PFS Risk Management & Insurance Planning 2

Question 1

Which homeowners policy form provides open-perils coverage on both the dwelling AND personal property?

Accepted Answer

HO-5 (Comprehensive Form)

Answer

The HO-5 comprehensive form is the broadest standard homeowners policy, providing open-perils (all-risk) coverage on both the structure and personal property.

Question 2

The standard coinsurance requirement in commercial property insurance typically requires coverage equal to what percentage of replacement cost?

Accepted Answer

80%

Answer

Most commercial property policies require the insured to carry coverage equal to at least 80% of replacement cost to avoid a coinsurance penalty at claim time.

Question 3

A personal umbrella liability policy is best described as:

Accepted Answer

Excess coverage above underlying policy limits

Answer

An umbrella policy provides excess liability coverage that activates after the limits of underlying policies (homeowners, auto) are exhausted.

Question 4

Replacement cost coverage differs from actual cash value coverage because replacement cost:

Accepted Answer

Does not deduct depreciation when settling claims

Answer

Replacement cost coverage pays to repair or replace damaged property at current costs without deducting for depreciation, while actual cash value subtracts accumulated depreciation.

Question 5

Which automobile insurance coverage pays for damage to the insured's own vehicle resulting from a collision, regardless of fault?

Accepted Answer

Collision coverage

Answer

Collision coverage pays for damage to the insured's own vehicle from a collision with another vehicle or object, regardless of who caused the accident.

(PFS) Personal Financial Specialist Practice Test

(PFS) Personal Financial Specialist Practice Test

PFS Risk Management & Insurance Planning 2