MISCELLANEOUS PERSONAL LINES COVERAGE CHAPTER

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MISCELLANEOUS PERSONAL LINES COVERAGE (CHAPTER

7) EXAM QUESTIONS

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -24 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: Inner-city and Wildfire Risks

Answer:

As inner-city and brushfire areas have their own distinct risks, insurers who voluntarily write policies for them may stay within their risks in binding coverage. An insurer who writes policies covering areas designated by the Insurance Services Office (ISO) as brushfire hazard areas is not required to bind coverage for inner-city risks. Insurers who write policies covering inner-city risks are not required to bind coverage for brushfire hazard areas. Each may be proportionately relieved of the responsibilities and risks of the other on the overall FAIR Plan system.

Question 2: Fair Access to Insurance Requirements (FAIR Plan)

Answer:

The California FAIR Plan is designed to provide basic property insurance when it cannot be obtained through standard markets because of the geographic location of the property. To be covered, the property must meet underwriting standards. At a minimum the FAIR Plan covers real or tangible property against direct loss from the basic SFP perils with the EC endorsement and VMM. Property must be at a fixed location in an area designated by the Commissioner as geographic or urban or those areas designated as brush by the Insurance Services Office.The California FAIR Plan is a joint reinsurance association formed by insurers licensed to write basic property insurance in the state. Each property insurer must participate in the plan, and assumes a pro rata share of the market. All active licensed Property or Casualty Broker-Agents are authorized to transact coverage through the FAIR Plan, and the Department of Insurance has issued notices which strongly recommend that each Property or Casualty Broker-Agent register with the FAIR Plan to provide the required assistance to consumers.Coverage is not available for auto or farm risks.

Agents do not have binding authority. If a risk is acceptable, coverage becomes effective on the date the premium quotation is issued, as long as the premium is received by the FAIR Plan within 15 days.Property and Casualty agents are required to either assist consumers in submitting FAIR Plan applications on request or provide consumers with the toll-free phone number for the FAIR Plan if the

applicant has:

An insurable interest in the property Made an effort to secure coverage with a standard insurer Certified that he/she has been unable to obtain insurance The maximum amount of coverage on a single location is $1.5 million.

Question 3: Personal Jewelry Floater

Answer:

Coverage may be written on a valued, or actual cash value basis.Jewelry floaters commonly include a Pair and Sets clause. An appraisal is usually mandatory prior to, or at the time of, insuring the property.The insured must report newly acquired items within 30 days.

Question 4: Self-Insured Retention (SIR)

Answer:

If the coverage in an umbrella is broader than the underlying policy (meaning the primary policy doesn't insure a loss) the umbrella will drop down and cover the entire loss. When an umbrella policy drops down and acts as a primary policy, the insured pays a self-insured retention, which is a method of loss cost-sharing. The only time the insured must pay a self-insured retention is when the umbrella drops down. If the primary policy pays its limit, and then the umbrella policy makes payment, the insured does NOT pay the self-insured retention.A SIR is like a deductible in that the insured is responsible to pay it in order to have the policy coverage.

However, there are some differences between a deductible and a SIR:

• An insurance deductible is included in the policy limits, but a SIR is independent from the dollar

amount limits of the policy

• The SIR amount listed in the policy declarations is not payable by the insurance provider on behalf of

the insured. Instead, the insured has the responsibility to pay it directly to the claimant

Question 5: Musical Instrument Floater

Answer:

The insured must report newly acquired items within 30 days. Instruments played "for hire" are not covered. For coverage to apply, a Performance for Pay endorsement must be added and an additional premium must be paid

Question 6: Coverage

Answer:

Coverage is usually written in increments of $1 million, with a single limit per occurrence covering claims for both Bodily Injury/Property Damage and Personal Injury in excess of the insured's underlying policy limits.

Question 7: Conditions

Answer:

Insurance companies issuing umbrella coverage require their insureds to have underlying primary insurance in place. Underlying insurance provides coverage for the same risks that are insured under an umbrella policy.

Question 8: Fine Arts Floater

Answer:

This floater covers such items as paintings, rare manuscripts, and antiques. The floater provides automatic coverage for 90 days for newly acquired items. Coverage is written on a valued basis.

Question 9: Personal Inland Marine Insurance

Answer:

Don't be confused by the name "Inland Marine." Today, this insurance has very little to do with waterways. Historically, this type of insurance originated before the industrial revolution, when rivers and other inland waterways provided the primary means of transport. Today, the term refers to the coverage that is used to insure moveable property against direct loss.

The four recognized categories covered by Inland Marine insurance are:

• Property in transit

• Property held by a bailee

• Fixed instrumentalities of transportation (e.g. bridges and tunnels)

• Property subject to being in several locations

Personal Inland Marine policies can be attached to a Homeowners Policy or may be written as stand-alone policies. Since moveable property is also known as floating property, stand-alone policies are often called floaters.

Question 10: Personal Property floater

Answer:

Covers all personal property, with some exclusions, and is not itemized or scheduled.

Question 11: Perils Insured Against

Answer:

Most inland marine policies are issued on an open perils basis, largely because it was the tradition of marine and cargo insurance to provide coverage on an "all-risk" basis. However, some inland marine policies are issued on a named-perils basis, specifically, the various type of trip and transit policies that cover property in transit, such as the Annual Transit policy, which typically insures only against fire, windstorm, collision, and theft.

Question 12: File and Non-filed Forms

Answer:

Personal inland marine policies are generally exempt from rate and filing requirements, and thus may be classified as either filed or non-filed. Filed inland marine forms are standardized and must be filed with the Commissioner much like standard homeowners or personal auto policies. However, the vast majority of personal inland marine policies are non-filed. Because non-filed forms are not standardized, they can be more easily tailored to the specific exposures covered by the policy.Question 13: This policy is similar in design to a Homeowners Policy and similar in coverage to a Personal Auto Policy.Section I of the policy provides open perils coverage for a watercraft's hull, motor, trailer, equipment, and accessories. The insured's direct (first-party) losses are settled on an ACV basis subject to the policy's deductible Section II provides Watercraft Liability, Medical Payments, and Uninsured Boaters coverages.As in homeowners or personal auto policies, liability coverage protects against the claims of third parties for damage caused by the insured's negligence.

Answer:

Outboard Motorboat Policy

Question 14: Personal Effects Floater

Answer:

This floater provides open perils coverage for items transported by travelers. The coverage applies worldwide, but not at the insured's home (where the property would be covered by a dwelling or homeowners policy.)