AINS 22 - Segment B Questions With Complete Solutions
A garage attached to a dwelling would be covered under which
one of the following HO-3 Section I coverages?
A. Coverage A - Dwelling
B. Coverage B - Other Structures
C. Coverage C - Personal Property
D. Additional coverages Correct Answers A. Coverage A -
Dwelling
A homeowner wishes the broadest possible coverage for his
home and contents, which of the six ISO Homeowners program
forms would be the most appropriate for his coverage needs?
Correct Answers The HO-5
A homeowners policy differs significantly from the DP-3 policy
in that the unendorsed DP-3 policy:
A. Provides liability coverage only for owner-occupied
dwellings.
B. Does not provide liability coverage.
C. Provides liability coverage only for on-premises occurrences.
D. Does not provide liability coverage for "intentional acts."
Correct Answers B. Does not provide liability coverage.
A personal umbrella policy provides coverage for a particular
loss, but the underlying policies do not. This feature of an
umbrella policy is called
Select one:
A. Retention.
B. Laser coverage.
,C. Drop-down coverage.
D. Self-insurance. Correct Answers C. Drop-down coverage.
A property owner of a repeatedly flooded property who refuses a
reasonable flood-hazard mitigation from the NFIP will
experience a flood insurance premium increase of what % of the
chargeable rate for the property at the time of the mitigation
offer?
A. 50%
B. 75%
C. 125%
D. 150% Correct Answers D. 150%
A Self-insured retention (SIR) in a personal umbrella policy is
similar to a
A. Coverage limit
B. Deductible
C. Policy premium
D. Exclusion Correct Answers B. Deductible
A sinkhole causes the partial collapse of a wall of Ryan's
residence. The home is insured under an unendorsed DP-3
policy. Where would the question of whether this loss is covered
be answered?
A. Other coverages
B. Perils insured against
C. General exclusions
D. Conditions Correct Answers C. General exclusions
,A windstorm causes a tree on the insured's premises to fall,
breaking the electrical lines that enter the house. The loss of
electrical power causes the food in the freezer to thaw and spoil.
This loss is:
A. Covered because damage resulting from loss of electrical
power is covered.
B. Covered because it was caused by a covered peril on the
residence premises.
C. Not covered because damage resulting from loss of electrical
power is excluded.
D. Not covered because food is not considered personal
property. Correct Answers B. Covered because it was caused by
a covered peril on the residence premises.
A young working couple is purchasing their first home. Facing
budget pressures, they are content to accept named perils
coverage on the dwelling in exchange for a lower premium.
Assuming there are no mortgage restrictions, which one of the
following ISO policy forms would be most appropriate for this
couple?
A. HO-5—Comprehensive Form
B. HO-6—Unit-Owners Form
C. HO-2—Broad Form
D. HO-4—Contents Broad Form Correct Answers C. HO-2—
Broad Form
Adam and his insurer disagree on the amount of a loss covered
by his homeowners policy. Adam wants the insurer to pay
$10,000 toward the loss. The insurer's representative feels that
, the loss should be valued at $5,000. How could the appraisal
process resolve this situation?
Select one:
A. Adam's loss will be valued at $7,500 which is an equitable
compromise.
B. Both Adam and the insurer will jointly select an acceptable
appraiser to set the value.
C. Adam is forced to litigate the loss since agreement cannot be
reached.
D. Adam and the insurer will each select an appraiser, and the
two appraisers will submit their differences to an impartial
umpire who will reach a resolution. Correct Answers D. Adam
and the insurer will each select an appraiser, and the two
appraisers will submit their differences to an impartial umpire
who will reach a resolution.
Adverse selection occurs because
A. The underwriting guidelines are inadequate to detect
applicants who will have losses.
B. An underwriter unfairly discriminates in the underwriting
process.
C. People with the highest probability of loss are the ones most
likely to purchase insurance.
D. People who intend to commit insurance fraud purchase
coverage. Correct Answers C. People with the highest
probability of loss are the ones most likely to purchase
insurance.
A garage attached to a dwelling would be covered under which
one of the following HO-3 Section I coverages?
A. Coverage A - Dwelling
B. Coverage B - Other Structures
C. Coverage C - Personal Property
D. Additional coverages Correct Answers A. Coverage A -
Dwelling
A homeowner wishes the broadest possible coverage for his
home and contents, which of the six ISO Homeowners program
forms would be the most appropriate for his coverage needs?
Correct Answers The HO-5
A homeowners policy differs significantly from the DP-3 policy
in that the unendorsed DP-3 policy:
A. Provides liability coverage only for owner-occupied
dwellings.
B. Does not provide liability coverage.
C. Provides liability coverage only for on-premises occurrences.
D. Does not provide liability coverage for "intentional acts."
Correct Answers B. Does not provide liability coverage.
A personal umbrella policy provides coverage for a particular
loss, but the underlying policies do not. This feature of an
umbrella policy is called
Select one:
A. Retention.
B. Laser coverage.
,C. Drop-down coverage.
D. Self-insurance. Correct Answers C. Drop-down coverage.
A property owner of a repeatedly flooded property who refuses a
reasonable flood-hazard mitigation from the NFIP will
experience a flood insurance premium increase of what % of the
chargeable rate for the property at the time of the mitigation
offer?
A. 50%
B. 75%
C. 125%
D. 150% Correct Answers D. 150%
A Self-insured retention (SIR) in a personal umbrella policy is
similar to a
A. Coverage limit
B. Deductible
C. Policy premium
D. Exclusion Correct Answers B. Deductible
A sinkhole causes the partial collapse of a wall of Ryan's
residence. The home is insured under an unendorsed DP-3
policy. Where would the question of whether this loss is covered
be answered?
A. Other coverages
B. Perils insured against
C. General exclusions
D. Conditions Correct Answers C. General exclusions
,A windstorm causes a tree on the insured's premises to fall,
breaking the electrical lines that enter the house. The loss of
electrical power causes the food in the freezer to thaw and spoil.
This loss is:
A. Covered because damage resulting from loss of electrical
power is covered.
B. Covered because it was caused by a covered peril on the
residence premises.
C. Not covered because damage resulting from loss of electrical
power is excluded.
D. Not covered because food is not considered personal
property. Correct Answers B. Covered because it was caused by
a covered peril on the residence premises.
A young working couple is purchasing their first home. Facing
budget pressures, they are content to accept named perils
coverage on the dwelling in exchange for a lower premium.
Assuming there are no mortgage restrictions, which one of the
following ISO policy forms would be most appropriate for this
couple?
A. HO-5—Comprehensive Form
B. HO-6—Unit-Owners Form
C. HO-2—Broad Form
D. HO-4—Contents Broad Form Correct Answers C. HO-2—
Broad Form
Adam and his insurer disagree on the amount of a loss covered
by his homeowners policy. Adam wants the insurer to pay
$10,000 toward the loss. The insurer's representative feels that
, the loss should be valued at $5,000. How could the appraisal
process resolve this situation?
Select one:
A. Adam's loss will be valued at $7,500 which is an equitable
compromise.
B. Both Adam and the insurer will jointly select an acceptable
appraiser to set the value.
C. Adam is forced to litigate the loss since agreement cannot be
reached.
D. Adam and the insurer will each select an appraiser, and the
two appraisers will submit their differences to an impartial
umpire who will reach a resolution. Correct Answers D. Adam
and the insurer will each select an appraiser, and the two
appraisers will submit their differences to an impartial umpire
who will reach a resolution.
Adverse selection occurs because
A. The underwriting guidelines are inadequate to detect
applicants who will have losses.
B. An underwriter unfairly discriminates in the underwriting
process.
C. People with the highest probability of loss are the ones most
likely to purchase insurance.
D. People who intend to commit insurance fraud purchase
coverage. Correct Answers C. People with the highest
probability of loss are the ones most likely to purchase
insurance.
