Ethan: Practice Exam pt. 1

What is the term for the maximum amount an insurer will pay for all applicable claims during the policy period? A) Aggregate limit B) Each-occurrence limit C) General aggregate limit D) Products-completed operation aggregate limit

A) Aggregate limit

Ike is very happy when his home owners insurance company pays his claim, citing a specific exclusion in his policy concerning animals that does not apply. Which animal is responsible for causing Ike's claim? A) Ike's dog that bit a neighbor's child B) Ike's dog that chewed the woodwork C) birds that nested in the attic D) termites that destroyed Ike's deck

A) Ike's dog that bit a neighbor's child

Duncan calls you because his auto policy was cancelled. He threatens to file a claim with the insurance department because his insurer cancelled the policy within its 31-day grace period. What do you tell Duncan? A) Life and health insurance policies have grace periods; auto policies do not B) His grace period expired C) You'll request reinstatement right away D) His grace period is 30 days

A) Life and health insurance policies have grace periods; auto policies do not

What endorsement can be added to a commercial general liability policy to limit coverage for bodily injury or property damage resulting from mold and 'sick building syndrome'? A) Limited fungi or bacteria coverage B) Mold extension C) Limited pollution liability extension D) Pollution liability coverage

A) Limited fungi or bacteria coverage

Matt's auto insurer denied a liability claim because the person seeking coverage is not an 'insured' under Section A' liability of Matt's auto policy. Who submitted the claim? A) Matt's roommate, after he totaled his own uninsured car B) Matt's resident wife, after she crashed her friend's car C) Matt's boss, after he wrecked Matt's car D) Matt's resident daughter, after her rental car was stolen

A) Matt's roommate, after he totaled his own uninsured car

Maya decides to use part of her clients' premiums to take a vacation but intends to eventually pay the funds to the insurer within the next few months. Which statement about Maya's actions is correct? A) Maya has committed theft B) Maya is acting lawfully if she eventually pays the funds to the insurer C) Maya is acting lawfully if the clients are aware of her actions D) Maya is subject to an administrative fine only

A) Maya has committed theft

John calls you and says he wants to add a motorcycle to his personal auto policy. What endorsement do you recommend? A) Miscellaneous Type Vehicle endorsement B) Extended Non-owned Coverage endorsement C) Named Driver endorsement D) Motorcycles can't be insured on a PAP

A) Miscellaneous Type Vehicle endorsement

The air conditioning unit in Myrna's condo malfunctioned. Water seeped under her parquet flooring and caused major damage, which was covered by her insurance. The contractor discovered Myrna's electrical wiring did not meet current building codes and would also have to be replaced. This additional cost was not covered because her policy contained what type of exclusion? A) Ordinance of law B) Food C) Leakage or seepage D) Mechanical breakdown

A) Ordinance of law

John offers potential clients courtside tickets to a professional basketball game in exchange for purchasing a homeowners insurance policy. Which prohibited sales practice is John committing? A) Rebating B) Controlled business C) Replacement D) Churning

A) Rebating

Mary is an editor for a fashion magazine who works from home. As she descends the stairs to the dining room for supper, she trips on a loose carpet and falls, breaking her arm. Which of the following statements is true about coverage for this injury? A) She cannot recover under workers compensation B) She can recover under umbrella liability insurance C) She can recover under employer's liability insurance D) She can recover under her homeowners liability insurance

A) She cannot recover under worker's compensation

Dane needs to know if a car he just bought will be covered automatically by his BAP when Symbol 7 is used for liability coverage. His insurance agent tells him all of the following EXCEPT: A) Symbol 7 provides automatic coverage B) Coverage will be provided on the newly acquired auto if Dane's insurer already insures all other autos he owns C) Coverage will be provided if the newly acquired auto is a replacement auto D) Dane must inform his insurer within 30 days after acquiring the new auto that he wants coverage on it

A) Symbol 7 provides automatic coverage

Ted, the insurance representative for Malone Company, does not understand the difference between insurance written on a stated amount basis or on an agreed value basis. How would you explain the difference to Ted? A) With stated amount, Ted will recover no more than the stated amount, and may recover less if actual cash value is less. With agreed value, Ted recovers the listed value. B) Ted would recover the same amount with both approaches C) Ted would recover a higher amount under stated value because agreed value could have some flexibility D) With stated amount, the schedule determines the amount paid. With agreed value, there is no schedule but rather an agreed upon value.

A) With stated amount, Ted will recover no more than the stated amount, and may recover less if actual cash value is less. With agreed value, Ted recovers the listed value.

Reginald, an eager new insurance salesman, persuades Tom to switch his auto policy to a company Reginald represents because Tom can save several hundred dollars. However, Reginald does not tell Tom the recommended policy provides substantially less coverage. Reginald has failed to meet his duty to A) disclose all pertinent information concerning the proposed policy B) place coverage with a solvent insurer C) act with express authority D) represent the terms and conditions of a proposed policy

A) disclose all pertinent information concerning the proposed policy

What commercial crime endorsement provides coverage when an employee is held captive and forced to surrender money because of a threat to his physical safety? A) extortion' commercial entities B) kidnap/ransom and extortion' direct loss C) detention or hijacking D) ransom and embezzlement

A) extortion' commercial entities

Daniel had owned his home in Arkansas for 15 years when it was destroyed by a tornado. How will the loss be valued? A) full amount of insurance written in the policy B) replacement value C) replacement value less depreciation D) assessed value

A) full amount of insurance written in the policy

Which of the following is not an exclusion under Part B' Medical Payments? A) funeral expenses B) public or livery conveyance C) racing D) war

A) funeral expenses

Town Square Insurance Company renews its homeowners policies with an increased limit for Medical Payments to Others coverage, without charging an additional premium. What clause might provide coverage for the increased limit to an insured whose policy has not yet renewed with the increased limit? A) liberalization clause B) assignment clause C) loss payee clause D) renewal clause

A) liberalization clause

What is a false statement of material facts? A) misrepresentation B) representation C) concealment D) promise

A) misrepresentation

If the Commissioner finds that an agent engaged in an unfair method of competition or an unfair or deceptive business practice, he or she may do all of the following EXCEPT: A) order the agent to pay restitution B) order the agent to cease and desist C) impose a monetary fine on the agent D) suspend or revoke the agent's license

A) order the agent to pay restitution

The Anniversary Rating Date endorsement on a workers' compensation policy informs the insured that all of the following may change on the anniversary rating date EXCEPT: A) recovery rights B) premium C) rates D) experience rating modification factor

A) recovery rights

Jane is self-employed and hires two employees. When she purchases a workers compensation policy for the benefit of her employees, what endorsement does she purchase to provide WC benefits for herself? A) sole-proprietors, partners, officers, and others coverage endorsement B) voluntary compensation and employer's liability coverage endorsement C) anniversary rating date endorsement D) maritime coverage endorsement

A) sole-proprietors, partners, offices, and others coverage endorsement

Lika breaks her wrist when she falls on a slippery floor at work. Her doctor places a cast on her wrist and forearm and tells her to stay off work for four weeks while the bones heal. After that, Lika can expect to return for work full time. How would you classify her disability under workers compensation insurance? A) temporary total disability B) temporary partial disability C) permanent total disability D) permanent partial disability

A) temporary total disability

What do a direct writer and an exclusive agent have in common? A) they both only represent one insurer B) both are considered independent contractors C) both are only employed by one insurer D) neither is considered a captive agent

A) they both only represent one insurer

How many declarations pages are contained in a commercial general liability policy? A) two B) three C) four D) five

A) two

What endorsement can be added to the BOP to provide coverage for loss of business income and extra expense if the described location suffers an interruption of electrical service? A) utility services' time element B) utility services-direct damage C) protective safeguards D) identity fraud expense coverage

A) utility services' time element

How is the relationship between an insurance company and the individual who sells their insurance policies defined? A) Vicarious liability B) Risk C) Agency D) Bailment

Agency

The protective safeguards endorsement in a BOP makes an exception for automatic sprinkler systems shut off as a result of breakage, leakage, freezing conditions, or the opening of sprinkler heads. The insured is not required to notify the insurer of the impairment if full protection is restored within how many hours? A) 72 B) 48 C) 36 D) 24

B) 48

What auto symbol is shown on the Dec page of a business auto policy to indicate that only specifically described autos are insured for that coverage? A) 1 B) 7 C) A D) F

B) 7

Which of the following persons is not entitled to coverage under a property insurance policy? A) A mortgagee B) A bailee C) A loss payee D) An additional insured

B) A bailee

Hank noticed his property insurance policy excluded water damage and was concerned because his property is located in a coastal area that has flooded in the past. After researching the issue, he learned that A) A water exclusion doesn't address flood B) A water exclusion also serves as a flood exclusion C) A water damage exclusion excludes all water damage except that caused by flood D) A flood exclusion excludes every type of water damage

B) A water exclusion also serves as a flood exclusion

Abby is planning to purchase an automobile insurance policy in Arkansas. Which statement about uninsured/underinsured motorist coverage is correct? A) Abby's policy must include uninsured/underinsured motorist coverage B) Abby may reject uninsured/underinsured motorist coverage in writing C) Abby's policy must include limits for uninsured/underinsured motorist coverage that are higher than the amounts required by the Arkansas financial responsibility law D) Abby's policy will be cancelled if she rejects uninsured/underinsured motorist coverage

B) Abby may reject uninsured/underinsured coverage in writing

Which entity protects policy owners and beneficiaries if a property or casualty insurer fails to perform its obligations because of insolvency? A) Arkansas Consumer Protection Department B) Arkansas Property and Casualty Insurance Guaranty Association C) Arkansas Property and Casualty Protection Corporation D) Arkansas Property and Casualty Advisory Board

B) Arkansas Property and Casualty Insurance Guaranty Association

Amy insures her insurance agency on a BOP. The agency is incorporated and, in addition to Amy, four people work at the agency: Pam, Kristy, Bob, and Scott. Which of the following persons is not an 'insured' on the BOP? A) Bob, the agency's treasurer B) Carl, Amy's husband C) Pam, a part-time employee D) Kristy, a volunteer

B) Carl, Amy's husband

Because Irene owns a dog, her insurance agent tells her that she's more likely to submit a liability claim than someone who doesn't own a dog is. What insurance term BEST defines the condition of Irene's dog ownership? A) Peril B) Hazard C) Frequency D) Severity

B) Hazard

Phenomenal Florists is sued for injuries sustained by a customer who was seriously injured in the shop while buying flowers. The claim was settled for $100,000, the limit of liability in Phenomenal's business owners policy. Legal expenses to defend it totaled $50,000. Since the limit of liability was exhausted in the settlement, must Phenomenal reimburse the insurer for the legal expenses? A) Yes. The $50,000 for legal expenses or defense costs is subject to the limit of liability, which was exhausted by the settlement B) No. Defense costs are paid in addition to the limit of liability C) Yes. The business owners policy does not cover the cost of defense D) No. The insurer would rather pay the defense costs to manage the litigation

B) No. Defense costs are paid in addition to the limit of liability

How does medical payments coverage under the personal auto policy differ from medical payments coverage under a home owners policy? A) home owners policies cover medical payments for third parties and members of the insured's family. PAP's cover medical payments for third parties B) PAP's cover medical payment for third parties and resident members of the insured's family. Home owners policies cover medical payments for third parties C) both policies cover medical payments on the same basis D) neither policy covers medical payments for family members

B) PAP's cover medical payment for third parties and resident members of the insured's family. Home owners policies cover medical payments for third parties

Selena is unable to find an insurance company that will write insurance on her home because she has had several losses within the past three years. You tell her you are able to secure coverage in which of the following ways? A) By adding an endorsement to her auto policy B) Through the state's FAIR plan C) By adding coverage to her business policy D) Through the state's auto assigned r!. A state Fair Access to Insurance Requirements (FAIR) is the market of last resort for individuals who are unable to secure property insurance in the standard marketplace

B) Through the state's FAIR plan

Walter is employed by Savoy Enterprises and sometimes uses his car to run errands for the company. After picking up a client at the airport in his car, Walter has an accident. The client is injured and files a claim against Walter and Savoy Enterprises. Walter's insurer handles the claim against him, but will it handle the claim against Savoy? A) No, Savoy's auto insurer must take over the claim against Savoy B) Yes, Savoy Enterprises is also an insured under Walter's personal auto policy C) Yes, each insurer will pay half of the claim D) Yes, if the Savoy policy includes drive other car coverage

B) Yes, Savoy Enterprises is also an insured under Walter's personal auto policy

Ted is shopping for a new auto insurance policy and calls Sara, an independent agent, for advice on what type of policy to buy. Until the underwriter can review Ted's application, Sara issues a written binder to initiate coverage before the policy is issued. Which statement is correct about this written binder in relation to an oral binder? A) they are essentially the same and have the same effect B) a written binder is preferable because it reduces the likelihood of a dispute over terms C) an oral binder is preferable because a written binder might limit coverage and contain errors D) a written binder is a legal document but an oral binder is not

B) a written binder is preferable because it reduces the likelihood of a dispute over terms

Which of the following parties is not protected by a property or casualty insurance policy? A) secured creditors B) bailees C) mortgage holders D) loss payees

B) bailees

An insurance policy may contain insurance coverages in addition to those contained in the insuring agreement. All of the following terms are used to refer to these secondary coverages EXCEPT: A) coverage extensions B) exclusions C) additional coverages D) supplementary payments

B) exclusions

Bart suffered a serious work-related injury and receives workers' compensation benefits while he is unable to work. The injury leads to his death. His wife wants to sue Bart's employer, but her attorney tells her she is prevented from suing the employer because workers' compensation law contains a A) no-fault provision B) exclusive remedy provision C) supplementary payments provision D) occupational disease provision

B) exclusive remedy provision

Which type of insurer is incorporated, owned by its policy holders, but does not have capital stock? A) stock insurer B) mutual insurer C) authorized insurer D) domestic insurer

B) mutual insurer

Susan is in a collision with another motorist and files a collision claim with her auto insurer. The adjuster inspects the damage to her car and writes an estimate that includes replacing the damage with aftermarket parts, which are also known as A) OEM parts B) non-OEM parts C) salvage parts D) black market parts

B) non-OEM parts

Mr. Newman's auto policy has liability limits of 25/50/10. When he drives into another state, its compulsory insurance laws require him to have liability limits of 50/100/50. What must Mr. Newman do to his personal auto policy to secure limits of 50/100/50 when he's in the other state? A) add an endorsement B) nothing, coverage is automatically provided C) cancel and rewrite his policy with higher limits D) buy an out-of-state rider

B) nothing, coverage is automatically provided

Mrs. and Mrs. Urquhart hired Vozzella Construction to add an addition to their home and each party signed a contract. They required Vozzella Construction to obtain what kind of bond to protect them in the event the company fails to meet its contractual obligations? A. Bid bond B. Performance bond C. Fidelity bond D. Payment bond

B) performance bond

The owner of Boulevard Bakery tells a customer that a competitor, Mel's Donut and Bagel Shop, has a filthy kitchen and does not comply with required safety standards. The customer tells Mel about these comments and Mel sues Boulevard Bakery. Which coverage under Boulevard Bakery's commercial general liability policy might cover the bakery for this claim? A) bodily injury and property damage liability B) personal and advertising injury C) medical payments D) pollution liability coverage

B) personal and advertising injury

The Union Theater had two property policies in place the day it was destroyed in a fire. How did coverage apply under the policies if each made claim payment in proportion to the limits of liability contained in the policies? A) contribution by equal shares B) pro-rata C) concurrently D) nonconcurrently

B) pro-rata

A father and his young son are shopping in a toy store for the boy's birthday present. The boy cuts his thumb on the edge of a plastic model airplane. The toy manufacturer's commercial general liability policy will cover the claim if the manufacturer has which type of insurance? A) professional liability B) products and completed operations liability C) workers compensation D) casualty

B) products and completed operations liability

Which document do applicants for auto insurance use to indicate their state of residency or that their vehicle is principally garaged in that state? A) utility bill B) residency statement C) bank statement D) pre-printed pay stub

B) residency statement

Which statement is correct about assessments made by the Arkansas Rural Risk Underwriting Plan? A) the board can assess member insurers only once every five years B) the Commissioner may assess member insurers up to $200 annually to cover the expense of mailing fire department renewal subscription notices C) the Commissioner may assess member insurers up to $50,000 annually to cover the Association's loss claims and expenses D) all property and casualty and life and health insurers must pay assessments to the Rural Risk Underwriting Association

B) the Commissioner may assess member insurers up to $200 annually to cover the expense of mailing fire department renewal subscription notices

How many sections does an ISO Business Owners Coverage form contain? A) two B) three C) four D) five

B) three

Marilyn is shopping for a property policy and must decide whether to buy a named perils or an open perils policy. What statement is correct about the advantages of either policy? A) a long list of perils covered under a named perils policy makes it better than an open perils policy B) with an open perils policy, the insurer has the burden of proving that the loss is excluded C) named peril policies facilitate claim handling because they specify the cause of loss D) open peril policies are less expensive than names peril policies

B) with an open perils policy, the insurer has the burden of proving that the loss is excluded

Within how many days must an insurer notify the Commissioner after terminating a producer's appointment? A) 15 B) 20 C) 30 D) 60

C) 30

Jack is concerned about flooding in his town, so he is surprised to learn that his homeowners policy does not cover damage by flooding. What is an immediate option he might have to protect his property from flood damage? A) Build a retaining wall around his home B) Move to a home on higher ground C) Buy flood insurance through the National Flood Insurance Program D) Ask his agent to find a homeowners insurer that covers flood damage

C) Buy flood insurance through the National Flood Insurance Program

Honora noticed that her property insurance policy includes coverage in the event her building collapses. She doesn't believe she needs this coverage and asked the insurer to remove or strike this provision. Her insurer implies A) Since all parties had signed the insurance contract, no changes can be made B) She can cancel the policy and apply for new coverage C) Collapse coverage is included as an additional coverage for collapse caused by one of the specified perils D) It's advisable to have as much coverage as possible

C) Collapse coverage is included as an additional coverage for collapse caused by one of the specified perils

Ethel's insurance policy contains a provision that states coverage is not provided if loss is caused by any of a list of specified perils. Under what section of the policy is the provision contained? A) Insuring agreement B) Definitions C) Exclusions D) Policy conditions

C) Exclusions

Patrick purchases a certain type of bond because he believes his office manager and bookkeeper, Mrs. Quintall, will not be dishonest. What type of bond does he buy? A) Surety bond B) Public official bond C) Fidelity bond D) Permit bond

C) Fidelity bond

Jack, an underwriter with Market Place Insurance Company, reviews many sources of information to decide whether to accept or reject a risk. Which of the following sources of information is typically not used in the underwriting review process? A) loss history data B) motor vehicle record (MVR) C) academic records D) credit information

C) academic records

Priscilla has a commercial general liability policy with policy dates from January 1 of this year to January 1 of next year and a retroactive date of January 1 two years ago. On what form is Priscilla's CGL policy written? A) special form B) basic form C) claims-made form D) occurrence form

C) claims-made form

When you suggest to Ned that he purchase a commercial umbrella policy for the protection of his business, which of the following do you emphasize? A) commercial umbrella coverage is free B) commercial umbrella coverage can be added to his business auto policy C) commercial umbrella coverage provides a broader scope of coverage D) commercial umbrella coverage replaces his CGL policy

C) commercial umbrella coverage provides a broader scope of coverage

Mrs. Olson is flying from Boston to Los Angeles when she is held against her will on the airline. Under what insuring agreement on the Kidnap/Ransom forms of her commercial crime policy will coverage be provided for the expenses related to her confinement? A) political or military activity B) in transit delivery C) detention or hijacking D) extortion

C) detention or hijacking

The Arkansas Insurance Commissioner can examine the business transactions, accounts, and records of domestic insurers as often as necessary, but must do so at least once every how many years? A) one year B) four years C) five years D) ten years

C) five years

What term is used when a loss victim is financially restored up to the amount of his or her loss? A) risk transfer B) pooling C) indemnity D) risk retention

C) indemnity

The CEO of Edison Manufacturing Corp. wants to buy insurance for the company through an independent contractor who will represent Edison. His best choice would be to obtain insurance that is marketed through a(n) A) exclusive agent B) direct response marketer C) insurance broker D) captive agent

C) insurance broker

Nelson Contracting is located in New York and has a commercial general liability policy. It undertakes a new project at location in Paris, France and does not buy separate insurance for the new location. Shortly after beginning the new project, the Paris location receives a completed operations liability claim. How does the CGL policy respond? A) it pays the claim B) it defends the claim but does not make payment C) it denies the claim D) it pays the claim and seeks reimbursement from Nelson Contracting

C) it denies the claim

Mrs. Ogden submitted a claim under her personal auto policy for injuries she sustained in an accident. The insurer made payment, it said, despite the fault of the driver. Under what coverage did the insurer make payment for Mrs. Ogden's injuries? A) liability B) uninsured motorists C) medical payments D) underinsured motorists

C) medical payments

The personal Auto Policy (PAP) defines many terms used in the policy, such as 'your covered auto.' Which of the following autos is not included in the meaning of that term? A) vehicles shown in the declarations B) newly acquired autos C) non-owned autos D) temporary substitute autos

C) non-owned autos

Ascent insurance company receives a claim from its insured on October 1. Although it promptly begins to investigate the claim, it soon determines that it will be unable to complete its investigation before December 1. Which of the actions should it take with respect to the claimant? A) inform the insured that the claim is denied until further notice B) settle the claim now and seek reimbursement if the claim is later found to be unfounded C) notify the insured by November 15 that additional time is necessary for the investigation, and give reasons for the additional time D) reduce any claim payment for the cost of the additional expense of the investigation

C) notify the insured by November 15 that additional time is necessary for the investigation, and give reasons for the additional time

Ned stores several tanks of gasoline in his basement next to the furnace. This presents an example of a A) peril B) morale hazard C) physical hazard D) cause of loss

C) physical hazard

Edie's Emporium lost electricity for two weeks because the power plant exploded. Which of the following claims was paid under the utility services-direct damage endorsement on Edie's Emporium's BOP? A) the income lost during the two weeks power was out B) the extra expenses related to storage of some of the insured's perishable items C) the loss to some of the insured's perishable items D) the inconvenience Edie's Emporium suffered from the power outage

C) the loss to some of the insured's perishable items

Tina borrows a neighbor's car to run a personal errand. She collides with another car and injures the other driver. The injured driver files a liability claim against Tina and the neighbor. Whose policy will handle the claim? A) both policies will respond on a pro rate basis B) since Tina was at fault, only her policy will respond C) the neighbor's policy will be primary; Tina's policy will be excess D) Tina's policy will be primary ;the neighbor's policy will be excess

C) the neighbor's policy will be primary; Tina's policy will be excess

Which of the following coverages or provisions is not included in a business owners policy? A) property B) liability C) umbrella coverage D) common policy conditions

C) umbrella coverage

John and his insurer disagree over the value of John's damaged property and the amount the insurer is willing to pay for the damaged property. What is the best recourse for John to pursue? A) Lawsuit B) Complaint with the state insurance department C) Subrogation D) Appraisal

D) Appraisal

The declarations page in a workers compensation policy is called a(n) A) Policy detail page B) Insuring agreement C) General section D) Information page

D) Information page

Alhambra Construction Corp's workers compensation insurance policy has an experience modification factor of 1.8. What effect will this mod have on Alhambra's premium for workers compensation insurance? A) It indicates average loss experience and will not affect the premium B) It indicates a less than average loss experience and will reduce the premium C) It indicates no losses and will allow for a minimum premium D) It indicates a higher than average loss experience and will increase the premium

D) It indicates a higher than average loss experience and will increase the premium

Shelby's property insurance policy excludes expected losses, i.e., losses that are not generally insurable because they are anticipated losses. Her insurance agent refers to them as maintenance exclusions or wear-and-tear exclusions. Which of the following would not be found in that category? A) Damage by animals owned by the insured B) Deterioration C) Rust D) Lightning

D) Lightning

John faces bankruptcy and foreclosure of his home. When he abandons his home to avoid the attempts of his mortgage company to collect payment of his mortgage, what type of hazard does John pose to his homeowners insurance company? A) Physical B) Mental C) Emotional D) Morale

D) Morale

Aurelio owns a pizza parlor and hires Blythe as a full-time waitress to serve pizza and alcoholic beverages. Aurelio verifies Blythe's age with her birth certificate and driver's license, both of which are fraudulent. If Blythe is injured on the job and files a workers' compensation claim, will Aurelio be fined for the illegal employment of a minor? A) Yes, because a minor was serving alcoholic beverages in violation of state law B) Yes, because he employed a minor in violation of the law C) No, if a reasonable person would not know that the documents were fraudulent D) No, because he did not knowingly hire a minor in violation of the law

D) No, because he did not knowingly hire a minor in violation of the law

Casper's Carpet Cleaning is sued by a competitor who alleges that Casper stole marketing ideas and used them to advertise his services. Which coverage in Casper's business owners policy might cover the legal expense of defending him in this suit? A) Bodily injury B) Property damage liability C) Supplementary payments D) Personal and advertising injury

D) Personal and advertising injury

Of the seven exclusions contained in the ISO liquor liability form, four are sustainability the same as those found in the commercial general liability form. Which of the following is one of the three unique liquor liability exclusions? A) expected or intended injury B) workers compensation C) employers liability D) absence of a required license

D) absence of a required license

The business owners policy does not cover a business for liability it assumes in a contract, unless the insured would have been liable even in the absence of that contract, or unless the contract is an 'insured contract' as defined in the policy. Which of the following is not an insured contract? A) lease of premises B) elevator maintenance agreement C) railroad sidetrack agreement D) agreement to renew the insurance policy

D) agreement to renew the insurance policy

Tad's car is damaged in a collision. The adjuster determines that the cost of repairs will be approximately 80 percent of the actual cash value of the car. Therefore, this loss will be considered a A) total loss B) collision loss C) comprehensive total loss D) constructive total loss

D) constructive total loss

Diane's agency agreement specifically gives her the authority to collect insurance premiums. This type of authority is called A) apparent authority B) implied authority C) inherent authority D) express authority

D) express authority

Atlas Cartage Company has an MC S-90 endorsement. What benefit does Atlas get from this endorsement? A) It confirms that the trucker is an approved motor carrier B) It confirms that the trucker is a 'for hire' carrier C) It certifies that the trucker has completed the required driver safety courses D) It amends the trucker's auto liability policy to comply with requirements of the Motor Carrier Act of 1980

D) it amends the trucker's auto liability policy to comply with requirements of the Motor Carrier Act of 1980

Maurice, the owner of a shoe store, does not take seriously the responsibility to maintain the burglar alarm system in the store because he has insurance. He assumes that insurance will cover any loss due to burglary at the store. Maurice's attitude is an example of a A) morale hazard B) physical hazard C) crime hazard D) morale hazard

D) morale hazard

Ken suffers a groin injury while playing in a company softball tournament. Although the company's managers encouraged employees to participate, the employees were not required to do so. Ken's injury would therefore be excluded from workers' compensation in A) A few states B) All states C) A number of states D) Most states

D) most states

Allie was shopping at the mall on a busy Saturday afternoon. She wore a bracelet with expensive charms attached to it. Her mother gave her a new charm every Christmas, and Allie added each one to the bracelet. When she got home, she noticed that the charm from 1997 was missing. What cause of loss is typically used to describe Allie's loss? A) burglary by an unknown person or persons B) robbery by an unknown person or persons C) unexplained disappearance D) mysterious disappearance

D) mysterious disappearance

Mitch tripped on the sidewalk and let go of his briefcase, which landed in a flower stall and knocked several potted plants off a shelf. A shard from one of the flower pots landed in the soup being served to a patron at the sidewalk cafe next door. The patron took the soup home. Several days later, his wife added spices to the soup before serving it to their children. One child grew ill from ingesting the shard. The patron sued the owner of the flower stall, who in turn sued Mitch. Under these circumstances, is there a proximate causation between Mitch's actions and the injury caused to the child? A) no, the accident simply happened B) yes, mitch's briefcase was the entity causing the damage C) yes, mitch should have foreseen that if he tripped he might lose control of his briefcase and injured someone D) no, mitch could not reasonably anticipate that his tripping would set in motion a chain of events that would lead to the child's injury

D) no, mitch could not reasonably anticipate that his tripping would set in motion a chain of events that would lead to the child's injury

Ira's business auto policy has a Symbol 1 designation next to the liability coverage in the Declarations. Diana's BAP has a symbol 7 designation next to her liability coverage. Would either policy cover claims for bodily injury or property damage to third parties for a hired auto? A) both Ira and Diana would be covered B) neither Ira nor Diana would be covered C) only Diana would be covered D) only Ira would be covered

D) only Ira would be covered

In addition to the named insured, truckers and motor carrier forms afford insured status to all of the following EXCEPT: A) permissive users B) parties for whom the insured is vicariously liable C) owners of a hired trailer connected to a power unit covered under the policy D) owners of a hired trailer even if not connected to a power unit covered under the policy

D) owners of a hired trailer even if not connected to a power unit covered under the policy

All of the following may have an insurable interest in certain property EXCEPT: A) property owner B) bank or other mortgage holder C) finance company that financed the purchase of the insured property D) real estate agent who sold the property

D) real estate agent who sold the property

What type of insurance involves the transfer of risk from one insurance company to another insurance company? A) Self-insurance B) property and casualty insurance C) surplus lines insurance D) reinsurance

D) reinsurance

Heath was involved in an auto accident. He argued with the police officer and was placed under arrest after refusing to obey the officer's requests. Heath was not able to work that day and wants to know if the supplementary payments in his personal auto policy include loss of earnings resulting from an auto accident. His agent should advise him that A) supplementary payments do not include loss of earnings B) supplementary payments include only bail bond coverage and premiums on bonds and appeal bonds C) supplementary payments include only appeal bonds and post-judgement interest D) supplementary payments include loss of earnings

D) supplementary payments include loss of earnings

Which of the following is not an available covered peril under garage keepers liability coverage? A) Collision B) Specified causes of loss C) Comprehensive D) Substitute Transportation

Substitute Transportation

Which of the following parties has insurable interest in a home owned by Frank? A) Frank's daughter B) The mortgagee of Frank's home C) The prior owner of Frank's home D) The realtor attempting to sell Frank's home

The mortgagee of Frank's home

During a deposition in a law office, a witness loses her temper and throws several objects at the attorneys and the court reporter present. One of the attorneys wrestles the witness to the floor and subdues her. The witness later brings suit against the firm and the attorney, claiming that he used excessive force to restrain her and thus injured her. The firm's business owners policy (BOP) will probably... A) cover the loss as it arose from the reasonable use of force to protect people or property B) exclude the loss as it is not related to professional liability C) exclude the loss as it is not related to property damage D) cover the loss as it is related to personal and advertising injury

cover the loss as it arose from the reasonable use of force to protect people or property