Ch. 5: Personal Lines

The conditions of the Standard Fire Policy addressing the rules, duties, and provisions of the insured and the insurer are found in

The 165 lines of conditions

The New York Standard Fire Policy is classified as "Standard" because

The policy conditions are identical in every state.

The Standard Fire Policy is a named perils contract, which means

Only perils listed in the policy are covered.

During a house fire, an insured moves an antique chair listed on the policy to a storage unit. In the Standard Fire Policy, how many days will the antique chair be covered at the new location?

5 days

All of the following are excluded from coverage under a standard fire policy EXCEPT

Manuscripts and bullion

Even though the Standard Fire Policy is a named peril contract, under which of the following circumstances would the policy provide "all risk of loss" coverage on insured property?

When the loss is to insured property that has to be removed because of endangerment by a peril insured against under the policy

Removal coverage under a standard fire policy remains in effect for

5 days

The Standard Fire Policy would provide coverage in which of these cases?

Covered losses include the following: fire, lightning, and removal from premises.

Joe lit a fire in his fireplace and left it unattended. He had failed to check to see if the flue was open, so the smoke entered the house and discolored the walls, ceiling, and drapes. Joe also had to hire a company to remove the smoke odor. The total expense of cleaning and repainting was $6,000. How much would Joe's Standard Fire policy pay?

Nothing

The standard fire policy specifically excludes losses which occur when a building is vacant or unoccupied for

60 days or more

Which amount is figured by subtracting depreciation from the replacement cost of a covered item?

actual cash value

All of the following are TRUE statements regarding the requirements of an insurer to offer earth movement coverage in California EXCEPT

Only authorized agents which hold an "earth movement certificate" through the department of insurance are able to market residential property insurance which provides coverage for earth movement.

Which of the following terms best describes a trembling or shaking of the earth that is volcanic or seismic in origin?

earthquake

The purpose of the California residential property disclosure statement includes all of the following EXCEPT

Becomes a part of your residential property insurance policy

The standard fire policy only covers those perils specified in the policy for that reason it is known as a(n):

Named peril policy

Jack and Jill each own a 50% interest in a dwelling that is insured under a standard fire policy issued to Jill to cover her interest in the structure. The amount of insurance is $40,000. Following a $10,000 fire loss to the structure, Jill will receive

$5,000. Because Jill interest in the property is 50%, she will receive an amount equal to 50% of the loss.

All of the following statements are TRUE regarding the California Earthquake Authority (CEA) EXCEPT

The CEA is authorized to transact insurance to sell residential earthquake and any other insurance coverage as necessary.

California's Compulsory Financial Responsibility Law requires every driver and every owner of a motor vehicle to maintain financial responsibility (liability coverage) at all times. All of the following are acceptable forms of financial responsibility EXCEPT

A surety bond for $50,000 obtained from a company licensed to do business in California.

A state-established program that requires insurers who write property insurance to accept risks in economically depressed areas in the same proportion as their other business bears to the total property insurance market is called the

Fair Access to Insurance Requirements plan.

Any person who claims that he or she meets the criteria based on a driver's license and driving experience acquired anywhere other than in the United States or Canada is presumed to be qualified to purchase a Good Driver Discount policy if that person has been licensed to drive in the U.S. or Canada and meets the criteria for that period for at least the previous

18 months

The rate charged for a Good Driver Discount policy should be at least what percent below the rate the insured would otherwise have been charged for the same coverage?

20%

An insurer has the right of cancellation/nonrenewal of an existing insurance policy for all of the following EXCEPT

Arbitrary exclusion from coverage due to age of driver and type of vehicle to be insured.

All of the following are eligibility requirements for the FAIR plan EXCEPT

The property must be located in a riot-prone area.

California's Compulsory Financial Responsibility Law requires every driver and every owner of a motor vehicle to maintain financial responsibility (liability coverage) at all times. If you don't have acceptable financial responsibility and have an accident, you may lose your driver's license for up to

4 years

A state-established program that requires insurers who write property insurance to accept risks in economically depressed areas in the same proportion as their other business bears to the total property insurance market is called the

Fair Access to Insurance Requirements plan.

Which of the following is NOT a requirement for purchasing a Good Driver Discount policy?

A person must have been licensed to drive a motor vehicle for the previous 5 years. (It's 3 years)

Which of the following would be considered the most important factor in determining the rates and premiums for an applicant for an auto policy?

The applicants driving record (Rates and premiums for an automobile insurance policy shall be determined by application of the following factors in decreasing order of importance: the insured's driving safety record; the number of miles he or she drives annually; and the number of years of driving experience the insured has had.)

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