Illinois Property Insurance Basic Principles Practice Test

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• All Risk coverage is the top-of-the-line option that combines Basic and Broad with additional perils.
• Which is a reason to buy property insurance?
• Debris removal coverage typically helps with which of the following after a covered loss?
• Does replacement cost coverage pay for betterment?
• Which element of a contract ensures the insured has insurable interest at the time of loss?
• Which statement correctly describes the relationship between BOP and CPP coverage structures?
• How does the Other Insurance clause coordinate benefits when multiple policies cover the same loss?
• In appraisal, which participants resolve value disputes?
• The Premium is defined as which of the following?
• Depreciation is calculated as
• Define proximate cause and its relevance to coverage.
• A lapse occurs in an insurance policy when?
• What does HO-6 cover for condo owners?
• What does indemnity mean?
• Which statement best describes the coverage alignment across both BOP and CPP?
• What is the property benchmark used by a CPP?
• Which is an additional coverage under Homeowner Policies?
• What is the purpose of a deductible?
• Guaranteed Replacement Cost Endorsement describes
• Which entities offer flood insurance?
• Insuring Agreements (insuring clause) states
• How does the principle of utmost good faith apply to property insurance?
• Explain the concept of coinsurance in property insurance.
• What does a Green Upgrade endorsement cover?
• What is the difference between policy limit and replacement cost?
• Under a Business Owners Policy for a small business, the property coverage mirrors which standard commercial property form?
• For a large business, the property coverage under a Commercial Package Policy is designed to align with which form for property?
• What does aggregate limit represent?
• Most policies exclude indirect loss; an endorsement is needed to cover it.
• Which statement best characterizes pure risk?
• An Endorsement is best described as which of the following?
• Which statement best defines risk in insurance terms?
• Which is an example of an Inherent Vice?
• What are loss reserves?
• Who is the insured in Liability Coverage?
• Which statement about flood damage in standard homeowners policies is true?
• Which description best represents Liability Coverage?
• Which form does the BOP’s property portion mirror in terms of standard property coverage?
• What is an Inherent Vice?
• Insurance to Value is defined as
• Which statement best describes a deductible in an insurance claim?
• How are claims typically resolved?
• What is the Necessary Elements requirement for a liability claim?
• Do standard property policies provide broad mold or mildew coverage?
• What is underwriting?
• What is the purpose of first-party coverage in property insurance?
• In a coinsurance scenario: property value 200,000; required amount 80% (160,000); insured carries 120,000; loss 40,000. What is the payout?
• An underwriter is the insurance company representative who does which of the following?
• In a large business CPP, liability coverage follows which form?
• Which statement about a peril is accurate?
• What term is commonly used for the maximum amount the insurer will pay under each coverage?
• Under Gramm-Leach-Bliley Act privacy requirements, which statement is true?
• Which statement best describes pure risk?
• What does the law of large numbers imply for insurance pricing?
• Pooling of risks is defined as which of the following?
• For a large business, the property coverage under a CPP mirrors which standard property form?
• What is a proof of loss?
• Which statement about mold coverage is true?
• Which of the following represents a correct statement about cancellation grounds in Illinois?
• Are losses due to theft generally covered under standard property coverage?
• Under vacancy provisions, what must the insured do to maintain coverage for certain perils after a vacancy period?
• If a loss is caused by both a covered peril and an excluded peril, how might payment be determined?
• Loss settlement is equal to
• Named insured refers to
• In appraisal and arbitration, which statement accurately describes their roles?
• Damages in a liability claim can be claimed in which form?
• What is subrogation in property insurance?
• Personal Property is defined as items that are not permanently attached to land. Which of the following is an example?
• All Risk (Open Peril) Coverage protects against all perils except those excluded.
• Which of the following is a purpose of property inspections?
• What is a deductible?
• What does Loss of Use include in some policies?
• Which statement accurately describes the alignment of coverages in a Business Owners Policy (BOP)?
• Which statement describes cancellation?
• What best defines an insurance policy?
• What is the Inflation Guard endorsement and its purpose?
• Which statement best describes replacement cost coverage?
• Which professional is primarily responsible for calculating premium rate tables and loss reserves?
• The coinsurance provision generally requires the insured to carry insurance for at least what percentage of the property's value?
• Which statement best describes insurable interest?
• What does per occurrence limit specify?
• Which of the following is one of the adjuster's two primary responsibilities?
• Which document must be provided as Proof after a loss?
• In bodily injury, which items are included?
• What is the role of Conditions in a property policy?
• Who is typically responsible for deciding whether an application qualifies for coverage and what the premium will be?
• Indirect (consequential) Loss is a loss where the covered peril is not the direct cause; can money be a direct loss?
• Which hazard describes a loss due to legal action?
• What is subrogation in property insurance?
• Which statement best describes a Morale Hazard?
• What is a sub-limit in a property policy?
• What is the difference between Basic Causes of Loss and Broad Causes of Loss?
• Under most homeowners policies, which item is valued on an Actual Cash Value basis unless a Replacement Cost endorsement is added?
• Under HO Policy A-D Exclusions, which peril is still covered?
• In a small business policy, property coverage follows the terms of which form?
• What are warranties?
• What information is typically found on the declarations page of a property policy?
• How are losses with concurrent causes handled?
• Which coverage pays for items listed in the policy in addition to the standard liability limits?
• Who is a named insured and what is an additional insured in a property policy?
• Which component must be included in the premium?
• Actual Cash Value (ACV) in relation to Replacement Cost is defined as:
• Which peril is excluded under the EC Endorsement?
• Which duty is NOT typically required after a loss?
• Who is the claimant in Liability Coverage?
• Adding an 'additional insured' to a property policy generally provides what benefit?
• An additional insured is defined as
• What are actuarial tables used for?
• What does aggregate limit represent in a policy?
• What is the typical consequence if a warranty is breached in a policy?
• Under a Business Owners Policy for a small business, the liability coverage mirrors terms from which liability form?
• Underwriting is the process of deciding:
• Which statement about the deductible is correct?
• Which statement best describes a responsibility of an adjuster?
• Supplemental Payments are costs paid in addition to auto policy limits.
• In property insurance, which statement describes how Actual Cash Value and Replacement Cost differ?
• Loss Settlement or Adjustment is defined as what?
• How is valuation typically handled for dwelling versus personal property in homeowners policies?
• Which peril is covered under the Extended Coverage (EC) Endorsement?
• What does the Ordinance or Law endorsement cover?
• Which statement about replacement cost is true?
• An Adjuster is an insurance company representative who administers claims.
• In appraisal, value disputes are resolved by whom?
• Which pair of principles is central to property insurance?
• What is the difference between nonrenewal and cancellation?
• How do vacancy and unoccupancy affect coverage under property policies in Illinois?
• Which elements must be proven for an insurer to contest a claim based on representations?
• A Sewer and Drain Back-Up endorsement provides coverage for damage from what causes?
• The Insured is defined as which of the following?
• How does a higher deductible affect costs?
• Specified Peril Coverage protects property against losses caused by perils specifically named in the policy.
• What is a Scheduled Personal Property endorsement?
• Which statement describes how Personal Property is typically insured?
• For a large business, the liability coverage under a CPP is aligned with which form?
• An Assignment of Benefits (AOB) can affect claim control because it allows what?
• Buildings are defined as which of the following?
• If the insured does not rebuild, repair, or replace with like kind and quality at the same location, what will the insurer indemnify?
• Which statement about endorsements is true?
• What does Named Peril coverage mean?
• When must insurable interest exist in an insurance policy?
• In the appraisal process described for disputed property losses, who selects the umpire?
• Under coinsurance, which statement is true about exceptions?
• Loss settlement formula when not insured to value uses the formula
• What components are included in compensation for bodily injury?
• What rights does a mortgagee have under a property policy?
• Under the Fair Credit Reporting Act, which statement is true regarding an inspection report used by the insurer?
• What does the principle of adhesion mean for a property policy?
• What is Loss of Use coverage and how does it relate to ALE?
• Some property policies cover building, personal property, or both. This means:
• What defines insurable interest in property insurance?
• Which statement best describes the actuary's function?
• Which statement best distinguishes representations from warranties in property insurance?
• Which choice best describes direct loss versus indirect loss?
• Inflation Guard Endorsement describes
• Which coverages are automatically included in many Illinois property policies for debris removal and repairs?
• In basic insurance principles, which statement about risk and premium is correct?
• Negligence has two types; which are they?
• What is Additional Living Expense (ALE) coverage?
• HO-6 is designed for condo unit owners; which statement best describes it?
• Which statement about Buildings coverage is true?
• Bodily injuries meaning?
• What is the difference among Basic, Broad, and Special Causes of Loss forms?
• Why do property policies include Exclusions?
• Under HO-3, personal property is valued as Actual Cash Value unless Replacement Cost endorsement is added.
• Which statement best describes representations versus warranties in property insurance?
• What is an endorsement in a property insurance policy?
• What is the insuring agreement in a property policy?
• A Peril is best described as which of the following?
• Which form serves as the liability benchmark for both BOP and CPP?
• A Hazard is best described as which of the following?
• Under DP-3 and HO-3, how are contents typically valued?
• The liability portion of a BOP mirrors terms from which liability form?
• What does Coverage A typically cover in HO-6?
• Who bears the burden of proof in a liability claim?
• At what time is Notice of Loss required?
• Which endorsement specifically covers damage from sewer and drain backups?
• Which statement defines speculative risk?
• What does Loss Assessment coverage protect?
• Direct Physical Loss is also referred to as the proximate or immediate cause.
• What is an Assignment of Benefits (AOB) and how can it affect a claim?
• What are the insured's duties after a loss?
• Under the Vandalism and Malicious Mischief Endorsement, when is vandalism coverage excluded?
• Who is an Actuary?
• HO E (Personal Liability) and F (Medical Payments) Exclusions: which is excluded?
• Which statement best describes a Physical Hazard?
• Under claims payment, when will an insurer pay?
• A endorsement is a form added to an insurance policy for which purpose?
• What is the difference between water damage from a burst pipe and flood damage?
• In a property insurance dispute, how is a value disagreement resolved?
• Which statement best describes the typical steps to file a property claim?
• What is the purpose of a Glass or Breakage endorsement?