chapter 9

To establish the association's legal requirements in purchasing insurance, the association should consult all of the following, EXCEPT:

• Enabling statutes, such as the Condominium Act

• Lenders who directly or indirectly affect the insurance market

• A professional insurance consultant with expertise in the reinsurance market

• The association documents

According to the business judgment rule, how should directors and officers perform their duties?

• Perform their duties as they see fit, based upon input from family and friends

• Attend a CAM pre-licensure course

• Perform their duties in a manner that they reasonably believe to be in the best interest of the association

• Always select the highest bidder on a contract, because it is likely to best serve the association

Which of the following is NOT true about self-insurance?

• It is a risk management method in which a calculated amount of money is set aside for a potential future loss.

• The association may assess members to obtain the necessary funds.

• It may be funded through a line of credit with a financial institution.

• It is a risk management method that requires the purchase of insurance from an insurance company.

Which statement is CORRECT about reinsurance?

• It enables a primary insurer to transfer part of the risk of insuring a property to other insurers.

• It is a form of windstorm self-insurance that is funded entirely by three or more associations.

• It must be provided by an excess lines insurer.

• It is illegal in the state of Florida.

An association may apply to the OIR to form a self-insurance fund for windstorm insurance with at least two other residential associations if all of the following criteria are met, EXCEPT:

• The associations operate more than 50 units.

• The type of insurance is limited to property or casualty risk, general liability, or surety insurance.

• The coverage is sufficient to cover the probable loss of a 250-year windstorm event.

• The associations were created under F.S. 718, 719, 720, or 721.

All of the following are presumed to be true about directors and officers under the business judgment rule, EXCEPT:

• They know the requirements of their positions.

• They know the association documents and applicable laws.

• They know when to defer policy decisions to a CAM, attorney, accountant, or other person who has been trained to understand statutory responsibilities.

• They spend sufficient time to properly carry out their responsibilities, pursuant to the association documents and governing law.

Which of the following is NOT true about sinkhole and catastrophic ground cover collapse coverage?

• All insurers must provide coverage if requested by the insured.

• In most policies, structural damage is defined as damage affecting foundations or buildings.

• Renewal policies include coverage to the foundations and sidewalks in addition to the driveway and the building.

• The insured does not have to pay damages under a catastrophic ground cover collapse insurance policy unless the structure is condemned.

Filing a fraudulent insurance claim is what type of violation?

• A first-degree misdemeanor

• A second-degree felony

• A third-degree felony

• A second-degree misdemeanor

Which statement best describes Citizens Property Insurance Corporation?

• It is a not-for-profit entity created by the Florida Community Association Coalition.

• It is a not-for-profit government entity, created to provide insurance to individuals and entities that are unable to find insurance in the private sector.

• It is a catastrophe fund that assesses private insurers to cover unfunded liabilities.

• It offers discounts to associations for hurricane protection, based upon a questionnaire completed by the manager.

Which of the following is NOT true about Citizens Property Insurance Corporation?

• Its legislative purpose is to provide property insurance to persons and entities, including community associations, at a lesser cost than the private insurance market.

• It offers commercial residential multiperil policies to existing policyholders.

• It offers commercial residential windstorm only policies to new policyholders.

• It offers commercial residential policies excluding wind to new policyholders.