Exam 7
Mrs. Collins rents a house with an attached garage. While backing out of the garage her daughter opens the car door which catches the side of the garage causing severe damage to the wall. Mrs. Collins carries a HO-4 Homeowner policy and auto liability coverage. The landlord also carries a DP-3 on the dwelling and garage. Which policy should ultimately pay for this loss? Mrs. Collins' auto policy. Mrs. Collins' HO-4 policy. The landlord's auto policy. The landlord's DP-3 policy.
Mrs. Collins' auto policy. is correct. Explanation: Although the landlord's DP-3 dwelling policy would respond to this loss if the landlord made a claim under it, his insurer would most likely then subrogate against Mrs. Collins. Then, Mrs. Collins would file that claim under her Auto Liability coverage, which would respond up to its per accident property damage limit.
The insurance company does not pay for certain damaged property under an Equipment Breakdown policy. Identify the property. Property of others Property of the insured Obsolete property Building damage caused by a steam boiler explosion
Obsolete property is correct. Explanation: The insurance company does not pay for damaged property that is obsolete and useless to the named insured.
Sue buys a microwave at Quality Department Store, takes it home, plugs it in and is injured when it explodes. Quality's liability exposure would be addressed by the which of the following coverages? Select the Correct Answer Products Liability coverage Premises and Operations Liability coverage Medical Payments coverage Owners and Contractors Protective Liability coverage
Products Liability coverage is correct. Explanation: If a claim occurs off the insured's premises AFTER the product has been sold and relinquished to the purchaser, it becomes a Products Liability loss.
An unendorsed commercial building and personal property form, loss valuation is based on: Select the Correct Answer Actual cash value. Market value. Original cost. Replacement cost.
Actual cash value. is correct. Explanation: Losses are settled at ACV (Actual Cash Value). If the insured desires replacement cost settlement, a separate endorsement must be purchased.
Dwelling forms may be used to insure residential structures which: Select the Correct Answer Contain no more than 4 occupancy units. Have no more than 8 apartments. Are used as residences and for small retail sales operations. Are located on farms if no other business is conducted there.
Contain no more than 4 occupancy units
All of the following are true regarding the "write your own" program under flood insurance, EXCEPT: Select the Correct Answer Insurers must participate in the program. Rates are determined by the NFIP. The WYO Program operates as part of the NFIP, and is subject to its rules and regulations. Participation in the program is voluntary.
Insurers must participate in the program. is correct. Explanation: Insurers voluntarily participate in the program; they are not required to do so.
Which of the following is an obligation of the insured involving a covered property insurance loss? Select the Correct Answer Protect the property from further loss Pay the renewal premium Settle the claim as soon as possible Review the coverages of the policy to confirm coverage
Protect the property from further loss
An insured has injured a third party while loading his private passenger automobile. Which of the following would respond to cover the claim? Select the Correct Answer The Personal Auto Policy Section II of the Homeowner Policy A CGL Policy A Boatowners Policy
The Personal Auto Policy
What is the standard deductible under an Equipment Breakdown policy? Select the Correct Answer $100. $250. $500. $1,000.
Your answer: $500. is correct.
Under a watercraft or yacht policy how claims are settled: Select the Correct Answer Actual cash value Replacement cost Functional replacement cost Agreed amount basis
Actual cash value is correct. Explanation: Like physical damage coverage on an auto policy, the watercraft and yacht policies provide for the adjusting of physical damage losses to covered property on an "actual cash value basis".
An umbrella policy provision that requires the insured to participate in a portion of a loss not covered by primary coverage but is covered under the umbrella is: Select the Correct Answer Self-insured retention. Coinsurance clause. Participation clause. Deductible.
Self-insured retention. is correct. Explanation: This is called a self-insured retention which acts as a deductible for losses not covered under the primary coverage but are covered under the umbrella policy.
Under the appraisal clause of a property policy, when the two appraisers cannot agree on an umpire, the umpire is chosen by: The insurer. The insured. The adjuster. A court of law.
A court of law.. Explanation: If the two appraisers cannot agree on the selection of an umpire, either one can request that a court of law having jurisdiction make the selection.
What does the term "unvalued basis" mean as it relates to ocean marine hull insurance? Select the Correct Answer A policy wherein the amount of coverage is stated A policy designed to cover open lands A policy where the value is not declared until after the loss A policy where the value is determined by the exposure
A policy where the value is not declared until after the loss is correct. Explanation: This is a policy where the value of the property is not declared until after the loss. Some forms of ocean marine hull coverage are written on this basis.
Robbery involves all of the following, except: Select the Correct Answer Burglary. The presence of the insured or employee. Threat of violence. Criminal intent.
Burglary. is correct. Explanation: Robbery is generally theft or attempted theft from an individual, while burglary is theft from premises with signs of forcible entry or exit. But under the commercial crime form, theft from a watchman on premises (or a janitor by endorsement) is considered burglary. Robbery always involves the threat of violence or injury otherwise it would fit more aptly in the definition of burglary or theft.
An insured whose legally parked car is damaged by a mudslide may collect for damages under which of the following coverages? Select the Correct Answer Comprehensive (other than collision) coverage Property damage liability coverage Medical payments coverage Collision coverage
Comprehensive (other than collision) coverage is correct. Explanation: Comprehensive (Other Than Collision) coverage is "open peril" coverage. Unless excluded, losses from Other Than Collision are covered.
Which of the following terms expresses the key reason that employees receiving workers compensation benefits are barred from suing their employers for damages arising from workplace injuries?
Exclusive remedy is correct. Explanation: Employees who are provided with workers compensation benefits are prohibited from suing their employers for damages. Thus, these benefits are the "exclusive remedy" for the employee.
Which of the following Commercial Forms would cover sinkhole collapse? I. Basic. II. Broad. III. Special. IV. Extraordinary.
I, II, and III only is correct.
What is the difference between a Businessowners Policy and a Commercial Property Policy? I. The Businessowners Policy automatically provides earthquake coverage whereas a Commercial Property Policy does not. II. The Businessowners Policy includes liability coverage, while a Commercial Property Policy would not.
II
Which of the following would be covered under a garage liability policy?
Injury or damage arising out of a fishing boat the named insured stored on the garage premises. is correct. Explanation: The boat is covered under the liability part as long as it remains on the premises. Transported vehicles are covered under garagekeepers' coverage and not garage liability coverage. Leased autos can be covered under endorsements for car dealers. Racing vehicles are never covered under garage liability.
In crime insurance, which of the following individuals is NOT considered to be a custodian? Janitor Employee Partner Insured
Janitor. Explanation: A janitor would not fit the definition of a custodian and would not have custody of the insured property. Only the insured, employee or partner fits into this position. A night watch person also would not be a custodian.
Under "additional coverages" of Section II of a homeowners policy, damage to property of others will not be covered if it is caused intentionally by an insured who is at least: 13 years of age. 15 years of age. 16 years of age. 18 years of age.
13 years of age. Explanation: If the child is under age 13 the policy will cover the intentional acts. This coverage is only for property damage and not bodily injury
The policy territory under the general liability policy is found in which section of the policy? Select the Correct Answer Declarations page Definitions Limits of Insurance None of the responses are correct.
Definitions. Explanation: The policy territory is found in the definitions section of the policy.
Coverage under the National Flood Insurance Program may be written: Only in participating communities. For any property located in the United States. For any property located in flood prone areas. Only in participating states.
Only in participating communities. . Explanation: To be a participating community, FEMA guidelines must be accepted. Once accepted, the community can first be covered under the emergency flood program. Then the regular flood program.
A mutual insurance company is: Select the Correct Answer Owned by its policyholders. Owned by stockholders. A reciprocal insurance company. Similar to Lloyds of London.
Owned by its policyholders. is correct. Explanation: Policyholders own a mutual company and stockholders (sometimes called shareholders) own a stock company. Therefore, the difference between a mutual company and a stock company is ownership.
With surety bonds, who is to be protected under a performance bond? Select the Correct Answer The Obligee The Surety The Sub-contractors The Contractor
The Obligee is correct. Explanation: The obligee is protected by the bond in case the contractor defaults under the contract for the work to be performed. The surety issuing the bond is the guarantor under the bond.
Julia is a newly licensed agent and is anxious to sell her homeowner insurance products. She provides a quote for an HO-2 policy with a $1,000 deductible. Her prospect currently carries an HO-5 homeowner policy with a $500 deductible. Julia insists she has the better product. She is guilty of: Select the Correct Answer Coercion Rebating Twisting False advertising
Twisting is correct. Explanation: This is an example of "twisting" which is a prohibited act. Twisting is persuading a policyholder to drop an existing permanent policy in one company to replace it in another to the detriment of the policyholder. It is also any misrepresentation, fraudulent or unfair or incomplete comparison made to induce or which tends to induce, the lapse or surrendering of an existing policy.
The definition of "occupying" in the personal auto definitions means all of the following, EXCEPT: Select the Correct Answer In the vehicle Upon the vehicle Out or off the vehicle Under the vehicle
Under the vehicle is correct. Explanation: "Occupying" means in, upon, getting in, on, out or off. "Under the vehicle" is not included in the definition of occupying.
Under pollution clean up and removal coverage under the BOP, when must a loss be reported? Select the Correct Answer Within 180 days Within 60 days Immediately Within 90 days
Within 180 days. Explanation: The expenses will be paid only if they are reported to the insurer within 180 days of the date of the direct loss or the end of the policy period.
The HO-4 provides ____ coverage on the dwelling and ____ peril coverage on personal property. Answer Choices: Select the Correct Answer no / broad full / open limited / basic named peril / open
no / broad is correct. Explanation: The HO-4 (tenants form) insures tenants - people who do not own the building where they reside. It provides no coverage for the dwelling and broad peril coverage on the personal property.
Mary is a newly hired and unlicensed employee of an insurance agency. She is being trained by the other staff members. A customer comes in to pay their premiums and Mary collects the money. All of the following would apply in this situation, EXCEPT: Select the Correct Answer Mary is transacting Insurance Mary is guilty of a misdemeanor Mary could be fined up to $500 Mary could be jailed for up to one year and pay a $500 fine Mary is not guilty of anything
not doing anything wrong
In a Physicians Professional liability policy two separate errors cause several claims. How is the deductible determined? Select the Correct Answer Per claimant Per error Per Claim Per the total claim amount
per claim
Many property policies contain some extra coverages at no additional premium. Liability policies may contain these as well. These extras are known as: Select the Correct Answer Additional/Supplementary coverages Endorsements Liberalization clauses Property/Liability enhancements
Additional/Supplementary coverages. Explanation: Many policies contain additional/supplementary coverages that enhance the policy at no additional costs.
A farmer has unintentionally libeled a neighboring farmer by stating that the neighbor's dairy products are inferior to his. This is an example of: Select the Correct Answer Advertising/personal injury. Bodily injury. Contractual liability. Vicarious liability.
Advertising/personal injury. is correct. Explanation: This is an example of personal/advertising injury. No bodily injury or property damage occurred.
Adverse selection occurs when: Applicants are accepted by the insurer with little or no attention given to underwriting. The insurer experiences negative financial results due to unforeseen catastrophes. The insurer accepts some applicants who are opposed to rate increases. Some applicants are forced to accept certain coverage restrictions.
Applicants are accepted by the insurer with little or no attention given to underwriting. . Explanation: Insurers must carefully underwrite all risks to avoid being the victim of adverse selection which is the tendency of insureds with a greater-than-average chance of loss to purchase insurance. With adverse selection, the insurer is confronted with the probability of loss due to risks not factored in at the time of sale.
The insured owns an expensive rare painting. He has it appraised by an art dealer and has it insured for $50,000 under a personal articles floater. There is a market decline for this item. It is destroyed in a fire at his office. The company offers him $40,000, the current market value. How will the loss be handled? Select the Correct Answer Not covered since it is away from the insured's residence Covered for the full $50,000 amount The company is correct in offering fair market value at the time of the loss The company will ask for a reevaluation of the item based records and documentation of his cost, the current market value and the appraised value
Covered for the full $50,000 amount is correct. Explanation: There is an exception in the loss settlement clause for fine arts. Usually, unless indicated, the agreed amount clause does not apply to other scheduled property and losses are settled on an ACV basis. For fine arts the agreed amount clause does apply and the insured is entitled to $50,000 for the loss.
In the ocean marine insurance policy, the term "average" means: Select the Correct Answer Loss or damage. The ACV of the ship. The average value of the claim insured against by the perils of the sea . That coverage is written on a named peril basis.
Loss or damage. is correct. Explanation: The term "average" in ocean marine insurance refers to loss or damage. In order to protect the ship, its cargo and passengers, some of the cargo may be jettisoned (thrown overboard) to save the ship and cargo. Particular average means only one party pays for the loss. General average means all parties share in the loss.
Which of the following is considered a surety? Select the Correct Answer One that guarantees the performance of contracts. Fidelity Insurance Liability Insurance Insurance Indemnifying Banks
One that guarantees the performance of contracts. . Explanation: Surety means in bonding, the party (often the insurance company) that agrees to be responsible for the loss that may result if the principal does not keep their promise to perform. The surety has recourse against the principal for re-payment. This is different than casualty insurance where recourse against the insured is forbidden.
Which of the following statements correctly applies to a named perils policy? Select the Correct Answer Only the perils described in the declarations are covered. All direct damage to property is covered, unless the policy specifically excludes the peril. Only the perils listed by name are covered under the policy. All indirect damage to property is covered.
Only the perils listed by name are covered under the policy. is correct. Explanation: Only the perils listed by name in the cause of loss form are covered perils. A loss by a peril that is not named would not be covered. Under a named peril policy the burden of proof is on the insured to prove that one of the named perils caused the loss.
If an insured desires broader coverage than provided under the homeowners program for camera equipment, this coverage can be obtained through: Scheduled Personal Property Endorsement. Increased Coverage A. Inflation Guard Endorsement Increased Coverage D.
Scheduled Personal Property Endorsement. is correct. Explanation: In order to provide specific coverage for specified personal property the scheduled Personal Property Endorsement should be used. This provides broader coverage than the coverage under the HO forms and has fewer exclusions.
For an agreement to be considered a contract, it must contain all of the following, EXCEPT: Select the Correct Answer The contract must be carefully considered by both parties. One party must accept an offer that is made by the other party. Both parties must be legally competent at the time of making the agreement. The parties must exchange money, services, work, products, or other valuable consideration.
The contract must be carefully considered by both parties. is correct. Explanation: Contracting parties should carefully consider the agreement, but there is no legal requirement to do so. The other choices represent required elements of a contract.
Which of the following is generally not considered to be a legal defense against claims of negligence? Select the Correct Answer The loss to the plaintiff was caused intentionally by the defendant. A state law gives specific immunity from liability to the defendant. An intervening cause was the proximate cause of the plaintiff's injury rather than the defendant's action (or inaction). The relevant statute of limitation for filing a lawsuit has expired.
The loss to the plaintiff was caused intentionally by the defendant. is correct. Explanation: Intentional acts are excluded by all policies.
Each of the following is true about commercial property floaters filed by the Insurance Service Office (ISO), EXCEPT: Select the Correct Answer The rates for these coverages are unregulated. Individual insurers are not required to use the ISO forms. The coverages may be written as a monoline or part of a package policy. The coverages are usually written on an open perils basis.
The rates for these coverages are unregulated. . Explanation: Rates for Commercial Property Floaters filed with ISO are regulated. Each type of form requires a rating formula. These are audited by ISO. There are many forms, not filed with ISO, where the rates are not regulated. These are called "non-controlled" lines of insurance.
Coverage F under the farm forms covers which of the following? Unscheduled personal property Scheduled personal property Scheduled real property coverage Blanket real property coverage
Unscheduled personal property is correct. Explanation: Coverage F covers unscheduled personal property on a blanket basis. One limit for all business personal property is stated. The items are not scheduled as they are under Coverage E.
Under the Motor Carrier Act of 1980, a vehicle hauling excess oil, explosives or nitrous gases is required to carry a minimum liability limit of: $750,000 $1,000,000 $5,000,000 $2,000,000
$5,000,000 is correct. Explanation: Although oil haulers are only required to carry $1,000,000, the key word here is "excess oil" and when followed up with "explosives" makes this freight hazardous requiring the $5,000,000 limit.
Which of the following watercraft would be covered under Section II of the HO forms? Answer Choices: Select the Correct Answer A kayak Watercraft with a 40 horsepower outboard motor Watercraft with a 100 horsepower inboard motor A 28 foot sailboat
A kayak is correct. Explanation: A kayak, rowboat or canoe would be covered with no endorsement or additional premium under Section II (liability) of an HO form
All of the following would be covered under the Commercial Auto Policy, except: Select the Correct Answer A partner using his own vehicle running a personal errand. An employee using an employer's vehicle. A partner using a company vehicle while on company business. An executive using a company vehicle on company business.
A partner using his own vehicle running a personal errand. is correct. Explanation: A partner using his own vehicle on personal business would only be covered under his Personal Auto Policy.
The commercial inland marine conditions form: Answer Choices: Select the Correct Answer Contains the basic policy conditions that apply to many controlled inland marine coverage. Is used to write standard commercial fire coverage. Must be used with any commercial inland marine form. Can stand alone as a complete insurance policy.
Contains the basic policy conditions that apply to many controlled inland marine coverage. `
The Commercial Building and Personal Property Coverage form: Select the Correct Answer Describes the property to be insured. Delineates the perils to be insured. Describes the excluded perils. Delineates the perils to be insured and describes the exclusions to coverage.
Describes the property to be insured. is correct. Explanation: The purpose of this form is to define building, business personal property and property of others. The form does not contain the perils.
Which of the following are covered by the Federal Employers' Liability Act (FELA)? Longshoremen and harbor workers Coal miners Employees of interstate railroads Crew members on federal waters and the high seas
Employees of interstate railroads is correct. Explanation: The Federal Employers' Liability Act (FELA) applies to employees of interstate railroads. Like the Jones Act, it allows workers or the survivors of deceased workers to sue their employers for occupational injuries resulting from the employer's negligence.
Henry is furnished a company vehicle. He carries auto coverage on his owned vehicles. What coverage might Henry purchase to provide additional coverage on the furnished company vehicle? Select the Correct Answer Nothing since the company owns the vehicle and has coverage Additional insured coverage endorsement Named nonowned coverage Extended nonowned coverage
Extended nonowned coverage. Explanation: Henry should purchase the extended non-owned coverage to provide additional liability protection while driving the furnished company vehicle. This coverage would be excess over the coverage carried by his company on the vehicle.
Which of the following losses are covered under the H0-2 form? Select the Correct Answer Damage to the foundation of the house caused by freezing Fire damage to the interior of a house that has been vacant for 15 days prior to the loss Vandalism to the exterior of a house that has been vacant for 90 days Water damage caused by the overflow of a river
Fire damage to the interior of a house that has been vacant for 15 days prior to the loss is correct. Explanation: The only loss that is covered is the damage to the house that has been vacant for 15 days. Dwellings that are vacant for more than 60 days and sustain a vandalism loss would not be covered. Flood damage - overflow of a river - is not covered under any of the HO forms.
What coverage of the garage policy will pay for physical damage to a garage customer's auto regardless of legal liability? Select the Correct Answer Garage liability coverage (Section II) Garage physical damage coverage (Section IV) Garagekeepers coverage (Section III) Garagekeepers direct coverage endorsement
Garagekeepers direct coverage endorsement. Explanation: The garagekeepers direct coverage endorsement pays for damages to a customer's vehicle regardless of legal liability
The BOP is designed to cover all of the following, EXCEPT: Select the Correct Answer Gas stations. Small apartment houses. Medium size clothing stores. An office complex with 7,500 square feet in total floor area.
Gas stations. is correct. Explanation: The list of eligible risks for the BOP is rather narrow. Gas stations, garages and repair shops would not qualify.
Under a mobile home policy, how is the mobile home itself covered in case of a total loss? Select the Correct Answer Purchase Price Basis Actual Cash Value Basis Replacement Cost Basis Stated Amount Basis
Replacement Cost Basis. Explanation: If the mobile home is insured for at least 80% to value, the insured is entitled to replacement cost coverage up to the limit of the policy.
The most comprehensive coverage provided by the Dwelling Property program is found in the: Select the Correct Answer DP-3. DP-1. DP-2. DP-4.
The DP-3 form provides "open-peril" (all risk of loss) for the dwelling and other structures. The other forms provide "named peril" coverage.
Lisa Smith insures a truck using a "stated value" approach for physical damage coverage. The truck is appraised for $20,000. Nine months later the vehicle is totaled. The truck depreciated $2,000 since the insurance was effective. How much will she receive disregarding any deductible?
$18,000. Explanation: Even though she purchased the "stated value" endorsement, she will not receive more than the value of the truck at the time of the loss. The stated value is a cap on the insured's recovery.
Under Coverage C, business personal property is covered for: $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 is correct. Explanation: Business property is covered for $2,500 for losses on the premises and $1,500 off the premises in the newer HO forms.
Mary's automobile is stolen. The theft is properly reported to the police and the insurance company. She rents a car for two months. Which of the following would apply for the rental car? Answer Choices: Select the Correct Answer After a waiting period of 48 hours, her policy will pay $20 per day up to a maximum of $600. Will be automatically covered until the vehicle is repaired or the claim is paid for its loss. Would only be covered if she carried rental car coverage. Coverage would apply until the vehicle is recovered.
1
Under the discovery clause in the loss sustained policy, which of the following is covered? Select the Correct Answer A loss discovered up to one year after the policy expired but that occurred during the policy period A loss that is discovered two years after the policy has expired A loss that occurred prior to the inception date of the policy A loss that occurred during the policy period but was not discovered until five years after the expiration date
A loss discovered up to one year after the policy expired but that occurred during the policy period is correct. Explanation: The discovery clause in the loss sustained form states that losses that occur during the policy period, but are not discovered for up to one year after the policy has expired, can be covered under the expired policy. The discovery clause in the discovery form provides coverage during the policy period or within 60 days after the policy expires for coverage to apply.
Which of the following would not be covered by garage liability? Costs the insured sustains to recall defective products. A customer falls down at the dealership building. A faulty break job causes a customer's vehicle to crash into another car. While driving a dealership-owned pickup, an employee has an accident, injuring another person.
Costs the insured sustains to recall defective products. . Explanation: Garage liability coverage includes automobile liability and commercial general liability as well, but products being recalled are excluded from the ISO form. This is because liability insurance is to cover something that occurs and products are recalled to prevent something from occurring.
The insured is a large super market and maintains a large checking account balance. An employee has a friend that was told in confidence that the "transfer account" contained $200,000. The friend, without the employee's knowledge, pretends that he is the employee with the authority to conduct transactions on behalf of the insured and sends a fraudulent electronic request to the bank to transfer the funds with the intent of stealing them. What coverage would the insured need to cover this claim Insuring Agreement 3 "Inside the Premises Theft of Money and Securities." Employee dishonesty Insuring Agreement 7 "Funds Transfer Fraud" Insuring Agreement 5 "Outside the Premises" Coverage
Insuring Agreement 7 "Funds Transfer Fraud" is correct. Explanation: Insuring Agreement 7 is a new agreement that provides additional coverage that was previously available as an endorsement. Coverage is provided for a loss of funds as a result of a fraudulent instruction upon which an institution relied in order to transfer funds from the transfer account. A transfer account is an account kept at a financial institution for the purpose of being able to transfer funds as needed based on various forms of instructions from the named insured. Funds are defined as money and securities. A fraudulent instruction is a newly defined term in this policy. It is defined as an instruction supposedly transmitted by the named insured but was in fact transmitted by someone else without the named insured's consent or knowledge. The instruction can be electronic, telegraphic, cable, telefascimile (fax), telephone or teletype. A forged written instruction is also considered fraudulent instruction, as is an instruction supposedly transmitted by an employee but which was fraudulently transmitted without the named insured's or employee's knowledge or consent.
A company's promise to "pay for damage caused by or resulting from any covered cause of loss" would be found in which of the following sections of an insurance policy? Insuring Agreement Declarations Conditions Exclusions
Insuring Agreement is correct. Explanation: The perils covered are found in one of the three "cause of loss" forms that are a part of the insuring agreement.
A large super market is covered under crime coverage Insuring Agreement 5 "Outside the Premises" coverage. The insured has a relative take to the bank money, securities and a diamond ring that is going to be a prize for a lucky customer in a contest. He reaches the bank and is getting out of the vehicle when he is robbed. What will the insurance carrier do? Deny the claim because a relative cannot be a messenger Deny the claim for the ring Pay the entire loss Deny the entire loss
Pay the entire loss. Explanation: This agreement applies to loss of money and securities and other tangible property that has intrinsic value when the loss occurs outside the insured's premises. The property must be in the custody of a messenger who can be the named insured, or a relative, partner, or employee of the named insured. Loss of money and securities is covered if due to theft, disappearance, or destruction; the loss to "other property" has to be from an actual or attempted robbery. Note the difference. Loss of money is covered regardless of the circumstances of the loss; loss of "other property" is covered only under certain circumstances. If an employee is carrying money to be deposited into the insured's bank account and he is robbed, the loss is covered; if the employee somehow loses the money along the way, the loss is covered. Now, if the insured tells his employee to take a diamond ring from the safe to the bank and the employee is held up on the way to the bank by a robber, the policies will respond to the loss.
With an Equipment Breakdown policy, the loss settlement is: Select the Correct Answer ACV all of the time Replacement cost all of the time Replacement cost if the repair or replacement is made within 18 months Replacement cost if the repair or replacement is made within 24 months
Replacement cost if the repair or replacement is made within 24 months is correct. Explanation: The insured must repair or replace the damaged property within 24 months after the date of the breakdown (unless the time period is extended by the insurer in writing), or recovery of the loss is limited to the lesser of the cost it would have taken to repair the damaged property or the actual cash value of the property at the time of the breakdown. Usually coverage is on a replacement cost basis unless the insured or company endorses the policy to cover losses on an Actual Cash value bases. If replacement cost coverage applies, then the 24-month period is a factor if the insured is to receive replacement cost coverage for the loss.
Coverage E under the farm forms covers which of the following? Select the Correct Answer Unscheduled personal property Scheduled personal property Scheduled real property coverage Blanket real property coverage
Scheduled personal property. Explanation: Coverage E covers scheduled farm personal property. Each item to be covered is listed and an amount of insurance is stated
Under a self-insured workers compensation plan, what coverage should be purchased to cover a claim that is more than the insured's self-insured limits? Specific excess coverage Catastrophic coverage Umbrella coverage A surety bond
Specific excess coverage is correct. Explanation: Specific excess coverage should be purchased by a self-insured workers compensation plan to cover claims in excess of the self-insured limits of coverage.
What coverage is provided under the BOP for a steam boiler explosion? The steam boiler itself is covered. The steam boiler and the damage to the building and contents are covered. Steam boiler explosion is excluded under the BOP. A separate limit is provided under the BOP for steam boiler explosions.
Steam boiler explosion is excluded under the BOP.. Explanation: A steam boiler explosion that occurs inside the boiler is excluded. Separate equipment breakdown coverage is required
Which of the following types of property may be insured under a furriers block policy? Select the Correct Answer Stocks of furs owned by the insured furrier. Customer's furs entrusted to the furrier for storage. Furs or pelts on the premises of a breeder. Fur garments sold and delivered to customers.
Stocks of furs owned by the insured furrier.. Explanation: The furriers block policy is used to cover stocks of furs owned by the insured furrier and held for sale.
Secondary injury funds (also known as second or subsequent injury funds) are a part of most states' workers compensation laws. Which of the following most closely identifies their purpose? Designed to save the employer premium Designed to cover all employers within the state All employers which have had two or more workers compensation claims in the past years have their premiums surcharged The Fund reimburses employers who employ employees with a pre-existing partial disability who suffer a secondary injury.
The Fund reimburses employers who employ employees with a pre-existing partial disability who suffer a secondary injury. is correct. Explanation: Insurers pay into these funds. In some states, all insurers writing workers compensation coverage must pay into the fund, in other states, the stipulations for contribution are spelled out in the law. The Fund is a state agency which reimburses employers or, if insured, their insurance carriers for part of the workers' compensation costs in certain instances when an employee with a pre-existing permanent partial disability is injured on the job.
Which one of the following situations would be considered an example of strict liability? Select the Correct Answer Wayne keeps a large police-trained dog in his jewelry store as a deterrent to burglars. During the time the store is open for business, the dog is confined to a back room. One day, the dog escaped, ran into the showroom and bit a customer. The roof of a grocery store blew off during a tornado. Pieces of the roof struck the side of the store next door, damaged the siding and broke several windows. Carl thinks of himself as a master handyman but is careless with his tools. A trespasser tripped on a hammer and was injured. Alice deliberately hit Fred over the head with her heavy leather handbag after he remarked that she was overweight.
Wayne keeps a large police-trained dog in his jewelry store as a deterrent to burglars. During the time the store is open for business, the dog is confined to a back room. One day, the dog escaped, ran into the showroom and bit a customer. is correct. Explanation: In strict liability there is little if any defense. In most jurisdictions where strict liability is imposed, the defendant is held responsible whether or not he or she is negligent. Wayne had a duty to keep the dog restrained when open for business.
The Personal Auto Policy, under Supplementary Payments: Select the Correct Answer Will pay the insured up to $200 per day for loss of earnings due to testifying at a trial concerning an accident caused by the insured Will not pay for loss of earnings while testifying at a trial Will pay the insured $100 per day for loss of earnings while testifying at trial None of the responses are correct.
Will pay the insured up to $200 per day for loss of earnings due to testifying at a trial concerning an accident caused by the insured is correct. Explanation: The policy will pay up to $200 per day for loss of earnings, but not other income, because of attendance at hearings or trials at the company's request.
If an insurance policy is cancelled by the insurance company for fraud, the insurer: Select the Correct Answer Will still have to reimburse the policyholder any unearned premium due. Can refuse to reimburse earned premium because of the fraud. Can offset the owed premium return against any money paid out to the policyholder. None of the responses apply.
Will still have to reimburse the policyholder any unearned premium due.. The insurer will still be required to return the unearned premium to the insured. Return of earned premium is established by contract and is not affected by the reason the policy was cancelled. The insurance company may ultimately file a restitution claim against the policyholder if money for the loss has been paid and the claim is subsequently found to be fraudulent
In Alabama, can a sole proprietor be exempted from workers compensation coverage? If they hire more than five employees they cannot exempt themselves If they have a preexisting injury they can be exempted Yes they can be exempted from coverage Can only be exempted if approved by the workers compensation department
Yes they can be exempted from coverage is correct. Explanation: workers compensation law. Sole Proprietors or Partners must complete a WC14 Part I Form and file it with the workers compensation office. This WC14 will remain in effect until it is withdrawn by the Sole Proprietor or Partner which requires filing Part II of the WC14.
