comprehensive personal lines

An insured's home is covered by the DP-3 form. The policy provides $20,000 in coverage on a $50,000 home. When high winds destroy the roof, it is determined it will cost the insured $2,000 to replace it. Assuming the actual cash value of the roof is $750, how much would the insured collect for this loss?

$1,000 ACV-Actual Cash Value does not apply at all. This is direct loss to the dwelling, the dwelling loss is paid replacement cost everywhere EXCEPT: the DP-1 Basic form. Therefore, the 80% replacement value rule applies. The dwelling must be covered for at least 80% of the replacement cost at the time of the loss. The value of the home is $50,000. 80% of $50,000 = $40,000, this is what they should of had. They only had $20,000, which is 1/2 or 50% of what they should of had ($40,000) Therefore, the insured will receive 1/2 or 50% of the cost to replace the roof. 1/2 of $2,000 = $1,000.

How much will the Dwelling Policy pay for living expenses after a dwelling insured for $100,000 Coverage A is damaged by a fire?

$20,000 The Coverage E limit of insurance is 20% of the Coverage A limit.

Including debris removal, what is the maximum an HO-3 policy with a Coverage A amount of $250,000 will pay if a detached garage burns down?

$26,250 Coverage B, which covers structures that are not attached, is automatically issued for 10% of Coverage A. This means the Coverage B total is $25,000, and the policy allows for an additional 5% for debris removal: $25,000 + 5% or $1,250 = $26,250.

Policyholder C's debit card is stolen, and $1,000 is subsequently stolen from his account. How much will his HO-3 pay for the loss?

$500 Coverage up to $500 is paid for theft or unauthorized use of a credit card or electronic fund transfer card (debit card).

An insured has auto insurance with both Company A and Company B; how much will Company B have to pay for a covered loss of $3,000 if Company A's Limit of Liability is $100,000 and Company B's is $200,000?

2,000 If other auto liability insurance applies, each policy will pay its proportionate share of the loss. Company B's limit is 2/3 of the total coverage by both policies. 2/3 of the total loss of $3,000 = $2,000.

Which of the following may be insured on a replacement cost basis under the National Flood Insurance Program?

1- to 4-family residences and residential condominiums Under the National Flood Insurance Program, property is insured on an actual cash value basis, except one- to four- family residences and residential condominiums may be insured on a replacement cost basis.

The Broad Form Theft endorsement is attached to owner-occupied Dwelling policies to provide theft coverage for the owner-occupant's Personal Property. On-premises and off-premises coverage is available.

10 Cancellation of an automobile policy due to nonpayment of premium must be sent a minimum of 10 days prior to the effective date of cancellation. 20 days for all other reasons.

The DP-3 covers the dwelling against open perils, and personal property against the broad (DP-2) perils.

10 Cancellation of an automobile policy due to nonpayment of premium must be sent a minimum of 10 days prior to the effective date of cancellation. 20 days for all other reasons.

Under Alabama law, you cannot pay any valuable consideration to a person if they are not licensed as a producer. If a producer violates this provision, they are subject to a fine of up to:

3 times the commission paid A producer may not receive any valuable payment from any person or company if not licensed or appointed. A Producer is subject to a fine of up to 3 times the commissions paid. Only an insurer would be subject to a fine of up to 3 times the premium paid.

Under Alabama Law, it is illegal for an insurance company to accept applications and premiums from a producer that is not appointed with that company. If you violate this provision you are subject to a fine of up to:

3 times the premium paid It is illegal for you to submit applications and premiums to a company that has not appointed you. And likewise, it is illegal for that company to accept business from a producer that is not appointed. The Insurer can be fined up to 3 times the premium received for violating this law.

Residential dwellings with no more than _____ residential units and _____ roomers or boarders per family are eligible under a Homeowners Policy.

4 residential units and 2 roomers or boarders Residential dwellings eligible for the homeowners policy may contain one to four residential units and no more than 2 roomers or boarders per family.

What is the maximum horsepower allowed for a boat that you own to be covered under the Personal Liability section of a Homeowners policy?

50 The maximum horsepower allowed under the liability section of a H.O. policy without an endorsement attached is 50 HP for boats you own, and 25 HP for boats you rent. Provides Liability Only. A Watercraft Liability Endorsement may be added to amend the exclusions to include a larger boat, but for liability only.

With respect to 'Damage to Property of Others' in a Homeowners liability policy, the insureds duties after a loss requires that the insured submit a sworn statement of loss to the insurance company within how many days after the loss?

60 In a H.O. policy, when damage occurs to the 'property of others' in the insured's care, the insured must submit proof of loss within 60 days after the loss. This is one of the Insured's duties after a loss in H.O. liability.

All of the following would be included in the definition of 'insured location', except:

A 5-family dwelling in which the insured lives in one of the units, including the structures and grounds Eligible residential dwellings are those containing one to four residential units and no more than 2 roomers or boarders per family.

Property insurance policies that apply coverage only to perils that are stated in the policy, are considered to be written on:

A named peril basis A named perils form stipulates the perils that are insured against. A broader approach is provided by an open perils form, which insures against all perils, except those specifically excluded under the policy.

The definition of an uninsured motor vehicle under the Personal Auto Policy includes all of the following, except:

A vehicle newly acquired by the named insured that has not been reported to the insurer A vehicle owned by the insured would not fit the definition of an uninsured vehicle.

All of the following are considered uninsured motor vehicles, except:

A vehicle that is being used as a residence Vehicles used as a residence are excluded from the definition of an uninsured vehicle.

Paul is an agent for ABC Insurance Company, which has just issued a life insurance policy to Maria. Who is the "principal" in this transaction?

ABC Insurance Company The principal is part of the Law of Agency. The Law of Agency is a relationship where one party (the agent) represents and acts on behalf of the other party (the principal). The insurance company is the principal.

Under the HO-8 policy, the dwelling is valued on which basis?

Actual Cash Value HO-8 policies value the dwelling on an actual cash value basis.

The Basic (DP-1) Dwelling Form does not include which coverage?

Additional living expenses Coverage for Additional Living Expenses is only available under the DP-2 and DP-3 forms.

What is the name for an insurer authorized to write insurance policies in a particular state?

Admitted An admitted insurer is an insurer that is authorized to transact insurance in a state by that state's insurance department, as evidenced by a Certificate of Authority to transact business.

Which term describes the maximum amount payable for loss from all occurrences within a policy period?

Aggregate limit The aggregate limit is the most the policy will pay for all losses in the policy period.

All of the following are true of automobile physical damage Coverage D, except:

All of the following are true of automobile physical damage Coverage D, except: Automobile physical damage does not cover any damage to a vehicle hit by the insured. This liability would be covered by Part A.

A Personal Auto Policy is designed to cover:

An individual's or family's personal use of an auto The Personal Auto Policy is designed for insuring individuals and families. A private passenger automobile used for business purposes is eligible, but commercial automobiles are not eligible.

Negligence is what kind of tort?

An unintentional tort Negligence is an unintentional tort arising out of failure to use reasonable care.

In Alabama, if a person is involved in an accident, the DMV will require a security deposit within a specified period of time following the accident. Which of the following is acceptable as a security deposit?

Any of the answers listed A Liability policy is the best way to satisfy this requirement. If the owner or operator does not have liability and does not deposit the required security within 60 days after the Director of the DMV receives the accident report, the Director shall suspend the persons license and vehicle registration.

Which of the following is not an element of negligence?

Assumption of risk The elements of negligence are: Duty of care, violation of the duty of care, proximate cause, and damages that are foreseeable. Assumption of risk is a defense against negligence, rather than an element of it.

When property is valued on a replacement cost basis, losses will be paid:

At today's costs, without any deduction for depreciation Replacement cost valuation pays the cost to replace property with property of like kind and quality, without a deduction for depreciation. Many property policies providing loss valuation at replacement value require covered property to be insured to a certain percentage of its replacement value, such as 80% or 90%.

Which of the following would NOT generally be included in the Supplementary Payments portion of a Liability policy?

Bodily Injury caused by the insured Additional Coverages/Supplementary Payments covers claim related expenses incurred in the defense of a claim, to include: loss of earnings, first aid to others, expenses incurred at the insurers request, among others. Bodily Injury is not covered under supplementary payments, BI is a primary coverage type.

Coverage E of a Homeowners Policy would cover which of the following?

Bodily Injury to a guest caused by the insured's pet dog Coverage E of the Homeowners Policy provides Personal Liability coverage for bodily injury or property damage arising out of an occurrence, with certain limitations and exclusions. Injury caused by communicable disease and the sale of a controlled substance are both excluded under the policy.

Under the HO-4 and HO-6, personal property is covered on which basis?

Broad perils coverage These two Forms provide Broad Form Perils Coverage. Open perils coverage is available by Endorsement for scheduled items at an additional premium.

Which of the following is a third party contract?

Casualty Casualty or Liability is considered to be a third party contract. 1st party is the insured (defendant), 2nd party is the insurance company, and the third party is the claimant (plaintiff). Property insurance is a two party contract.

Which of the following is an example of Special Damages?

Compensation to an injured party for actual medical expenses and loss of earnings Special damages are an award to an injured party for actual and known expenses such as bills, loss of earnings, and the costs of repairing or replacing damaged property. Special damages are paid for tangible loss or damage.

Which of the following defenses against negligence prevents recovery for injuries caused by a negligent party if the claimant was also negligent?

Contributory Negligence Contributory Negligence prevents recovery for damages caused by a negligent party if the claimant was negligent to any extent. For example, if the claimant is 5% negligent and the wrongdoer is 95% negligent, the claimant is not permitted to collect damages.

Which coverage applies to the building described in the Dwelling policy Declarations?

Coverage A Coverage A applies to the Dwelling at the described location; Coverage B, to Other Structures; Coverage C, to Personal Property; Coverage D, to Fair Rental Value; and Coverage E to Additional Living Expenses.

Which is true regarding Dwelling policies?

Coverage C applies while insured property is located at the described location Coverage C may be extended to cover property of guests and servants. Coverage D, Fair Rental Value, is an indirect coverage.

Policyholder M insures her owner-occupied single family residence under a dwelling property policy (DP-3) with a limit of $100,000. If the dwelling is damaged in a fire, what policy coverage will pay for M's extra costs to stay in a motel and board her pets while the fire damage is being repaired?

Coverage E Coverage E pays for the necessary increase in living expenses incurred by the insured if the building is rendered unfit for its normal use.

Which statement is false?

Coverage F limits are subject to a deductible Section II coverages are not subject to a deductible.

Which of the following is not true of the National Flood Insurance Program?

Coverage becomes effective 24 hours after the applicant completes the application and pays the premium. Coverage becomes effective on the 30th calendar day after the applicant completes the application and pays the premium. This is to avoid insuring property that might already be in imminent or existing flooding conditions.

Part D of the Personal Auto Policy provides which of the following coverages?

Coverage for Damage to Your Auto Part D of the Personal Auto Policy includes Collision and Other Than Collision coverages.

Which of the following is false under the Personal Auto Policy?

Coverage is provided for theft under property damage liability Theft is covered under Physical Damage (Part D), not property damage liability (Part A).

The Additional Coverages part of a property insurance policy provides:

Coverage that supplements the basic coverages in the insuring agreement which is automatically included without an additional premium Additional coverages are automatically included in property policies without an additional premium. The type of additional coverages depends upon the type of policy. Additional coverages are paid in addition to those stated in the insuring agreement and include debris removal, collapse, and fire department service charges.

Of the Dwelling Policy forms, which one would cover an owned mobile home permanently affixed to a foundation?

DP-1 A mobile home is only eligible for coverage under the DP-1.

Which Dwelling forms include the Glass or Safety Glazing Material other coverage?

DP-2 and DP-3 This coverage is only provided under the DP-2 Broad form and DP-3 Special form coverages. DP-1 is Basic and does not include this coverage. This coverage pays for the breakage of glass or safety glazing material and damage to covered property caused by glass breakage.

Which of the following damages would be covered under the Liability Coverage of the Personal Auto policy?

Damage caused to a rented garage by the insured auto Liability coverage for property rented to, or in the care, custody, or control of the insured is very limited. Damage to a rental car would be covered by either collision or comprehensive coverage as applicable.

Which statement is true concerning Section II of a Homeowners Policy?

Damage to Property of Others coverage is provided up to a specified limit regardless of negligence Damage to Property of Others pays up to $1,000 regardless of whether the insured is liable or not.

What is the name for a type of policy that doesn't pay benefits until the limits of the primary policy has been exhausted?

Excess policy An excess policy makes payment only after all other insurance in place exhausts its limits or denies coverage.

Which statement is true of medical payments in a Personal Auto Policy?

Expenses for medical services sustained by the insured are covered Coverage applies to any occupant of the insured vehicle and also to members of the insured's household as pedestrians when struck by a motor vehicle or as an occupant of another person's vehicle.

An insurer organized in another state than the state in which it is authorized to do business is known as which type of insurer?

Foreign A foreign insurer is not organized under the laws of this state, but in one of the other states or jurisdictions within the United States, whether or not it is admitted to do business in the state or jurisdiction.

Losses that cannot be calculated objectively, such as pain and suffering or mental anguish, are considered:

General damages General damages

Rebating occurs when a producer:

Gives a prospect a discount or kickback in order to induce a sale Rebating, the practice of splitting commission with a prospect, is illegal in almost every state and is punishable by loss of license.

An agent holds a license and sells insurance for several companies, but is not appointed with company XYZ. If the agent writes a policy for XYZ, which of the following would apply?

If issued by the company, the company would be fined up to 3 times the premium received An insurer accepting and issuing business from an agent not appointed with the company would be fined up to 3 times the premiums paid. An insurer is NEVER fined based upon the commissions earned, producers are fined based on commissions. Insurers are fined based on premiums received.

Which of the following is FALSE about a claim payment for a Part D under Personal Auto?

If the insurer returns a stolen car to the insured, it doesn't have to pay claims for vehicle damage If the insurance company returns a stolen car to the insured, it must pay for any damage that occurred as a result of the theft.

If your barbeque pit begins to rust and fall apart or maybe a historic document turns yellow and fades away, these are both losses that would be excluded from coverage because they are considered to be predictable losses that are commonly called a(n):

Inherent Vice Inherent Vice is a condition or defect that exists within property itself that causes the property to spoil, break, destroy itself, decay, rust, yellow, etc. This is commonly excluded in property policies.

Which of the following coverages is not provided by the Personal Liability endorsement?

Injury caused to a regular resident of the dwelling Liability coverage applies to expenses incurred by residence employees, but not the named insured or regular residents of the named insured's household.

When an individual faces the risk of economic loss in the event of property damage, this indicates which of the following?

Insurable interest Typically, if there is a risk of financial loss, there is an insurable interest.

Which of the following is true regarding the Musical Instrument Floater?

Insured instruments may not be played for remuneration during the policy term If coverage is desired for musical instruments played for hire, the policy must be endorsed for such usage and an additional premium paid.

Which section lists the perils insured against by a property insurance policy?

Insuring Agreement The Insuring Agreement is the company's commitment to protect the insured and includes a description of the perils insured against.

After a lightning storm, the electrical transformer in B's town fails and she has no electricity for 3 days. The damage caused by the loss of electricity:

Is not covered Damage from power failure that takes place away from the insured premises is excluded under the dwelling forms.

All of the following are true of subrogation, except:

It allows the insurer to file suit against the insured The principle of subrogation requires the insured to transfer its right of recovery against any party causing a loss to the insurer, after it accepts payment from the insurer for a loss. Subrogation allows the insurer to recover from the third party that caused a loss any amounts paid to an insured. It also prevents the insured from collecting twice for the same loss. It does not allow the insurer to sue the insured.

Which of the following is true regarding an unendorsed HO-4?

It includes the Broad Form named perils on an actual cash value basis The HO-4 provides Broad Form named perils coverage on an actual cash value basis. Replacement cost coverage is available by endorsement, for an additional premium.

All of the following are true of the Personal Auto Policy, except:

It is written only with split limits of liability Limits of liability may be either split or single. Personal effects would be covered by the owner's homeowners or renter's policy.

Which of the following best describes the Towing and Labor Costs endorsement to the Personal Auto Policy?

It provides payment for towing to a garage, or for labor that is performed at the site of a mechanical disablement Towing and Labor Costs Coverage pays for towing a mechanically disabled auto to a garage or for labor performed at the site of disablement.

When the insurance company chooses to broaden coverage with no increase in premium, the broadened coverage automatically applies to all existing policies without the need for an endorsement. The company is exercising which of the following?

Liberalization clause This is the definition of the Liberalization clause. The insurer has liberalized and broadened coverage out of the kindness of their heart.

Medical Payments under Section II of the Homeowners Policy would cover all of the following, except:

Loss of income of an injured person Coverage F (Medical Payments to Others), pays necessary medical expenses incurred within three years from the date of an accident. This may include surgical, dental, hospital, ambulance, professional nursing and similar expenses.

Which of the following clauses protects the interests of the loss payee?

Loss payable clause The loss payable clause protects the interests of a person or business with insurable interest in the insured's property (known as a 'loss payee'), such as a financial institution who finances an auto loan.

Which coverage is not provided under Section II of a Homeowners Policy?

Medical expense of a boarder Medical expense of a boarder

Construction material having a fire-resistance rating between one and two hours for walls, floors and roofs, is classified as:

Modified fire-resistive Jointed Masonry construction includes exterior walls of masonry or fire-resistive construction rated for no less than one hour and with combustible floors and roofs.

Which of the following statements regarding flood insurance is not true?

No deductible applies to loss of contents A separate deductible applies to contents and building losses.

An agent has authority to do all of the following, except:

Represent the insured's interest An agent is primarily the representative of an insurer.

All of the following are true regarding the Broad Theft Endorsement on a Dwelling policy, except:

Only on-premises coverage is available The Broad Form Theft endorsement is attached to owner-occupied Dwelling policies to provide theft coverage for the owner-occupant's Personal Property. On-premises and off-premises coverage is available.

The Dwelling Special Form provides?

Open peril coverage on the building and named peril coverage on personal property The Dwelling Special form (DP-3) provides the broadest coverage of the dwelling forms. It provides open peril coverage on the dwelling and other structures and named peril coverage on personal property.

All of the following are false concerning the National Flood Insurance Program, except:

Payment for losses are made by the federal government Although private insurers sell and service flood insurance in addition to that provided by the National Flood Insurance Program, the federal government reinsures all flood insurance.

An insurance agent would recommend which of the following floaters to his client who is traveling to Europe for a month's vacation?

Personal Effects Floater The Personal Effects Floater provides worldwide open-peril coverage with one crucial exception: it does NOT apply at the insured's home. For this reason, it is meant to cover the personal property of travelers and tourists.

What coverage is not included under the Yacht policy?

Personal Injury Coverage In addition to providing property and liability coverage, a yacht policy also offers protection and indemnity coverage for the insured's legal liability for bodily injury and damage to property of others, personal property coverage for property on the yacht, and coverage for fuel spills, commercial towing, and dinghies. Personal injury is not covered.

Twisting involves which of the following?

Policy replacement Twisting is policy replacement. This generally occurs when a producer talks a policyowner into lapsing or surrendering an in force policy in order to purchase another policy.

Which of the following is not covered under Section II of the Homeowners Policy?

Property of the insured Section II provides liability coverage. Section I would cover property of the insured.

Which of the following is true about the National Flood Insurance Program?

Property removed to protect it from flood is covered for 45 days at other locations Property removed to protect it from flood is covered at other locations for 45 days, but only for the peril of flood.

Which statement is true concerning Homeowners policies?

Property usually located in a student dormitory is limited to 10% of Coverage C or $1,000, whichever is greater Property usually located at another location is limited to 10% or $1,000, whichever is greater.

Liability coverage is designed to:

Protect the insured from bodily injury and property damage they are legally obligated to pay Liability insurance only provides coverage for legal liability arising from unintentional torts for bodily injury or property damage to others caused by an insured.

Under a PAP, liability resulting from the insured's use of a non-owned auto is:

Provided on an excess basis The owner's coverage is primary and the driver's coverage is excess.

Most liability policies do not provide coverage for:

Punitive damages Punitive damages are awarded to punish and discourage a wrongdoer from repeating negligent acts. Most liability policies do not provide coverage for punitive damages.

Insurance is designed to provide protection against which of the following?

Pure Risk With pure risk, the only consideration is the possibility of loss or no loss. By contrast, speculative entails a chance of gain as well as a chance of loss

The uncertainty of loss from fire, wind, or hail is a type of:

Pure risk There is no chance of gain from exposure to a risk of loss by fire, wind, or hail.

Which of the following is not true about a Reciprocal Insurance Company?

Reciprocal companies may only transact liability insurance Reciprocals, unlike risk retention groups, are not restricted on the type of insurance they transact.

A temporary substitute vehicle is not a covered auto if used to substitute for which of the following?

Rental car To be eligible for coverage, a temporary substitute vehicle may only be used in place of a vehicle described in the policy.

An employee, whose duties are related to the maintenance of the residence premises, is defined as which of the following under Section II of the Homeowners Policy?

Residence Employee A Residence Employee might be either an inside domestic servant or an outside premise maintenance employee.

Which of the following statements is false concerning Section II of a Homeowners Policy?

Section II provides no defense in the event of a groundless, false, or fraudulent claim The policy provides for defense of any claim to which Coverage applies, even if groundless, false, or fraudulent.

Which of the following perils is not covered under the Dwelling Broad Form?

Smoke damage from industrial operations Smoke damage is a covered peril of the Dwelling Broad Form; however, the description of the peril specifically excludes smoke from agricultural smudging or industrial operations.

For the most part, the insurance industry is regulated by the:

State government The Department of Insurance is considered to be a branch of the State government, therefore, for the most part it is considered to be regulated by State Government.

The transfer of the right of recovery from the insured to the insurance company is called:

Subrogation Subrogation allows the insurer to take legal action against the negligent third party.

The DP-3 insures personal property against the same perils as:

The DP-2 Personal Property Coverage The DP-3 covers the dwelling against open perils, and personal property against the broad (DP-2) perils.

The location of the insured risk can be found in which part of an insurance policy?

The Declarations The function of the Declarations is to apply the common policy to a specific insured and property. The risk location, therefore, is found in the Declarations.

Which of the following is true of a Dwelling Form?

The Special Form covers the building and other structures on an open perils basis Coverage for the dwelling and other structures is provided on an open perils basis, meaning coverage is provided for all causes of loss except for those perils specifically excluded.

Under the National Flood program, which is true?

The deductible can be applied twice, once to the building and again to the contents There is one deductible for structures and another for contents. If the community is in a flood zone, the Community MUST participate in the flood program to buy flood insurance. Losses are all ACV, EXCEPT: 1-4 family residences. You don't have to live in a flood plain to buy a flood policy.

Which of the following is true regarding the HO-3 (Special Form)?

The dwelling and other structures (Coverages A and B) are written on an open perils basis The HO-3 (Special Form) provides the broadest coverage available on structures: open perils (or all-risk) coverage.

When an auto has two auto policies with the same insurer, the insurer's liability would not exceed:

The highest limit of the two policies Coverage will not be duplicated, so the policy with the highest limit applies.

Under which of the following circumstances would the Limited Theft Coverage endorsement be used?

The insured dwelling is tenant-occupied

If personal injury coverage is not provided by an insured's homeowners policy, but is provided by the insured's umbrella policy, and the insured is sued for slander, which of the following statements is correct?

The insured must pay the umbrella policy's self-insured retention The insured is required to pay the umbrella policy's self-insured retention when the umbrella policy responds to a claim on a primary basis because the underlying primary coverage does not apply.

Which of the following parties may assign a standard property policy?

The insured with prior written permission of the insurer The insured can only assign or transfer rights of ownership with prior written consent of the insurer.

If your $5,000 gold watch is stolen, how would your Homeowners policy respond?

The loss is limited to $1,500 and subject to a deductible Theft of jewelry, watches, furs, precious and semi precious stones are all limited to $1,500 and a deductible. A scheduled personal property endorsement is an excellent method of covering these items and pays as primary coverage without deductibles.

All of the following are elements of an insurable risk, except:

The loss may be catastrophic Insurers want to avoid insuring against catastrophic perils.

Which of the following is not included in the Declarations of a Property Policy?

The perils that are not insured against The perils not covered are listed in the Exclusions.

Which of the following is true regarding Coverage A under the Dwelling Policy?

The policy does not include coverage for wind loss of television antennas Wind loss of television antennas is so common the coverage is available only through attachment of an endorsement providing this coverage for an additional premium.

If an owner-occupied home is totally destroyed without fraud by a fire, the amount of the loss is based on:

The policy limit In the event of a total loss, the home is insured up to the policy limit. Coinsurance only applies to partial losses.

The concept that the insured should not profit from an insurance transaction is called:

The principle of indemnity Indemnity is the restoration of the insured to the same financial condition as before the loss.

Which of the following is needed to receive a producer's license after passing the state licensing exam?

The producer must submit a uniform application for licensure with the Commissioner Upon passing Alabama's State Exam, a producer Must ONLY submit an application for a state license with a fee attached. Your certificate of passing the exam is good for 1 year. Don't delay in getting your license.

Which of the following is not covered under the Dwelling Broad Form (DP-2)?

Theft Theft

The Dwelling Broad Form (DP-2) insures against all of the following perils, except:

Theft There is no theft coverage in a Dwelling broad Form policy.

Which Statement is true regarding a Difference In Conditions Policy?

There is no standard form There is no coinsurance or pro rata clause and the standard deductible is in the range of $10,000.

When a producer/agent misleads a person when comparing policies in order to induce the client to lapse, forfeit, surrender, exchange or convert an existing policy, the producer/agent is engaging in an unfair trade practice known as:

Twisting Twisting is Policy Replacement. It usually includes some coercion tactics and pressure to exchange a policy in order to purchase a new policy. It is usually not in the insureds best interest. Replacement is not illegal, but it is not recommended and is highly scrutinized. If replacement is done to the insureds detriment, the agent would be guilty of Twisting.

Which coverage protects the insured against drivers who do not have auto liability insurance limits adequate to cover a loss?

Underinsured Motorist Coverage When the at-fault driver of the other vehicle has insurance, but the limits are insufficient to cover the insured's damages, then the insured may make a claim under Underinsured Motorists Coverage.

Which of the following terms describes what applies when an insureds 13 year old daughter intentionally vandalizes a neighbors house?

Vicarious liability A parent and/or an employer is Vicariously liable for the acts of their children/employees actions.

The Personal Auto Policy Collision Coverage applies to which of the following?

Your car, regardless of liability Collision only applies to a vehicle of the insured and is applied regardless of fault.

An insured with a $500,000 HO-5 policy incurs $1,500 in damages due to a flood destroying the wood flooring. The policy will pay:

Zero Flood is a Section I exclusion and is not covered.

Possibility of loss is called:

risk Risk, simply defined, is uncertainty concerning a loss. Without the possibility of loss, no such uncertainty exists.