Fundamentals of Insurance - Practice Exam 12 Questions & Answers 100% Correct!!

A building valued at $120,000 is insured for $30,000 and there is an 80% co-insurance clause on the policy. The building was totally destroyed by fire last weekend. The insured would receive a settlement of: a. 7,000 b. 12,000 c. 30,000 d. 37,5000 - ANSWER-c. 30,000 The reinstatement clause contained in most policies of commercial property insurance provided that: a. The insureds shall have as much insurance on the property after an insured loss as they had immediately prior to it b. Coverage which is suspended due to a breach of policy conditions is automatically reinstated when that breach is corrected c. Coverage which has been terminated by the insurer may be re-instated at the request of the insured upon application to the insurer in writing d. Property lost or damaged shall be re-instated with equivalent property of like kind and quality - ANSWER-a. The insureds shall have as much insurance on the property after an insured loss as they had immediately prior to it The locked vehicle warranty requires that: a. The vehicle be equipped with a theft deterrent system b. The vehicle locked between the house of 9:00 p.m. and 6:00 a.m. and when not in motion c. The vehicle containing the property insured be properly licensed and registered by the highway traffic board d. Visible signs of forcible entry must be present before the insurer will agree to pay any claim for theft - ANSWER-d. Visible signs of forcible entry must be present before the insurer will agree to pay any claim for theft Loss resulting from the taking of property by a person breaking into the premises is defined as: a. Theft b. Robbery c. Burglary d. Hold-up - ANSWER-c. Burglary Crime policies define certain terms as they relate to coverage. The broadest meaning is given to: a. Burglary b. Theft c. Kidnapping d. Robbery - ANSWER-b. Theft In addition to the coverage provided for the explosion of boilers and pressure vessels, boiler, and machinery policies also provide this important coverage: a. Wear and Tear b. Gradual Deterioration c. Mechanical and Electrical Breakdown d. Latent Defect - ANSWER-c. Mechanical and Electrical breakdown The builders risk - Broad Form can be used to insure all of the following items, except one. Pick the exception: a. All materials and supplies entering into the completed project b. Value of landscaping c. Temporary building on project site d. Contractors tools and equipment - ANSWER-d. Contractors tools and equipment The basic principle behind business interruption insurance is: a. To restore the building to the condition it was in before the loss b. To find a place for the employees to work duri