by a "storm surge," a wind driven wall of water that

may cause heavy damage to properties located along the coastline. Would this be considered a "flood" under the NFIP program?

12. What is the NFIP definition of flood?

13. Define eligible contents of a flood policy



H.O. Dwelling & Related Concepts (Answers)

1. a. Not covered – Coverage B excludes property rented. b. Covered – Coverage C includes property used by the insured. c. Covered – Coverage C covers the insured’s property, wherever located. d. Covered – Coverage C covers the insured’s property, wherever located. e. Covered – Coverage C covers the insured’s property, wherever located. f. Covered - Coverage C includes guests’ property at an insured's residence; while the

insured is occupying the residence. g. Covered – Coverage C limits, but does not exclude, business property. h. Not covered - Coverage C excludes motorized vehicles, subject to exceptions which

do not include a go-cart.

2. a. Covered - The Liability exclusion for damage to property rented to the insured contains an exception for fire damage. b. Not covered - Medical Payments does not cover insureds. c. 1. Covered - the exclusion applies to those owned by the insured.

2. Covered - an outboard acquired during the policy term -is not excluded. 3. Covered - the exclusion applies only to outboards over 25 HP.

d. Covered - Damage to Property of Others covers damage caused by the insured without regard to legal liability.

e. Covered – premises rented for nonbusiness use is an “insured location.” f. Not covered under Section II. Liability coverage excludes damage to property in the

insured's care; Damage to Property of Others does not apply if Section I applies, and Section I covers (subject to the deductible) for fire damage to property used by the insured.

3. a. Covered – the full Coverage C limit applies worldwide. b. Covered - the Section II watercraft exclusion for sailboats excludes only those owned

by or rented to insured. Section I applies up to $1,000. c. Endorsement is needed - private structures may be specifically covered for amounts in

excess of what is afforded under Coverage B. d. Cannot cover under HO – only Section II coverage is available for such exposure. e. Endorsement is needed - "Business Pursuits" endorsement covers occupational

liabilities for those who are employed by others. f. Endorsement is needed - '"Inflation Guard" - will provide for automatic increases to

keep pace with increased costs. g. Covered – the definition of “insured location” includes vacant land.

4. a. Not covered if the vehicle is owned or operated by an insured. b. Not covered unless there is exterior damage to the building walls or roof. c. No limitations. d. Not covered if the utility failure occurs outside the insured's building.

5. a. Basic b. Special c. None d. Broad e. Special f. Special g. Basic h. Broad



6. $2,250 is payable. The policy prorates based on the total amount of fire insurance (Other Insurance condition). $3,500 loss less $500 deductible times ¾ (this policy’s proportion of total coverage) = $2,250.

7. A total of $2,200 will be paid: $1,500 jewelry (internal limit for theft); $300 TV; $400 personal property. The deductible is always applied to the total loss - thus $3,200 - $500 deductible = $2,700. Of the $2,700, policy internal limits will only pay $2,200.

8. a. Not covered ~ Coverage B excludes property rented. b. Covered - Coverage C includes property used by the insured. c. Covered – Coverage C covers the insured’s property, wherever it is located. d. Covered – same as c. e. Covered – same as c. f. Covered - Coverage C includes guests’ property at an insured's residence, while the

insured is occupying the residence. g. Covered – Coverage C limits, but does not exclude business property. h. Not covered- Coverage C excludes motorized vehicles, subject to exceptions which do

not include a go-cart.

9. a. $1,500 is payable - the loss less the $500 deductible (the limit on furs applies only to theft losses). b. Nothing is payable. Flood is a generally excluded peril. c. $3,500 is payable - $5,000 loss less $500 deductible but the limit on property usually

located at a secondary residence is limited to 10% of the Coverage C limit. d. $3,000 is payable. For full replacement cost settlement, the insured needed not less

than 80% of full replacement value as the Coverage A limit ($125,000 x 80% =$100,000). With $70,000 coverage, the loss payable is 7/10 times the $5,000 replacement cost, or $3,500, less the $500 deductible.

e. Nothing is payable – Money is not covered. f. Nothing is payable – the loss is not caused by a covered peril. g. Nothing is payable the rug comes under Coverage C, and the loss was not caused by

a covered peril. Damage to the floor is covered, but the loss is less than the $500 deductible.

10. C

11. Yes. Overflow of tidal waters is specifically included in the definition of flood.

12. Flood is defined as a two-part definition. (1) “a general and temporary condition of partial or complete inundation of two or

more acres of normally dry land area or two or more properties (at least one of which is your property) from (a) overflow of inland or trial waters; (b) unusual and rapid accumulation of runoff of surface waters from any source (c) mudflow.

(2) Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.

13. Must be a structure with two or more outside rigid walls and a fully secured roof, affixed to a permanent site, with 50% or more of the value above ground level. It must be located in an eligible community.



Homeowners Questions

1. Which of the following is most correct regarding eligibility requirements for the Homeowners Program? a. Must be owner occupied dwelling b. Must be owner occupied dwelling, condo, co-op c. Cannot be rented commercial dwelling d. Owner occupied 1-4 family dwelling, condos/co-ops, renters in any dwelling.

2. Which of the following non-dwelling occupancy is allowed?

a. Other structure rented to a real estate office b. Fenced yard leased as horse pasture c. Room in dwelling leased to accountant. d. Owners incidental use as office, studio or professional, or 2 roomers or boarders per

family occupancy

3. Which of the following occupancies are specifically excluded under the HO? a. Farms b. Duplexes c. 4 Unit apartments d. Tenant occupied commercial building used as a dwelling

4. Which of the following would not be an insured under a HO policy?

a. Residing spouse b. Residing Relative c. Named Insured d. Relative from New York over the age of 21 spending the summer

5. Which is the standard deductible for all perils except hurricane?

a. $500 b. $250 c. $1,000 d. Deductibles do not apply to property policies.

6. Which is correct regarding a building under construction for a HO for property?

a. Covers loss of workers property b. Covers loss of non-owned materials stored at the job site c. Covers loss to equipment while being tested d. Covers owned building materials/supplies while under construction at the job site.

7. Which is the standard deductible for a hurricane?

a. Maximum of $500 b. Minimum of $250 c. Minimum of $500; Company must offer option to purchase 2%, 5%, & 10% of the

building coverage. d. Deductibles do not apply to hurricane policies.



8. Which of the following is most correct as to the definition of Building in Coverage A? a. Dwelling building, appurtenant structures, construction materials adjacent b. Construction materials adjacent, dwelling building, attached structures, building

equipment & outdoor equipment to service the building c. Appurtenant structures, dwelling building, screen rooms attached, fences d. Dwelling building, outbuildings, fences, screened rooms, construction materials.

9. Under the HO6 which is most correct definition of Coverage A? a. Structures attached to the building b. Additions and Alterations c. Patio Furniture and Fixtures d. Outdoor equipment and equipment to service the building

10. Which is the most correct territorial limitation for personal property under the HO?

a. US, it's territories and possessions, Puerto Rico, Canada b. US, its territories and possessions, Puerto Rico, Canada, Mexico, So. America c. Anywhere except Mexico and Iraq d. Anywhere

11. Under Coverage C (HO policy) birds, animals & fish are covered how?

a. They are covered if their death was ruled accidental by the taxidermist. b. They are limited to $2,500/$500 for anyone animal, bird or fish c. They are "valued" property d. They are excluded

12. Under the HO6 what is the basic limit for Coverage A? a. Building is not covered on HO6 b. $2,500 c. Insured selects the limit d. $5,000

13. What are the correct limits for specified property under the HO?

a. Money, Precious Metals, Medals __________ b. Securities __________ c. Watercraft, trailers, accessories __________

14. Select the correct theft limit for specified property under the HO:

a. Silverware, goldware, and pewterware __________ b. Firearms __________ c. Jewelry __________

15. Under Additional Coverages, which is the correct limit for debris removal?

a. 10% of Coverage A $500 for any one tree, shrub, or plant b. No limit, included in Coverage A limit c. 5% of Coverage A d. 5% of Coverage A no more than $500 for any one tree, shrub, or plant



16. What is the limit per occurrence for electronic apparatus? a. $1,500 b. $1,500 while at the premises c. $1,500 while in an automobile and is equipped to be operated by the power from the

vehicle or by battery d. $1,500 while in an automobile and being operated by power from the auto

17. What is the limit for electronic apparatus used for business purposes? a. $500 away from the premises and used for business purposes b. $1,500 away from the premises and in an auto c. $1,500 while in an auto and is equipped to be operated by power from the auto or

under its own power d. $1,500 while in an auto, away from the premises and is used primarily for business

purposes.

18. What is the limit for Fire Department Service Charges under the HO? a. $250 but only if there is a contract for the service b. $500 c. $1,000 but only if there is a contract for the service d. $1,000

19. Which of the following is most correct for fraudulent use of credit cards, fund transfer

cards, forgery and counterfeit money? a. $250 per occurrence b. $500 per occurrence c. $500 per card d. $500 total for the policy year

20. Under the HO which is the correct limit of Building Ordinance/Law coverage?

a. 5% of Coverage A and an additional $10,000 b. 10% of Coverage A and an additional $10,000 c. No coverage, must be endorsed d. 10% of Coverage A as an additional amount of insurance

21. Under the HO8 what is the limit for theft coverage? a. $1,000 at the premises b. Full coverage at the premises c. No coverage d. $1,000 at the premises with signs of forcible entry



22. Under the H02 which is the most accurate covered causes of loss? a. Fire, theft lightning, smoke, sinkhole collapse, freezing, windstorm,

vandalism/malicious mischief b. Fire, theft, lightning, sinkhole collapse, windstorm, vandalism c. Fire, theft lightning, sinkhole collapse windstorm, vandalism, falling objects, vehicles d. Fire, lightning, windstorm, hail, explosion, riot/civil commotion, vehicles, smoke

vandalism/malicious mischief, theft, falling objects, weight of ice snow or sleet, accidental discharge/overflow of water or steam

23. Under conditions in the HO which properties are ACV in lieu of R/C?

a. Certain excluded parts of the building b. Paint, window frames c. Awnings, carpeting, appliances, outdoor antennas and outdoor equipment d. Indoor personal property while being used outdoors

24. Under Section II of the HO which of the following is the covered territory?

a. US, it's territories & possessions, Puerto Rico, Canada b. US, it's territories & possessions, Puerto Rico, Canada, Mexico c. Anywhere except Mexico d. Worldwide

25. Under Section II of the HO which business pursuits are covered?

a. Insured has an insurance agency in his garage b. Insured rents appurtenant structure to real estate agent as an office c. Insured rents room in house to mortgage broker as an office d. Insured uses part of house as office, studio or professional office

26. Under Section II of the HO which is most correct as to golf carts coverage?

a. It is a motorized vehicle must be covered on auto policy b. Must be endorsed onto the Homeowners policy c. Only while being used on a golf course d. While at an insured location, on a golf course and within a private residential

community that has the authority over the roadways in the community. 27. Under Section II of the HO which is the correct Basic Limit?

a. $300,000 Coverage E/$1,000 Coverage F b. $100,000 Coverage E c. $100,000 Coverage E/$1,000 Coverage F $10,000 statutorily imposed vicarious

parental liability d. $100,000 Coverage E/$1,000 Coverage F

28. What are the increased limits available for the following types of property?

a. Money & securities b. Jewelry/Furs c. Silverware, Goldware, Pewterware d. Firearms e. Electronic Apparatus



Homeowners (Answers)

1. D 2. D 3. A 4. D 5. A 6. D 7. C 8. B 9. B

10. D 11. D 12. D 13. a. $200

b. $1,500 c. $1,500

14. a. $2,500 b. $2,500 c. $1,500

15. C 16. C 17. D 18. B 19. B 20. D 21. A 22. D 23. C 24. D 25. D 26. D 27. C 28. a. Money $1,000, securities $2,000

b. $5,000 c. $10,000 d. $6,500 e. $6,000



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Property & Casualty Exam Workbook Unit 6: Commercial Auto


UNIT

COMMERCIAL AUTO

OVERVIEW

While the Personal Auto Policy is used to insure the automobile exposures of individual

and families, the Business Auto Policy insures the automobile exposures of businesses.

The Business Auto policy includes one of three coverage forms in addition to the

Commercial Package Policy’s Common Policy Conditions and Declarations: The Business

Auto Coverage form, the Garage coverage form and the Truckers coverage form. The

Garage coverage form is used to insure businesses engaged in selling, servicing,

repairing, parking or storing autos. The Business Auto coverage form can be used to

insure the automobile exposures of all businesses other than garage or trucking

businesses.

OBJECTIVES


• Business Auto Policy

• Business Auto Coverage Form

• Garage Insurance

Unit 6: Commercial Auto Property & Casualty Exam Workbook


COMMERCIAL AUTO

CA 00 01 03 06

BUSINESS AUTO COVERAGE FORM

Various provisions in this policy restrict coverage. Read the entire policy carefully to determine rights, duties and what is and is not covered.

Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations. The words "we", "us" and "our" refer to the Company providing this insurance.

Other words and phrases that appear in quotation marks have special meaning. Refer to Section V – Definitions.

SECTION I – COVERED AUTOS

Item Two of the Declarations shows the "autos" that are covered "autos" for each of your coverages. The following numerical symbols describe the "autos" that may be covered "autos". The symbols entered next to a coverage on the Declarations designate the only "autos" that are covered "autos".

A. Description Of Covered Auto Designation Symbols

Symbol Description of Covered Auto Designation Symbols

1 Any "Auto"

2 Owned "Autos" Only

Only those "autos" you own (and for Liability Coverage any "trailers" you don't own while attached to power units you own). This includes those "autos" you acquire ownership of after the policy begins.

3 Owned Private Passenger "Autos" Only

Only the private passenger "autos" you own. This includes those private passenger "autos" you acquire ownership of after the policy begins.

4 Owned "Autos" Other Than Private Passenger "Autos" Only

Only those "autos" you own that are not of the private passenger type (and for Liability Coverage any "trailers" you don't own while attached to power units you own). This includes those "autos" not of the private passenger type you acquire ownership of after the policy begins.

5 Owned "Autos" Subject To No-Fault

Only those "autos" you own that are required to have No-Fault benefits in the state where they are licensed or principally garaged. This includes those "autos" you acquire ownership of after the policy begins provided, they are required to have No-Fault benefits in the state where they are licensed or principally garaged.

6 Owned "Autos" Subject To A Compulsory Uninsured Motorists Law

Only those "autos" you own that because of the law in the state where they are licensed or principally garaged are required to have and cannot reject Uninsured Motorists Coverage. This includes those "autos" you acquire ownership of after the policy begins provided, they are subject to the same state uninsured motorists requirement.

7 Specifically Described "Autos"

Only those "autos" described in Item Three of the Declarations for which a premium charge is shown (and for Liability Coverage any "trailers" you don't own while attached to any power unit described in Item Three).

8 Hired "Autos" Only

Only those "autos" you lease, hire, rent or borrow. This does not include any "auto" you lease, hire, rent, or borrow from any of your "employees", partners (if you are a partnership), members (if you are a limited liability company) or members of their households.

9 Nonowned "Autos" Only

Only those "autos" you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes "autos" owned by your "employees", partners (if you are a partnership), members (if you are a limited liability company), or members of their households but only while used in your business or your personal affairs.

CA 00 01 03 06 © ISO Properties, Inc., 2005 Page 1 of 2



19 Mobile Equipment Subject to Compulsory or Financial Responsibility Or Other Motor Vehicle Insurance Law Only

Only those "autos" that are land vehicles and that would qualify under the definition of "mobile equipment" under this policy if they were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where they are licensed or principally garaged.

CA 00 01 03 06 © ISO Properties, Inc., 2005 Page 2 of 2

P&C State Exam Prep Material Unit 6: Commercial Auto

Gold Coast Schools 112

Commercial Automobile Questions

1. How are covered autos designated on a business auto policy?

a. By symbols

b. They are covered by definition

c. They are listed on a schedule

2. Under the BAP what is the maximum load capacity of trailers for automatic liability coverage?

a. 5,000 lbs.

b. 1,500 lbs.

c. 2,000 lbs.

3. What is the limitation for transportation expense under the BAP?

a. $20/$600 $25 for Towing and Labor

b. $20/$600 for Private Passenger only $25 for Towing and Labor

c. $50/$750 for Private Passenger only $25 for Towing and Labor

4. How is PIP, UM and Med Pay added to the BAP?

a. By endorsement

b. They are not available for business auto

c. They are automatically included

5. Define the following radius of operations a. Local

b. Intermediate

c. Long Haul

6. The Garage form is a combination of?

a. Truckers and Liability

b. Auto and Liability

c. Property and Auto

7. Which symbol does the State say is appropriate for Dealers liability?

a. 22 owned autos

b. 27 Specifically described auto

c. 21 All autos

8. What is symbol 29 used for?

a. Service garages

b. Non-owned autos used in the garage business

c. All the above

9. Which symbol is used for physical damage on autos in the insured's CCC?

a. 29

b. 27

c. 30



10. Which symbol is used for physical damage on Dealers autos?

a. 21

b. 27

c. 31 11. How are autos rented or leased to others covered on the Garage form?

a. Must be endorsed for additional premium

b. Cannot be covered. Needs separate policy

c. Covered if customer has left their vehicle for service/repair 12. How is product or work recall covered under the Garage form?

a. Must be endorsed for additional premium

b. Is excluded

c. Needs a separate policy 13. What is the limitation for customer liability under a Dealers policy?

a. No coverage

b. Can be endorsed for additional premium

c. 10,000/20,000/10,000 if customer has no auto coverage 14. Under Garagekeepers coverage what does legal liability mean?

a. Means the insured is not liable

b. Means the insured must be negligent for coverage to apply

c. Means the customers coverage applies

15. Under Garagekeepers collision coverage, what are the standard deductibles?

a. No deductible applies unless selected by the insured

b. 500/1000/2000

c. 100/250/500 16. How is theft or conversion by the insured or employees covered?

a. Automatically covered up to policy limits

b. Must be endorsed for additional premium

c. Is excluded 17. What is the endorsement that buys back damage to the insured's own product?

a. Product Liability endorsement

b. Broad Form Products

c. None of the above

18. Which endorsement would be used to provide coverage on Dealers autos driven or transported over 50 miles?

a. Automatically covered under physical damage

b. Dealers Drive-away Collision

c. Excess Collision Coverage Endorsement



19. Which endorsement provides physical damage for loss from voluntarily parting with a

vehicle through trick or scheme or where there is not a valid title?

a. Please, dealers aren't that stupid

b. Trick or Scheme Endorsement

c. False Pretense Endorsement

Garage Coverage Form 20. ABC, Inc. is an auto dealer and has a Garage policy with Covered Auto Symbol 21 for

liability. State 'covered" or "not covered" for each of the following situations and explain.

a. Customer Janie was test driving an auto from ABC's stock; had an accident and injured Pat. Pat claimed against ABC for injuries.

b. Customer George left his car with ABC for repairs. After its return, George had an accident and was injured. George sued ABC for his injuries, alleging the accident was caused by faulty repairs.

c. Customer Sandy bought a car from ABC and soon thereafter had a fire from an electrical system failure. The car was destroyed, and Sandy sued ABC for the loss.

d. Customer Jules ordered a car from ABC which ABC had to secure from another dealer 75 miles away. After ABC's employee picked up the car and was driving it back, an accident occurred, causing injuries to Carol. Carol sued ABC for the injuries.

21. Mike's Motor, Inc. (MMI) is an auto dealer and has a Garage policy with Covered Auto

Symbol 22 for Physical Damage coverage, symbol 31 for Comprehensive and Collision coverages, and Garagekeepers insurance (legal liability), with symbol 30 for Comprehensive and Collision coverages. State "covered" or "not covered" for each of the following situations, and explain.

a. Customer Bill was test-driving an auto from MMI’s stock and had an accident.

b. Customer Cindy left her car with MMI for servicing. MMI had the car parked outside the building when a hailstorm ruined the finish. Cindy sued MMI for the damage.



c. Customer Ramon ordered a car from MMI, which MMI had to secure from another dealer 75. miles away. After MMI's employee picked up the car and was driving it back, an accident occurred. The car was damaged.



Commercial Automobile Questions (Answers) 1. A 2. C 3. B 4. A 5. a. Local: operates within a radius of 50 miles

b. Intermediate: operates within a radius of more than 50 miles but less than 200 miles c. Long Haul: operates more than 200 miles outside of radius

6. B 7. C 8. C 9. C

10. C 11. C 12. B 13. C 14. B 15. C 16. C 17. B 18. B 19. C 20.

a. Covered – symbol 21 covers for any auto. b. Covered – within definition of garage operations, no exclusion. c. Not covered – exclusion for damage to the insured’s products. d. Covered – liability for any auto.

21. a. Covered- Collision coverage covers Dealers autos (symbol 31). b. Covered - if dealer found liable Garagekeepers coverage, no exclusion. c. Not covered - Collision coverage exclusion for over 50-mile pickup.

Property & Casualty Exam Workbook Unit 7: Commercial Property


UNIT

COMMERCIAL PROPERTY

OVERVIEW

Commercial property insurance is the form of insurance that covers direct, and indirect

losses related to properties other than one to four-family dwellings and farm

properties. While other specific objectives may be accomplished, the primary purpose

of this field of insurance may be characterized as first-party coverage against economic

loss arising from damage to tangible property, such as building structures and personal

property associated with such structures.

OBJECTIVES


• Commercial Property Insurance

• The Commercial Property Contract

• Building and Personal Property Coverage Form

• Builders Risk Coverage Form

• Business Income Coverage Forms

• Extra Expense Coverage Form

• Leasehold Interest Form

• Legal Liability Coverage Form

• Condominium Coverage Forms

• Causes of Loss Forms – General

• Causes of Loss Form – Basic

• Causes of Loss Form – Broad

• Causes of Loss Form – Special

• Farm Coverage

• Terrorism Risk Insurance Act (TRIA)



Causes of Loss Forms

Causes of Loss Form

Perils insured against

Basic

Fire, lightning, explosion, riot/civil commotion smoke, vandalism, windstorm & hail, damage caused by aircraft or vehicle, volcanic action and sinkhole collapse, glass breakage.

No coverage for: water damage (except automatic fire sprinkler system), collapse (except for sprinkler system’s tank), falling objects, weight of ice, sleet or snow.

Broad

Same as basic, plus:

Water damage, see basic, falling objects, collapse, weight of ice, sleet or snow.

Special

(structure only)

Open Perils – covers for all risks of direct physical losses, unless excluded or limited. Examples of covered perils: theft, spillage, sonic shock waves from aircraft, accidental breakage, damage by animals not owned or kept by the insured, interior damage from rain (windstorm) without exterior damage.

Unit 7: Commercial Property Property & Casualty Exam Workbook


Leasehold Interest Coverage Form

Five different exposures facing tenants can be covered

Any reference to landlord or owners’ loss is incorrect!

Tenant's Loss of a Favorable Lease: When a tenant has a lease at a lower rate than other tenants in the building or general area, they have a favorable lease. We can insure the difference between what they pay and what they would pay over the period of their lease, if their lease is broken due to a loss from a covered peril.

Tenant's loss of a Favorable SUB-LEASE: When a tenant subleases a part of their space at a HIGHER rate than they are paying, we can insure the difference between what they pay to the building owner and what their subtenant pays them over the period of the sub-lease, if the sub· lease is broken due to a loss from a covered peril.

Tenant's loss of the Remaining Value of Improvements & Betterments:

See PROPERTY INSURANCE PAGE 5

Tenant's Loss of the Remaining Value of a Bonus Paid to Acquire a Lease: In some instances, a tenant may be required to pay extra to get a lease, usually guaranteeing exclusivity of their type of business, for example, the only jewelry store in the mall. If their lease is broken due to a covered peril, we can insure the remaining value. The bonus is divided by the number of years in the lease (amortized).

EXAMPLE: Tenant pays $100,000 bonus on a 5-year lease. Each year 1/5 ($20,000) is used up. At the end of year #1 - $80,000 remains, after year #2 - $60,000, etc.

Tenant's loss of the Remaining Value of Prepaid Rent: Tenant's often pay "First & Last month rent." (Security deposits are protected under Florida real estate laws). Sometimes a tenant is offered a period of "free rent" usually at the end of a lease, as an incentive to take a longer lease. If the lease is broken due to a covered peril, we can insure the prepaid rent which would otherwise be lost.

To attract an "anchor" tenant, the developer leases the entire $10,000 1st floor to a bank for

$5/foot on a 10-year lease. Other tenants are paying $10/foot.

The bank subleases ½ (5,000) of their space to a law firm for $10/foot for 10 years.

The bank has a favorable lease AND a favorable sublease



Other Insurance Property Commercial Personal (HO & DP)

Total insurance needed $100,000


Company “a” $25,000 (25%)

Company “b” $75,000 (75%)

Company “a” $25,000 (25%)

Company “b” $75,000 (75%)

Perils of fire & wind Perils of fire & wind Perils of fire & wind Perils of fire & wind

Covered fire claim of $20,000 occurs Covered fire claim of $20,000 occurs

“a” pays 25% $5,000 paid

“b” pays 75% $15,000 paid

“a” pays 25% $5,000 paid

“b” pays 75% $15,000 paid

If the perils provided are different, then the other insurance provision provides for an alternative

method of payment

Property Covers direct and indirect losses to other than one-to four-family dwellings & farm properties. First-party coverage against economic loss arising from tangible property. Commercial property insurance contract contains:

▪ Declarations, common policy conditions, commercial property conditions, ▪ Coverage forms, causes of loss form, and various endorsements.

o Perils (fire, lightning, and windstorm) insured against will be stated in the causes of loss form (basic, broad or special)

Commercial Personal (HO & DP)



Company “a” $25,000 (25%)

Company “b” $75,000 (75%)

Company “a” $25,000 (25%)

Company “b” $75,000 (75%)

Perils of fire Perils of fire & wind Perils of fire & wind Perils of fire & wind

If a different plan applies, then the plan with the better provisions (plan b) is excess over any other plan, whether collectible or not.

If a different plan applies, then coverage is pro-rated based upon the amount of fire

insurance.

Company b - $75,000 excess f & w Assume a covered wind claim of $20,000

company a - $25,000 primary fire Co “a” pays -0- Co “b” pays $15,000

Company “B” Excess - $75,000

Company “A” Primary $25,000

Fire Claim Of $20,000 – “A” Pays $20,000

Fire Claim Of $30,000 – “A” Pays $25,000

“B” Pays $5,000

Wind Claim Of $20,000 – No Coverage

Wind Claim of $30,000 – “B” Pays $5,000



Contract conditions Cancellation/non-renewal: First 90 days: 20 days advance written notice, except for Non-payment: 10 days advance written notice After 90 days: 45 days advance written notice, except for Non-payment: 10 days advance written notice Non-renewal: 45 days advance written notice 120 days advance written notice Changes: must be agreed to between insurer and first named insured. Transfer consent: insured may not transfer rights under the policy without insurer's written

Concealment, fraud Misrepresentation for coverage is void if facts are material or relevant to type of coverage applied Control of Property: acts of others beyond the insured's control does not impair protection for

the insured. Act or neglect of insured relative to one location does not impair protection for other locations covered in policy.

Liberalization: insured gets, benefit of broader coverage if company adopts revision, if

insured purchased policy within past 45 days. This only applies when revision broadens coverage. No additional premium charged.

Other insurance: when two policies have same basis, policies will pro-rate. If under different

basis, policy with lesser perils becomes primary & policy with better perils becomes excess.

Policy period/ Territory: loss must commence during policy period and only in the United States,

Puerto Rico, & Canada. Subrogation: insured transferring their rights of recovery to the insurer, in order for the

insurer to recover money which was paid from the insured's policy. Right of recovery is to the extent of loss payment (amount of claim check).

Deductible: Deductible is subtracted from loss, not the policy limit. Standard / minimum deductible is $500 / optional: $1,000, $5,000. $10,000 Hurricane (separate deductible applies) minimum $500



Covered property Building: includes the structure in declarations, and any permanently additions or

fixtures, 'including outdoor fixtures and personal property to service premises (fire extinguisher), floor coverings refrigerating, ventilating, and cooking, dishwashing & laundering appliances, permanently installed machinery and equipment. Additions under construction, materials and equipment if on or within 100 feet of premises.

Business Personal Property: furniture, fixtures, equipment, stock, owner personal property used in

business, tenant’s improvements & betterments, cost of labor and materials on property of others performed by insured or others on their behalf.

Personal Property of Others: includes property in the insured's care, custody or control.

Additional coverages Signs: attached or not; covered up to $2,500 per sign in any one occurrence. Debris removal: indirect loss / must be covered cause of loss. Automatically included in

building coverage. If building limit is exhausted or maximum of 25% limit exhausted, additional $10,000 provided.

Preservation of Property: preserving property from covered cause of loss covers damage moving to a

temporary location and for 30 days at temporary location from any cause of loss. You had to be protecting your property from a covered cause of loss for this coverage to activate.

Fire department Service charge: reimburse fire department service charge up to $1,000 if protecting property

from a covered cause of loss. Pollution Clean Up and Removal: covers the cost of extracting pollutants from the ground or water if pollution is created by a covered cause of loss. The loss is only covered if reported within 180 of the date of the covered loss. Maximum of $10,000 total for all covered losses during any 12-month period. Increased Cost of Construction: When the cost to repair the damage is increased due the application of a building ordinance or law that affects the repairs, this additional coverage is activated. Replacement Cost (RC) option must be selected to trigger coverage. The ordinance or law must be in effect at the time of the occurrence. There is no coverage for ordinances or laws that the insured failed to comply with prior to the loss. Coverage is limited to 5% or the limit of insurance or $10,000; whichever is less.

Extensions of coverage Policy subject to an 80% or more coinsurance requirement and the following will provide additional insurance, over & above your policy limits.



Automatic coverage: 30 days automatic coverage at new buildings $250,000 each, and

$100,000 for personal property at each building. Personal effects/ Property of others: $2,500 / no theft coverage for personal effects of owners, partner,

employees, or property of others (clients’ property) Valuable papers & Records: $2,500 includes cost of research, replace or restore lost information. Property Off-premises: $10,000/ excludes property in or on vehicles, in custody of salespersons, or

at a fair or exhibition. Outdoor property: $1,000 - fences, radio/TV antennas, detached signs and trees, shrubs and

plants (max $250 for anyone tree, shrub or plant) perils covered for outdoor property are: fire, lightning, explosion, riot or civil commotion or damage from an aircraft. Includes debris removal.

Non-Owned Detached Trailer: Extends coverage to detached trailers that the insured does not own. The

trailer must be used in the insured’s business and located on the premises described in the Declarations page and must be done by written contract and must indicate it is the responsibility of the named insured to provide coverage.

The limit of insurance is $5,000 and can be increased. Coverage is excess

over any other insurance provided for the trailer. Note: This is an extension of coverage Fences, radio/TV antennas, trees, shrubs and plants are covered up to $1,000 (not more

than $250 on any one tree, shrub, or plant) for perils of fire, lightening, explosion, riot, civil commotion or aircraft. Detached signs are limited to $2,500 and the perils covered are governed by the causes of loss form attached to the policy. Cost of debris removal is included.



Property section – business income

Extra expenses - $40,000

With extra expense Without extra expense

Original loss $100,000 $100,000

Saved ins. Co. -10,000 -10,000

Actual loss 90,000 90,000

Reimbursed

Expenses

+40,000 +10,000

(towards expenses – saved ins. Co)

Total paid 130,000 100,000

With extra expense Without extra expense

Original loss $100,000 $100,000

Saved ins. Co. -80,000 -80,000

Actual loss 20,000 20,000

Reimbursed

Expenses

+40,000 +40,000

(towards expenses – saved ins. Co)

Total paid 60,000 60,000

Without extra expense: reimburses insured to the extent of how much they save the insurance company.



Business income coverage options

No coinsurance – no minimum or maximum coverage required

Premium is considerably higher when compared with the coinsurance form

Maximum period of indemnity

Pays for actual loss of income sustained for up to 120 days from the loss, up to policy limit.

Monthly limit of indemnity

Instead of a time limit, a fractional amount of the amount of coverage is available monthly

1/3 of amount of insurance 1/4 of amount of insurance 1/6 of amount of insurance

When 2-3 months downtime max



If projected period of restoration is over 6 months use coinsurance form

Compare & contrast example – amount of coverage $40,000 both forms

Month 1

Month 2

Month 3

Month 4

Month 5

Month 6

Actual monthly loss sustained

$15,000 $10,000 $8,000 $6,000 $4,000 $3,000

Maximum period of indemnity (120 days) pays for 4 months

$15,000 $10,000 $8,000 $6,000 None None

Using ¼ example: monthly Limit of indemnity pays:

$10,000 $10,000 $8,000 $6,000 $4,000 $2,000

Possible exam questions using the above scenario:

Questions Answers

How much will maximum period of indemnity pay? $39,000 (loss for 120 days) $15,000+$10,000+$8,000+$6,000

How much will monthly limit of indemnity pay during the same time frame as maximum period?

$34,000 (loss during 120 days) $10,000+$10,000+$8,00-0+$6,000

How much will monthly limit of indemnity pay total? $40,000

How much will be paid in month 1 under maximum Period versus monthly limits?

$15,000 maximum period v. $10,000 Monthly limit

In what month is monthly limit of indemnity exhausted?

Month 6 (total policy limit has been used up in that month)



Property Questions

1. Under the property policy, what are the 3 causes of loss forms?

2. What is the definition for flood?

3. What is the standard deductible for property policies?

4. If a building is valued at $100,000 and the insured has a policy with $45,000 coverage with 90% coinsurance clause. How much will be paid if the insured has a $50,000 loss?

5. Under the value reporting form, if the insured's June report is due, when will it be considered late?

6. Under the value reporting form, if the insured does not make their first report of values, what is the penalty?



7. What is the purpose of the business income coverage form?

8. What is the purpose of the extra expense form?

9. Under which form will theft be a covered peril?



Property Questions (Answers)

1. Basic – Broad – Special

2. Partial or complete inundation of 2 or more acres of normally dry land areas

3. $500.

4. 45,000 = 1 x $50,000 = $25,000

90,000 2

5. 7/31

6. 75% of the loss; not 25% of policy limit

7. Covers loss of profits and current continuing expenses through a “Period of Restoration.”

8. Reimburse insured for extraordinary expenses incurred to maintain uninterrupted operations

9. Special



Commercial Property - Questions 1. Commercial Property is sometimes referred to as which of the following?

a. Business owners

b. Commercial Package

c. Fire Policy

d. Fire and Allied lines

2. Commercial Property is which? a. First party coverage b. Third party coverage c. Has nothing to do with parties

3. Which is most correct as to how the insured may change the policy?

a. Insured does not have the authority to change the policy b. By notifying his/her insurance agent they have made a change to the policy c. By giving the insurer 10-day notice of the change d. By written consent of the insurance company

4. Which is most correct as to how the insured may transfer rights & duties under the policy?

a. By selling the property and notifying his/her agent

b. By selling the property and notifying his/her carrier

c. Cannot be transferred

d. With the written consent of the carrier

5. Which is most correct if there is concealment, misrepresentation or fraud by the insured? a. Insured can be penalized for a loss same as with coinsurance b. Deductible will be doubled if there is a loss c. Loss will be valued at ACV d. Policy can be declared null and void by insurer

6. Which is most correct as to the policy territory?

a. US, its territories or possessions, Canada and Mexico b. US, its territories or possessions, Puerto Rico and Canada c. US, México, Canada, Puerto Rico d. Worldwide

7. For commercial residential properties, what are the optional deductibles required?

a. Either a per event or an annual basis hurricane deductible b. A per event subject to a 3% maximum c. An annual subject to a 10% maximum d. A per event or an annual subject to a 5% maximum

8. In the beach area of the Florida lower east coast, the standard deductible for windstorm

and hail losses is a. $500 b. $1,000 c. $10,000 d. A percentage of the value of the property



9. Which of the following is the most accurate definition of building?

a. The structure in the declarations b. Including additions, fixtures, permanently installed machinery & equipment, fire

extinguishers, floor coverings, temporary structures within 100 feet of the premises c. Both a & b d. None of the above

10. Which of the following is most accurate as to property not covered?

a. Accounts, bills, currency, deeds, evidences of debt, money or securities, bullion or manuscripts, autos, paved surfaces

b. Autos held for sale, animals (unless boarded or held for sale, self-propelled machines unless stock, bulkheads, pilings, piers, wharves or docks

c. Owned building and personal property d. Both a & b

11. Which is most accurate for debris removal coverage under additional coverages? a. 25% of the amount paid for loss + the deductible + an additional $10,000 only if

exceeds 25%, or the limits are exhausted. b. 25% of the amount paid for loss + and additional $10,000 c. 25% of the amount paid for the loss - the deductible + additional $10,000 d. None of the above

12. Which of the following is most accurate as to the time limit for preservation of property after

a loss? a. 60 days at a new location and while it is in transit b. 45 days at a new location excluding while in transit c. 30 days at a new location and while it is in transit d. There is no time limit

13. Which is most correct regarding pollution cleanup and removal? a. The event must be reported within 180 days of the covered loss maximum of $10,000

all covered losses during 12-month period. b. No coverage available must have a pollution policy c. Covers up to the policy limit, provided the insured was not at fault d. None of the above

14. Which is most correct as to Increased Cost of Construction coverage? a. Pays due to application of building ordinance or law, subject to RC option selected &

limited to 5% or $10,000 whichever is greater. b. Must be added by endorsement c. Is not available d. Building ordinance or law must be in effect at time of loss, subject to RC option

selected, and limited to 5% or $10,000 whichever is lesser.

15. For property off premises, which of the following is not covered? a. While temporarily at a location not owned, leased or operated by the insured up to

$10,000 b. Property in a vehicle or in custody of salespersons c. Both A & B are not covered d. None of the above



16. Which is most accurate for outdoor property?

a. Covers only for the perils of fire, lightning, explosion, riot/civil commotion, aircraft & includes debris removal

b. Can be endorsed for additional premium c. Fences, radio/TV antennas, trees, shrubs, plants covered up to $1,000 (not more than

$250 anyone tree, shrub or plant) d. All the above

17. Which of the following is most accurate as to the vacancy clause? a. If building is vacant for more than 60 consecutive days coverage is suspended for

vandalism, sprinkler leakage, glass breakage, water damage & theft. b. Coverage is reduced by 15% for all other Causes of Loss c. Insured needs a Vacancy Permit endorsement d. All the above

18. Agreed value endorsement does which of the following? a. Waives coinsurance b. Is based on values filed with the company c. Must be insured for 80% of value, 90% if coverage is blanket d. All the above

19. Which is most accurate as to Building Ordinance Coverage? a. Covers the insured when required by law to demolish undamaged portions of buildings b. Requires 80% or higher coinsurance and replacement cost coverage c. Endorsements are available to cover property that is limited in coverage or excluded under

the underlying policy. d. All the above

20. Under the Builders Risk coverage form select the correct answer:

a. Coverage includes foundations b. $5,000 coverage for non-owned materials & supplies in insured's CCC c. Need for adequate Insurance In lieu of Coinsurance d. All the above

21. Under Business Income Coverage Forms know the definitions of the following: a. Period of restoration (72-hour deductible)

b. Maximum period of indemnity (increases time limit to 120 Days)

c. Monthly Limit of Indemnity (limits recovery to a fraction of coverage during each

consecutive 30 days during period of restoration (⅓, ¼, 1/6)

d. Agreed Value Eliminates coinsurance requires financial statements

e. Extended Period of Indemnity 30 days extended period can be increased to any longer period up to 730 days

f. Extra Expense-Review this carefully so you understand the coverage



22. Which of the following are not excluded in all the forms?

a. Earth movement (other than catastrophic ground collapse) b. Loss from utility service failure c. Flood, rising waters" mudslide, backing up of water through sewers or drains d. Fire, wind/hail, vandalism

23. The Causes of Loss – Special Form is also known as? a. All other like perils b. All other perils c. Causes of Loss – Broad Form d. Open Perils

24. Which of the following Causes of Loss (perils) are added to the Basic form to create the Broad form?

a. Falling objects, weight of ice snow or sleet, water damage, collapse b. Vehicles, falling objects, water damage c. Collapse, explosion, falling objects, water damage, vehicles d. None of the above

25. Define Farm coverage as follows:

a. Coverage A b. Coverage B c. Coverage C d. Coverage D e. Coverage E f. Coverage F g. Coverage G

26. TRIA stands for _________________________________________________________

27. A certified act of terrorism is defined as:

a. b.

c.

d.

28. No act will be certified by the Secretary as an act of terrorism if property and casualty losses do not exceed $____________.



Commercial Property – Questions (Answers)

1. D 2. A 3. D 4. D 5. D 6. B 7. A 8. D 9. C

10. D 11. A 12. C 13. A 14. D 15. B 16. D 17. D 18. D 19. D 20. D 21. (Answers in questions) 22. D 23. D 24. A 25.

a. Coverage A: Dwelling b. Coverage B: Other Structures – appurtenant to the dwelling c. Coverage C: Household property d. Coverage D: loss of use e. Coverage E: Schedule farm personal property f. Coverage F: Unscheduled farm personal property g. Coverage G: Other farm structures

26. Terrorism Risk Insurance Act (TRIA) 27.

a. To be an act of terrorism b. To be a violent act or an act that is dangerous to human life, property or infrastructure c. To have resulted in damage within the United States, or outside the U.S. in the case of U.S.

air carriers, vessels and/or missions. d. To have been omitted by an individual or individuals as part of an effort to coerce the

civilian population of the U.S. or to influence the policy or affect the conduct of the U.S. government y coercions

29. $5,000,000 (Five Million)



Property Part 1 - Questions

Commercial Property Contract

1. What is the standard deductible under a Commercial Property policy?

Building and Personal Property Coverage Form

2. The insured has coverage under the form for "Building" only. The following items, located in an employee's snack bar within the building, were damaged by a covered cause of loss; a fire extinguisher, carpeting, a refrigerator, a dishwasher, and table and chairs. Which items are covered property?

3. Because the insureds' property was threatened by a fire, the insured, with personal property coverage, had the covered property moved to another location. What coverage does the insured have for (a) the expense of moving the property; (b) damage to the property while it is being transported; (c) damage to the property at the temporary location?

4. An insured with a Building and Personal Property for, which covers a building for $500,000

and personal property for $150,000, purchases a building and its furniture at another location. What coverage, if any, is provided by the policy for this new purchase?

5. The insured, with coverage for "Your Business Personal Property" only with a limit of

$100,000, had damage to the following property from a windstorm (which was a covered cause of loss in the policy): (a) personal effects of employees, (b) shrubbery, (c) customers property being repaired, (d) outdoor TV antenna. What property is covered/not covered; what special limits (if any) apply?

6. At the time of loss, it is found that the covered building had been vacant for 75 consecutive days. To the extent each of the following is a covered cause of loss, what impact would the vacancy have on any loss payment from (a) fire; (b) vandalism, (c) windstorm?



7. A tenant-insured, with $100,000 coverage on "Your Business Personal Property" only,

installed permanent fixtures to the owner's building (not legally subject to removal at the end of the lease) at the beginning of a 10-year lease at a cost of $20,000. A covered cause of loss occurred exactly 3 years after the effective date of the lease. The actual cash value of the fixtures, at time of loss, was $18,000. Assuming no other coverage issue, how much could the insurer pay for total loss of these fixtures if:

a. they were promptly replaced by the insured;

b. they were never replaced

8. What optional coverage is available to an insured, who wishes to cover 100% of the value

of a building, but to avoid the possibilities of a coinsurance penalty?

9. The insured has building coverage of $500,000 and purchases the Inflation Guard option

at 6%. The insured's annual policy was effective on January 1. What is the amount of the insured's protection on May 1?

10. The insured's policy contains a Value Reporting form; limit is $300,000. At time of a

$100,000 loss to covered property from a covered cause of loss it is found that (a) the insured never made a first value report, which is overdue; (b) first value report was made, accurately stating values to be $250,000 but next report was overdue; (c) last Value report was for $200,000 and the next report is not yet due, but actual values on that date were $250,000. With no other coverage issues, how much (if any) is payable for each loss?

11. Describe the conditions under which the "Building Ordinance" optional coverage should be

considered.



Other Coverage Forms

12. The insured has a Builders Risk Coverage form, limit $400,000. During the construction period, a loss of $120,000 occurred to covered property from a covered cause of loss. It is found that due to interim changes in specifications, the building's completed value would be $600,000. With no other coverage issues, how much (if any) is payable for this loss?

13. The insured has Business Income coverage for one year, effective January 1. For the full

year, the insured's net profit would have been $60,000 and total operating expenses would have been $240,000. A covered cause of loss, however, occurred at the insured premises on July 1 and operations were necessarily suspended until December 1, at which time normal operations resumed. During each month of interruption, the following occurred'("Profit" means that which would normally have been earned and "Expenses" mean those which necessarily continued through the period of restoration):

Profit Expenses July (exclude first 72 hours) $ 7,000 $ 22,000 August 6,000 18,000 September 3,000 13,000 October 2,000 11,000 November 2,000 16,000 Totals $20,000 $ 80,000

With no other coverage issues, if the insured has a $100,000 coverage limit, how much is payable if the coverage is

a. 50% coinsurance. b. 1/4 monthly limitation. c. Maximum Period of Indemnity option.

14. The insured has Extra Expense coverage, with a limit of $100,000, and a period of

restoration limits of 25%-50%-75%-100%. After damage at the insured premises from a covered cause of loss, the insured had a 3-month period of restoration and incurred necessary and reasonable extra expenses of $35,000 in the first month, $20,000 in the second month and $20,000 in the third month. With no other coverage issues, how much (if any) is payable?

15. What coverage form should be considered by one who leases a building from another, as

to possibly being responsible to the owner for the building being damaged by fire during the lessee's occupancy?

16. What two types of interests may be insured under a Commercial Property Condominium form?



Farm

17. For each of the following, indicate whether or not it could be covered under the Farm Property form?

a. Livestock

b. Barn

c. Residential dwelling located on the farm

d. Silo

e. Farm machinery

f. Household property

g. Loss of use for residence premises

h. Farm produce

i. Growing crops

TRIA

18. For an action to be certified as an “act of terrorism”, the act must be violent in nature towards

a. Human life b. Property c. Infrastructure d. All the above

19. To be considered an “act of terrorism”, losses must exceed what amount?

a. $100,000 b. $500,000 c. $1,000,000 d. $5,000,000



Property Part 1 - Answers 1. The standard deductible is $500 for all loss or damage in any one occurrence from all perils

other than hurricane. 2. All except the table and chairs. 3. (a) Not covered (b) covered (c) covered for up to 30 days. 4. For a 30-day period, the insured is automatically covered for up to $250,000 on the building

and $100,000 on its contents. 5. (a) And (c) are covered, subject to a total limit of $2,500. (b) and (d) are not covered.

Specified perils applicable do not include windstorm. 6. (a) And (c) – loss payment reduced by 15%. (b) no coverage. 7. $18,000 (actual cash value). (b) $14,000 ($20,000 original cost) x (7 years remaining in lease,

divided by 10 years from installation date to end of lease period). 8. The Agreed Value option. 9. $510,000. Coverage increases pro rata throughout the policy term at an annual rate of 6% x

$500,000, which is $30,000 at year-end and (divided by 12) or $2,500 per month. On May 1, 4 months have passed. 4 x $2,500 = $10,000 added to the original limit.

10. (a)$75,000 (75% of loss payable). (b) $100,000 (loss payment not to exceed amount last reported, which in this case does not

impose a penalty). (c) $80,000 ($100,000 loss) x ($200,000 value reported divided by $250,000 actual value on

reporting date). 11. Building Ordinance coverage should be considered if (a) the community has an ordinance

which requires demolition of undamaged portions of the building after a partial loss and (b) if the insured's building is not in accordance with current building, zoning or land use laws.

12. $80,000: ($120,000 loss) x ($400,000 limit divided by $600,000 completed value). 13. (a)$66,667. This is computed as: ($100,000 loss) x ($100,000 amount divided by $150,000

amount required for coinsurance clause compliance). Coinsurance clause compliance is computed at $300,000 annual profit and expenses times 50% coinsurance. (b) $96,000. With 1/4 monthly limitation, the maximum recoverable for each month is

$100,000 x 1/4 or $25,000. The first month loss is $29,000; $4,000 of this is not covered; the remainder of the loss does not exceed $25,000 per month nor the policy limit.

(c) $82,000. This form covers for four months without limitation. The fifth-month loss of $18,000 is not covered.

14. $75,000. As the loss was of three months duration, 75% of the $100,000 limit was available.

15. Legal Liability Coverage form.

16. A condominium owner under a Unit-Owners form or a condominium association under an association form.

17. (a)Yes 18. D (b) Yes 19. D (c) Yes (d) Yes (e) Yes (f) Yes (g) Yes (h) Yes (i) No

Property & Casualty Exam Workbook Unit 8: General Liability


UNIT

GENERAL LIABILITY

OVERVIEW

The field general liability insurance embraces business liability hazards other than

those dealt with by more specialized forms of coverage such as automobile, aviation,

marine, professional and workers’ compensation. All kinds of businesses need this

type of protection to cover for liability arising from premises, general operations and

products manufactured or sold. The primary policy form for covering these general

business hazards is the Commercial General Liability (CGL) policy. The CGL policy

comes in two coverage forms, an “occurrence” form and a “claims-made” form.

OBJECTIVES


• The CGL Contract

• Coverage A – Bodily Injury & Property Damage Insuring Agreement

• Coverage B – Personal & Advertising Injury

• Coverage C – Medical Payments

• Supplemental Payments

• Who is insured?

• Limits of Insurance

• Conditions

• Miscellaneous Forms of General Liability Insurance

• Excess Liability / Umbrellas

• Professional Liability Insurance

• Farm Liability

• Employment-Related Practices Liability

• Cyber Liability Insurance

Unit 8: General Liability Property & Casualty Exam Workbook



FLORIDA CHANGES – CANCELLATION AND NONRENEWAL

This endorsement modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE PART ELECTRONIC DATA LIABILITY COVERAGE PART LIQUOR LIABILITY COVERAGE PART POLLUTION LIABILITY COVERAGE PART PRODUCT WITHDRAWAL COVERAGE PART PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART

A. Paragraph 2. of the Cancellation

Common Policy Condition is replaced by the following:

2. Cancellation Of Policies In Effect a. For 90 Days Or Less

If this policy has been in effect for 90 days or less, we may cancel this policy by mailing or delivering to the first Named Insured written notice of cancellation, accompanied by the reasons for cancellation, at least:

(1) 10 days before the effective date of cancellation if we cancel for nonpayment of premium; or

(2) 20 days before the effective date of cancellation if we cancel for any other reason, except we may cancel immediately if there has been:

(a) A material misstatement or misrepresentation; or

(b) A failure to comply with the underwriting requirements established by the insurer.

b. For More Than 90 Days If this policy has been in effect for more than 90 days, we may cancel this policy only for one or more of the following reasons:

(1) Nonpayment of premium;

(2) The policy was obtained by a material misstatement;

(3) Failure to comply with underwriting requirements established by the insurer within 90 days of the effective date of coverage;

(4) A substantial change in the risk covered by the policy; or

(5) The cancellation is for all insureds under such policies for a given class of insureds.

If we cancel this policy for any of these reasons, we will mail or deliver to the first Named Insured written notice of cancellation, accompanied by the reasons for cancellation, at least:

(a) 10 days before the effective date of cancellation if we cancel for nonpayment of premium; or

(b) 45 days before the effective date of cancellation if we cancel for any of the other reasons stated in Paragraph 2.b.

B. Paragraph 3. of the Cancellation Common Policy Condition is replaced by the following:

3. We will mail or deliver our notice to the first Named Insured at the last mailing

address known to us.

COMMERCIAL GENERAL LIABILITY

CG 02 20 03 12

CG 02 20 03 12 © Insurance Services Office, Inc., 2011 Page 1 of 2



C. Paragraph 5. of the Cancellation Common Policy Condition is replaced by the following:

5. If this policy is cancelled, we will send the first Named Insured any premium refund due. If we cancel, the refund will be pro rata. If the first Named Insured cancels, the refund may be less than pro rata. If the return premium is not refunded with the notice of cancellation or when this policy is returned to us, we will mail the refund within 15 working days after the date cancellation takes effect, unless this is an audit policy. If this is an audit policy, then, subject to your full cooperation with us or our agent in securing the necessary data for audit, we will return any premium refund due within 90 days of the date cancellation takes effect. If our audit is not completed within this time limitation, then we shall accept your own audit, and any premium refund due shall be mailed within 10 working days of receipt of your audit.

The cancellation will be effective even if we have not made or offered a refund.

D. The following is added and supersedes any other provision to the contrary:

Nonrenewal

1. If we decide not to renew this policy, we will mail or deliver to the first Named Insured written notice of nonrenewal, accompanied by the reason for nonrenewal, at least 45 days prior to the expiration of this policy.

2. Any notice of nonrenewal will be mailed or delivered to the first Named Insured at the last mailing address known to us. If notice is mailed, proof of mailing will be sufficient proof of notice.

CG 02 20 03 12 © Insurance Services Office, Inc., 2011 Page 2 of 2




CONTRACTUAL LIABILITY LIMITATION

This endorsement modifies insurance provided under the following:

COMMERCIAL GENERAL LIABILITY COVERAGE PART PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART

The definition of "insured contract" in the DEFINITIONS Section is replaced by the following:

"Insured contract" means:

a. A contract for a lease of premises. However, that portion of the contract for a lease of premises that indemnifies any person or organization for damage by fire to premises while rented to you or temporarily occupied by you with permission of the owner is not an "insured contract";

b. A sidetrack agreement;

c. Any easement or license agreement, except in connection with construction or demolition operations on or within 50 feet of a railroad;

d. An obligation, as required by ordinance, to indemnify a municipality, except in connection with work for a municipality;

e. An elevator maintenance agreement.

COMMERCIAL GENERAL LIABILITY

CG 21 39 10 93

CG 21 39 10 93 Copyright, Insurance Services Office, Inc., 1992 Page 1 of 1



COMMON POLICY CONDITIONS All Coverage Parts included in this policy are subject to the following conditions. A. Cancellation

1. The first Named Insured shown in the Declarations may cancel this policy by mailing or delivering to us advance written notice of cancellation.

2. We may cancel this policy by mailing or delivering to the first Named Insured written notice of cancellation at least:

a. 10 days before the effective date of cancellation if we cancel for nonpayment of premium; or

b. 30 days before the effective date of cancellation if we cancel for any other reason.

3. We will mail or deliver our notice to the first Named Insured's last mailing address known to us.

4. Notice of cancellation will state the effective date of cancellation. The policy period will end on that date.

5. If this policy is cancelled, we will send the first Named Insured any premium refund due. If we cancel, the refund will be pro rata. If the first Named Insured cancels, the refund may be less than pro rata. The cancellation will be effective even if we have not made or offered a refund.

6. If notice is mailed, proof of mailing will be sufficient proof of notice.

B. Changes This policy contains all the agreements between you and us concerning the insurance afforded. The first Named Insured shown in the Declarations is authorized to make changes in the terms of this policy with our consent. This policy's terms can be amended or waived only by endorsement issued by us and made a part of this policy.

C. Examination Of Your Books And Records We may examine and audit your books and records as they relate to this policy at any time during the policy period and up to three years afterward.

D. Inspections And Surveys

1. We have the right to: a. Make inspections and surveys at any

time;

b. Give you reports on the conditions we find; and

c. Recommend changes.

2. We are not obligated to make any inspections, surveys, reports or recommendations and any such actions we do undertake relate only to insurability and the premiums to be charged. We do not make safety inspections. We do not undertake to perform the duty of any person or organization to provide for the health or safety of workers or the public. And we do not warrant that conditions:

a. Are safe or healthful; or b. Comply with laws, regulations, codes or

standards.

3. Paragraphs 1. and 2. of this condition apply not only to us, but also to any rating, advisory, rate service or similar organization which makes insurance inspections, surveys, reports or recommendations.

4. Paragraph 2. of this condition does not apply to any inspections, surveys, reports or recommendations we may make relative to certification, under state or municipal statutes, ordinances or regulations, of boilers, pressure vessels or elevators.

E. Premiums The first Named Insured shown in the Declarations:

1. Is responsible for the payment of all premiums; and

2. Will be the payee for any return premiums we pay.

F. Transfer Of Your Rights And Duties Under This Policy Your rights and duties under this policy may not be transferred without our written consent except in the case of death of an individual named insured. If you die, your rights and duties will be transferred to your legal representative but only while acting within the scope of duties as your legal representative. Until your legal representative is appointed, anyone having proper temporary custody of your property will have your rights and duties but only with respect to that property.

IL 00 17 11 98 Copyright, Insurance Services Office, Inc., 1998 Page 1 of 1



Wheels: A Question of Where

The Commercial General Liability Policy excludes bodily injury and property damage arising out of the use of automobiles and out of the transportation of mobile equipment by an automobile. Operation of mobile equipment, however, is covered under the CGL and represents an important exposure for many insureds, especially contractors.

Mobile equipment as defined in the CGL policy includes the following types of land vehicles, which are not designed for travel on public roads:

▪ Bulldozers, farm machinery and forklifts.

▪ Vehicles maintained for use solely on or next to premises that the insured owns or rents. For example, a vehicle used solely at a lumber yard to transport building materials.

▪ Vehicles that travel on crawler treads.

▪ Vehicles maintained to provide mobility to permanently mounted power cranes, shovels, loaders, diggers or drills, road construction or resurfacing equipment.

▪ Trailers with permanently attached air compressors, pumps, generators and cherry pickers.

Each item of mobile equipment owned, rented or used by an insured must be checked against this list to determine if coverage is applicable under the CGL or, alternatively, if the equipment should be insured under the business auto policy. Vehicles that are exempted from the mobile equipment definition are self-propelled and have

the following types of permanently attached equipment:

▪ Equipment that is designed for snow removal, road maintenance (not construction or resurfacing), or street cleaning.

▪ Cherry pickers mounted on an automobile or truck chassis.

▪ Air compressors, pumps and generators.

Although these vehicles are considered autos and are not covered under the CGL policy, an exception grants coverage for bodily injury or property damage. The coverage for these type vehicles with attached equipment is split between the CGL, which covers the operation of the equipment, and the business auto policy, which covers on-the-road exposure.

Bodily injury caused by a fallen tree limb as a result of the activities of a tree trimming crew operating from a cherry picker attached to a parked vehicle would be covered under the CGL. But injury caused by the vehicle while travelling on the road would be excluded under the CGL but covered under the business auto policy.

In assessing an account for business auto and CGL coverage, a comprehensive list of all vehicles must be made and reviewed against the definition of mobile equipment, contained in the CGL policy. Those vehicles falling outside the mobile equipment definition must be scheduled under the business auto policy subject to an appropriate premium to avoid a potentially serious gap in coverage.



“Autos” vs. “mobile equipment”

For other than “regular road vehicles” licensed and carrying people or cargo principally, the following indicates the “auto” or “mobile equipment” classification of various kind of vehicles.

Type of Equipment (Notes) Auto “Mobile

Equipment” Type of Equipment (Notes) Auto

“Mobile Equipment”

Air Compressor: Road Construction Equipment X

Not self-propelled (1) X Road Maintenance (not Construction/Resurfacing Equipment):

Self-Propelled (2) X Not self-propelled X

Building Cleaning Equipment See Air Compressors

Self-Propelled X

Bulldozers, other equipment On crawler treads

X Road Resurfacing Equipment (1) X

Cherry Pickers, similar devices to raise or lower workers:

X Shovels (1) X

Not self-propelled (1) X Snow Removal Equipment:

Self-Propelled (2) X Not self-propelled X

Cranes (power) (1) X Self-Propelled X

Diggers (1) X Spraying Equipment –

Drills (1) X See Air Compressor

Farm Machinery X Street Cleaning Equipment –

Trucks used on farm X Not self-propelled X

Forklifts X Self-Propelled X

Generators Vehicles Which Are:

Not self-propelled (1) X Designed for use principally off public roads

X

Self-Propelled (2) X Maintained for use solely on or next to premises named insured owns or rents

X

Geophysical Exploration Equipment- See Air Compressor

Not otherwise classified, maintained Primarily for purposes other than Transportation of persons or cargo

X

Lighting Equipment – See Air Compressor

Welding Equipment –

Loaders (1) X See Air Compressors

Pumps: Well Service Equipment

Not self-propelled (1) X See Air Compressors

Self-Propelled (2) X

Notes: (1) - Vehicles on which the equipment is permanently attached, maintained primarily to provide mobility to such equipment. (2) – “Mobile Equipment”, if designed for use principally off public roads or maintained for use solely on or next to named insured’s owned or rented premises.



“CGL” means liability coverage is provided by standard CGL insurance and is excluded by standard business auto coverage. “BAC” means liability coverage is provided by standard business auto coverage (assuming coverage is issued for the vehicle to be a covered auto) and is excluded by standard CGL insurance.

Type of Equipment (Notes) Operation

of Equipment Other

Hazards Type of Equipment (Notes)

Operation of Equipment

Other Hazards

Air Compressor: Road Construction Equipment (1) CGL CGL

Not self-propelled (1) CGL CGL Road Maintenance (not Construction / Resurfacing Equipment):

Self-Propelled (2) CGL BAC Not self-propelled CGL CGL

Building Cleaning Equipment (see air compressors)

Self-Propelled BAC BAC

Bulldozers, other equipment on crawler treads (3)

CGL CGL Road Resurfacing Equipment (1) CGL CGL

Cherry Pickers, similar devices to raise or lower workers:

Shovels (1) CGL CGL

Not self-propelled (1) CGL CGL Snow Removal Equipment:

Self-Propelled (2) CGL BAC Not self-propelled CGL CGL

Cranes (power) (1) CGL CGL Self-Propelled BAC BAC

Diggers (1) CGL CGL Spraying Equipment – See Air Compressor

Drills (1) CGL CGL Street Cleaning Equipment

Farm Machinery CGL CGL Not Self-Propelled CGL CGL

Trucks used on farm CGL CGL Self-Propelled BAC BAC

Forklifts CGL CGL Vehicles Which Are:

Generators CGL CGL Designed for use principally off public roads (3)

CGL CGL

Not self-propelled (1) CGL CGL Maintained for use solely on or next to premises named insured owns or rents (4)

CGL CGL

Self-Propelled (2) CGL BAC

Not otherwise classified, maintained Primarily for purposes other than Transportation of persons or cargo (4)

CGL CGL

Geophysical Exploration Equipment-See Air Compressor

Welding Equipment – See Air Compressors

Lighting Equipment – See Air Compressor

Well Service Equipment - See Air Compressors

Loaders (1) CGL CGL

Pumps:

Not self-propelled (1) CGL CGL

Self-Propelled (2) CGL BAC

Notes: (1) Vehicles on which the equipment is permanently attached, maintained primarily to provide mobility to such equipment (2) “CGL” if designed for use principally off public roads or maintained for use solely on or next to named insured’s own rented

premise. (3) Although designed for principally off public roads, “CGL” applies in the event there should be operation on a public road (4) CGL does not exclude operation on a public road, for example, to secure needed service or repair, so long as maintained for sole

purposes described.



AVAILABLE ENDORSEMENTS

VALUE REPORTING Used when personal property values fluctuate (department stores, furniture stores, auto dealers)

PROVISIONAL AMOUNT

Coverage set above the expected highest monthly value. This is the maximum coverage that applies.

PREMIUM IS BASED UPON 75% OF THE PROVISIONAL AMOUNT

The insured makes monthly reports of value. At expiration, the 12 reports are totaled and divided by 12 to calculate the average monthly value. Premium is adjusted to this average. If the average is higher than 75% of provisional amount, additional premium is due. If lower, return premium is paid by insurer.

Reports must be timely and accurate, reporting 100% of value

Reports must be filed within 30 days of the end of the month

THE FIRST REPORT IS LATE, LOSS IS REDUCED BY 25%

EXAMPLE: Policy starts Jan 1. First report is due within· 30 days of Jan 31. If received by March 2 it is on time. Any covered loss that occurs through March 2 is paid in full (less deductible) up to the Provisional Amount. If the January report has not been made and loss occurs after March 2, only 75% of loss will be paid. The maximum payable under any circumstances if the first report has not been made is 75% of the Provisional Amount (the amount for which premium has been charged).

IF THE FIRST REPORT WAS MADE AND A LATER REPORT IS OVERDUE, LOSS IS LIMITED TO THE LAST REPORTED VALUE

EXAMPLE: The January report is $20,000; February report is $40,000. March report not yet made:

THE MARCH REPORT IS DUE BY APRIL 30 and is LATE on MAY 1

If covered loss occurs anytime up to April 30, it is covered in full (less deductible) up to the Provisional Amount. If loss occurs after April 30, the maximum amount payable is $40,000.

100% OF VALUE MUST BE REPORTED OR A PENALTY IS CHARGED

Using the above EXAMPLE, If the report was not yet due at time of loss, (prior to May 1) but adjuster determined correct end of February value was $80,000, the insured under reported by 50%:

Value Reported $40,000 + Actual Value $80,000 = ½ Only ½ of claim will be covered

IF THE CLAIM AMOUNT WAS $100,000, ONLY $50,000 (½) IS PAID

If the loss occurred after April 30, the report was late at time of loss. If under reported as above, only ½, MAXIMUM OF $40,000 IS PAYABLE.

REPORTS MUST BE 100% ACCURATE AND TIMELY TO AVOID PROBLEMS!!!

NOT FOR TEST PURPOSES: Premium charged for Value Reporting is ¾ of provisional amount. Increase

amount insured states as highest expected monthly value by 33.4% and use as the provisional amount. Thus, if

the first report is late at time of loss, coverage provided will be equal to the insured's stated highest value. This often results in return premium due at expiration which can be applied towards the renewal premium, as opposed to an additional premium due which, when added to next year's premium, may result in a "cash-flow problem" for the insured and loss of an account for you!



Claims Made CGL – Test #1 A 2000 OCC

B 2001 OCC

C 2002 CM

D 2003 CM

E 2004 CM

F 2005 CM

G 2006 CM

H 2007 OCC

I 2008 CM

J 2009 CM

K 2010 CM

L 2011 CM

M 2012 OCC

N 2013 CM

O 2014 CM

RA RA RA RA All policies: Jan. 1 inception and Dec. 31 expirations dates (calendar year) RA = retroactive date. If RA date shown, assume January 1 of policy year. If no RA date shown, this indicates no change of RA date. OCC – OCCURRENCE FORM CM = CLAIMS MADE FORM WHICH COMPANY, IF ANY, PAYS THE CLAIM, INDICATE BY LETTER:

Occurrence Date

Report Date

Claims Made Date

Occurrence Date

Report Date

Claims Made Date

1 5/00 3/02 4/02 14 4/07 8/07 2/08

2 5/01 2/02 5/08 15 3/07 4/08 5/14

3 2/02 2/03 5/03 16 5/08 6/09 8/10

4 5/02 6/02 7/05 17 3/09 7/09 1/10

5 12/04 4/05 5/05 18 10/09 7/10 2/12

6 11/04 2/05 7/07 19 11/10 2/12 9/12

7 10/04 6/05 7/06 20 12/10 4/11 7/12

8 3/05 4/06 5/10 21 12/11 4/12 9/12

9 10/05 9/06 3/07 22 5/12 4/13 5/14

10 11/05 4/07 7/07 23 5/12 1/13 2/15

11 6/05 2/07 4/12 24 6/13 7/13 8/14

12 8/05 2/07 9/11 25 3/13 4/14 12/14

13 7/06 2/07 9/07



Claims Made CGL – Test #1 A 2000 OCC

B 2001 OCC

C 2002 CM

D 2003 CM

E 2004 CM

F 2005 CM

G 2006 CM

H 2007 OCC

I 2008 CM

J 2009 CM

K 2010 CM

L 2011 CM

M 2012 OCC

N 2013 CM

O 2014 CM

RA RA RA RA All policies: Jan. 1 inception and Dec. 31 expirations dates (calendar year) RA = retroactive date. If RA date shown, assume January 1 of policy year. If no RA date shown, this indicates no change of RA date. OCC – OCCURRENCE FORM CM = CLAIMS MADE FORM WHICH COMPANY, IF ANY, PAYS THE CLAIM, INDICATE BY LETTER:

Occurrence Date

Report Date

Claims Made Date

Answers Occurrence

Date Report Date

Claims Made Date

Answers

1 5/00 3/02 4/02 A 14 4/07 8/07 2/08 H

2 5/01 2/02 5/08 B 15 3/07 4/08 5/14 H

3 2/02 2/03 5/03 D 16 5/08 6/09 8/10 K

4 5/02 6/02 7/05 E 17 3/09 7/09 1/10 K

5 12/04 4/05 5/05 NONE 18 10/09 7/10 2/12 L

6 11/04 2/05 7/07 E 19 11/10 2/12 9/12 L

7 10/04 6/05 7/06 NONE 20 12/10 4/11 7/12 L

8 3/05 4/06 5/10 G 21 12/11 4/12 9/12 NONE

9 10/05 9/06 3/07 G 22 5/12 4/13 5/14 M

10 11/05 4/07 7/07 NONE 23 5/12 1/13 2/15 M

11 6/05 2/07 4/12 NONE 24 6/13 7/13 8/14 O

12 8/05 2/07 9/11 G 25 3/13 4/14 12/15

Not enough information

given 13 7/06 2/07 9/07 G



Commercial General Liability Test 1. What forms make up the CGL contract?

2. For what hazards does the CGL contract cover?

3. Complete this sentence ...

The CGL contract protects the insured for hazards arising from....

4. The CGL policy comes in two coverage forms. What are they?

5. With the occurrence form, when must the accident happen in order to be covered?

6. For what period of time may the company audit the insured’s books

7. Define

a. “Bodily Injury” (BI)

b. “Property Damage” (PD)

8. Define: occurrence (not the form):

9. In the CGL policy, what is;

a. “Coverage A”

b. “Coverage B

c. “Coverage C” 10. What are the cancellation provisions in General Liability?



11. With the occurrence form, when must the accident be reported in order to be covered? 12. With the occurrence form, when must the claim be made in order to be covered?

13. With the" claims made form, when must the accident happen in order to covered?

14. With the claims made form, when must the accident be reported in order to be covered?

15. With the claims made form, when must the claim be made in order to be covered?

16. What is the retroactive date and to what form does it apply?

17. For which form does the extended reporting periods apply?

18. Is the basic extended reporting period free and automatic coverage? If not, when must it be purchased?

19. When should the insured consider the “SERP” coverage?

20. With “SERP”, how long do you have to make claim?



21. There are 12 BI & PD exclusions. What are they?

22. What contractual agreements are covered in the CGL contract?

23. What type of liquor liability is covered in the CGL contract?

24. Does the CGL contract cover liabilities arising out of mobile equipment?

25. Is there any liability coverage for:

a. Autos

b. Watercraft

26. Miscellaneous property damage is excluded in the CGL contract. Give four brief examples.

27. Give 3 examples of personal injury & 3 examples of advertising liability.

28. Are medical payments a voluntary or legal liability coverage?

29. Give 4 examples of persons not covered for medical payments.



30. Who are insureds if the named insured is: a. an individual

b. a partnership or joint venture

c. an organization

31. What type of nonemployee is covered as an insured?

32. If the named insured acquires or forms another business, what type of coverage is afforded?

Who is the exception to this coverage?

33. What does the term “Aggregate Limits” mean?

34. What do the 2 aggregate limits apply to?

35. How much coverage applied per person under medical payments?

36. what are the minimum limits for:

a. fire damage

b. general aggregate

c. products – completed operations

d. personal and advertising injury

37. How much coverage do you get with the supplemental extended reporting period? 38. What form is available to cover a pollution liability exposure?



39. What form is available to cover a specific hazard of an independent contractor? 40. How does the lawyer’s professional liability form differ from other forms? 41. What are the supplementary payments in the CGL contract?

42. What does “separation of insureds” mean?

43. Is the claims-made policy primary or excess over other policies?



Commercial General Liability Answers

1. Declarations Page, CGL Conditions, Common Policy Conditions, Nuclear Energy Liability Exclusion, Pollution Liability Amend and Claims Made or Occurrence Form

2. Direct, Indirect or Contingent and Contractual 3. Bodily Injury and Property Damage (Premises & Operation / Products & Completed

Operations) 4. Occurrence & Claims-Made 5. During the policy period 6. During the policy and up to 3 years after policy has expired 7. BI: Physical injury / harm and the sickness, disease and death that results.

PD: Damage to tangible property, loss of use of damaged property and blocked access 8. 1. Accident – Sudden and unexpected event.

2. Continuous and repeated exposure to the same general harmful conditions. 9. Coverage A: Bodily Injury and Property Damage

Coverage B: Personal and Advertising Injury Coverage C: Medical Payments

10. Non-renewal – 45 days First 90 days in effect: 20 days advance written notice, unless non-pay – 10 days After 90 days in effect: 45 days advance written notice, unless non-pay – 10 days

11. Anytime. There is no limit. 12. Anytime. There is no limit. 13. On or after the retroactive date and before the policy expiration 14. Under CGL: During the policy period

Under B.E.R.P.: Within 60 days of policy expiration 15. Under CGL: During policy period

Under S.E.R.P.: Within 5 years, if reported within 60 days of policy expiration 16. Original effective date and R/A date only applies to Claims-Made form. 17. Claims-Made form only 18. B.E.R.P. is automatic. No need to purchase 19. When policy cancels, Insured changes to another Claims-Made policy with new R/A Date.

When the Insured changes to occurrence policy, goes out of business or retires. 20. Unlimited duration 21. Intentional injury, Contractual, Liquor Liability, Employee Injuries, Pollution Liability,

Auto/Watercrafts/Aircrafts, Mobile Equipment, Misc. Property Damage, Insured’s Products, Insured’s Work, Defects/Delays, Recall and Electronic Data

22. 1. If Insured would have been liable anyway without an agreement 2. Insured Contracts such as: Leases, Easement Agreement / Sidetrack Agreement &

Hold Harmless Agreement if they were entered before the Bodily Injury or Property Damage

23. Anyone not in the business of selling, furnishing, distributing & serving alcohol/liquor 24. Yes, while on the job site or being put to its intended use. 25. A. Autos – Non-owned Autos parked on or next to the Insured’s premises.

B. Watercraft – Watercrafts ashore on the Insured’s Premises & Non-owned less than 26’ and not charging a fee.

26. 1. Damage to property owned, leased, rented or occupied. 2. Damage to property Insured has sold, given away or abandoned 3. Damage to the part of real property (structure) insured is working on. 4. Defective work.

27. Libel (written), Slander (spoken) wrongful eviction. Infringement of Copyright, slogan, etc.

28. Voluntary, non-legal coverage



29. Insured, Insureds or Tenants employees, tenants (when they are injured in the part of the building they normally occupy), anyone participating in athletics.

30. Individual and spouse Partners and spouses Corporate / Executive officers, directors and stockholders

31. Anyone acting as a real-estate / property manager for the Insured 32. 90 days automatic coverage. 33. Maximum amount paid from policy 34. General Aggregate: Premises & Operations, Personal/Advertising Injury, Fire Legal & Med

Pay Products & Completed Operations Aggregate: Products & Completed Operations. 35. $5,000 per person 36. a. $25,000 unless per occurrence is higher, then min is $50,000.

b. $50,000 c. $25,000 d. $25,000

37. same as expiring aggregates 38. Limited: Damage from contamination, etc.

Broader: Damage and clean-up costs 39. Owners and Contractors Protective (OCP) 40. Claims expenses are deducted from any amount which is payable. Claims expenses are

deducted first and claim check issued for difference. 41. Defense, premium for appeal bonds, release on attachment bonds, $250 premium on Bail

Bonds, Pre-Judgment and Post-Judgment Interest, $250 Lost Wages for Insured 42. In liability claims, each individual and each entity is looked at separately to determine

coverage and defense. 43. Excess



General Liability Questions 1. Which of the following are the coverage forms available for CGL?

a. Occurrence or Claims Made

b. Business Owners

c. Commercial General Liability

d. All the above

2. Which of the following cancellation/non-renewal time frames is correct regarding the CGL policy?

a. The insurer provides written notice 60 days prior to cancellation

b. For non-payment, the company may cancel with 20 days’ notice

c. After 90 days, 45 days written notice is required for non-renewal

d. During the first 90-days the policy is in force, the company must provide 10 days written notice of cancellation

3. Which is most accurate as to examination of Books and Records by the carrier?

a. Anytime the carrier chooses

b. During the policy period and up to one year after expiration

c. Carrier can only request a self-audit after policy expires

d. During the policy period and up to 3 years after expiration

4. How may the rights and duties of the insured be transferred?

a. Insured cannot transfer rights and duties

b. Insured may notify agent to transfer rights and duties

c. Rights and duties transfer automatically when insured sells business

d. By written consent of the carrier

5. The definition of Bodily Injury includes which of the following?

a. Slander, libel

b. False imprisonment, improper entry

c. Nonphysical injuries such as damage to reputation

d. Physical harm including sickness or disease or death resulting there from

6. When work is deemed completed:

a. When all work called for in the contract is completed

b. When all work to be done at the site has been completed if contract calls for work at more than one site

c. When that part of the work done at a job site has been put to its intended use by someone other than contractor or sub-contractor

d. All the above



7. Which of the following most accurately describes "Product"?

a. Goods or products other than real property

b. Containers, materials, parts or equipment furnished in connections with goods or products

c. Goods or products manufactured, sold, handled or distributed or disposed of by the insured, others trading under the insured's name

d. All the above

8. Which of the following most accurately defines “Occurrence” in a general liability policy?

a. An accident

b. A happening, sudden and accidental

c. A faulty product

d. An accident, including continuous or repeated exposure to the same general harmful conditions

9. Which of the following is defines “covered territory” as explained in a general liability

policy?

a. Worldwide no matter where the product is manufactured or sold.

b. United States and its territories or possessions, Puerto Rico, Mexico, and Canada.

c. United States and its territories or possessions, Puerto Rico and Canada, including international waters and airspace between these places

10. Under the contractual exclusion which contracts are specifically accepted?

a. All contracts are excluded

b. All contracts are excluded unless they are made during the policy period

c. Leases, easements, elevator maintenance, sidetrack agreements, entered into prior to BI or PD

d. Who cares?

11. Which is most accurate as to the BERP?

a. Loss will be considered to have been reported on the last day of the policy period and will be eligible for coverage if the loss occurred during the policy period and is discovered and reported within 60 days of expiration.

b. Loss will be covered if it occurred during the policy period or within 60 days of policy expiration and was reported within 60 days of expiration

c. Loss will be covered if it occurred within 30 days of expiration and was reported within 60 days of expiration

d. Loss will be covered if it occurred within the policy period but was not discovered and reported until 5 years after policy expired.

12. Which is most accurate as to how liquor liability is covered under the CGL?

a. Excluded insured must purchase a separate policy

b. If insured is not in the business of serving, selling, bottling or distributing alcohol, coverage is provided for.

c. Excluded, but insured can endorse for additional premium for Host liability only.

d. None of the above



13. Which of the following are not exclusions in the CGL?

a. Liquor Liability

b. Employee Injuries

c. Intentional Bodily Injury

d. Mobile equipment at the premises

14. Which is most correct as to how Pollution is covered under the CGL?

a. $10,000 cleanup costs at the job site from a covered cause of loss

b. $10,000 cleanup costs as a result of an auto accident

c. $10,000 cleanup costs at the premises due to accidental spillage

d. No coverage

15. Which of the following are not exclusions under the CGL?

a. Damage to insured's product

b. Damage to Insured's work

c. Defects, Delays, Recall

d. Damage to a sub-contractor’s work

16. Which of the following are included in Personal Injury/Advertising injury coverage?

a. Liability from written or oral publications with knowledge of falsity

b. Violation of the law with knowledge or consent of the insured

c. Liability assumed under contract, breach of contract

d. False arrest, detention or imprisonment, malicious prosecution, wrongful entry or eviction, libel, slander

17. Define supplementary payments:

18. Who is an insured?

19. Which of the following is the basic limit of liability under the CGL?

a. $25,000

b. $50,000

c. $100,000

d. $300,000

e.

20. Which is the basic limit for Fire Damage under the CGL?

a. $25,000

b. $50,000

c. $100,000

d. No basic limit applies



21. In relation to the occurrence limit, the aggregate limit is which?

a. Same as the occurrence

b. There is no aggregate

c. Equal to or higher than per occurrence

d. Who cares?

22. Which best describes Owner & Contractors Protective Liability (OCP)?

a. Covers only specific contractors and specific jobs

b. Covers insured's premises liability only

c. Covers insured against claims for Bodily Injury/Property Damage from work done by another on behalf of the insured

d. None of the above

23. Which best describes Liquor Liability Coverage Form?

a. Is included in the CGL form for host liquor liability

b. Is excluded in the CGL form

c. Covers for those in the business of selling, serving, bottling, distributing alcohol

d. All the above

24. Which best describes the difference between excess liability and umbrella liability?

a. There is no difference

b. Umbrella can provide coverage not included in the primary coverage

c. Excess can provide coverage not included in the primary coverage

d. Neither is worth the money

25. What is the Definition of Professional Liability?

26. The minimum limits for PS&D are which?

a. 25,000/50,000

b. 50,000/75,000

c. 100,000/250,000

d. 250,000/750,000

27. The minimum limits for Lawyers Professional are which?

a. 25,000/75,000

b. 250,000/750,000

c. 100,000/250,000

d. They are too cheap to buy insurance

28. Under Lawyers Professional, how are claims paid?

a. A separate limit selected by the insured

b. Above the policy limits, an unlimited amount

c. Within the policy limits, claims expenses paid first

d. The form does not pay claims



29. Under the Farm Liability form which is the limit for custom farming?

a. Covered for the first $2,000 in receipts

b. Covered for the first $5,000 in receipts

c. No coverage without an endorsement

d. What the heck is custom farming?



General Liability Questions (Answers) 1. A 2. C 3. D 4. D 5. D 6. D 7. D 8. D 9. C

10. C 11. A 12. B 13. D 14. D 15. D 16. D 17. Supplementary payments:

All costs of litigation, including court costs, prejudgment interest, interest on judgments, cost of bonds to release attachments, $250 cost of bail bonds, $250 per day loss of earnings due to loss time

18. a. If named insured is an individual: spouse and legal successors b. If named insured is a partnership or joint venture: partners, members, and spouses c. If named insured is an LLC: members and managers d. If named is insured is any other organization: officers, directors, and stockholders

19. C 20. C 21. C 22. C 23. C 24. B 25. Definition of Professional Liability: Liability arising from rendering or the failure to render

professional services. 26. D 27. A 28. C 29. B



General Liability Questions CGL – Bodily Injury & Property Damage – Insuring Agreement 1. General Liability Insurance may protect an insured against three different legal theories of

recovery. Identify the three kinds of legal liability.

2. Name the two different forms of Comprehensive General Liability Coverage.

3. A CGL contract must contain a Declarations, the Common Policy Conditions, and a Nuclear Energy endorsement. What other form is necessary to complete the contract?

4. Viewing only the CGL insuring agreement for BI and PD, which of the following claims could be covered, if no exclusion applies? Explain each answer.

a. Claimant injured by a product manufactured by insured in U.S., but sold in the Bahamas, where injury occurred.

b. Claimant injured by a product manufactured by insured in Bahamas, but sold in U.S., where injury occurred.

c. Claimant injured by product manufactured and sold by insured in Bahamas, injury occurred in U.S.

d. Insured caused an accident which did not damage claimant's premises, but blocked access to claimant's premises, and, claimant is suing for resultant loss of business.

e. Claimant sued insured, seeking an injunction against completion of a contract, alleging it was unsafe because it had already resulted in injuries to others.

f. Insured sought coverage for defense against a $100,000 claim. Prior claims had resulted in only $50,000 protection remaining.

5. Assume, for each of the following, insured had calendar year policies: occurrence policies in 2010 and 2011; claims-made policies in 2012 and 2013, both stating retroactive date January 1, 2012. The insured retired from business and did not renew or replace the 2013 policy. If there is BI or PD from a covered occurrence, which policy or policies (if any) apply for the following situations?



a. Insured sold product which caused injury in 2010. It injured claimant in 2011, claimant first made claim against insured in 2012.

b. How, if any, would your answer in a. differ if the 2012 claims-made policy contained no

retroactive date? c. Claimant injured in 2012, at which time insured reported occurrence. Claim was first

made against insured on February 1, 2013. d. Same as c., but claim was first made against insured on July 1, 2013. e. Same as c., but claim was first made against insured on February 1, 2014. f. Same as c., but claim was first made against insured on July 1, 2014 g. When the insured retires from business on December 31, 2013:

(1) What standard optional coverage should be considered?

(2) How is such coverage procured?

(3) What happens if the insurer does not wish to provide coverage?

(4) Does such coverage leave any gaps for occurrences which happened prior to expiration of the last policy?



6. Suppose, in the situation described in 5., the insured did continue in business and continued the coverage on January 1, 2014, but with another carrier and with a new retroactive date of January 1, 2014:

a. How, if any, would your answer to 5.f. differ?

b. Is any coverage gap presented by such a series of policies? If so, describe.

CGL – Bodily Injury & Property Damage - Exclusions 7. With the only coverage issue being whether or not an exclusion applies, indicate "excluded" or

"not excluded" or "partially excluded" for each of the following, and explain: a. Claimant was injured by a 24- foot power boat which the insured had rented to take

employees fishing.

b. Insured, a building contractor was sued by a person injured when a minor employee of the insured became intoxicated at the insured's employees' picnic and then injured the claimant with his automobile.

c. Insured manufactured a series of defective products and recalled them all from the marketplace. The claimant was injured by one of the products.

d. The insured was a tenant, and there was an explosion which damaged the owner's

building. The owner alleged the explosion was due to the insured's negligence and claimed (or the building damage.

e. Same as d., except it was a fire, rather than an explosion.

f. Claimant was injured by an insured's parking valet, who was parking, a customer's car, in insured's parking lot on insured’s premises.

g. Same as f., except the claimant was the owner of the car which was damaged by the valet in the process of parking it.

h. Insured sold claimant a television set, which exploded. Claimant sued insured for the value of the set

i. The insured, AB Construction, contracted ~o build a building for Crusoe's Island Restaurant. The contract contained a "hold harmless" clause, wherein AB would indemnify Crusoe's for any of Crusoe's liabilities. Mark was injured and made a claim



against Crusoe's. Crusoe's sued AB to be held harmless from this claim, per the contract agreement

j. Insured was a general contractor and was sued by a claimant who was injured by an employee of the plumbing subcontractor. The subcontractor was not an insured under the policy.

k. The insured was sued by a claimant for bodily injuries after being assaulted and intentionally injured by one of the insured's employees.

l. Insured installed electrical wiring in a building which later burned down, allegedly due to faulty wiring. Building owner claimed against insured for damage to and loss of use of the building.

m. A general contractor claimed against insured plumbing contractor for cost of tearing out pipes which were allegedly installed in a faulty manner, in a building under construction.

CGL – Coverages Other Than Bodily Injury & Property Damage CGL insured owns apartment house. What coverages (if any), other than BI and PD, apply for the following:

a. Tenant, while in lobby, slipped and fell; medical bills incurred.

b. Insured, suspecting illegal activities by a tenant, checked tenant’s apartment while tenant was gone. Tenant sued for damages for wrongful entry.

c. Guest of a tenant, after using insured's swimming pool, became ill from chlorine in pool water incurred medical bills.

d. Insured incurred $300 out of pocket travel expense to give a deposition in a claim, requested by company

CGL – Remainder of Contract 8. Under a CGL policy, ''Flowers. Inc." is the named insured. Assuming a covered occurrence,

which of the following interests are insureds under the policy for the situations described? a. Bill and Ted are employees of Flowers. Bill injured Ted on the job. Ted sued Bill.



b. Flowers sublet work to Acme. An employee of Acme injured Dianne. Dianne sued Acme.

c. Flowers listed property for sale with Barbara. Barbara was showing the property to Miguel, a prospective purchaser, who was injured. Miguel sued Barbara.

d. Flowers's executive vice president, Juanita, was sued by a Flowers employee for an injury on the job. "

e. Flowers formed a partnership with Vases, Inc. and, within 5 (five) days thereafter, an occurrence caused injury to Phil, who sued the partnership.

f. How, if any, would your answer to ‘question e.’ differ if Phil had sued Flowers alone, rather than the partnership?

g. Flowers purchased Greenhouses, Inc. thirty (30) days later, Greenhouses was sued by Hal, who had been injured in an occurrence one (1) year before.

9. The insured had a CGL policy with limits of $100,000 each occurrence BI and PD, $100,000 Personal and Advertising Injury, $300,000 General Aggregate, $300,000 Products Aggregate, $5,000 Medical Payments and $50,000 Fire Damage Liability. Assume covered occurrences and claims were all during the current policy period:

a. Three persons were injured in an accident. There are no liability claims, but there are medical expenses of $3,000 for one person, $7,000 for the second person and, $12,000 for the third person. How much is payable?

b. The company paid a $60,000 PD liability claim for an occurrence during an ongoing construction job. After this claim and the claim in a., how much coverage is available to the insured for the next claim for BI or PD?

c. The company paid a $30,000 liability claim for fire damage to the building rented by the tenant. What limit is available if the same type of loss should occur again at the same building?

d. After the claim payments in a., b. and c., what aggregate limits of protection remain available to the insured?



e. A claimant injured by the insured's product secured a damage judgment for $150,000.

How much is payable?

f. The company paid a claim for slander in the amount of $80,000. Later, there was another claim for slander, by another person, who was awarded a judgment of $70,000. How much is payable for the second claim?

g. What limits, after all the preceding claims are paid, remain available to the insured for the rest of the policy year?

10. Sanborn, Inc. and Butler, Inc. have identical CGL policies, except the BI/PD each occurrence limits are $100,000 for Sanborn and $300,000 for Butler. Sanborn and Butler" become jointly liable for a BI claim of $60,000. How much is paid by each policy?



11. A Physicians, Surgeons and Dentists Professional Liability policy names "Smith, M.D., "Jones, M.D." and "Smith & Jones, P.A." as insureds.

a. Smith was sued by a patient for complications arising from an illegal abortion performed by Smith." Covered or not covered? Explain.

b. Policy limits are 100/300. For previous occurrences during the policy period, the insurer had already settled three claims, two against Smith and one against Jones, paying $100,000 for each. Another claim has been made during the policy period, against Jones. Must the company defend? Is there any coverage? Explain.

12. The insured is a hospital with Hospital Professional Liability coverage. State "covered" or "not covered" for each following incident, and explain.

a. The claimant is a patient who was taking an exercise walk in the hall, slipped and fell on a wet floor that had just been mopped.

b. The claimant is a patient who alleges injury from food poisoning by hospital food.

c. The claimant alleges malpractice by a staff physician. Apart from the claim against the physician, the claim is against the hospital for failure of its professional standards committee to discharge the physician, prior to the incident, for prior acts of the physician" which had come to the committee's attention.

13. The insured is a law firm with a Lawyers Professional Liability policy. a. Samantha, formerly associated with the insured firm, was sued by a client for an act

during the time she was with the firm. The act and the claim both occurred during the current policy period. Is Samantha covered under the policy, or the policy of the firm with which she became associated before the claim was made, or both policies, or neither policy?

b. The insured's limits are 100/300. In a covered claim, there was judgment for the claimant for $150,000. Defense costs in the case were $20,000. How much of the judgment can the policy pay?

c. A disgruntled employee of the law firm, bent on sabotage, secreted some important papers on a case, ultimately resulting in a professional liability claim by the client whose case was lost because of the employee's act. Covered or not covered? Explain.



14. The Farm Liability coverage form provides coverage for bodily injury or property damage

arising out of a. Farm operations. b. Personal activities. c. Both above. d. Neither of the above.



General Liability Questions (Answers)

1. Direct; indirect or contingent; contractual.

2. Occurrence and Claims – Made.

3. A coverage form – either Occurrence or Claims-Made form. 4.

a. Covered territory is anywhere in the world if the product was manufactured or sold in U.S. b. Covered. Same as a. c. Not covered. Product not manufactured or sold in U.S., Canada or Puerto Rico. d. Covered. "Property damage" includes loss of use of tangible property which has not been

physically damaged. e. Not covered. Claim is not for money damages f. Covered. Defense against claim is afforded until policy limits are exhausted.

5.

a. The 2011 occurrence policy applies (occurrence form applies to BI/PD which occurs during the policy term). The 2012 claims-made policy does not apply because the occurrence happened before the retroactive date.

b. The occurrence policy would still apply, and the 2012 claims-made policy would also apply (with no retroactive date, it applies· to claims for all prior occurrences if first made during its term). Occurrence policy would be primary, the claims-made coverage would be excess.

c. The 2013 claims-made policy applies (occurrence after retroactive date, claim first made during its term). The 2012 claims-made policy does not apply because it has expired, and nothing has happened to invoke the basic extended reporting period.

d. Same answer as c. e. The 2013 claims-made policy applies. As it was not renewed, the basic extended reporting

period applies. f. Same as e. As the occurrence was reported before 60 days after policy expiration, a basic

extended period applies as to claims made for 5 years. g. (1) The insured should consider buying supplemental extended reporting period coverage

because the basic only provides an additional 60-day reporting period. (2) It must be requested of the insurer in writing within 60 days of expiration. (3) The insurer has no choice; issuance is guaranteed. (4) No, unless the occurrence took place prior to the retroactive date.

6. a. The answer is the same. Although claim is made in 2014 the occurrence was before the

retroactive date of the 2014 policy. The basic extended reporting provision of the 2013 policy applies. b. There is a coverage gap: If an occurrence happened in 2012 or 2013, and was not

reported within 60 days of the 2013 policy expiration, then the basic extended reporting period of the 2013 policy would not apply, and the 2014 policy would not apply because of its retroactive date.

7.

a. Not excluded - general watercraft exclusion accepts non-owned boats under 26 feet, not used to carry persons or property for a charge.

b. Not excluded – liquor liability exclusion applies only to those in the liquor business.

c. Not excluded – recall exclusion does not apply as this is a products claim, not liability for recall.



d. Excluded – damage to property rented to insured.

e. Not excluded - exclusion does not apply to fire damage.

f. Not excluded - exception to automobile exclusion permits parking of non-owned autos on insured's premises.

g. Excluded – property in the insured’s care, custody or control.

h. Excluded – damage to the insured’s product.

i. Not excluded - contractual exclusion does not apply to business agreement entered into before the injury.

j. Not excluded – no policy exclusion applies to situation.

k. Not excluded – the injury was not intentionally inflicted by the insured.

l. Partially excluded – no coverage for the insured’s own work; balance of loss not excluded.

m. Excluded - property damage exclusion for restoration of work improperly performed.

8.

a. Covered by Medical Payments. Exclusion applies to insured’s tenants only while on that portion of premises tenant normally occupies.

b. Covered by Personal Injury.

c. No coverage – Medical Payments covers only accidents, not sickness.

d. Covered by Supplementary Payments.

9.

a. Bill in not insured – employees are not insureds as to injuries to fellow employees.

b. Acme is not an insured – no provision includes insured’s subcontractors.

c. Barbara is in an insured – real estate manager.

d. Juanita is an insured – corporate executive officer.

e. The partnership is not an insured - automatic coverage for new businesses does not include partnerships.

f. Flowers is not insured – no interest is insured for a partnership which is not a named insured.

g. Greenhouses is not an insured - automatic coverage for new businesses is only for events which occur after the acquisition.

10.

a. $13,000 payable – maximum $5,000 per person.

b. $100,000, each occurrence limit.

c. $50,000 -limit applies per fire.

d. General Aggregate: $112,000 ($300,000 original less $103,000 paid to date). Products Aggregate: $300,000 (no claims yet).

e. $100,000, the per occurrence limit.

f. $70,000 – limit applies per person.

g. Against the $300,000 general aggregate limit, claims paid total $253,000. Thus, a total of $47,000 remains available for the next occurrence for BI and PD or for Personal and Advertising Injury or for Fire Damage or for Medical Payments before the General Aggregate is exhausted. $200,000 Products Aggregate remains (original $300,000 less the one $100,000 products claim paid); $30,000 is paid by each - as both are CGLs, equal shares apply.

11.

a. Not covered – criminal acts are excluded.

b. The insurer must defend and pay up to the $100,000 limit. The limits apply separately to each insured and there is $200,000 aggregate coverage remaining for Jones.



12. a. Not covered - this was not a medical incident and was unrelated to furnishing professional

services (this would be covered under the hospital's Commercial General Liability policy). b. Covered – this situation is included in the definition of “medical incident.” c. Covered - the definition of "medical incident" includes activities of insured's boards and

committees.

13. a. This policy covers. Under the definition of insured, Samantha is an insured for acts prior to

termination and the policy of the new firm does not cover her for prior acts. b. $80,000. The policy limit ($100,000) applies to defense costs first, then to damages. c. Not covered – coverage excludes liability arising out of a malicious act by an employee.

14. C is correct. The Farm Liability coverage form provides coverage for both farm operations

and personal activities.




Property & Casualty Exam Workbook Unit 9: Commercial Package Policies


UNIT

COMMERCIAL PACKAGE POLICIES

OVERVIEW

Commercial Package policies are those that combine or “package” individual lines of

insurance in a single contract. Such packages are generally thought to be advantageous

to both the insured and insurer. For the insured, there are fewer policies with which to

deal, the chance of coverage gaps or overlapping coverage is reduced, and premium

savings often result. Insurers realize expense savings and may avoid adverse risk

selection. Standard commercial packages do not include aviation, surety, health, ocean

marine or workers’ compensation exposures. All or parts of all other may be packaged.

There are two standard policy forms, the Commercial Package Policy and the Business

Owners Policy.

OBJECTIVES


• Commercial Package Policies

• Commercial Package Policy

• Business Owners Policy

Unit 9: Commercial Package Policies Property & Casualty Exam Workbook


Package Policies Business Owners Chart

• ELIGIBLE RISKS ARE THOSE SPECIFIED BY THE INSURANCE SERVICE OFFICE (ISO)

Type of

Business Type of Occupancies Permitted Area Permitted and Limitations

1)

Apartment Buildings and Residential Condominiums

• Eligible offices

• Incidental Eligible Wholesalers *

• Incidental Retail *

• Incidental Processing and Service *

• Incidental Contractors **

• * No more than 25,000 sq. ft.

• ** Contractors No more than 7,500 sq. ft. or 15% of total area

2) Offices and Office Condo Associations

• Office Building not over 6 stories

• Office’s Tenants

• Same incidental businesses above*

• Owners – Building maximum 100,000 sq. ft.

• Tenants – No more than 25,000 sq. ft.in a single building

3)

Mercantile (Retail) / Wholesale/ Service and Processing risks

• Owners or Tenants

• Up to 25,000 sq. ft.

• No more than $3,000,000 gross sales at any location

• No more of 25% annual gross sales from off premises operations

4) Specialized (trade) contractors

• Singe specialty – Plumbing, electrical or other eligible activities

• Excluded – Hazardous Types (Carpentry & General Contractors) and also over 3 stories in height

• No more than 25,000 sq. ft.

• Gross sales no more than $3,000,000

• Maximum annual payroll $300,000

• Maximum height 3 stories

• 10% maximum subcontracted work

• No equipment rental

• Unrelated annual sales maximum 25%

5) Limited-cooking or Fast food business

• Cooking with microwaves, toasters, pizza ovens, infrared snack warmers, grilling, enclosed broiling, deep fat fryers, roasting and barbecuing

• Eligibility depends on size, seating capacity, type of food, drinks served, method of serving and cooking methods.

6) Convenience Food Stores

• With or without gasoline sales

• Eligible restaurants

• Gasoline sales less than 75% annual sales

• No auto service or repair shops

• No car wash

• No propane/kerosene sales

7) Self-Storage Facilities

• Maximum height 2 stories

• No cold storage

• No industrial material

• No chemical material

• No pollutants or waste

8) Motels (Building BPP)

• No Bars

• No Lounges

• Not more than 3 stories.

• No seasonal

• Closed more than 30 days



Package Policies Questions

1. What are the two “standard” policy forms for commercial packages?

2. All classes of risk are eligible for CPP except which?

3. Under the BP what is the limitation for permitted incidental occupancies for apartments & residential condo?

4. What is the limitation for trade contractors?

5. What is the square foot limitation and gross sales limitation for mercantile, wholesale & processing risks under the BP?

6. Can a general contractor be covered under a BP?

7. Under the BP for restaurants what does “limited cooking” mean?

8. What are the two forms available under the BP?

9. Under the BP property, how are losses settled?

10. What is the limitation for outdoor property under the BP?

11. What is the built-in percentage for inflation guard under the BP?

12. Under the BP which classes of personal property are at ACV in lieu of RC?

13. What is the limitation for personal property other than money/securities?



14. What is the on premises limitation for valuable papers/records?

15. Off premises location?

16. What is the limitation for accounts receivable:

a. on premises

b. off premises?

17. What is the loss of income provision in the BP?

18. What are the limits available under BP for employee dishonesty?

19. What is the minimum liability limit available under the BP?

20. What limits of fire legal liability are available under the BP?



Package Policies Questions (Answers)

1. Commercial Package Policy and Business Owners Policy

2. Those that are eligible for homeowners insurance, aviation, surety, health, ocean marine and workers’ compensation.

3. Not over 6 stories, permitted incidental occupancies cannot exceed 100,000 sq. ft. in a single building.

4. Primarily a single specialty, building or tenant cannot exceed 25,000 square feet and gross sales do not exceed $3,000,000. No work over 3 stories, subcontract 10% or less and gross payroll less than $300,000.

5. 25,000 square feet; $3,000,000 less than 25% of gross sales off premises.

6. No.

7. Food preparation does not emit enough smoke or grease vapors to require installation of exhaust systems or dry-chemical extinguishing systems.

8. All perils and basic.

9. Replacement Cost.

10. $2,500 aggregate – no more than $500 for any one tree, shrub or plant.

11. 8%

12. Household contents, property of others, used goods, manuscripts and works of art or antiques that specifically valued at ACV.

13. $5,000 off premises.

14. $10,000 on premises.

15. $5,000

16. a. On premises - $10,000

b. Off premises - $5,000

17. Up to 12 months of interruption, with no dollar limit.

18. $5,000 - $10,000 - $25,000 - $50,000 or $100,000 per occurrence

19. $300,000

20. $50,000



Commercial Package Policy Questions

1. Which of the following can be written as part of a Commercial Package policy? (select all that apply) a. Commercial Property

b. Boiler and Machinery

c. Farm

d. Commercial Inland Marine

e. Commercial Crime

f. Business owners

g. Commercial Auto

h.

2. The form which must be attached to a CPP and contains conditions that apply to all

coverages provided is the _________________________________________

3. What two types of property are covered under the Business owner policy?

4. What two types of coverage are provided under the Business owners policy in addition to property coverage?



Commercial Package Policy Questions (Answers) 1. a., b., c., d., e., and g 2. Common Policy Conditions form. 3. Buildings and Business Personal Property. 4. Liability; Medical Payments.



CPP Questions 1. For the commercial package policy which of the following are the two standard Policy Forms?

a. Standard and Special b. Basic and Special c. Commercial Package Policy and Businessowners Policy d. None of the above

2. All classes of risk are eligible for the CPP except which? (most correct)

a. Single family dwellings b. Apartment buildings c. 1-4 family dwellings d. Those that are eligible for homeowners’ insurance

3. Under the businessowners policy (BP) which is not eligible?

a. Apartment houses, residential condos b. Offices and office condos not over six stories, not over 100,000 square feet. c. Limited-cooking and fast food restaurants d. Roofers, general contractors

4. Define a Trade Contractors 5. Which of the following coverage forms are available under the BP?

a. Causes of Loss Form - Basic

b. Causes of Loss Form - Broad

c. Causes of Loss Form - Special

d. Both Basic and Special Forms 6. Under the BP which is most correct as to valuation of property?

a. Replace with like kind or quality

b. Replacement Cost

c. Actual cash value

d. Coinsurance clause applies

7. Which is most correct as to the limitation for Business Income and Extra Expense?

a. Must be added by endorsement

b. 25% monthly limitation

c. 80% coinsurance applies

d. Includes at no dollar limit up to 12 months coverage

8. Which is most correct as to the limitation for debris removal under the BP?

a. 10% of covered property up to the coverage limit

b. 25% of covered property

c. 25% of the loss up to policy limit + $10,000

d. none of the above



9. Which of the following are not automatically covered under additional coverages?

a. Fire department service charge-$1,000

b. Extended business income-30 days

c. Pollutant Clean up and Removal $10,000

d. Employee Dishonesty 10. Which of the following are automatically covered under additional coverages?

a. Outdoor signs b. Mechanical Breakdown c. Forgery or alternation-$2,500 d. Money & securities

11. Which is most correct about inflation guard in the BP?

a. Can be added by endorsement b. 8% and can be increased c. 8% cannot be increased

12. Which is most correct limit for valuable papers & records, accounts receivable on & off

premises? a. a $10,000 on $5,000 off each b. $5,000 on $5,000 off each c. $10,000 on $5,000 off valuable papers & record, $5,000/$5,000 accts receivable

13. Which is most correct as to outdoor property under the BP?

a. $1,000 but not more than $250 anyone tree, shrub or plant b. $2,000 but not more than $500 anyone tree, shrub or plant c. $2,500 but not more than $500 anyone tree, shrub or plant d. No coverage

14. On the BP if the coverage is not insured to value, how will a loss be settled?

a. Replacement cost coinsurance does not apply b. Coinsurance applies, insured will suffer coinsurance penalty c. Actual Cash Value

15. Under the BP which of the following is most correct about employee dishonesty?

a. Optional coverage up to $100,000 available b. Automatically included for $100,000 blanket c. Not available on the BP

16. Under the BP which is most correct as to the limit of liability available?

a. $300,000 is the minimum limit, cannot be increased b. $100,000 is the minimum limit but can be increased c. $300,000 is the minimum limit, but can be increased d. Insured selects limit of liability

17. Which is most correct as to the aggregate limit on the BP?

a. No aggregate applies b. Aggregate is 2-times occurrence limit c. Aggregate is the same as the occurrence limit d. Aggregate is the occurrence limit plus the prod/comp ops limit



CPP Questions (Answers)

1. C 2. D 3. D 4. Definition of Trade Contractors; work is primarily a single specialty, building or tenant does

not exceed 25,000 sq. ft., gross sales do not exceed $3,000,000, no more than $300,000 payroll, no work over 3 stories, subcontracted work 10% or less.

5. D 6. B 7. D 8. C 9. D 10. C 11. B 12. A 13. C 14. C 15. A 16. C 17. B

Property & Casualty Exam Workbook Unit 10: Workers’ Compensation


UNIT

WORKERS’ COMPENSATION

OVERVIEW

Each state in the United States has a workers’ compensation (WC) law. While they vary

widely in details, the basic thrust of all are the same: employees are compensated for

occupationally incurred injuries, regardless of fault, in return for which employers are

immunized from injury lawsuits by employees. In some states, WC benefits are

provided entirely by the state. In others, both state funds and private insurance are

utilized. In the majority of states, Florida included, the benefits are regulated by the

state, but paid entirely through private insurance or self-insurance means. Regulation

of the workers’ compensation law in Florida is by the Division of Workers’

Compensation of the Department of Financial Services.

OBJECTIVES


• Summary of the Workers’ Compensation Law

• Employers and Employees

• Penalties for Non-Compliance

• Injuries Covered

• Compensation (Benefits)

• Medical Expenses

• Disability Benefits

• Medical Expenses

• Disability Benefits

• Miscellaneous Law Provisions

• Workers’ Compensation and Employers Liability Insurance Policy

• Rating



WORKERS COMPENSATION – WHO COUNTS AND WHEN IT’S REQUIRED Florida Statute 440.02 15(b)2 requires workers compensation of all non-construction related private employment of four or more people. For those in the construction industry WC is required with one or more employees the question then is, "who is an employee?" as it relates to workers Compensation coverage. EMPLOYEES: All employees count regardless of age, hours worked, legal or illegal employment, and regardless of whether there is a written contract of employment or not. For example, a flower shop employs 3 full time people, plus a 75-year-old retiree who works three hours a week on Saturday. For WC purposes, there are 4 employees. OFFICERS: All officers of a corporation count as employees if they "perform services for remuneration." For example, Joe is the president of Joe's Body Shop Incorporated, works daily, and gets paid. He counts as an employee. If Joe employs three other people then WC is required. SOLE PROPRIETORS & PARTNERS

CONSTRUCTION INDUSTRY: Sole proprietors and partners do count as employees for those occupations considered to be part of the construction industry.

NON-CONSTRUCTION INDUSTRY: Sole proprietors and partners do NOT count as employees. For example, Sue owns Sue's Flower Shop and she is not incorporated. She has three full time employees who work for her. For WC purposes Sue is not an employee and WC is not required. Sole proprietors and partners who wish to be covered must specifically elect coverage by signing the appropriate form. If they do not elect coverage they will not be covered by a WC policy at the time of injury.

REJECTION OF COVERAGE

CONSTRUCTION INDUSTRY: A maximum of three officers may exempt.

NON-CONSTRUCTION INDUSTRY: Any number of officers or partners may exempt. Once exempted, individuals no longer count as employees. For example, Joe's Auto Body Shop Incorporated from above has one officer (Joe) who works and gets paid, as well as three other full time employees. If Joe signs no rejection form, then WC is required because there are four employees. However, if Joe as president of the corporation exempts, then there are only three employees and WC is not required.

RECOMMENDING COVERAGE: Regardless of whether WC coverage is required, it should always be recommended by the agent.

Unit 10: Workers’ Compensation Property & Casualty Exam Workbook


Worker’s Compensation

*This amount changes annually. State exam is based on the material in the current state study manual.

Type of Entity Non-Construction Construction

> 3 or 4 or more 1 or More

Sole Proprietor Employer can elect coverage ER not EE’s except in construction they are considered EE’s – CANNOT exempt themselves from coverage

Partnership (owners) NOT covered automatically

Employer can elect coverage ER not EE’s except in construction They are considered EE’s – CANNOT exempt themselves from coverage

Corporations (officers) covered auto Can exempt officer no Limit Exempt no more than 3 officers and must own a minimum of 10% of the corporation.

Classes of Disability

Worker’s Compensation

Permanent Total Temporary Total Permanent Impairment Temporary Partial

66⅔ of AWW up to maximum of SAWW

66⅔ of AWW up to maximum of SAWW

Impairment and wage loss (supplemental) benefits are paid.

Wage loss formula

No limit on time 2 years maximum 104 weeks Time period based on the percentage of impairment rating below:

Maximum 104 weeks

Catastrophic Injuries: 1. Spinal cord injury/paralysis 2. Amputation of arm, leg 3. Severe brain injury 4. 2nd or 3rd degree burns – 25%

entire body or 3rd degree burns – 5% Hands and face

5. Total/industrial blindness

Except – for 6 months during rehab or retraining – 80% of AWW/max $842*

Impairment Benefit: 75% of TTD until the earlier of: 2wks for each % - Up to 10% 3wks for each % - Up to 15% 4wks for each % - Up to 20% 6wks for each % - Up to 21% or higher or death of employee

If more than 104 weeks, Considered for Permanent Impairment status.

Continues until the date of Maximum Medical Improvement (MMI) or 104 Weeks – then considered for Permanent Impairment status.

Wage Loss (Supplemental Benefit) 75% of 66⅔ of AMW.



Workers Compensation Questions # 1 1. What is the death benefit under WC?

2. What is the limit of coverage under Part I of WC?

3. To be eligible for FWCJUA what is required?

4. How is Permanent, Total Disability compensated?

5. What is the basis for determining disability benefits?

6. Construction Industry requires how many employees for WC?

7. What is the purpose of the Statewide Average Weekly Wage?

8. What benefits are provided under the WC policy?

9. What does Part II cover?

10. What is Part III Other States designed to do?

11. What are the statutory limits under Part II?



12. What is the time limit for death benefits?

13. What is the waiting period?

14. What types of employment are exempt from WC Law?

15. Define Casual Labor.

16. List the workers not considered to be employees under WC Law.

17. Which Department regulates WC?

18. What is the time limit for auditing WC Policies?

19. What is the limit for medical expenses under WC?

20. How does the law address an employee waiving his rights to WC?



Workers Compensation Questions # 1 (Answers)

1. Actual funeral expense up to $7,500 then 66⅔% of AWW up to maximum of $150,000 for all dependent claims combined.

2. No exclusions, no dollar limits. 3. Unable to obtain coverage from at least 2 other carriers and must not be indebted for any

previous unpaid WC premiums.

4. 66⅔% of employees, AWW during period of disability without time limit 5. Statewide AWW 6. One 7. Sets the maximum weekly amount that can be paid for disability. 8. Medical expenses, compensation for disability, death benefits. 9. Employer’s liability.

10. Provides automatic coverage in states not listed for part one coverage. 11. $100,000/$100,000/$500,000 12. 1-year from accident or if continuously disabled, within 5 years after the accident. 13. No benefits payable for the first 7 days of a disability. If disability goes past 21 days,

benefits are paid retroactivity from day 1.

14. Domestic servants in private homes, small farms, professional athletes, sports officials at interscholastic sports, labor under court order, state & county prisoners, employees covered by the defense base act.

15. Work taking less than 10 days, wage less than $500 and work is not in the course of

employer’s normal practice.

16. Independent contractors, casual work, commercial real estate agents, certain musical and theatrical performers, truck owners/operators, taxis and limos.

17. Division of Workers Compensation of the Department of Financial Services. 18. Up to 3 years after policy expires. 19. None 20. A defined employee cannot waive his rights under Workers Compensation.



Workers Compensation Questions # 2

1. What is the purpose of the Statewide Average Weekly Wage?

2. What benefits are provided under the WC policy?

3. What does Part Two of WC cover?

4. What is the maximum time for Temporary Partial Disability to be compensated?

5. What is Part Three- Other States Coverage designed to do?

6. What are the statutory limits under Part Two?

7. What is the time limit for Death Benefits under WC?

8. What is the time limit under WC for waiting period and retroactive period?

9. What are the types of employment exempt from WC Law?



10. Define Casual Labor? (not working in your garden)

11. Define the workers not considered to be employees under WC Law:

12. Which department regulates WC Law?

13. What is the time limit for auditing WC policies?

14. What is the limitation for medical expenses under WC?

15. How does WC Law address an employee waiving his right to WC?

16. What is the death benefit under Workers Compensation?

17. What is the limit of coverage under Part One of WC?

18. To be eligible for "FWCJUA” what is required?

19. For Permanent Total Disability, how is compensation calculated? (WC)

20. Construction Industry-requires how many employees for WC?




1. Sets the maximum benefit for WC. 2. Medical expenses, death Benefit, disability compensation. 3. Employers liability-claims by employees for injuries not subject to WC law, claims by

others for their liabilities to insureds, employees, claims by relatives of injured employees for consequential damages.

4. 104 weeks 5. Provide coverage in states where the insured begins operations after the Policy is

written. 6. 100,000/100,000/500,000 7. 5 years, if continuous disability existed or within one year of accident. 8. Waiting period: 7 days, retroactive period: 21 days. 9. Domestic, farm work (less than 5 regular employees), professional athletes.

10. Less than $500, not more than 10 days, not the same type of work insured normally performs.

11. Independent contractors, casual labor, unpaid volunteers in non-profit agencies. 12. Division of Workers Compensation of the Department of Financial Services. 13. Anytime during policy term & three years after expiration. 14. No $, no time limit. 15. Illegal 16. $150,000 for dependents; %7,500 funeral expense 17. No limit under part one, pays medically necessary expenses forever. 18. Rejection by 2 carriers, no unpaid premiums including audits. 19. 66⅔% of AWW 20. One-sole proprietors are employees.



Workers Compensation Questions # 3

All Law and Coverage

1. Is there any need for a non-construction industry employer with fewer than four employees to carry workers compensation insurance?

2. With no special elections made and a standard policy issued with no exceptions, for each following injury occurring on the job, state "Yes" or ''No'' as to whether or not compensation would be payable, and explain.

a. The insured is a corporation; the president is injured.

b. The employee is injured resulting from failure to use a required safety appliance.

c. The employee contracted influenza.

d. The insured is a partnership; one of the partners is injured.

e. The insured employs only domestic servants; one of them is injured.

f. The employee is injured by assault, perpetrated by another employee.

g. The employee is injured by assault, perpetrated by the insured employer.

h. The employee, who was injured in an auto accident, decided to sue the owner of the other vehicle.

3. State the classification of disability, as a basis for compensation benefits, for each of the following:



a. Because of the nature of the injury, the employee was able to work only part time at reduced wages for a period of two months, after which full earning capacity returned.

b. The employee was unable to work at all for one month, then fully recovered and resumed normal activities.

c. The employee suffered a back injury which, until he died, required acceptance of work at lower wages than he was earning when injured.

d. The employee suffered a severe brain injury which prevented any gainful employment thereafter.

4. If Florida employer's policy is issued in standard form with no options, Part One stating Florida only, Part Two at basic limits, and Part Three left blank, state "Yes" or "No" as to whether the employer's policy could cover the situation described and explain.

a. An employee was injured while traveling for insured, in another state.

b. An employee was injured in Florida, but claimed benefits under the U.S. Longshore and Harborworkers Act.

c. An employee injured in Florida was a minor, and was knowingly employed by the insured in violation of law.

d. The insured awarded a contract to paint his building. An employee of the painting contractor was injured, and the contractor had not insured for WC. The employee claimed against the insured for WC benefits.



5. What are the 1st three coverage sections of the Workers Compensation policy?

a.

b.

c.




1. Yes. All persons who employ others should carry WC insurance. Apart from securing the benefits for employees, the employer could be sued by an injured employee, and all other forms of liability insurance exclude coverage for injuries to employees.

2. a. Yes - corporate officer is employee, unless exemption is elected.

b. Yes -law's provision is to reduce; not deny, benefits. c. No - ordinary diseases of life are not covered occupational diseases. d. Construction industry: yes - unless exemption is elected. Non-construction industry: No -

for coverage, an election must be made. e. Yes - when exemption waived by purchase of insurance, coverage is the same as for

nonexempt employers. f. Yes - benefits are denied to the one who intentionally causes injury. g. Yes - same as f. h. Yes - decision to claim against others does not preclude also claiming WC benefits.

3. a. Temporary partial.

b. Temporary total. c. Permanent impairment. d. Permanent total.

4. a. Yes – injuries outside Florida are covered by Florida law.

b. No – policy requires endorsement to afford coverage. c. Yes – law does not exclude injuries to minors (policy exclusion relates only to Part Two). d. No - injured person is not an employee of insured. Law's requirement to provide coverage

for employees of subcontractors applies only to contractors who sublet part of their contract work.

5. a. Part One - Workers Compensation

b. Part Two - Employers Liability

c. Part Three - Other States




Property & Casualty Exam Workbook Unit 11: Crime


UNIT

CRIME

OVERVIEW

Commercial Crime and Employee Dishonesty coverage may be written as part of a

package policy, sharing the Declarations page and the Common Policy Conditions with

the other lines of coverage in the package; or it may be written as a stand-alone policy

with its own Declarations page and Policy Conditions. The coverage is written with a

basic Commercial Crime Coverage Form, which includes seven primary insuring

agreements. Each insuring agreement carries its own limit and deductible, and each may

be left out by not showing a limit for it on the Declarations page.

OBJECTIVES


• Crime and Employee Dishonesty Insurance

• Commercial Crime Forms

• Primary Insuring Agreements

• Additional Insuring Agreements Available by Endorsement

• Discovery vs. Loss Sustained Coverage

• Other Crime Coverage Provisions

Unit 11: Crime Property & Casualty Exam Workbook


Crime Questions # 1 1. Employee theft insurance is also known as:

2. A completed crime policy includes (at least 4):

3. The 4 most important general exclusions are:

4. How long is the discovery period?

5. If a loss occurred prior to the policy’s inspection while another policy was in force, the loss is covered subject to 4 certain conditions. Name them:

6. Is crime insurance primary or excess to other recoverable insurance?

7. For whose benefit does the policy apply?

8. How are the following valued? a. Money:

b. Securities:

c. Other property:

9. What is the basic deductible found on the standard crime policy?



10. What 3 ways can employee dishonesty be written? 11. When does coverage on an employee, who the insured knows has committed a dishonest

act end?

12. Why is employee dishonesty excluded under forgery or alteration? 13. Define “theft”: 14. Define where “inside” coverage applies: 15. Who may have custody of property “outside” the premises? 16. What is “robbery of a custodian?” 17. What must be present to differentiate between a burglary and a theft? 18. Certain property is limited under the robbery and safe burglary form and also the premises

burglary form. Identify at least 5 types of limited property?

19. Under the premises burglary form, coverage is suspended until all former security

conditions are restored. How can this suspension be avoided?



Crime Questions # 1 (Answers)

1. Fidelity Coverage 2. Declarations, common policy conditions, crime general provision form and 1 or more

coverage forms. 3. Acts committed by insured, indirect loses, legal expenses, loss from government action,

nuclear events or war. 4. Policy period + 60 days 5. Discovery period under prior policy had expired – this policy became effective on the date

the prior insurance was terminated, loss would have been covered under terms of this policy. The amount recoverable is the lesser of the two limits.

6. Excess 7. The named insured’s property – owned or held for which the insured is legally liable. 8. a. Face

b. Value on date loss is discovered c. Actual replacement cost or if less, cost to repair

9. $500 or higher- deductibles are optional (employee dishonesty) 10. Scheduled persons, scheduled positions, blanket. 11. When the owner/manager learns of the fact. 12. If an employee did it, it’s employee dishonesty. 13. Any unlawful taking of property meant to exclude employee dishonesty and mysterious

disappearance. 14. Within insured’s building or while covered property is within a banking premises or similar

place of safe depository. 15. Property in the care, custody or control of a messenger or armored car service. 16. Taking or attempted taking of property by one who has caused or threatened to cause bodily

harm or committed an obviously unlawful act. 17. Visible signs of entry or exit. 18. Accounting errors, voluntarily parting, fire damage to premises, vandalism damage to

premises, loss of money contained in money-operated devices, unless recorded. 19. If a watch person is maintained while premise is closed.



Crime Questions # 2

1. Inside the Premises-Theft of Money & Securities covers what?

2. Under Employee Theft, what triggers immediate cancellation of coverage for an employee?

3. What are the coverages provided by Employee Theft?

4. Define "Custodian" as used in “Inside the Premises-Robbery or Safe Burglary of Other Property.”

5. Define “Safe Burglary.”

6. What is the special limit per occurrence for precious metals, stones, pearls, furs and to the physical or intrinsic value of manuscripts, drawings or records?

7. What does “Outside the Premises coverage” apply to?

8. What is the additional exclusion that applies to computer fraud?

9. What is the special limit for loss to manuscripts, drawings and records that applies to Computer Fraud?

10. What does money orders and counterfeit paper currency coverage apply to?

11. How many primary insuring agreements are included in the basic Commercial Crime Coverage Form?



12. Name the seven additional insuring agreements that may be added to the basis Commercial Crime Coverage Form by endorsement.

13. Explain the Discovery basis for loss.

14. What is the standard deductible under Employee Theft?

15. Under which coverage form does the insured have legal expenses included?

16. Which coverage specifically excludes loss of property contained in money-operated devices?

17. Explain the Loss Sustained basis of loss.

18. How are the following valued for payment of loss: money, securities and other property?

19. What are the three ways employee theft may be written?



Crime Questions # 2 (Answers)

1. Money, securities resulting from TDD and damage to the premises if the insured or the owner is legally liable.

2. Discovery of any dishonest act committed by the employee whether before or after employment by the insured. Further, the company can cancel for any employee with 30 days written notice to the insured.

3. Loss of or damage to money, securities and other property resulting from theft committed by an employee.

4. You, your partners or an employee, but does not include lease employees. 5. Taking or attempted taking of property from within a locked safe or vault by unlawful entry,

with visible marks of forcible entry, or taking of the safe or vault from inside the premises. 6. $5,000 per occurrence. 7. Loss of money, securities outside the premises in the care custody control of a messenger

or armored car service resulting from TDD. Also covers robbery of other property under the same circumstance.

8. Inventory shortage 9. $5,000

10. Loss resulting from having accepted counterfeit currency or money orders in good faith in exchange for merchandise, money or securities. This includes money orders and counterfeit paper currency from any country.

11. seven 12. Extortion, Clients Property, Funds Transfer Fraud, Lessee of Safe Deposit; Boxes, securities

Deposited with Others, Safe Depository, Guests Property. 13. Any loss discovered during the policy period or within 60 days after expiration is covered

regardless of when it occurred. 14. $500 15. Forgery or alteration. 16. Inside the Premises- Theft of Money & Securities. 17. Covers only losses that both occurred and were discovered during the policy period or within

one years of expiration. 18. Money - face value, securities - value on the day loss is discovered, other property - ACV or

cost to repair or replace whichever is less. 19. Scheduled persons, scheduled position and blanket.



All Coverages Questions

1. Identify which Coverage form (or forms) would cover the following losses. If no standard form could cover, state "None."

a. The insured accepted a check in payment for an account, which proved to be a' forgery and valueless.

b. The insured’s safe was broken into by a burglar; claim is for loss of cash stolen.

c. The insured's safe was fraudulently entered by one who knew the combination; claim is for merchandise stolen.

d. The insured's employee fraudulently transferred funds to an outside cohort through the insured's computer.

e. A fire destroyed the insured’s cash.

2. Insured's coverage: A - Blanket Employee Dishonesty - $50,000; C - Theft, Disappearance and Destruction - $10,000 Inside, $5,000 Outside Premises. Assuming no coverage issue other than stated, how much (if any) is payable for each loss? If no coverage, what Coverage form (if any) could the insured have had to cover the loss?

a. Insured discovered that two years ago, over a period of six months, three employees had collaborated to steal $60,000 in merchandise.

b. Criminal entered insured's store while it was open and staged a holdup. $2,000 cash was taken from cash registers. Safe door was blown off with explosives. $300 damage to safe and $5,000 cash taken. Merchandise valued at $1,000 was also taken.

c. While insured's premises were closed, criminal forced watchman, under threat of force, to open premises. A safe valued at $800 and containing $3,000 in cash, plus $25,000 in merchandise was taken.

d. Insured's employee was taking a $7,000 cash deposit to bank. Employee walked in with a bank holdup in process and was relieved of the deposit by the robber.



e. Insured opened premises and found $500 cash missing from cash drawers, $2,000 in merchandise gone. Insured found back door was left unlocked the night before, through which the culprit apparently entered.

f. Insured's employee drew check for $5,000 on insured's bank account, forged insured's signature, and cashed it.

g. Unsuccessful break-in attempted at insured's owned premises, but $400 damage to the building in the attempt.



All Coverages Questions (Answers) 1. a. None (Forgery or Alteration does not cover incoming instruments).

b. Theft, Disappearance and Destruction (Inside) or Robbery and Safe Burglary – Money & Securities.

c. None

d. Employee Dishonesty.

e. Theft, Disappearance and Destruction (Inside).

2. a. $50,000. Limit applies to one or more employees involved together in a loss.

b. $7,300 is covered under Theft, Disappearance and Destruction. Premises Theft coverage would be needed for the $1,000 merchandise taken.

c. $20,000 is paid under Premises Burglary for the merchandise. The other $3,800 is payable under Theft, Disappearance and Destruction.

d. $7,000 paid under Theft, Disappearance and Destruction-Inside (within a banking premises is "Inside").

e. $500 covered under Theft, Disappearance and Destruction. Premises Theft coverage needed for coverage on merchandise.

f. $5,000 payable under Employee Dishonesty

g. Both, Premises Burglary and Theft, Disappearance and Destruction apply to the loss, but loss is less than deductible under Premises Burglary, so $400 paid by TDD.

Property & Casualty Exam Workbook Unit 12 Surety Bonds


UNIT

SURETY BONDS

OVERVIEW

Suretyship is not insurance. Although suretyship is transacted with the structure of the

property and liability insurance business, there are important differences. Suretyship

dates back over 4,500 years, whereas insurance in the form resembling today’s practice

is only about 300 years old. Surety bonds may be effected through companies

specializing in that field, but most of the business is written in multiple line companies

that maintain specialty departments for servicing surety bonds.

OBJECTIVES


• Suretyship vs. Insurance

• Parties to A Bond

• The Bonding Process

• Contract Bonds

• Fiduciary and Court Bonds

• License and Permit Bonds

• Miscellaneous Bonds

P&C State Exam Prep Material Unit 12 Surety Bonds


Statement of Bonding Limits Qualifying Agent’s Name: Business Entity’s Name: Board Rule 61G6-5.004(l), FAC., requires that you submit a statement signed and sealed by an officer of a Florida licensed surety company that the surety company would issue p performance or payment bond in the amount of $25,000 for an unlimited electrical contractor or alarm system contractor and $10,000 for a specialty contractor. You may substitute an irrevocable letter of credit from a responsible financial institution in the same amounts, in lieu of this requirement. (The letter is on the next page.) Surety Agent:

1. Attach a copy of the "Power of Attorney" certifying that said power of attorney appointed is in full force and effect.

2. Have signature of officer of Surety Company notarized. 3. Date Surety Company was licensed to do business in the State of Florida. 4. This statement of bonding limits represents the bond ability of the named business entity

based on its current financial condition and is submitted for the purpose of licensure of the business entity.

This is a statement that the business entity is bondable and the surety agent would issue a performance or payment bond for the business entity in an amount of $25,000 for an unlimited electrical contractor and alarm system contractor or $10,000 for a specialty contractor. This is to certify that the business entity noted above is qualified to be bonded with (Name of Surety Agent) (________________________________________) CASUALTY & SURETY COMPANY and we would issue a performance or payment bond in the amount of (please circle amount of bond) $25,000 or $10,000. (See note above when determining amount.) _________________________ _________________________________ Signature-Officer of Surety Agent Print Name of Officer ATTORNEY-IN-FACT Date licensed to do business in Florida __________ and License # ______________________ STATE OF _________________ COUNTY OF ___________________ SWORN TO AND SUBSCRIBED BEFORE ME THIS ____ DATE OF __________ 20___. ____________________________________ NOTARY PUBLIC



Surety Company Seal

License & Permit Bonds A license or permit bond is one required by law or ordinance as a condition precedent to the granting of a license to engage in a particular business, or a permit to exercise a particular privilege. The bonds may be divided into five (5) common classes:

1. Those that put "teeth" into ordinances that have been adopted for the protection of the public, i.e., a plumber may have to post a license and permit bond to satisfy a city ordinance which will make him conform to the regulations required of his trade.

2. Bonds required of individuals or corporations that are granted a particular privilege, a. the requirement of a company hanging a sign over its business that may pose a

hazard to the general public. 3. Those bonds which guarantee the payment of taxes such as gasoline tax bonds, cigarette

tax bonds, etc. 4. Bonds which protect the public against loss of money that may be entrusted to the

licensee. An example would be the bond of a real estate broker or used car dealer. 5. Bonds that are required of certain businesses that may become infiltrated with dishonest

individuals were a guaranty not required, i.e., small loan laws that require small loan companies to post bonds directed at compliance of the law.

In all cases, the producer will be expected to furnish, among other things, an application and financial statements of the applicant. The term covered by this type of bond corresponds to the term covered by the license or permit. The right to file claims under any bond, for losses sustained while the bond was in force, continues for varying periods, depending upon the law of the particular state. Some types of license and permit bonds common to Florida are cigarette tax, citrus fruit dealers, gasoline taxes, horse or dog racing, mobile home dealers, motor vehicle dealers, pistol toting, escrow agents, surplus line agents, electrical contractors, employment agents and travel bureau.



Conservation Bond Guardian gets 4 years Broward Circuit Judge Izzy Guilty sentenced a Florida woman to 4½ years in prison and 10½ years’ probation for stealing $254,295.37 from an elderly woman and leaving her to die penniless.

Wynn Terseason, age 53, was appointed guardian by the courts in March 2005 for Penny Less, who was age 95 and too ill to care for herself. One month later, a probate judge granted Wynn Terseason total control over Penny Less’s life and finances.

But from September 2005 until February 2009, Wynn Terseason depleted Penny Less’s accounts, cashing up to 50 checks totaling more than $250,000 made out to cash or to herself.

Penny Less died in July 2009.

Surety Bonds and How They Function The Principal Must Perform

(Owes the Obligation). Obligee Has an Obligation Owed Surety Pays $$$ to Obligee

If contractor submits a bid on public building needs a Bid Bond.

Contractor will (1) accept the job and (2) furnish a performance bond.

If building is not completed per contract they pay $$$

Contractor gets a Performance Bond which guarantees the building is completed on time and per specifications.

The building will be constructed properly and completed on time.

If building is not completed per contract they pay $$$

Contractor needs Maintenance Bond for agreed upon time in case of cracks, leaks, maintenance problems, etc.

The contractor, not the public should pay for construction errors.

A long term, often 3-10 years, obligation per the contract.

To build a new shopping center or subdivision a Subdivision Bond is required.

Contractor, not the public should pay for parks, schools, sidewalks, roads, etc.

Guarantee to fund these items if contractor does not.

Supply Contract Bond required by contractor from his/her suppliers of building materials

If construction materials as agreed, contractor (Obligee) collects.

Guarantees payment if supplier defaults.

Court – Defendants Bond: Prisoner seeks release. Must return to stand trial in the future.

Governor (State) or President (Federal)

If defendant skips, they pay $$$

Fiduciary – Probate Bond: Lawyer appointed as executor of estate.

Heirs have right to proper handling. Surety pay estate if mishandled.

Permit Bond – Rock concert promoter must supply security and cleanup.

City is protected if they must send in police of clean-up crew if promoter defaults.

Surety pays if promoter doesn’t.



Bonds Definition Questions 1. Define the three parties to a Surety Bond. 2. Some bonds have a fourth party which is? 3. Define Bid Bond. 4. Define Performance Bond. 5. Define Payment Bond. 6. Define Maintenance Bond. 7. Define Fiduciary Bond. 8. Define Court Bond. 9. Define Public Official Bond. 10. Define License Bond. 11. Define Lost Instrument. 12. Define Blue Sky Bond. 13. Define Customs Bond.



Bonds Definition (Answers) 1. Surety, obligee, principal.

2. Indemnitor

3. Guarantees that the bidder will enter into contract and satisfy future bonding requirements.

4. Guarantees the obligee indemnification resulting in losses from principal’s failure to

complete per contract.

5. Guarantees payment by the contractor for labor and materials.

6. Guarantees replacement or correction of faulty work/materials for a specific period of time.

7. Performance and utmost good faith of a person appointed by the court.

8. Required of plaintiffs and/or defendants to protect opposing parties from loss if legal entitlement is not shown.

9. Principal will uphold oath of office and faithfully perform.

10. Required by public bodies to protect the public by guaranteeing compliance by the bondee with laws, ordinances.

11. Bond protects the issuer of the instrument from loss when they make a replacement.

12. Required of investment companies to protect the public from fraud and misrepresentation.

13. Guarantees the payment of duties/taxes.



Surety Questions # 1

(Questions 1 – 5)

Surety and insurance differ.

Enter “S” if surety or “I” if insurance:

1. ____ Is a two-party contract

2. ____ Is a three-party contract

3. ____ Pays to or on behalf of insureds

4. ____ The right of recovery exists against the non-performer

5. ____ May be cancelled or non-renewed

6. Recovery against those who default is known as ________________________.

7. The bond amount is called the _____________________.

8. The _____________________ is the one who must perform.

9. The _____________________ guarantees someone will perform.

10. The _____________________ reimburses for any loss from someone who did not perform.

11. The _____________________ is one who is guaranteed that someone will perform.

12. The ____________________________ is someone appointed to execute bonds. 13. The company issuing the bond wants to assure itself that the person who wants the bond

will not default. They are interested in 3 important areas. they are:

a. ____________________________________________



b. ____________________________________________

c. ____________________________________________

14. Bond for construction work typically requires four separate bonds. Show the correct order (by letter) from the list below.

a. Defendants Bond b. Performance Bond c. Insolvency Bond d. Payment Bond e. Bid Bond f. Customs Bond g. Maintenance Bond

1st ____ 2nd ____ 3rd ____ 4th ____

15. ________________ Bond for the estate of deceased persons.

16. ________________ Bond for investment companies.

17. ________________ Bond for cable TV or natural gas companies.

18. ________________ Bond when someone loses their stock certificate.

19. ________________ Bond for the estate of minor or incompetents.

20. ________________ Bond required to develop residential housing area.



Surety Questions # 1 (Answers)

1. I (Insurance)

2. S (Surety)

3. I (Insurance)

4. S (Surety)

5. I (Insurance)

6. Salvage

7. Penalty

8. Principal

9. Surety

10. Indemnitor

11. Obligee

12. Attorney in fact

13. a. character of principal

b. principles financial resources

c. experience and capability of principal to perform

14. 1st E 2nd B 3rd D 4th G

15. Probate

16. Blue Sky

17. Franchise

18. Lost Instrument

19. Conservation

20. Subdivision



Surety Questions # 2 1. If Fred loans money to Bill, and Carl signs the note to guarantee to Fred that the loan will

be repaid, does this constitute a surety bond? 2. Bonds, Inc. provides a guarantee to Dan that Phil will meet an obligation.

a. How are Bonds, Inc., Dan and Phil identified as parties to a surety bond? Surety: Obligee: Principal:

b. If Martha agrees to hold Bonds, Inc. harmless from any loss under the arrangement, what is Martha known as?

c. If Sylvia executed the bond, what is Sylvia known as?

Surety Obligee Indemnitor Attorney-in-fact Insurance Agent

3. Mary wants Bonds, Inc. to provide a surety guarantee to Carol that if a certain contingency occurs, Mary will pay Carol $10,000. Bonds, Inc. requires that the bond be fully collateralized. What does this mean?

4. If Bonds, Inc. issues a surety bond to protect the creditors and heirs of an estate for proper

performance of Darryl, the executor of the estate, what means are available to Bonds, Inc. to be sure that Darryl dispenses funds properly?

5. If Terry is planning on having a building constructed and securing competitive bids, identify

all bonds to be considered for full- and long-term protection against defaults.

6. Identify the type of bond (general classification and sub-classification, if applicable) that would be indicated for the following situations. a. A court has appointed a person to wind up the affairs of a bankrupt company.



b. A large company has negotiated an arrangement with an office supply company to

provide complete furnishings for its new home office building.

c. A contractor wishes to regain use of his equipment by a creditor who has secured a writ of attachment against the equipment.

d. A new brokerage firm is organized to sell investments in oil and gas stocks.

e. A developer is planning a major housing development on a large tract of land, and is seeking a permit from authorities to undertake the project.

f. A person seeks an injunction to prevent another from cutting trees on land, the ownership of which is under dispute.



Surety Questions # 2 (Answers) 1. This is not a surety bond. While a three-party contract with a guarantee that repayment by

one is guaranteed by another, it does not include the element of the right of the guarantor to have salvage against the borrower.

2. a. Bonds, Inc.: Surety; Dan; Obligee; Phil; Principal.

b. Indemnitor

c. Attorney-in-fact

3. Mary must deposit money or other property valued at $10,000 with Bonds, Inc. to be retained until performance has been completed.

4. Joint control.

5. Bid, Performance, Payment and Maintenance.

6. a. Judicial – Fiduciary – Insolvency.

b. Contract – Supply Contract.

c. Judicial –Court – Defendants.

d. Blue Sky.

e. Contract – Subdivision.

f. Judicial – Court – Plaintiffs

Property & Casualty Exam Workbook Unit 13 Marine


UNIT

MARINE

OVERVIEW

Inland Marine insurance first developed as an extension of Ocean Marine coverage, to

provide coverage for cargo traveling over land, instead of by sea. To help identify the

kind of risks that are eligible for either Ocean or Inland Marine insurance, the industry

developed the Nationwide Definition. Imports, Exports, Domestic Shipments,

Instrumentalities of Transportation or Communication, Personal Property Floater Risks,

and Commercial Property Floater Risks. Imports

OBJECTIVES


• Inland Marine Insurance

• Commercial Inland Marine Policies

• Rating

• Ocean Marine Insurance

Unit 13: Marine Property & Casualty Exam Workbook


Commercial Inland Marine Questions

1. Inland marine was developed as an extension of which coverage?

2. What are the six categories of risk eligible for Marine Coverage under the Nationwide Definitions?

a. b. c. d. e. f.

3. What is the characteristic that makes a risk eligible for Inland Marine Coverage?

4. The function of inland marine is generally considered to be covering what types of property?



5. The controlled coverage forms provide which type of coverage? Basic, Broad or All risk?

6. Which policy covers the insureds goods either incoming or outgoing on an annual basis?

7. Which policy covers insureds goods on a per trip basis?

8. Which policy protects the carrier instead of the shipper for goods in transit?

9. What does the Mail Coverage Form do?

10. What are some examples of Instrumentalities of Transportation & Communication?

11. What is a bailment?

12. What is a bailee?

13. What is a bailor?

14. Which form covers “confusion of goods”?

15. Which form covers heavy machinery, equipment and tools?

16. Which forms covers medical surgical and dental instruments on and off the premises, as well as furniture and fixtures in the doctor’s office?

17. Under the Theatrical Property Coverage Form what types of risks are specifically excluded?

18. What is covered under the Film Coverage Form?



19. What is the Commercial Articles Coverage Form used for?

20. Which form reimburses the insured for amounts which cannot be collected from customers due to damage to the company’s accounts receivable records, extra collection expenses, costs to reestablish records and interest on any loans the insured must obtain to stay in business while collections are impaired?

21. Which would be used to cover equipment, machinery, building materials in transit or during the course of installation, testing, building, renovating or repair?

22. Which form covers hardware, data, media and software, extra expense, business interruption and liability?

23. Which coverage form is used to cover merchandise for sale that has been financed and is written only in a reporting basis?

24. What is the basis for rating commercial inland marine policies?



Commercial Inland Marine Questions (Answers) 1. Ocean Marine

2.

a. imports,

b. exports,

c. domestic shipments,

d. instrumentalities of transportation or communication,

e. personal property floater risks,

f. commercial property floaters risks. 3. Portability 4. Personal 5. All risk 6. Annual Transit Policy 7. Trip Transit 8. Motor Truck Cargo 9. All risk coverage for loss of property sent by registered, first class, certified or express mail

10. Bridges, dams, tunnels, oil pipelines, piers, docks, radio / TV towers 11. Delivery of property by the owner to someone else to be held for a specific purpose then

returned to the owner 12. One who receives the property 13. One who owns the property 14. Cleaners, dryers and laundries 15. Contractors Equipment Floater 16. Physicals and Surgeons Equipment Coverage Form 17. Rental companies, supply houses, circuses, carnivals, rodeos 18. Exposed motion picture film including sound track and properly recorded tapes until

production is complete and positive prints are made. 19. Photographic equipment or musical instruments used commercially 20. Accounts Receivable Coverage Form 21. Installation coverage form 22. Electronic Date Processing Form 23. Floor Plan Form 24. Generally based upon a rate per $100 of insurance, varying by class.



Ocean Marine Questions

1. What is the oldest form of insurance known?

2. What have the courts required for a valid ocean marine contract to exist?

3. What are the typical coverages under a Hull Policy?

4. What are the types of deductibles typically available for hull coverage?

5. What are the two forms available for providing cargo coverage?

6. What does Freight Coverage do?

7. Which coverage would protect the ship owner from liability for the negligent operation of the vessel in damaging another ship?

8. Which coverage protects the ship owner from damage to passengers, crew members or persons on other ships, damage to cargo docks or other property?

9. Which coverage is wind, waves, collision, stranding, sinking and other such accidents?

10. Which coverage is fire?

11. Which form buys back the war exclusion?

12. Which form provides coverage for all types of taking of the insureds property by force?

13. Which coverage is used for the voluntary throwing overboard of parts of the ship or cargo to save the vessel from sinking of further damage?

14. Which coverage is for fraud by the master or crew?



15. Loss which is a voluntary sacrifice of a part of the ship or cargo made by the master to avert a common peril which might destroy the entire ship or cargo is called?

16. Which clause requires the insured to take all steps necessary to save and preserve the goods from loss or to minimize a loss which has occurred?

17. When the property no longer exists or is beyond salvage what type of loss is it?

18. What type of loss is it when the costs to salvage plus cost to recondition exceeds the value

19. When the buyer assumes responsibility for the cargo once goods reach the designated point?

20. The seller assumes complete responsibility for securing all necessary insurance?

21. When the buyer purchases his own insurance?

22. When the seller assumes cost and risk until delivery alongside overseas vessel and within reach of loading tackle?

23. Damages which a charterer agrees to pay as damages for delay in loading, unloading or time lost by a vessel prevented from pursuing profitable employment by perils of the sea or accidental causes?



Ocean Marine Questions (Answers)

1. Ocean Marine 2. Utmost Good Faith 3. Fire, lightning, earthquake, assailing thieves, perils of the seas, jettisons, barratry of the

master or mariners, and all other like perils 4. Average, franchise, percent of value 5. Floating or open or reporting form 6. Protection for the vessel owner in the even freight charges are not paid. 7. Running down clause 8. Protection & Indemnity 9. Perils of the Seas.

10. Perils on the Sea 11. Free of Capture and Seizure 12. Enemies 13. Jettison 14. Barratry 15. General Average Clause 16. Sue and Labor Clause 17. Actual Total Loss 18. Constructive Total Loss 19. Free-On-Board (F.O.B.) 20. Cost, Insurance & Freight CIF 21. C.F. Cost & Freight 22. Free Along Side FAS 23. Demurrage



Inland Marine Matching

____ 1. Contractors A. Covers sound track & recorded Equipment tapes until positive prints are made. ____ 2. Physicians & B. Covers photographic equipment Surgeons or musical instruments used by newspaper or orchestra. ____ 3. Cleaners, Dyers C. Covers mobile agricultural Laundry equipment. ____ 4. Equipment Dealers D. Covers hardware & software ____ 5. Film Coverage Form E. Covers heavy equipment, tools and machinery. ____ 6. Theatrical Property F. Covers confusion of goods. Coverage Form ____ 7. Valuable Papers G. Can also cover office furniture and fixtures. ____ 8. Installation Coverage H. Not available to circuses, carnivals or rodeos. ____ 9. Accounts Receivable I. Covers the seller or buyer or both for goods sold on an installment basis. ____ 10. Commercial Articles J. Covers manuscripts, maps, deeds & Coverage books but not money. ____ 11. Electronic Data K. A firm selling air conditioning Processing Form or elevators might buy this. ____ 12. Installment Sales L. Covers interest on loans while Floater collections are impaired.



Inland Marine Matching (Answers)

1. E

2. G

3. F

4. C

5. A

6. H

7. J

8. K

9. L

10. B

11. D

12. I



Marine All Coverages - Questions 1. If the insured had a Personal Articles floater, including basic coverage with no

options for all available classes of property, how much (if any) would be payable in each following described loss? Explain each answer.

a. An antique crystal pitcher, scheduled under Fine Arts for $500, was accidentally dropped and broken.

b. A ring, scheduled for $1,500, was stolen from the glove compartment of the insured's unlocked car. It was found the ring could be replaced for $1,200.

c. For silverware, the insured had a sterling silver service scheduled for $2,000 coverage. The insured, purchased some silver place settings at a cost of $700. Two weeks later, both the scheduled item and the new place settings were stolen.

d. A diamond ring was scheduled for $3,000. From a fault in the stone, it cracked and was thereafter worthless. The remaining value of the setting was $200.

e. A camera was scheduled for $500. While in the insured's car, it was caught in a flash flood and was a total loss. The company found it could replace the camera for $350.

f. The insured had a large home electric organ scheduled for $4,000. It had been removed to a shop for repairs, and the repair shop burned down. The lowest cost for a reasonable replacement was $5,000.

2. State the form of inland marine insurance that might be appropriate for each following type of business or exposure described.

a. Television repair shop.

b. Common carrier, for hauling goods of others.

c. Appliance store, for goods sold on credit.

d. Professional photographer.

e. Lender who finances retail store stock.



3. What form of Ocean Marine coverage would be called for to insure interests in?

a. The income to be earned by hauling cargo?

b. Damage to goods being carried?

c. Damage to a vessel?

d. Legal liability for injuries to passengers?

4. Identify the perils clause under which each of the following types of losses could be covered.

a. A member of the crew maliciously damaged the cargo.

b. The cargo was intentionally thrown overboard to save the ship.

c. Collision with another vessel.

d. Theft of the cargo.

e. Sinking.

f. Damage from water to extinguish a fire.

5. Identify the policy clause that provided:

a. Payment will be made for a partial loss, except for certain perils.

b. Payment will be made for an insured, when goods of others are voluntarily sacrificed for the common good.

c. The insured must protect covered goods and preserve them from loss.



Marine All Coverages – Questions (Answers) 1.

a. No coverage. Breakage of fragile article excluded except for certain named perils. b. $1,200 payable. Loss is not excluded and coverage is for ACV. c. $2,000 payable. Silverware does not include automatic coverage for acquired property. d. No coverage. Loss is from inherent vice, excluded. e. $350 payable. Loss is not excluded and coverage is ACV. f. $4,000 payable. Scheduled limit applies as not exceeding ACV, loss not excluded.

2.

a. Bailee b. Motor Truck Cargo c. Installment Sales d. Commercial Articles e. Floor Plan

3.

a. Freight insurance b. Cargo insurance c. Hull insurance d. Protection and Indemnity insurance

4.

a. Barratry b. Jettison c. Perils of the Seas d. Thieves e. Perils of the Seas f. Fire

5.

a. Free of Particular Average b. General average c. Sue and Labor




Property & Casualty Exam Workbook Unit 14: Aviation


UNIT

AVIATION

OVERVIEW

Aviation insurance is a highly specialized field, designed to meet general aviation needs.

While the aviation insurance policy is not standardized, the insurance contract contains

many adaptations of other familiar general insurance forms – specifically fire and

automobile. Some insurers write aviation insurance on their own contracts. Others

participate in one of the several aviation pools or underwriting groups specializing in

writing aircraft insurance exclusively. Adequate insurance facilities now exist for

handling most aviation risks. Due to the highly specialized problems and the potentially

catastrophic losses, it is imperative that adequate market capacity for aviation

insurance be available.

OBJECTIVES


• Aircraft Hull Policies

• Aircraft Liability Coverages

• Admitted Aircraft Liability Coverage

• Medical Payments Coverage

• Special Aviation Insurance Coverages

• Exclusions

• Underwriting Considerations

Unit 14: Aviation Property & Casualty Exam Workbook


Aviation Questions # 1

1. What is Hangarkeepers Coverage used for?

2. Name three General Exclusions found in the Aviation Policy.

3. What type of deductible is generally used in Aircraft Hull policies?

4. Loss to the Aircraft Hull is generally valued on what basis?

5. What are the usual coverages written on an Aircraft liability policy?

6. How does the Aircraft policy cover an insured who has received a special permit or waive from the FAA?

7. What type of coverage would be needed for passenger’s baggage?

8. Define the ways in which hull coverage can be written.



Aviation Questions # 1 (Answers)

1. Aircraft in the hangar owners CCC (similar to Garagekeepers)

2. a. Lack of current FAA airworthiness certification b. If craft is used or maintained for purposes other than its classification c. If operated by other than pilot named in declarations

3. Percent of value

4. Stated value

5. Bodily injury excluding passengers/passenger liability/property damage

6. Not covered

7. Cargo

8. a. All risk not in flight

b. Named peril not in flight c. All risk in flight



Aviation Questions # 2

1. Identify the form of coverage (if any) which would be responsive to the following needs or situations: a. Coverage for owner of repair service, to cover damage to customer’s planes. b. Coverage for owner of air freight service, for damage to customer’s cargo. c. Coverage for an aircraft owner to cover for damage to the plane. d. Coverage for an aircraft owner that would enable the owner's injured guests to recover

for the owner's negligence, without having to resort to legal action.

2. An insured has Hull and Liability (including passengers) coverages on an owned pleasure aircraft. Explain the potential problems (if any) posed by the following based on usual policy conditions. a. Insured flew the plane into Canada. b. Insured’s FAA airworthiness certificate expired. c. Insured hired a substitute aircraft while his was being repaired. d. Insured accepted an offer to fly two persons to a meeting, for a fee. e. Baggage storage compartment came open during flight; guest’s luggage fell out and

was lost.

3. Which of the following statements are true; which are false? If false, explain the misstatement. a. Hull coverage is usually written on a valued basis and subject to a deductible based on

a percentage of value. b. “In-motion” hull coverage generally means coverage only while the aircraft is in flight. c. Liability coverage on aircraft may be written with or without protection for injuries to

passengers. d. Medical Payments pay for injuries to persons only if the insured is legally liable for

damages. e. Admitted Liability coverage responds only if requested by the insured.



Aviation Test 2 Answers

1. a. Hangar keeper’s Liability

b. Cargo Liability

c. Hull Insurance

d. Admitted Liability

2. a. No problem – typical policy territory includes Canada.

b. No coverage when airworthiness certificate expires.

c. No problems as to liability for operation, as Liability insurance usually includes temporary substitute aircraft. As to damage to the hired plane, however, Liability excludes damage to property in insured’s custody.

d. If declared use of aircraft is private pleasure, other usage is excluded.

e. No coverage – care, custody and control exclusion.

3. a. True

b. False. In-motion generally means whenever moving under own power which would include, for example, taxiing.

c. True.

d. False. Medical Payments pays without regard to legal liability.

e. True.




Property & Casualty Exam Workbook Unit 15: Boiler & Machinery / Equipment Breakdown


UNIT

BOILER AND MACHINERY EQUIPMENT BREAKDOWN

OVERVIEW

The field of Boiler and Machinery insurance embraces risks of direct loss and indirect loss

arising from “accidents” to “objects”. A completed Boiler and Machinery policy consists

of Declarations, Common Policy Conditions, coverage form, Object Definitions form, and

endorsements.

OBJECTIVES


• Boiler & Machinery Policy

• Boiler & Machinery Coverage Form

• Objects Definitions Forms

• Indirect Loss Coverage Endorsements

• Miscellaneous Options

• Small Business Forms

Property & Casualty Exam Workbook Unit 15: Boiler & Machinery/Equipment Breakdown


Boiler & Machinery Questions # 1 1. What are the forms available under Boiler & Machinery?

2. What types of covered property are included under property damage liability?

3. Under Boiler & Machinery, do we automatically cover direct or indirect damage?

4. If the insured has a Boiler & Machinery form with no endorsements, would expediting expense be covered?

5. Under extensions of coverage, we have automatic coverage at a newly acquired location for how long?

6. Are internal limits for expediting expense, hazardous substances, ammonia contamination & water damage included or in addition to your property damage limit?

7. Under the loss settlement condition: a. Are claims paid on a replacement cost or ACV basis?

b. What is the exception to that condition?

Unit 15: Boiler and Machinery / Equipment Breakdown Property & Casualty Exam Workbook


8. Under the business interruption coverage:

a. What are the two forms that are available?

b. What is the difference between the two forms?

9. Under the actual loss sustained form, what is the coinsurance requirement?

10. Under the small business forms, what is the maximum amount allowed? 11. Under the small business Boiler & Machinery form, what is the coverage available for

business interruption and extra expense? 12. Under the small business Boiler & Machinery forms, what is the maximum coverage

available for spoilage?



Boiler & Machinery Questions # 1 (Answers)

1. Boiler and Machinery Form, Small Business Boiler and Machinery Form, Small Business Boiler and Machinery Broad Form.

2. Boilers, refrigerating equipment, air conditioning equipment, generators, pumps, engine machinery, compressors, transformers and turbines.

3. No, available by endorsement. 4. Yes 5. 90 days 6. Are included within the policy limits 7. a. Replacement cost

b. Replacement must be made within 18 months 8. a. Valued or actual loss sustained

b. Valued – pays agreed dollar limit for each day of total interruption or proportionate part for partial interruption up to the policy limit. Actual Loss Sustained pays actual lost profits through period of interruption.

9. 100% coinsurance 10. $5,000,000 11. 25% of the limit that applies to property damage losses as an additional amount of

insurance 12. $25,000



Boiler and Machinery Questions # 2 1. What does Expediting Expense cover?

2. Define the property covered under Boiler/Machinery policy.

3. For the Small Business B/M form what is the maximum 80% replacement Cost that may be written?

4. What is the standard deductible under Boiler & Machinery?

5. Automatic Coverage for new locations is what time periods?

6. How is Indirect Loss covered?

7. For replacement cost to apply what is the time limit for the insured to replace or repair?

8. What is the maximum expediting expenses in Small Business B/M?

9. What does Consequential Damage Endorsement cover?

10. What is the definition of "Accident"

11. Explain the Suspension condition.

12. Explain Valued Business Interruption endorsement.

13. Explain Actual Loss Sustained endorsement.




1. Cost of temporary repairs and cost to hasten permanent repairs or replacement 2. Property of the Insured/property in insureds ccc if he is legally liable 3. $5,000,000 4. $500 5. 90 days 6. Either valued or actual loss sustained 7. 18 months 8. $25,000 9. Spoilage loss from lack of power

10. Sudden & accidental breakdown of the object or part of the object 11. Allows immediate suspension of coverage under certain circumstances. 12. That pays an agreed amount each day of interruption with a daily limit and total dollar

limit w/deductible that can be either days or dollars. 13. Covers lost profits and continuing expenses subject to 100% coinsurance



Boiler & Machinery Questions # 3

Boiler and Machinery Coverage Form

1. Under a policy with the Boiler and Machinery form, with no endorsements, state "covered" or "not covered" for the following incidents, and explain. If not covered, state how (if at all) it could have been covered under Boiler and Machinery insurance.

a. Following some repairs, a boiler had a sudden and accidental breakdown while being tested.

b. In an accident involving a covered object, a visitor on the insured's premises suffered injuries and sued the insured.

c. Personal property owned by another, in the insured's care, was damaged in-an-accident involving a covered object, resulting in a liability claim by the owner.

d. The insured suffered water damage to carpeting and floor when an accident occurred to the air conditioning unit, a covered object.

2. Which of the three available coverage forms would be indicated if the insured wanted.

a. A total coverage limit of $7,500,000? __________________________________

b. Coverage for up to $100,000 in spoilage? ______________________________

c. Business interruption protection of a “valued” basis? ___________________________



3. What amount would be payable if the insured had a Boiler and Machinery Coverage form with Extra Expense endorsement stating limits of $100,000 and, as to period of restoration, "20%-40%-60%-80%-100%," when a covered object was destroyed in an accident and, to maintain operations, the insured incurred $30,000 of necessary extra expenses during the first month, $20,000 during the second month, $15,000 during the third month, and $5,000 during the fourth month, after which normal operations resumed?

4. By what means may an insured, desiring protection for business interruption, be certain to avoid coinsurance penalty in a loss?




Boiler and Machinery Coverage Form 1.

a. Not covered – exclusions delete coverage during testing. b. Not covered - bodily injury liability is an optional coverage which must be added by

endorsement, if desired. c. Covered – included in definition of covered property. d. Covered – (subject to a limit of $25,000) – covered property.

2.

a. Boiler and Machinery form - the small business forms are subject to a maximum limit $5,000,000.

b. Boiler and Machinery form, wherein spoilage may be added for any limit. Small Business Broad form has maximum limit of $25,000.

c. Boiler and Machinery form - "valued" business interruption is not available under the small business forms.

3. $70,000 (the full amount of the loss). As the loss has gone into a fourth month, 80% of the limit, or $80,000, is available.

4. The insured may avoid a coinsurance penalty by (a) maintaining a coverage amount not less than 100% of annual profits plus continuing expenses under the actual loss sustained form, or buying the "valued" form, or (c) buying one of the small business forms, which do not have a coinsurance clause.




Property & Casualty Exam Workbook Unit 16: Heath


UNIT

HEALTH

OVERVIEW

Health insurance has been broadly, generically defined as insurance against loss by

sickness or bodily injury. “Health insurance,” also known as “disability insurance,” is

insurance of human beings against bodily injury, disablement or expense resulting

from sickness, and every insurance appertaining thereto. Health insurance does not

include workers’ compensation coverages.

OBJECTIVES


• General Policy Provisions

• Application

• Types of Policies

• Hospitalization Expense Insurance

• Accident Insurance

• Surgical Expense Insurance

• Physicians Coverage

• Major Medical Insurance

• Disability Income Insurance

• Long Term Care

• Medicare Supplement Insurance

• Health Maintenance Organizations

• Preferred Provider Organizations

Unit 16: Heath Property & Casualty Exam Workbook


Health Questions # 1

1. If a health insurance policy is allowed to be cancelled midterm by the insurance company

a. what is the minimum number of days required by Florida law?

b. what provision refers to this type of policy?

2. what is the provision for an Optionally Renewable policy?

3. what is the provision for a Conditionally Renewable policy?

4. what is the provision for a Guaranteed Renewable policy?

5. what is the provision for a Non-Cancellable policy?

6. Refer to #2, 3, 4, and 5 – when can these policies be cancelled:

7. When would dental expenses or cosmetic surgery be covered under the health policy:

8. What grace period applies to monthly premium payments?

9. If the insurer gives the insured a conditional receipt and requires the reinstatement application, what are the different reinstatement provisions?

10. If the insured has a guaranteed renewable or non- cancellable policy, and the insurer finds out about a sickness or disease during the first two years, how will the "time limit on certain defenses clause" apply?

11. Waiver of premium applies to:

12. "Double indemnity" will be paid for death benefits under certain circumstances.



Name them:

13. Hospitalization Expense form will pay for:

14. Hospital Indemnity form will pay for:

15. When will accident insurance pay for an air travel injury?

16. Surgical Expense will pay for:

17. Physicians coverage will pay for:

18. Major Medical with limit of $1,000,000 and has a coinsurance or participation of 80% with a deductible of $1,000. If the insured has $10,000 in medical expenses, how much will the insurance company pay?

19. Insurance companies do not wish to participate in any arrangement where the total benefit will be more than __________% of normal income.

20. Under a Medicare Supplement, policy cannot limit pre-existing conditions for any longer than:

21. Which managed health care system (HMO/PPO) has a separate facility in which to see patients:



Health Questions # 1 (Answers)

1. a. 20 days b. Cancellation clause

2. Cannot cancel during policy period 3. Non-renewal if certain conditions are met 4. Must renew, can raise premium 5. Must renew, cannot raise premium 6. #2 – not during policy period

#3 – when certain conditions are met #4 – cannot cancel #5 – cannot cancel

7. Accident 8. 10 days 9. 1. Accept premium and require a reinstatement app.

2. Reinstatement is automatic after 45 days 10. Can deny claim 11. Total disability 12. Passenger on public conveyance, or elevator, collapse or fire in a building, boiler

explosion, Hurricane, tornado, lightning 13. Daily room and board, nursing care, lab fees, operating room, medical supplies 14. Flat amount per day 15. With a fare paying passenger 16. Doctor doing surgery 17. Non-surgical – in office, hospital or at home. 18. 10,000 -1,000 9,000 x .8 = $7,200. 19. 66 ⅔ 20. 6 months 21. HMO




1. What is Optionally Renewable health insurance?

2. What is Conditionally Renewable health insurance?

3. What is guaranteed renewable health insurance?

4. Does Non-Cancellable insurance exist in real time?

5. Generally, what does an AD&D policy provide coverages for?

6. What is the grace period in Florida for health insurance policies that are weekly, monthly, and all others?

7. Explain the reinstatement provision in health policies in Florida.

8. Define Elimination Period.

9. What does a Hospitalization Expense policy cover?

10. What does Hospital Indemnity cover?

11. What does Surgical Expense cover?

12. What does Physicians Coverage do?



13. What does Major Medical refer to?

14. What type of coverage replaces income?

15. Florida has set standards for Medicare Supplemental policies. What are they?

16. The standards for Medicare Supplemental Insurance are set by whom?

17. From where are the majority of health insurance premiums derived?

18. What happens if the health policy is not paid by the end of the grace period?

19. Define: 'Time Limit on Certain Defenses Clause"

20. What is the Waiver of Premium?




1. Insurer cannot cancel during term but can non-renew at expiration. 2. Insurer can refuse to renew only under certain conditions. 3. Insurer is required to renew to a stated age and can increase premium for a class of

insureds. 4. insurer cannot cancel, cannot increase premium and must renew to a stated age 5. Only Accidental death benefit, dismemberment benefits as a percentage of principal sum

or partial benefits. All accident related hospital & medical expense reimbursement, loss of earnings.

6. Weekly: 7 days, monthly: 10 days, all other: 31 days. 7. Reinstatement is at time of approval or automatic after 45 days, if insurer fails to notify of

disapproval. At reinstatement, accident coverage is immediate, sickness - 10 days waiting period.

8. Same as waiting period. The time between when the policy is issued and accepted and sickness benefits begin.

9. Basic cost of room & board, nursing care, lab fees, operating room, medical supplies, etc. 10. Flat amount per day, regardless of other insurance. 11. Physician’s fees for surgery. 12. Non-surgical care by a doctor. 13. Coverage for catastrophic loss usually with high deductible, maximum limit & co

insurance. 14. Disability insurance (not unemployment compensation). 15. Policy must: specify minimum limits that fill Medicare gaps, must be in understandable

language, pre-existing conditions limit cannot exceed six months. 16. Florida Statutes. 17. Group insurance. 18. It expires or lapses. 19. After 2 years a claim may not be reduced or denied due to preexisting conditions unless

specifically excluded before date of loss. 20. Eliminates premium payment when insured is totally disabled




All Provisions and Coverages

1. Insured A has a conditionally renewable policy. B has a guaranteed renewable policy. C has a Non-Cancellable policy. On which of these (if any) may the insurer:

a. Cancel the policy during its current term?

b. Increase the premium from that which originally applied?

c. Decline renewal, when the insured has reached an age specified in the policy?

2. The insured has a Non-cancellable policy, including a waiver of premium clause, with premium payable annually on January 1.

a. The insured incurred expenses, which would normally have been covered, on January 27. The insured had failed to pay the renewal premium. Any coverage? Explain.

b. The insured did not pay the January 1 renewal premium until February 10. The company required a reinstatement application, which the insured completed and was received by the insurer on February 20. The insured incurred medical expenses, which would normally have been covered, on April 15, and had not heard anything from the insurer about the reinstatement. Any coverage? Explain.

3. An insured has a hospitalization expense policy, a surgical expense policy, and a physician's coverage policy. What single form of policy might afford the insured a greater degree of protection for the same items of expense?

4. The insured has a major medical policy. The only limits stated are $500,000 maximum, $2,000 deductible and 80% coinsurance. How much is payable under such a policy if covered medical expenses of $12,000 are incurred?



5. What kind(s) of individual Health Insurance are specifically designed to cover the following?

a. Portions of medical expenses not covered by Medicare.

b. Loss of income from inability to work due to sickness.

c. Hospital room and board charges.

d. Physician’s charges for an appendectomy

e. Physician’s charges for a hospital visit

f. Hospital laboratory fees




1. a. None may be canceled during their term.

b. The premium for the conditionally renewable policy and for the guaranteed renewable policy (under certain conditions) may be increased.

c. Insurer may decline renewal under the conditionally renewable policy, for reasons stated in the policy.

2. a. Coverage is still in effect. The minimum grace period for premium payment is 31 days.

b. Coverage is in effect. Reinstatement is automatic after 45 days if the insurer fails to notify the insured of disapproval within that period.

3. A major medical policy.

4. $8,000 ($12,000 less $2,000 deductible = $10,000 x 80% = $8,000).

5. a. Medicare supplement insurance.

b. Disability income insurance.

c. Hospitalization expense insurance, major medical insurance.

d. Surgical expense insurance, major medical insurance.

e. Physician’s coverage, major medical insurance

f. Hospital expense insurance, major medical insurance.



Long Term Care Questions

1. Long Term Care is also known as? a. Major Medical b. Nursing Home Care c. Medicare Supplement Insurance d. Federal Medicare Program

2. All the following are types of LTC EXCEPT: a. Skilled Nursing care; continuous care b. Intermediate nursing care provided by registered nursed but not on 24-hour care c. Custodial Care; assistance with day to day living d. Surgical expenses

3. LTC assistance may be offered at _______________________________,

________________________, or ___________________________________________

4. The elimination period for LTC ranges from ________ to __________

5. Because of HIPAA all LTC policies must be a. Renewable b. Guaranteed renewable c. Optionally renewable d. Conditionally renewable

6. Who, in addition to the applicant, must receive a lapse notice? a. The insurer b. The funeral home c. A secondary addressee d. The Home Owners Association Management Company



Long Term Care Questions (Answers)

1. B 2. D 3. Client’s Home, Nursing Home, Adult Care Center 4. Zero (0); 180 5. B 6. C

Property & Casualty Exam Workbook Unit 17: Residual Markets


UNIT

RESIDUAL MARKETS

OVERVIEW

On many occasions, the voluntary insurance market may be unable to meet the needs of

Florida residents for certain coverages. Sometimes the need is seen to be temporary or

permanent. The Florida Legislature has reacted to such situations as they have arisen by

establishing various market organizations to provide coverages known as “residual

markets,” These state-created organizations appear to the public to be similar to

insurance carriers, although the ultimate responsibility for operating results falls upon all

licensed carriers in Florida.

OBJECTIVES


• Florida Automobile Joint Underwriting Association (FAJUA)

• Citizens Property Insurance Corporation (CITIZENS)

• Florida Workers’ Compensation Joint Underwriting Association (FWCJUA)

Unit 17: Residual Markets Property & Casualty Exam Workbook


Residual Markets Know the following

1. Eligibility for Citizens Property Insurance Corp both wind only and including wind for commercial properties

2. Underwriting criteria for Citizens (not wind) for commercial properties

3. Homeowners forms used by Citizens in the dwelling program

4. Causes of loss form used by Citizens for commercial property (not wind)

5. Perils covered under Citizens Wind only

6. Types of Buildings eligible for Citizens Wind only

7. Eligibility for coverage in the FWCJUA (workers compensation)

8. When is coverage effective in FWCJUA

9. What are the sub-plans for FWCJUA

10. Maximum Limits available under FAJUA (automobile)

11. Who qualifies for coverage under FAJUA

12. Coverages available under FAJUA

13. Coverages available for commercial vehicles under FAJUA

14. Limits available for commercial vehicles under FAJUA

Property & Casualty Exam Workbook Unit 19: Selected Florida Statues & Rules; Glossary Terms


UNIT

SELECTED FLORIDA STATUES & RULES GLOSSARY TERMS

OVERVIEW

This next session is comprised of select Florida Statues and Rules that pertain to

Property and Casualty. This section comprises of approximately 30% of the state final

exam.

OBJECTIVES


• Unauthorized Entities

• Ethics and Insurance

• Insurance Discounts for Wind Mitigation

• Florida Insurance Guaranty Association (FIGA)

• Selected Florida Statutes

• Florida Administrative Rules.

Unit 19: Selected Florida Statues & Rules; Glossary Terms Property & Casualty Exam Workbook


Rules and Regulations

Approximately 30% of the State Exam consists of Florida Laws. The following sections are those we know have had questions.

Page # Statute Title

203-206 20.121 Department of Financial Services

214 624.02 “Insurance” defined

214 624.03 “Insurer” defined

214 624.031 Self-insurance defined

215 624.05 “Department”, “commission” and “office” defined

215 624.06 “Domestic”, “foreign”, “alien” insurer defined

216 624.09 “Authorized”, “unauthorized” insurer defined

216 624.10 Transacting insurance

219 624.401 Certificate of authority required

219-220 624.402 Exceptions, certificate of authority

220-221 624.425 Agent countersignature required, property, casualty, surety insurance

221-222 626.015 Definitions

223 626.025 Consumer protections

223-224 626.0428 Agency personnel powers, duties, and limitations

224-226 626.112 License and appointment required …

228-229 626.175 Temporary licensing

229-230 626.202 Fingerprinting requirements

230-231 626.221 Examination requirement; exemptions

233-235 626.2815 Continuing education requirements

235-236 626.311 Scope of license

237 626.371 Payment of fees, taxes for appt. period without appt.

237-238 626.381 Renewal, continuation, reinstatement or termination of appointment

238 626.382 Continuations, expiration of license insurance agencies

238 626.431 Effect of expiration of license and appointment

238 626.551 Notice of change of address, name

239 626.572 Rebating; when allowed

239-240 626.611

Grounds for compulsory refusal, suspension, or revocation of agent’s, title agencies’, adjuster’s, customer representative’s, service representative’s, or managing general agent’s license or appointment

241 626.6115 Grounds for compulsory refusal, suspension or revocation of insurance agency license.

241-242 626.621 Grounds for discretionary refusal, suspension, or revocation of agent’s, adjuster’s, customer representative’s, service



representative’s, or managing general agent’s license or appointment

242-243 626.641 Duration of suspension or revocation

243-244 626.730 Purpose of license

244 626.731 Qualifications for general lines agent’s license

244-245 626.7315 Prohibition against the unlicensed transaction of general lines insurance

245-246 626.732 Requirement as to knowledge, experience, or instruction

247 626.7353 Appointment of customer representatives

249 626.748 Agent’s records

249-251 626.752 Exchange of business

251 626.753 Sharing commissions; penalty

260-261 626.901 Representing or aiding unauthorized insurer prohibited

261 626.902 Penalty for representing unauthorized insurer

261 626.914 Definitions (Surplus Lines Law)

261 626.915 Surplus lines insurance authorized

262-263 626.916 Eligibility for export

263-265 626.918 Eligible surplus lines insurer

265-267 626.921 Florida Surplus Lines Service Office

268-280 626.9541 Unfair methods of competition and unfair or deceptive acts or practices defined (Definitions)

280-281 626.9743 Claims settlement practices relating to motor vehicle insurance

281-282 626.9744 Claim settlement practices relating to property insurance

285 626.4025 Residential coverage and hurricane coverage define

286-290 627.4133 Notice of cancellation, nonrenewal, or renewal premium

290-293 627.701 Liability of insureds; coinsurance; deductible

296-297 627.7015 Alternative procedure for resolution of disputed property insurance claims

297-299 627.706 Sinkhole insurance; catastrophic ground collapse definitions

301-302 627.712 Residential windstorm coverage required; availability of exclusions for windstorm or contents

302 627.714 Residential condo unit owner coverage loss assessment coverage required

302-303 627.7142 Homeowner Claims Bill of Rights

307 627.744 Required pre-insurance inspection of private passenger motor vehicles.

309 627.827 Premium finance agreement defined

310 626.901 Premium financing by an insurance agent or agency

311 628.021 Stock insurer defined

311 628.031 Mutual insurer defined

314-315 69B-150.013 Identity of Insurer



315 69B-213.040 Who May Appoint a Customer Representative

315 69B-213.050 Limits on Lines and Products the Customer Representative May Handles

216 69B-213.130 The Customer Representative’s Authority; Limitations

316-317 69O-196.010 Refunds regarding Premium Finance Companies



Glossary Terms (not in alphabetical order) Abandonment Clause Computer Fraud Coverage Form

Absolute Liability Concealment

Accident Conditionally Renewable

Aggregate Limit Condominium Association Coverage Form

Agreed Value Consequential Damage

Aircraft Hull Insurance Contingent Liability

Aircraft Liability Insurance Contract

Airport & Air Meet Liability Contractors Equipment Coverage Form

Allied Lines Contractual Liability

All Risk Insurance Coverage Trigger

Annual Transit Policy Dealers Drive-Away Collision

Appraisal Clause Debris Removal

Automobile Mechanical Breakdown Insurance Declarations

Aviation Insurance Deductible

Assignment Clause Direct Loss

Bail Bond / Court Bond Disability Insurance

Bailee Discovery Period

Barratry Dread Disease Policy

Bid Bond Drive-Other-Car Coverage

Binder Dwelling Policy

Blanket Insurance Earthquake Coverage

Blue Sky Bond Electronic Data Processing Coverage

Boiler and Machinery Coverage Form Employee Dishonesty Coverage From

Builders Risk Coverage Form Employers Liability Coverage

Building and Personal Property Coverage Form Endorsement

Burglary Excess Coverage

Business Income Form Expediting Expenses

Business Pursuits Endorsements Extended Nonowned Coverage Endorsement

Businessowners Policy (BP or BOP) Extended Reporting Period

Camera and Musical Instrument Dealers Form Extra Expense Coverage Form

Cargo Liability Coverage Farm Coverage Part

Causes of Loss Form (Basic, Broad, Special) Fidelity Bond

Claims-Made Form Fiduciary

Coinsurance Clause Financial Responsibility Law

Collision Florida Automobile Joint Underwriting Association

Commercial Articles Coverage Form Forgery or Alteration Coverage Form

Commercial Package Policy Franchise Deductible

Comprehensive Coverage Fraud

Garage Coverage Form Nuclear Energy Liability Exclusion Endorsement

Garagekeepers Liability Objects Definition Form

General Average Obligee

General Liability Occurrence

Grace Period Occurrence Form

Hangarkeepers Liability Optionally Renewable

Hazard Percentage Deductible

Health Insurance Peril

Health Maintenance Organization Perils of the Sea

Homeowners Policy Personal and Advertising Injury

Hospital Indemnity Insurance Personal Article Floater

Hospitalization Expense Insurance Personal Injury Protection



Hull Insurance Personal Liability Protection (PIP)

Improvements and Betterments Personal Property Floater

Indemnitor Physical Damage

Indemnity Policy

Indirect Loss / Consequential Loss Pollution Liability Coverage

Inland Marine Insurance Premise Burglary Coverage Form

Insolvency Bond Preservation of Property

Insurable Interest Primary Insurance

Insurance Principal

Insurance Service Office (ISO) Private Passenger Auto

Insuring Agreement Products and Completed Operations

Jettison Professional Liability

Jewelers Block Proof of Loss

Law of Large Numbers Property Damage

Leasehold Interest Coverage Form Proximate Cause

Legal Liability Punitive Damages

Liability Insurance Pure Risk

Liberalization Clause Replacement Cost

License and Permit Bonds Reporting Form

Limits of Liability Representation

Liquor Liability Coverage Residual Market

Loss of Use Coverage Retroactive Date

Lost Instrument Bonds Robbery and Safe Burglary Coverage

Major Medical Insurance Salvage

Medicare Supplement Insurance SR-22 Filing

Misrepresentation Single Limits

Mortgagee Rights Speculative Risk

Motor Truck Cargo Policy Split Limits

Named Nonowner Coverage Straight Deductible

Negligence Strict Liability

Noncancelable Surety

Subrogation Theatrical Property Coverage Form

Sue and Labor Clause Theft

Supplementary Payments Unfair Insurance Trade Practices Act

Third-Party Insurance Coverage Uninsured Motorist Coverage

Towing and Labor Endorsement Utmost Good Faith

Uncontrolled Lines Vacant

Uninsured Motorist Coverage Valued Policy

Owners and Contractors Protective Liability Valued Policy Law

Vandalism & Malicious Mischief (VMM)

Vicarious Liability

Waiting Period

Waiver

Waiver of Premium

Warranty

Workers’ Compensation Insurance

Instrumentalities of Transportation and Communication

Premise Theft and Robbery Outside the Premise Coverage Form

Theft, Disappearance & Destruction Coverage Form

Property & Casualty Exam Workbook Surplus Lines


60 Hour Surplus Lines Pre-Licensing Course

Widen your marketing and income in the non-admitted field of insurance. The Surplus lines agent license (PL-1-20) allows agents to offer coverage to unusual and difficult insurance risks. For example, aircraft insurance, cargo insurance, fireworks displays and sales, commercial contracting, marine, luxury watercraft, and many more. Florida Statutes 626.914(1) defines a “surplus lines agent” as “an individual licensed to handle the placement of insurance coverages with unauthorized insurers and to place such coverages with authorized insurers as to which the licensee is not licensed as an agent.” Surplus lines agents must be licensed and appointed a general lines agents (2-20), or a licensed and appointed managing general agent, or a service representative. In the ever-changing market of insurance, insurers are constant reevaluating the risks they wish to protect. With a Surplus lines license, you will have the ability to tap into one of the most lucrative markets in the property and casualty arena. Application Qualifications (http://www.myfloridacfo.com) Complete an online application for license and submit appropriate fees. • Be a natural person at least 18 years of age. • Be a resident of the state of Florida. • Be a United States citizen or legal alien who possesses a work authorization from the United

States Immigration and Naturalization Services. • Be fingerprinted at one of the Department's fingerprint sites. • If licensed in another state within three years, provide a Letter of Clearance. • Be licensed and appointed as a Florida resident general lines insurance agent (PL-2-20) • Meet the requirements for applicants with prior criminal history State Examination Qualifications (Must be completed within four years of application date) • Successfully completed 60 hours of approved insurance course work in surplus and excess

lines insurance approved by the Florida Department of Financial Services

Exemptions for State Examination

• A Letter of Clearance indicating the licensee held a property and casualty and surplus lines license for at least one (1) year in their home state; and apply for this license within 90 days of becoming a resident of the State of Florida.

This course is taught in a “blended” format (36-hours; classroom / 24-hours; self-study-online). For additional information or to register for Surplus lines, please contact a Career Counselor at (800) 732-9140.

Florida Department of Financial Services Course Approval Code: 100949 Provider Approval Number: 753

http://www.myfloridacfo.com/

Property & Casualty Exam Workbook Exam Simulator


Property & Casualty

Online Exam Simulator

$40.00 + Tax

Contact a Gold Coast

Career Counselor

to Purchase an Access Code.

(800) 732-9140

Documents

Property & Casualty - Gold Coast Schools