CALA Property & Casualty Insurance Coverage 2 — Questions and Answers
Question 1: Under a standard homeowners policy, which of the following losses would be covered by Coverage B (Other Structures)?
- A detached garage damaged by a fallen tree (Correct answer)
- A fence damaged by flood water
- A storage shed used partially for business
- A swimming pool that cracks due to soil settlement
Correct answer: A detached garage damaged by a fallen tree
Coverage B applies to detached structures on the residence premises; wind-blown tree damage is a covered peril under standard HO forms.
Question 2: A commercial general liability (CGL) policy's 'products-completed operations' hazard covers claims arising from:
- Premises liability while work is in progress
- Bodily injury caused by a product after it leaves the insured's control (Correct answer)
- Professional errors made by the insured
- Property in the insured's care, custody, or control
Correct answer: Bodily injury caused by a product after it leaves the insured's control
Products-completed operations coverage applies to BI or PD arising from a product or completed work after it has left the insured's possession.
Question 3: Which valuation method pays the cost to repair or replace damaged property with like kind and quality without deducting for depreciation?
- Actual cash value
- Replacement cost value (Correct answer)
- Functional replacement cost
- Agreed value
Correct answer: Replacement cost value
Replacement cost value (RCV) pays the full cost to repair or replace without subtracting depreciation.
Question 4: An insured's auto policy has a $500 comprehensive deductible. A deer strikes the vehicle, causing $1,800 in damage. How much does the insurer pay?
- $0, because animal collision is excluded
- $500
- $1,300 (Correct answer)
- $1,800
Correct answer: $1,300
Animal strikes are covered under comprehensive (other-than-collision); the insurer pays $1,800 minus the $500 deductible = $1,300.
Question 5: The 'inland marine floater' is best suited to insure which type of property?
- Real property permanently attached to a building
- Movable personal property frequently transported to different locations (Correct answer)
- Underground utility lines on a commercial premises
- Inventory stored only at a fixed warehouse
Correct answer: Movable personal property frequently transported to different locations
Inland marine policies are designed for property that moves — such as cameras, contractor equipment, or fine art in transit.
Question 6: Which clause in a property policy requires the insured to carry insurance equal to a specified percentage of the property's value to avoid a co-insurance penalty?
- Subrogation clause
- Pro-rata clause
- Coinsurance clause (Correct answer)
- Consent-to-settle clause
Correct answer: Coinsurance clause
The coinsurance clause penalizes the insured for underinsuring by paying only a proportionate share of a partial loss.
Question 7: Under a personal auto policy, Medical Payments coverage (MedPay) pays for reasonable medical expenses regardless of:
- The vehicle's year, make, or model
- Who was at fault for the accident (Correct answer)
- Whether a deductible has been satisfied
- Whether the injured party is a listed driver
Correct answer: Who was at fault for the accident
MedPay is a first-party, no-fault coverage that pays medical expenses for the insured and passengers without regard to fault.
CALA Property & Casualty Insurance Coverage 2
Under a standard homeowners policy, which of the following losses would be covered by Coverage B (Other Structures)?