Exam 5 Questions not sure about
Under Coverage C, business personal property is covered for: Answer Choices: Select the Correct Answer $2,500 on and off the premises $2,500 off the premises and $500 on the premises $2,500 on the premises and $1,500 off the premises $2,500 anywhere in the world
$2,500 on the premises and $1,500 off the premises. Explanation: Business property is covered for $2,500 for losses on the premises and $1,500 off the premises in the newer HO forms.
An insured carries property insurance with a limit of $25,000 and an 80% coinsurance clause. The covered building, however, is worth $40,000. How much would she collect in the event of a total loss? Answer Choices: Select the Correct Answer $25,000 $20,000 $32,000 $40,000
$25,000 is correct. Explanation: Coinsurance only affects partial losses and not a total loss. In the event of a total loss when the limit of insurance is less than 80% of the value of the building, the insured will receive a claim payment equal to the policy limit.
Under the "regular program" a flood insurance policy will insure a single family residence for up to: Answer Choices: Select the Correct Answer $250,000. $35,000. $100,000. $185,000.
$250,000. . Explanation: The limit under the regular flood program is $250,000. Under the emergency flood program the dwelling is covered for only $35,000.
The custom farming endorsement is usually attached to a farmowners policy when receipts exceed: Answer Choices: Select the Correct Answer $5,000 $4,000 $10,000 $7,500
$5,000 is correct. Explanation: The custom farming endorsement is used when a farmer is farming for others and the receipts exceed $5,000 per year.
What is the lump-sum benefit paid to the estate of a deceased worker with no dependents? Answer Choices: Select the Correct Answer $2,000 $5,000 $7,500 $10,000
$7,500. Explanation: If the deceased employee, at the time of his or her death, has no dependents, then within 60 days of his or her death, the employer will pay a one-time lump sum payment of $7,500 to the deceased worker's estate.
Anyone who threatens, forces or corruptly influences, obstructs or impedes the due and proper administration of the fraud law relating to the insurance business may be fined and/or imprisoned up to: Answer Choices: Select the Correct Answer 5 years. 15 years. 20 years. 10 years.
10 years.. Explanation: Under the Federal Insurance Fraud and False Statements Act, if a person impedes a fraud investigation relating to insurance, they may be fined and/or jailed up to 10 years.
The homeowner policy will provide which of the following for personal property located in a self storage facility? Answer Choices: Select the Correct Answer Full Coverage C limit $2,500 10% of the Coverage C limit $5,000
10% of the Coverage C limit is correct. Explanation: The newer homeowner forms will limit coverage for personal property at self storage facilities up to 10% of the Coverage C limit or $1,000 whichever is higher.
In case of a loss, how many days notice does the insured have after notification of a claim to submit the claim to the underwriters of the ocean marine coverage? 180 days. 90 days. 60 days. 120 days.
180 days.. Explanation: In case of a loss, the insured must notify the lead insurance company before it takes any action. There is no coverage for the loss unless the notification is made within 180 days after the loss occurs, unless the insurance company has agreed to a different notification period.
Under the dwelling insurance program an endorsement that may be attached to the policy to cover dwellings in the course of construction. The insurance company must be advised when construction is completed and within ____ after the insured takes occupancy of the dwelling. Answer Choices: Select the Correct Answer 30 days 45 days 60 days 90 days
30 days. Explanation: When the intended occupant of a dwelling under construction is the named insured, the dwelling under construction endorsement is attached to the dwelling policy to provide coverage. The insurance company must be advised when construction is completed and within 30 days after the insured takes occupancy of the dwelling.
In order for a leased car to be considered "owned" under the Personal Auto Policy, the lease must be in writing and for least: Answer Choices: Select the Correct Answer One year 18 months 6 months 3 months
6 months. Explanation: The vehicle must be leased for six continuous months.
A temporary insurance producer license may be issued in Alabama for up to: Answer Choices: Select the Correct Answer 6 months. 1 year. 3 months. 60 days.
6 months. is correct. Explanation: Six months is the limit for a temporary license.
An employee is disabled for nine days after a work-related accident. For how many days, if any, will the employee be entitled to disability benefits? Answer Choices: Select the Correct Answer 9 7 6 0
6. Explanation: Since there is a three day waiting period in Alabama before disability benefits begin, this employee would be entitled to six days of disability benefits.
The Continuing Education Requirements do not apply to a producer who has been licensed in Alabama for 15 years and who is at least ___ years of age.
60
What type of a ship would be used to transport break-bulk or bulk cargo shipments? Answer Choices: Select the Correct Answer A conventional cargo ship. Container ship. Tanker. Barge.
A conventional cargo ship. . Explanation: A conventional cargo ship is used to transport break-bulk cargo or bulk cargo.
Which of the following statements is false with regards to the benefits of insurance? Answer Choices: Select the Correct Answer A fixed rate of return and profit enriches insurers and their owners. Insurance allows individuals and companies to undertake activities they might not attempt otherwise. Total risk is potentially reduced because of insurers' attention to loss control. Tens of thousands of people achieve gainful employment in the industry.
A fixed rate of return and profit enriches insurers and their owners. is correct. Explanation: Insurers do not operate on a fixed rate of return and profit, they can lose money. The other choices represent true benefits of insurance.
Which of the following property is excluded under homeowners personal property coverages? Answer Choices: Select the Correct Answer A valuable baseball card collection owned by the named insured's son that is covered under a separate personal articles floater. A suitcase full of clothes while the named insured is vacationing in Russia. A suitcase full of clothes while the named insured is vacationing in Mexico. A valuable baseball card collection that the named insured's young son owns, but the agent is unaware of.
A valuable baseball card collection owned by the named insured's son that is covered under a separate personal articles floater. is correct. Explanation: Personal property more specifically insured elsewhere is specifically excluded in homeowners personal property coverage. Homeowners personal property coverage covers insured's personal property anywhere in the world.
Under the farm property form with replacement cost coverage, after the first $1,000 how is the claim paid?
ACV until repairs are completed and then the full replacement cost is paid. Explanation: Like most property forms that provide replacement cost coverage, the insurer will not pay replacement cost until the repairs have actually been made.
How are household personal property claims settled under the farm policy? Answer Choices: Select the Correct Answer Replacement cost Market value Replacement cost if insured 80% to value Actual cash value
Actual cash value is correct. Explanation: Claims under farm policies for household personal property will be settled on an actual cash value basis similar to the homeowner policy. An endorsement for replacement cost settlement is available for additional premium.
Plumbing under the kitchen sink of an insured's condominium comes loose and leaks water all over the floor. The repair person has to tear out the floor under the sink to repair the hose. The cabinet is also damaged. What would the insured's HO-6 cover? Answer Choices: Select the Correct Answer The loss would be denied All of the loss is covered except the hose Only the cost to repair the damaged floor is covered. Only the loss to the cabinet is covered.
All of the loss is covered except the hose. Explanation: The HO-6 would cover the water damage to the floor as well as the cost to repair the damaged floor. The repair to the hose is not covered.
Which of the following are excluded from the loan/lease endorsement: Answer Choices: Select the Correct Answer Excessive use charges Cost of warranties Negative equity All of the responses apply
All of the responses apply is correct. Explanation: The loan/lease gap endorsement will not pay for any of these items as well as past due payments and late fees.
In order for coverage to trigger in an employment-related Practices Liability Policy, the insured must inform the carrier of which of the following? Answer Choices: Select the Correct Answer The description of the event causing the wrongful act The names of the people involved The potential damages that may be sought if a claim develops All of the responses are correct
All of the responses are correct. Explanation: All of the responses are correct and required to be reported by the insured to the carrier as a potential claim as a result of a wrongful act.
A common carrier is not held liable for the loss of a shipper's goods when the loss results from: Negligence of the carrier. An act of God..
An act of God.. Explanation: They are not responsible for acts of God such as floods, hurricanes or for the negligence of the shipper (poor packing).
You have an HO-3 policy on your home. Coverage F will pay medical expenses for: Answer Choices: Select the Correct Answer Anyone invited onto your property and injured while there A son or daughter away at college You and all resident relatives Roomers and boarders
Anyone invited onto your property and injured while there is correct. Explanation: "Medical payments to others" provides coverage for an injury occurring on the insured premises to a non-resident invitee.
In property and casualty insurance, when must a person absolutely have an insurable interest?
At the time of loss
The inception and expiration dates of an insured's underlying commercial liability polices and commercial umbrella liability policy should be the same in order to: Answer Choices: Select the Correct Answer Assure non-concurrency Relieve the paperwork load for the insurer. Align the reporting periods. Avoid gaps in coverage.
Avoid gaps in coverage.. Explanation: It is better to have the policies issued with the same inception and expiration dates to avoid gaps in coverage.
Which of the following dwelling forms provides removal coverage for 30 days? Answer Choices: Select the Correct Answer The Broad and Special Forms only The Basic, Broad and Special Forms The Basic and Broad Forms only The Special Form only
Broad and Special
All of the following items have a built in limit (maximum) of coverage if the cause of loss is theft, EXCEPT: Answer Choices: Select the Correct Answer Patterns Furs Jewelry Computers
Computers. Explanation: Although computers may have limitations of coverage if the cause of loss is electrical, viruses or hacking, there is no built in THEFT limit for these items. The other three have a built in $2,500 limit for theft losses.
Under the HO-5, if the insured carries 80% to value, what does replacement cost coverage NOT apply to? Answer Choices: Select the Correct Answer The Dwelling Other Structures Contents An Attached Garage
Contents is correct. Explanation: Replacement cost coverage does not apply to contents unless replacement cost for contents coverage is purchased by endorsement.
In a liability situation, more than one policy will share equally in the loss until the lowest policy limit is exhausted and continue in that fashion until all policy limits are exhausted. This is known as: Answer Choices: Select the Correct Answer Pro-rata liability. Primary and excess liability. Contribution by equal shares. Other insurance clause.
Contribution by equal shares. is correct. Explanation: If more than one policy is involved in a liability situation, "contribution by equal shares" will require each policy to share in the loss up to the lowest limit of insurance which at that point, that lowest limit policy is exhausted and excused. The remaining companies continue to share the loss equally until each policy is exhausted.
Each of the following is true about Builders Risk Coverage, EXCEPT: Answer Choices: Select the Correct Answer Coverage terminates the day after construction is completed. The amount at risk increases over time. Land, lawns and trees are not covered. In effect, the coverage has a 100% coinsurance requirement.
Coverage terminates the day after construction is completed. . Explanation: Coverage normally terminates 90 days after the work has been completed or has been accepted. In addition, coverage will cease once the building has been put to its intended use.
Where is covered property listed and described on the BOP? Answer Choices: Select the Correct Answer In the coverage form Under the conditions On the declarations page Under the extensions of coverage
Dec page
Each of the following is a feature of Business Income Coverage, EXCEPT: Answer Choices: Select the Correct Answer Deductibles. Consequential loss coverage. Optional coverages are available. Coinsurance.
Deductibles. . Explanation: Business Income Coverage does not contain deductibles.
The insured's business is covered under a jewelers block policy. The owner's wife decides to wear an expensive piece of jewelry to a party that is for sale by the business. In case of a loss, what will the insurer do? Answer Choices: Select the Correct Answer Deny the claim because of an exclusion Pay the claim Pay 50% of the claim Require evidence that she was modeling the jewelry
Deny the claim because of an exclusion. Explanation: One of the exclusions in the form is to exclude coverage while stock is being worn by the insured, an employee or a family member of either
All of the following are excluded under the commercial crime "Inside the Premises - Theft of Money and Securities" insuring agreement, except: Answer Choices: Select the Correct Answer Dishonest acts of customers. Fire. Vandalism. Accounting errors.
Dishonest acts of customers. is correct. Explanation: Fire, vandalism, and accounting errors are specifically excluded in this insuring agreement.
Which of the following is a not a common exclusion in inland marine insurance? Answer Choices: Select the Correct Answer Earth movement Loss of use Unauthorized instructions Dishonest acts by the insured
Earth movement. Explanation: Common exclusions in commercial inland marine include government action, nuclear hazard, war, loss of use and loss of market, dishonest acts by an insured or its employees, voluntary parting of property by false pretense, and unauthorized instructions to transfer property.
The law recognizes two types of waivers. They are: Answer Choices: Select the Correct Answer Estoppel/indemnity Apparent/implied Express/implied Specific/contractual
Express/implied. Explanation: They are express and implied. An express waiver occurs when the insurer or its representative knowingly gives up a known right under the insurance contract. Perhaps the right to request an appraisal of the damaged property is an example. By comparison, an implied waiver may be the result from some act of neglect on the part of the adjuster.
The ocean marine coverage which insures either prepaid shipping charges or the income to be earned for moving cargo is: Answer Choices: Select the Correct Answer Freight insurance. Protection and indemnity A block policy. Cargo coverage.
Freight Insurance - cover shipping charges Cargo form - insures the cargo
Which of the following would not be covered under the specified cause of loss physical damage coverage under the commercial auto form? Answer Choices: Select the Correct Answer Glass breakage Fire Lightning Flood
Glass breakage. Explanation: The specified cause of loss form covers the following perils: fire, lighting, explosion, theft, windstorm, hail, earthquake, flood, vandalism or mischief, transportation by a conveyance. The coverage does not include glass breakage, hitting a bird or animal nor falling objects or missiles.
Henry is the first named insured on a $1 million umbrella liability policy. His wife, Dorothy, is also an insured. Both Henry and Dorothy were sued for $1 million in separate, unrelated suits by separate third parties. Both insureds lost their suits on the same day. In this possible but rare situation, if the umbrella policy is applicable and the self-insured retention is not applicable: Answer Choices: Select the Correct Answer Henry will receive more protection from the policy than Dorothy because he is the first named insured. The policy will pay $500,000 toward each award. The policy will only honor Henry's claim. Henry will not receive more protection than Dorothy and the policy could pay a total of the $2 million amount for the two awards, subject to the "aggregate limit".
Henry will not receive more protection than Dorothy and the policy could pay a total of the $2 million amount for the two awards, subject to the "aggregate limit". is correct. Explanation: These are two separate unrelated third party claims and each would be covered up to the policy limit provided the combined losses do not exceed the "aggregate" limit of the policy.
The commercial auto policy form provides for "worldwide liability coverage" for private passenger autos that the insured: Answer Choices: Select the Correct Answer Hires, leases, rents or borrows without a driver. Purchases. Sells. Occupies.
Hires, leases, rents or borrows without a driver.. Explanation: The new revised forms provide coverage for a period of 30 days provided the insured's liability must be determined in a settlement agreed to by the insurer or in a suit filed in the United States or its territories, possessions, Puerto Rico or Canada.
The elements of negligence include: I. A duty of care existed. II. A duty of care was breached. III. Injury or damage resulted. IV. Criminal conduct.
I, II, and III only is correct. Explanation: Negligence is established as a tort - a civil wrong. It occurs when one party, either through action or inaction, fails to exhibit a reasonable care that causes another party unnecessary harm but it is not necessarily criminal conduct. The negligent party is presumed to have an obligation or duty to protect against the negligent act.
Money and securities are best covered under which of the following? Answer Choices: Select the Correct Answer Inside the Premises Theft of Money and Securities Robbery and safe burglary. Premises burglary. Theft coverage only.
Inside the Premises Theft of Money and Securities is correct. Explanation: This coverage provides theft, disappearance and destruction and is the best method to insure the theft of money and securities inside the premises. The other responses are more restrictive in coverage.
Which of the following is not included in the crime term "theft?" Robbery Burglary Larceny Inventory shortage
Inventory Shortage
Which of the following would be found in a yacht policy? Answer Choices: Select the Correct Answer Cargo belonging to others coverage Liability coverage Sails, oars, and ballast Earth movement
Liability coverage is correct. Explanation: A yacht policy is an ocean marine type policy which covers the main risks associated with watercraft. It also covers use on fresh water rivers and lakes. Yacht policies contain liability insurance. These policies also offer hull, medical payments and Longshore and Harbor Worker coverage to cover work related injuries to the captain and crew.
While in England an insured has her purse stolen and files a claim for $500 of cash, $1,000 in airline tickets, $250 for miscellaneous items and $50 for the value of the purse. How much of this loss would be covered under a DP-1 dwelling form? Answer Choices: Select the Correct Answer Nothing $1,050 $1,800 $1,750
Nothing is correct. Explanation: None of the dwelling forms provide theft coverage of personal property unless the theft coverage endorsement is purchased.
The insurance company does not pay for certain damaged property under an Equipment Breakdown policy. Identify the property. Answer Choices: Select the Correct Answer Property of others Property of the insured Obsolete property Building damage caused by a steam boiler explosion
Obsolete property. Explanation: The insurance company does not pay for damaged property that is obsolete and useless to the named insured.
Crime insurance has a discovery period clause. Under the discovery condition in the loss sustained form, how long are losses covered that occurred during the coverage period after the policy has expired? Answer Choices: Select the Correct Answer One year Two years Anytime, provided the loss occurred during the policy period Sixty days
One year. Explanation: Losses that are discovered after the policy has expired but that occurred while the bond was in affect are covered for up to one year. The loss must, however occur during the policy. Only the discovery can happen after expiration.
Under an HO-3, materials and supplies to be used in the construction, alteration or repair of the structure and kept next to the residence premises are covered: Answer Choices: Select the Correct Answer If they have been at the location more than 30 days If they have been at the location less than 30 days Only if they are lost due to an insured peril Only if they are lost due to fire
Only if they are lost due to an insured peril is correct. Explanation: Coverage applies if the loss is caused by an insured peril. However, coverage does not apply to the theft of building materials.
The insured's have a homeowner policy with a $5,000 loss deductible. The husband has purchased some expensive camera equipment to take on a cruise for recording their trip. Also special scuba gear and sportswear have been purchased for both. They are concerned about fire and theft. What coverage would you recommend? Answer Choices: Select the Correct Answer Personal articles form Personal property form Personal effects form Reduce the homeowner deductible temporarily
Personal effects form. Explanation: Due to the high deductible under their homeowner policy the Personal Inland Marine "personal effects" form could be used. One could compare the cost of the deductible reduction versus the cost of the personal effects form as well.
As respects flood insurance the RCBAP (residential condominium building association policy) will settle claims on what basis? Answer Choices: Select the Correct Answer Functional Replacement Cost Replacement Cost Actual Cash Value Market Value
Replacement Cost is correct. Explanation: The RCBAP settles losses on a replacement cost basis.
Coverage E under the farm forms covers which of the following? Answer Choices: Select the Correct Answer Unscheduled personal property Scheduled personal property Scheduled real property coverage Blanket real property coverage
Scheduled personal property is correct. Explanation: Coverage E covers scheduled farm personal property. Each item to be covered is listed and an amount of insurance is stated
A dry cleaner wants to insure the pressure boilers used in the business. They also would like to cover some equipment and accessories that can be used in the boilers but have not yet been installed. Which of the following, if any, can be used to cover this exposure? Answer Choices: Select the Correct Answer Expediting Expense Coverage Extra Expense Coverage Ordinance and Law Coverage Spare Parts and Equipment Coverage
Spare Parts and Equipment Coverage. Explanation: The Spare Parts and Equipment Endorsement can be used to schedule the value of this extra equipment and accessories.
Which of the following is not needed for rating the premium in the BOP? Answer Choices: Select the Correct Answer Square foot area Gross sales Protection class Rate group
Square foot area. Explanation: Square footage is not needed in the rating of the premium for the BOP. It does play a role in determining the eligibility of the risk for the BOP
All of the following are exclusions under Equipment Breakdown coverage, except: Answer Choices: Select the Correct Answer Sudden and accidental loss. Fire losses. Flood. Wear and tear.
Sudden and accidental loss. is correct. Explanation: The Equipment Breakdown policy covers sudden and accidental loss. It can be modified to cover indirect loss (loss of income) as a result of a direct loss. The commercial property forms would cover a fire loss as a result of a boiler explosion since this would be an ensuing loss.
Which of the following would be covered under the property damage section of the uninsured motorist coverage? Answer Choices: Select the Correct Answer The baby's car seat Luggage Emergency equipment Tapes, discs or other media
Tapes, discs or other media is correct. Explanation: The purpose of uninsured motorist property damage is to cover the insured's property when the negligent driver fails to carry the statutory limits of auto coverage, a hit and run situation or a person who is underinsured. However, coverage is only for those items that relate to an automobile's permanently installed equipment such as tapes, discs or other media. The other items would be addressed under the insured's homeowner policy.
Paul's Perfect Pipe Plumbing is repairing the toilet at Dan's home. While resetting the toilet, Paul breaks the water feed line to the tank causing water to discharge ruining the wallpaper, carpet and sub-flooring in the bathroom. How will Paul's CGL respond to this claim? Answer Choices: Select the Correct Answer The CGL will pay for all of the damage caused by the water. The CGL will pay for the damage to the water feed line. The CGL will pay for the damaged wallpaper but not the sub floor. The CGL will exclude coverage completely
The CGL will pay for all of the damage caused by the water. is correct. Explanation: The operations liability hazard will pay for all of the damage caused by the water, but not the damage to the feed line itself as this is Paul's work.
Under the commercial property condominium association form, coverage is based on: Answer Choices: Select the Correct Answer The commercial property form The association agreement and bylaws The special cause of loss form State and local ordinances
The association agreement and bylaws. Explanation: The coverage provided by the form will be based on the condominium association agreement and by laws.
All of the following are covered under the Equipment Breakdown coverage form, except: Answer Choices: Select the Correct Answer The breakdown of any structure or materials supporting the equipment. A structure. Business personal property. Personal property of others.
The breakdown of any structure or materials supporting the equipment.. Explanation: The policy does not cover the structure or materials supporting the equipment.
Which of the following statements is not true regarding a released bill of lading? Answer Choices: Select the Correct Answer The carrier agrees to over-insure the cargo so that the shipper will be compensated for all losses. The common carrier may limit its liability by using this type of contract. The document serves as a receipt from the carrier to the shipper of the goods. All of the responses are true.
The carrier agrees to over-insure the cargo so that the shipper will be compensated for all losses.. Explanation: The definition of a released bill of lading is "A bill of lading on which no stated value has been indicated, thereby limiting the carrier's liability to statutory amounts or to the specified rate per pound of merchandise shipped."
A worker is operating a bulldozer clearing land for the construction of a building. All of a sudden there is a hurricane warning and he is injured by the high winds. What is the status of collecting workers compensation benefits? Answer Choices: Select the Correct Answer Full benefits would apply Loss of income is reduced 50% Only medical benefits would apply The claim would be denied because it was caused by "acts of God."
The claim would be denied because it was caused by "acts of God.". Explanation: Workers' compensation doesn't pay for injuries that result from "acts of God" (like floods or hurricanes) unless the job has a particularly high risk of such injuries.
Which of the following is correct in order for the additional coverage of "collapse" to be available under special BOP? Answer Choices: Select the Correct Answer The collapse must be such that the building can not be used as intended The remaining part of the structure standing must be demolished The remaining part of the structure must be judged unsound to rebuild on The building must be leaning, settling or in danger of collapsing
The collapse must be such that the building can not be used as intended. Explanation: The definition of collapse in the policy is the "abrupt falling down or caving in of the structure or part of the structure" and it must render the building as unusable as intended.
Mr. Johnson has a "Towing and Labor Charges Coverage Endorsement" added to his Personal Auto Policy indicating $50 coverage for his only covered auto. One day his auto becomes disabled along the highway and he has it towed to a nearby service garage for repair. If the towing charge is $15 and the repair charge is $50, how much will the insurance company pay? 15 50 65 25
The correct answer is: $15. Explanation: The policy will only pay $15.00. The repair coverage only applies for costs incurred at the place of disablement.
What is the purpose of the Nationwide Definition for inland marine exposures outlined in specific detail: Answer Choices: Select the Correct Answer The coverage that marine insurers could write. The classes of property not eligible for inland marine coverage. What types of insurance companies could issue inland marine policies. The role of the National Association of Insurance Commissioners
The coverage that marine insurers could write. is correct. Explanation: This defines the types of coverage that inland marine insurers could provide.
In regards to work-related injury cases which fall outside the scope of workers compensation laws, which of the following is false? Answer Choices: Select the Correct Answer Common law defenses are retained by the employer. Damages must be paid by the employer if negligence is established by the employee. Pain and suffering damages may be awarded to the employee and/or family members. The employer cannot be held liable for such injuries due to the exclusive remedy doctrine.
The employer cannot be held liable for such injuries due to the exclusive remedy doctrine. is correct. Explanation: All states have enacted workers compensation laws to provide no-fault benefits to most employees who are injured while working. Some worker injuries fall outside the scope of these laws. In those cases, employers can be sued by the injured employee and perhaps others, and employer can be held liable for damages if negligence is established.
For all but small employers, premiums in a standard worker compensation policy include an adjustment, upwards or downwards, based upon how the employer's actual loss experience compares to that expected of employers which do similar work. What is the name of the factor that accounts for this adjustment? Answer Choices: Select the Correct Answer The scheduled rating factor The loss constant The loss ratio adjustment factor The experience modification factor
The experience modification factor is correct. Explanation: The experience modification factor (EMF, or E-mod) is a number calculated each year by the National Council on Compensation Insurance (NCCI) for all workers compensation policyholders except small employers. The E-mod is based on how the employer's actual losses (with certain adjustments for fairness) during the "experience period" compare to the expected losses for employers doing the same type(s) of work. An E-mod greater than 1.00 means that actual losses exceeded expected losses, and an E-mod lower than 1.00 means that actual losses were below those expected. The E-mod is multiplied against an employer's standard, or "manual" premium to arrive at the Estimated Annual Premium.
An insured has a diamond ring scheduled on a personal artibles floater for $8,000. She also has a homeowner policy with the same company. The ring is stolen on vacation and the cost to replace the ring is $9,000. What will be the outcome of this loss? Answer Choices: Select the Correct Answer The insurer will pay the $9,000 replacement cost since the insured had a replacement cost endorsement on the homeowner policy. The insurer will pay $8,000 from the persona articles floater and the remaining $1,000 from the homeowner policy. The insurer will pay $8,000 from the floater only. The insurer will pay $1,500 which is the theft limit on jewelry in the homeowner policy.
The insurer will pay $8,000 from the floater only.. Explanation: The insurer will pay the $8,000 policy limit on the floater. Once insured on the floater, the ring is no longer considered covered property on the homeowner policy.
An insured's wife is wearing a diamond necklace while on vacation in Europe. It is valued at $1,500 and is stolen. What coverage would apply under their homeowner policy? Answer Choices: Select the Correct Answer The policy will pay the loss less the deductible. The claim will be denied because they were out of this country. The loss has exceeded the theft limit. Theft is not covered for jewelry valued in excess of $1,000
The policy will pay the loss less the deductible. is correct. Explanation: Personal property is covered anywhere in the world. The theft limit for jewelry is $1,500. The loss less the deductible is covered
Each of the following is true about farm coverages, EXCEPT: Answer Choices: Select the Correct Answer The principal residence may be covered by farm forms or homeowner forms. Farm coverage may be written as a monoline policy or part of a package. Livestock may be insured. Property and liability coverages may be included.
The principal residence may be covered by farm forms or homeowner forms. is correct. Explanation: The principal residence must be covered under a farmowne policy. The homeowner policy is not designed to cover farm property, even the residence.
What are the unique features of the Businessowners policy form? Answer Choices: Select the Correct Answer It provides owned auto and ocean marine coverage The premium is adjustable and is based on number of employees The property coverage is open peril with no coinsurance requirement It has fewer exclusions
The property coverage is open peril with no coinsurance requirement. Explanation: BOPs include favorable property insurance provisions, including all-risk coverage with no coinsurance clause.
Which of the following best describes the reason for using various work classifications in the calculation of workers compensation premiums? To prevent discrimination by employers is incorrect. To accurately reflect the risks of each employer.
To accurately reflect the risks of each employer. Explanation: There are hundreds of different work classifications which are used in the calculation of workers compensation premiums, with a different rate for each one. By classifying an employer's payroll according to work classification, the premiums charged more accurately reflect the actual risk of loss for each employer.
A Commercial Property Policy on a mortgaged property specifies which of the following responsibilities as a duty of the insured? Answer Choices: Select the Correct Answer To provide a sworn proof of loss statement following a loss if requested by the company To return the policy if it is canceled by the insurance company To pay the mortgagee in full in the event of a total loss Hire a public adjuster to appraise damages
To provide a sworn proof of loss statement following a loss if requested by the company is correct. Explanation: The insured is required to provide a proof of loss to the insurer. If the insured refuses to provide a proof of loss, the mortgagee has this option. In case of a loss, the mortgagee can be paid the amount owed, subject to the policy limit
Roger Reed, an employee of Moo Insurance Services, is driving his car while traveling to a client's office on company business. He strikes and injures a pedestrian. He will be liable as the operator and owner of the vehicle. Moo will potentially be ____ liable because Roger was acting on their behalf. Answer Choices: Select the Correct Answer Vicariously. Absolutely. Strictly. Primarily.
Vicariously. . Explanation: Vicarious liability is being held liable for the actions of another person, such as an employee. Since Reed was working on behalf of Moo at the time of the accident, they would need Symbol 1 or 9 to cover this liability exposure. Symbol #1 provides coverage for any vehicle used in the insured business and symbol #9 covers non-owned vehicles.
You throw a roast in the oven and decide to go to the movies, thinking that you have plenty of time. The movie turns out to be a six-hour "art film." You return to a blackened carcass and the contents of your home are thoroughly smoked. Would a claim for smoke damage be covered under the homeowner forms? Answer Choices: Select the Correct Answer Yes, the loss is covered under the peril of fire. No, the loss is not covered. Yes, the loss is covered under the peril of smoke. No, the smoke was not caused by an unfriendly fire and therefore the loss is excluded.
Yes, the loss is covered under the peril of smoke.. Explanation: Even though this was not a fire (friendly or unfriendly), the loss is still covered under the peril of smoke. Property forms include the peril of smoke. This is a separate peril and the smoke damage does not have to occur as a result of a fire.
The clause in an ocean marine policy that refers to "particular average" means:
Your answer: Only one party shares in the loss. is correct. Explanation: The particular average clause means only one party shares in the loss.
