CIA Insurance Policies & Coverage Analysis 2

Question 1

An insured's homeowner policy includes an 'other structures' coverage limit of 10% of the dwelling limit. If the dwelling is insured for $300,000, what is the maximum coverage for a detached garage?

Accepted Answer

$30,000

Answer

Other structures coverage under standard homeowner policies is typically 10% of the dwelling limit, so 10% of $300,000 equals $30,000.

Question 2

Which clause in an insurance policy requires the insured to maintain coverage at a specified percentage of the property's value to avoid a penalty at the time of loss?

Accepted Answer

Coinsurance clause

Answer

The coinsurance clause requires insureds to carry insurance equal to a set percentage of property value or bear a proportional share of any loss.

Question 3

A business owner's policy (BOP) typically combines which two primary coverages?

Accepted Answer

Commercial property and general liability

Answer

A BOP bundles commercial property insurance and commercial general liability into a single policy designed for small to medium-sized businesses.

Question 4

Under a standard auto policy, uninsured motorist (UM) coverage primarily protects the insured when:

Accepted Answer

The at-fault driver carries no liability insurance

Answer

UM coverage compensates the insured for bodily injury or property damage caused by a driver who has no liability insurance.

Question 5

What is 'subrogation' in the context of insurance?

Accepted Answer

The insurer's right to pursue a third party responsible for a loss after paying the insured

Answer

Subrogation allows the insurer, after compensating the insured, to pursue the negligent third party to recover the amount paid.

(CIA) Certified Insurance Appraiser Practice Test

(CIA) Certified Insurance Appraiser Practice Test

CIA Insurance Policies & Coverage Analysis 2