1. Which is eligible to be covered on a replacement cost basis by a Homeowners Policy endorsement?
A. A two-year old television set Correct
B. A baseball card collection
C. A spoon from the 1930's World's Fair
D. An antique sewing machine
Explanation
Replacement cost coverage on personal property typically applies to items that can be replaced with new items of similar kind and quality without deduction for depreciation. Antiques and collectibles (B, C, D) often fall under 'actual cash value' or require scheduled coverage for their appraised value, not replacement cost for a new equivalent. A two-year-old television set, while depreciated, is a modern item that can be replaced.
2. A premium finance agreement MUST contain all of the following EXCEPT
A. the name and place of business of the premium finance company to which payments may be made
B. list of the drivers excluded on the policy Correct
C. a brief description of the insurance contracts involved and the amount of the premium
D. the amount of the finance charge
Explanation
A premium finance agreement is a contract for financing insurance premiums; it details financial terms and policy descriptions but does not typically list specific excluded drivers, which would be part of the actual insurance policy itself, not the financing agreement.
3. An Earthquake Endorsement to a Homeowners Policy defines a single earthquake as all earthquake shocks that occur within a
A. 12-hour period
B. 24-hour period
C. 48-hour period
D. 72-hour period Correct
Explanation
Earthquake endorsements often define a single occurrence to include all shocks occurring within a 72-hour period. This means that regardless of how many tremors or aftershocks occur within that timeframe, only one deductible applies.
4. The Garagekeepers Coverage under the Garage Coverage Form
A. Covers damage to products sold for sale
B. Replaces the Garage Liability Policy
C. Covers damage to customers' vehicles in the insured's care, custody, or control Correct
D. Covers owned vehicles on a primary basis
Explanation
Garagekeepers coverage specifically covers physical damage to customers' vehicles while they are in the care, custody, or control of the garage owner (e.g., for repairs, service, or storage).
5. The Basic Form Dwelling Policy provides
A. Coverage on a named peril basis Correct
B. Liability coverage for damage caused by the insured
C. Additional living expenses
D. Recovery on a replacement cost basis
Explanation
The Basic Form Dwelling Policy (DP-1) is a named perils policy, meaning it only covers losses caused by perils specifically listed in the policy. It does not automatically include liability or additional living expenses, and typically covers losses on an actual cash value basis, not replacement cost.