Exam Questions #1

All of the following people would be considered insureds under the liability section of a homeowners policy EXCEPT a) The legal representative of a deceased insured. b) The 22-year-old niece of the insured who is visiting. c) A 15-year-old foster child residing in the premises. d) The mother of the insured who is residing in the household.

b) The 22-year-old niece of the insured who is visiting. Relatives of the insured of any age are considered insureds only if they are residents of the household.

Workers Compensation laws provide all of the following types of benefits EXCEPT a) Rehabilitation benefits. b) Death benefits. c) Pain and Suffering compensation. d) Medical benefits.

c) Pain and Suffering compensation. Award for pain and suffering is not compensated under Workers Compensation.

Which of the following is defined as a covered cause of loss in businessowners property coverage? a) Rain b) Smoke from agricultural smudging c) Pollution d) Leakage from fire-extinguishing equipment

d) Leakage from fire-extinguishing equipment Only leakage for fire-extinguishing equipment is defined as a covered loss. The other causes are specifically excluded from coverage.

An insured owns a large dog. The first day he has to leave the dog home alone to go to work, the insured comes back to find his $400 couch torn apart, his $100 coffee table chewed up, his $50 window curtain shredded, and a $200 window pane shattered where his dog jumped through. The insured has personal property coverage under a special form dwelling policy. How much of this loss will the policy cover? a) $0 b) $200 c) $250 d) $750

a) $0 Damage that results from domestic animals is excluded under the special form dwelling policy.

What is the basic limit for costs incurred at the place a vehicle is disabled provided by the towing and labor costs endorsement? a) $25 b) $50 c) $75 d) $100

a) $25 This endorsement provides a basic limit of $25 for towing and labor costs incurred at the place a vehicle is disabled. Higher limits are available for an additional premium.

What is the maximum number of boarders per unit that would be allowed in the homeowners policy? a) 2 b) 3 c) 4 d) 5

a) 2 Homeowners policies may insure a property that has no more than 2 families or 2 roomers or boarders per unit.

Which of the following would be covered by the broad theft endorsement on a dwelling policy? a) A camera the insured has with him on vacation b) A pedigreed show dog c) Fabric and patterns in a clothing designer's studio at her home d) An antique car

a) A camera the insured has with him on vacation All of these examples except the camera are types of property specifically excluded from coverage under the broad theft endorsement.

Which of the following is paid to make recommendations about changes in coverage and limits? a) Advisers b) Brokers c) Underwriters d) Producers

a) Advisers Insurance advisers give advice to clients about insurance exposures and coverages and make recommendations about changes in coverage and limits.

What documentation grants express authority to an agent? a) Agent's contract with the principal b) Agent's insurance license c) Fiduciary contract d) State provisions

a) Agent's contract with the principal The principal grants authority to an agent through the agent's contract.

First aid costs for others injured on the insured's premises a) Are paid in addition to the liability limit. b) Apply only if the insured is legally liable. c) Also cover injuries to the insured's family members. d) Are deducted from the liability limit.

a) Are paid in addition to the liability limit. First aid costs for others apply even if you are not legally liable and are in addition to the stated limits, but do not apply to those regularly at the location.

Which of the following is a statutory defense? a) Comparative negligence b) Assumption of risk c) Intervening cause d) Contributory negligence

a) Comparative negligence Many states, by statute, require that damages be apportioned based upon the degree of negligence of each party in an accident.

Which of the following dwelling coverages would provide coverage to a garage not attached to the primary insured dwelling? a) Coverage B b) Coverage C c) Coverage E d) Coverage A

a) Coverage B Coverage B covers other structures not attached to the primary dwelling, except by fence or utility line, or something similar.

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? a) False advertising b) Unfair claims c) Twisting d) Defamation

a) False advertising False advertising is the illegal practice of advertising or circulating materials that are untrue, deceptive, or misleading.

Which of the following coverages would provide protection for the liability of an auto repair garage to owners of vehicles destroyed in the garage by fire? a) Garagekeepers b) Product liability c) Motor carrier d) General liability premises and operations

a) Garagekeepers Garagekeepers insurance covers garage operators against direct damage or legal liability for damage to vehicles in the insured's care, custody, or control. This coverage may be included as a part of the garage coverage form or written as a separate endorsement to other policies.

The main difference between an HO-4 and an HO-6 is a) HO-6 provides limited dwelling coverage as well as contents coverage. b) HO-4 does not cover additional living expenses. c) HO-6 does not cover additional living expenses. d) HO-4 provides limited dwelling coverage as well as contents coverage.

a) HO-6 provides limited dwelling coverage as well as contents coverage. HO-4 provides no dwelling coverage because a tenant does not own the dwelling; the condo owner does own the condo and is provided with coverage for improvements. Both HO-4 and HO-6 cover theft and additional living expenses.

The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the a) Insuring agreement. b) Conditions. c) Exclusions. d) Declarations.

a) Insuring agreement. The insuring agreement is the part of the policy structure that describes the insured perils and the method of indemnification.

An insurance producer fails to obtain automobile insurance for client after agreeing to do so. The client is involved in an automobile accident after running a red light and is found to be at fault. The damage to the other vehicle totals $5,000. Which statement regarding the producer's errors and omissions liability policy is true? a) It will provide coverage because the damage to the client resulted from the producer's negligence. b) It will not provide coverage; such physical damage to property is not covered. c) It will not provide coverage because the property damage resulted from the client breaking the law. d) It will provide coverage because punitive damages have been awarded.

a) It will provide coverage because the damage to the client resulted from the producer's negligence. Errors and omissions coverage protects insurance producers and brokers from financial losses they may suffer if an insured sues to recover his or her financial loss due to the producer giving incorrect advice or not informing the insured of important issues.

Under the dwelling policy, Coverage C - Personal Property is a) Limited to covering a servant's property while at the insured location. b) Automatically provided as 50% of Coverage A. c) A prohibited coverage in the dwelling form. d) Limited to 50% of the amount of insurance that is written as Coverage A.

a) Limited to covering a servant's property while at the insured location. Dwelling Coverage C is limited to covering property owned by a guest or servant while the property is at the insured location. Under a homeowners policy, the property would be covered the same while on or off the premises.

A business uses its own trucks to deliver their own products to the customer. Which commercial auto coverage form should the business buy to insure the trucks? a) Motor carrier coverage b) Business auto physical damage c) Commercial carrier coverage d) Truckers liability

a) Motor carrier coverage The motor carrier coverage form can cover anyone who transports goods. Private carriers can be insured under the business auto coverage form or the motor carrier coverage form.

The livestock coverage form covers which of the following losses? a) Named peril coverage for death of livestock b) Sheep died after an attack by the family dog c) A cow died after it ran into a moving tractor d) All risk coverage for death of livestock by any cause except those excluded

a) Named peril coverage for death of livestock Livestock coverage is named peril coverage resulting in death or destruction of livestock by basic causes of loss except by vehicles.

Erroneous Publishing copied all the material from Angels Inc.'s book. The only changes made by Erroneous were to rename the title and chapters, put a different cover on it, and distribute it as its own. Angels Inc. files a claim against Erroneous and seeks damages. Will a commercial general liability policy cover the claim? a) No, because the claim results from copyright infringement and is not in an advertisement. b) No, because there is no bodily injury or property damage. c) Yes, because the claim is a result of Erroneous products and work. d) No, because this event does not meet the definition of infringement.

a) No, because the claim results from copyright infringement and is not in an advertisement. Advertising injury is defined in the policy as any of the following: libel, slander, defamation, or violation of the privacy of others, misappropriation of advertising, ideas, and infringement of copyright, title, or slogan. However, because the copyright infringement was in a product and not an advertisement, coverage is specifically excluded.

Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must a) Respond to the consumer's complaint. b) Defend the report if the agency feels it is accurate. c) Change the report. d) Send an actual certified copy of the entire report to the consumer.

a) Respond to the consumer's complaint. The consumer has the right to request the information on the report, the reasons for turn down and any adverse underwriting decisions. The reporting agency is required to respond to the consumer's complaint, and, if necessary, to reinvestigate the report.

Which of the following symbols is available to an insured with vehicles subject to no-fault coverage? a) Symbol 5 b) Symbol 7 c) Symbol 9 d) Symbol 6

a) Symbol 5 Symbol 5 covers owned autos subject to no fault coverage.

An employer may satisfy the requirement of providing workers compensation insurance on their employees by all of the following methods EXCEPT a) The Monopolistic State Fund. b) Obtain coverage from a private insurance carrier. c) Obtain coverage from the Competitive State Fund. d) Self-insurance.

a) The Monopolistic State Fund. There is no monopolistic State fund in operation in Maryland.

Which of the following is a characteristic of a Reciprocal Insurance Exchange? a) The attorney-in-fact manages the exchange. b) It normally writes all lines of insurance. c) Stock holders share in any profits. d) It issues nonassessable policies.

a) The attorney-in-fact manages the exchange.

Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT a) The insurer does not have the right to inspect the insured's property and operations. b) The insurer does not make safety inspections for the insured. c) The insurer does not guarantee that conditions are safe or healthful. d) The insurer does not guarantee that the insured is meeting all required safety regulations.

a) The insurer does not have the right to inspect the insured's property and operations. The inspection and survey condition DOES allow the insurer the right to inspect the property and operations. These inspections are important in determining the insurability of the insured's property and operations, in setting proper insurance rates, and in making loss control recommendations.

The individual named insured endorsement under a commercial auto policy provides coverage for which of the following? a) The sole proprietor of the business and his or her family members b) The sole proprietor of the business only c) The sole proprietor of the business and his or her employees d) The sole proprietor of the business and his or her spouse only

a) The sole proprietor of the business and his or her family members This endorsement will provide the sole proprietor and family members liability coverage for personal use of nonowned, hired and borrowed autos and changes the definition of who is an insured to include family members for any owned private passenger vehicle covered by the policy.

An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay? a) $0 b) $30,000 c) $32,000 d) $40,000

b) $30,000 This insured only carried 75% of the amount of insurance he had agreed to carry ($120,000 of the agreed $160,000), so the insurer will pay only 75% of the loss, or $30,000. If the insured had carried the required amount of insurance, partial losses would be paid in full. In the event of a total loss, the face of the policy would be paid. If the full amount is not carried, divide the actual amount carried by the amount that should be carried (the coinsurance amount), and multiply it by the loss.

Under Coverage C of a farm policy, what is the limit payable on business property located away from the premises? a) $250 b) $500 c) $1,000 d) $100

b) $500 Business property located away from the premises is covered for up to $500.

An insured has a personal auto policy with both comprehensive (other-than-collision) and collision coverage. His car is stolen and recovered five days later. If the insured claims transportation expenses of $20 per day, how much will his policy pay? a) $45 b) $60 c) $75 d) $100

b) $60 The policy will pay $20 per day after 48 hours, not to exceed 30 days in total.

A broker requests a hearing with the Commissioner. Within how many days of the request must the hearing be held? a) 10 b) 30 c) 60 d) 90

b) 30 If the Commissioner finds a hearing justified, it will be held within 30 days after the demand is made.

How long is a waiting period upon purchase of flood coverage through NFIP? a) 10 days b) 30 days c) 60 days d) There is no waiting period.

b) 30 days Upon purchase of a flood policy, a 30-day waiting period is in place beginning from the time of application and premium payment.

The Property and Casualty Guaranty Corporation is obligated to pay the full amount of any claim between $100 and $300,000 if the claim occurs within what period of time? a) 180 days before the policy has expired b) 30 days after the insurer has been declared insolvent and before the insurance policy has expired c) 45 days after an insurer has been declared insolvent and after the insurance policy has expired d) 90 days before the policy has expired

b) 30 days after the insurer has been declared insolvent and before the insurance policy has expired The Corporation extends its obligations to the covered claims that exist on or before the determination of the insurer's insolvency or that arise within 30 days after the determination of insolvency, if the claim is between $100 and $300,000.

An applicant for an insurance license has failed his written examination. How many days must he wait before we can take another examination? a) 24 hours b) 4 days c) 10 days d) 30 days

b) 4 days If an applicant fails an examination, he or she cannot retake the examination for at least 4 days.

In the event of a loss covered by the policy, if the insurer requests a signed sworn proof of loss, the named insured is required to submit it within a) 30 days. b) A specified time. c) 1 year. d) 5 business days.

b) A specified time. In the event of a loss covered by the policy, the named insured is required to submit to the insurer a signed sworn proof of loss within the allotted time (usually 60 days, but may vary).

The commercial general liability coverage form excludes bodily injury or property damage that the insured has assumed under any contract or agreement. However, the exclusion does not apply to certain types of contracts, as long as the injury or damage occurs a) Before the contract expires. b) After the execution of the contract. c) After the contract expires. d) Before the execution of the contract.

b) After the execution of the contract. The commercial general liability coverage form excludes bodily injury or property damage that the insured has assumed under any contract or agreement. However, the exclusion does not apply to certain types of contracts, as long as the injury or damage occurs after the execution of the contract.

An insurer may terminate a private passenger auto liability insurance policy in Maryland for all of the following reasons EXCEPT a) An at fault accident 2 years before renewal. b) Bankruptcy 30 months prior to the renewal of the policy. c) 3 non-fault accidents within the three years preceding renewal of the policy. d) Proof of fraudulent claims activity.

b) Bankruptcy 30 months prior to the renewal of the policy. Credit may not be used to cancel or non-renew private passenger auto policies. Credit may be used as a rating factor.

A policy that insures all property at multiple locations for a single amount is referred to as a) Specific. b) Blanket. c) Reporting. d) Special.

b) Blanket. Blanket coverage provides one limit of insurance for multiple locations or classes of property with the entire limit of insurance available to respond to any loss. No single item is assigned a specific amount of insurance. However, different amounts of insurance may be shown for buildings in general and contents in general.

A builder's risk form is most often written as which of the following? a) Specific value form b) Completed value form c) Scheduled form d) Reporting form

b) Completed value form

The homeowners policy covers collapse caused by all of the following EXCEPT a) Weight of too many people attending an event hosted in the house. b) Foundation cracks. c) Weight of snow. d) Hidden insect or vermin damage.

b) Foundation cracks. Collapse must be caused by some sudden, unexpected reason. The foundation cracks would take years to cause collapse, meaning there would be plenty of time to find and repair them.

What type of compensatory damages will pay for pain and suffering and disfigurement? a) Normal b) General c) Special (specific) d) Tort

b) General General compensatory damages are for intangible elements that cannot be specifically measured in terms of dollars.

When a surety insurer terminates the appointment of a surety agent, it must notify the Commissioner and the Chief Clerk of the District Court of Maryland of the termination a) Within 30 days. b) Immediately. c) Within 5 business days. d) Within 15 days.

b) Immediately. A surety insurer that terminates the appointment of any surety agent must immediately file a written notice of termination with the Commissioner and with the Chief Clerk of the District Court of Maryland.

If an insurance premium is paid by the policyowner to the agent, but the agent fails to remit that premium to the insurer, which of the following statements is true? a) The policy will lapse. b) It is considered that the payment was submitted to the insurer. c) The agent's license will be revoked. d) The policy effective date will change to the date when the agent remits the premium.

b) It is considered that the payment was submitted to the insurer. Since the agent is a representative of the insurer, payment to the agent represents payment to the company.

All of the following statements describe the concept of strict liability EXCEPT a) It is applied in product liability cases. b) It is imposed on defendants engaged in hazardous activities. c) Claimants may need to provide proof that a product defect caused an injury. d) It is imposed regardless of fault.

b) It is imposed on defendants engaged in hazardous activities. Strict liability is commonly applied in product liability cases. The business is then liable for defective products, regardless of fault or negligence.

Crews of ships are covered by the a) Federal Employers Liability Act. b) Jones Act. c) U.S. Longshore and Harbor Workers Compensation Act. d) States' workers compensation laws.

b) Jones Act. The Jones Act is a federal law that provides remedies to seamen who are injured while working on a vessel. It extends the provisions of the Federal Employers Liability Act (FELA).

According to the Nationwide Marine definitions, risks that may be the subject of inland marine insurance include all of the following EXCEPT a) Cargo transported by truck. b) Large pleasure boats. c) Property while stored at a warehouse. d) Shipments made by freight train.

b) Large pleasure boats. Large pleasure boats will not be included in inland marine coverage. They would instead be covered in a boatowners policy, or, if large enough, under yacht insurance.

Which of the following types of insurance may be written by a risk retention group? a) Homeowners Liability b) Products Liability c) Workers Compensation d) Personal Auto Liability

b) Products Liability RRGs apply to all types of liability insurance except Personal Liability and Workers Compensation.

Poe Insurance Co. has decided to cancel Joseph's auto liability policy due to nonpayment. What is Poe Insurance Co. required to do? a) Nothing; nonpayment is grounds for immediate cancellation b) Provide Joseph with written notice at least 10 days in advance c) Provide Joseph with written notice at least 45 days in advance d) Provide Joseph with a 45 day grace period; during this time, Joseph can pay overdue premiums and reinstate the policy

b) Provide Joseph with written notice at least 10 days in advance If an insurer wishes to cancel an auto liability policy for nonpayment they must provide the insured with a written notice at least 10 days in advance. If an insurer wishes to nonrenew an auto liability policy they must provide the insured with a written notice at least 45 days in advance.

What term represents the type of licensee that solicits business or represents itself to the public as an adjuster of first party insurance claims, or who receives compensation for investigating, appraising, evaluating, or otherwise giving advice or help to an insured in the adjustment of claims for losses or damages arising under insurance contracts? a) Solicitor b) Public Adjuster c) Broker d) Producer

b) Public Adjuster A public adjuster solicits business or represents itself to the public as an adjuster of first party insurance claims. An adjuster also receives compensation for investigating, appraising, evaluating, or otherwise giving advice or help to an insured in the adjustment of claims for losses or damages.

#11. Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called a) Described coverage. b) Specific coverage. c) Schedule coverage. d) Blanket coverage.

b) Specific coverage. One location is insured for a specific amount of insurance on the structure and contents.

How much is the premium for the dwelling under construction endorsement under the dwelling policy? a) 50% of the actual value premium b) The average amount of insurance during construction c) 75% of the gross premium d) The full value of the house

b) The average amount of insurance during construction The premium is based on the average value of the house and building materials from the first day of construction until completion.

On a DP-3 Dwelling Property Special Form policy, the coverage provided for personal property is a) The same as provided on the DP-1 Broad Form. b) The same as provided on the DP-2 Broad Form. c) All risk d) Open Peril

b) The same as provided on the DP-2 Broad Form.

Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value? a) They are subject to a $1,000 deductible. b) They are automatically provided with replacement cost coverage. c) They qualify for maximum compensation under the flood insurance program. d) They are excluded from the flood insurance policy.

b) They are automatically provided with replacement cost coverage. Single-family dwellings are automatically provided with replacement cost coverage if insured to at least 80% of the replacement value, or the maximum allowed under the regular flood insurance program.

All of the following statements are true regarding fire department service coverage under the businessowners policy EXCEPT a) This coverage provides an additional amount of insurance. b) This coverage limit pays in place of the limit of insurance shown in the declarations. c) This coverage limit is payable in addition to the limit of insurance shown in the declarations. d) This coverage is not subject to any deductible.

b) This coverage limit pays in place of the limit of insurance shown in the declarations. The fire department service charge covers charges up to $2,500 for DP '10 ($1,000 for DP '02) and is payable in addition to the limit of insurance shown in the declarations and is not subject to any deductible.

Agents are not required to be licensed if they sell a) Credit insurance and health insurance. b) Travel insurance. c) Variable products. d) Auto insurance.

b) Travel insurance. There are situations where an individual may sell an insurance product and be exempt from the state requirement to be licensed. Those agents selling only travel insurance or credit insurance are not required to be licensed.

Medical benefits under Workers Compensation statutes are provided a) For up to $100,000 per injury or disease. b) Without limit. c) For up to $500,000 per injury or disease. d) For a certain percentage of the workers annual income.

b) Without limit. There is no maximum set for necessary medical expense.

What is the amount of valuable papers and records coverage provided in an unendorsed Homeowners policy? a) No coverage is provided b) $1,000 c) $2,500 d) Up to Coverage C policy limits

c) $2,500 An unendorsed Homeowners policy will provide up to $2,500 for valuable papers and records. More extensive coverage can be added with the Valuable Papers Endorsement.

If an insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis at both locations for a) 90 days. b) 5 days. c) 30 days. d) 60 days.

c) 30 days. Personal property being moved to a new location can be covered for up to 30 days without notice to the insurer.

When an insurer desires to cancel or non-renew a property insurance policy, they must give advance written notice of a) 15 days. b) 30 days. c) 45 days. d) 10 days.

c) 45 days. When an insurer desires to cancel or non-renew a property insurance policy, they must give advance written notice of at least 45 days.

What is the maximum number of roomers or boarders for properties insured under the dwelling policy? a) 2 b) 3 c) 5 d) 6

c) 5 Dwelling policies may insure a property that allows up to 5 roomers or boarders.

The Commissioner must examine the affairs, transactions, accounts, records, and assets of each domestic insurer at least every a) 2 years. b) 3 years. c) 5 years. d) Year.

c) 5 years. The Commissioner must examine the affairs, transactions, accounts, records, and assets of each domestic insurer at least every 5 years.

The employee theft crime policy includes a coverage extension that applies to employees temporarily outside the coverage territory for up to a) 30 days. b) 60 days. c) 90 days. d) 120 days.

c) 90 days. The coverage includes a coverage extension that applies to employees temporarily outside the coverage territory for up to 90 days.

The subject of a fraud is valued at $500. The person who committed that fraud is guilty of a) A minor violation. b) A crime. c) A felony. d) A misdemeanor.

c) A felony. Anyone convicted of insurance fraud, in which the subject is valued at $300 or greater, is guilty of a felony. If the subject of the fraud is valued at less than $300, the person is guilty of a misdemeanor.

Which of the following statements regarding coverage for the flood and earthquake perils is true? a) Flood and earthquake coverage is available only through government insurance. b) Flood insurance is usually provided in property policies, but earthquake coverage is available by endorsement only. c) Both flood and earthquake are excluded perils in all property policies. d) Flood and earthquake coverage is available in all policies.

c) Both flood and earthquake are excluded perils in all property policies. Flood and earthquake are both excluded perils in all property policies. However, coverage for both or either one usually can be purchased separately for an additional premium (by endorsement).

Which of the following would provide coverage for loss of income when an insured rental dwelling is rendered uninhabitable because of a covered loss? a) Coverage B b) Coverage C c) Coverage D d) Coverage A

c) Coverage D Coverage D provides fair rental value coverage when insured rental dwellings suffer a loss covered by Coverage A, B, or C.

Which of the following would provide coverage for loss of income when an insured rental dwelling is rendered uninhabitable because of a covered loss? a) Coverage B b) Coverage C c) Coverage D d) Coverage A

c) Coverage D Coverage D provides fair rental value coverage when insured rental dwellings suffer a loss covered by Coverage A, B, or C.

If the premium charged for a particular insured is increased or decreased for a future period based on that insured's loss experience for a period in the recent past, the policy uses a/an a) Manual rating plan. b) Retrospective rating plan. c) Experience rating plan. d) Judgment rating plan.

c) Experience rating plan. An experience rating plan adjusts the premiums charges based on the claims history, positive or negative, of the individual insured.

Expenses that an organization would not have incurred if business interruption had not existed are known as a) Additional expenses. b) All inclusive expenses. c) Extra expenses. d) Continuing expenses.

c) Extra expenses. Extra expenses are expenses that an organization would not have incurred if the business interruption had not occurred. Examples include additional overtime labor costs, or renting a similar building to continue operations as opposed to waiting until the existing building is rebuilt.

For what term is a public officials bond normally written? a) Biannual b) Continuous c) For the term the principal is elected to serve d) Annual

c) For the term the principal is elected to serve Public officials bond is normally written for the term of office that the principal is elected to serve.

All of the following coverages are available to insureds through the Maryland Auto Insurance Fund EXCEPT a) Underinsured Motorists Coverage. b) Personal Injury Protection. c) Guaranteed replacement cost. d) Bodily Injury and Property Damage Liability.

c) Guaranteed replacement cost. The following coverages are available to insureds purchasing coverage through the Maryland Auto Insurance Fund: Bodily Injury and Property Damage Liability, Uninsured/Underinsured Motorists Coverage, PIP (Personal Injury Protection) and Add-on coverage.

Which professional liability form provides form coverage for liability arising out of malpractice, error, or mistakes made in rendering professional services? a) Directors and officers liability b) Medical malpractice c) Physicians, surgeons and dentists malpractice d) Lawyers professional liability

c) Physicians, surgeons and dentists malpractice The physicians, surgeons and dentists malpractice form provides coverage for liability arising out of malpractice, error, or mistakes made in rendering or failing to render professional services.

Under the claims-made CGL the supplemental extended reporting period a) Automatically provides an unlimited extension for losses that occurred during the policy period but for which a claim is not made until after policy expiration. b) Automatically extends coverage for losses that occurred during the policy period and are claimed within 60 days following policy expiration. c) Provides an unlimited extension for making claims for losses that occurred during the policy period, but the insured must pay an additional premium. d) Automatically extends coverage to include claims made within 5 years of policy expiration, provided the losses occurred during the policy period.

c) Provides an unlimited extension for making claims for losses that occurred during the policy period, but the insured must pay an additional premium. The basic extended reporting period is five years and is included automatically. The extended reporting period must be purchased and has no time limit.

Which of the following is NOT settled on an actual cash value basis while covered under the business property coverage form? a) Manuscripts b) Works of art or antiques c) Valuable papers and records d) Property of others

c) Valuable papers and records Valuable papers and records are valued at the cost of blank materials for reproducing the records and labor to copy the records.

Which of the following is NOT one of the available additional coverages in the builders risk form? a) Fire department service charge b) Pollutant cleanup c) Vandalism d) Debris removal

c) Vandalism The 4 additional coverages offered by the builders risk form are debris removal, fire department service charge, pollutant cleanup and removal, and preservation of property.

Which of the following would NOT be covered by medical payments to others in Section II of your HO policy? a) You are walking your neighbor's dog and it bites someone. b) You allow the neighborhood kids to play flag football in your yard; one is injured. c) You cut your leg while whacking weeds in your backyard with your neighbor's weed whacker. d) Your child's nanny falls while walking down your steps.

c) You cut your leg while whacking weeds in your backyard with your neighbor's weed whacker. Medical payments to others covers invitees, residence employees not covered by workers compensation, and injury to others caused by animals in your control. If you hurt yourself, accident and health insurance would be needed for your injuries.

Under the businessowners policy, the coverage for the newly acquired property is limited to a) $10,000. b) $25,000. c) $50,000. d) $100,000.

d) $100,000. The newly acquired or constructed property extension applies to business personal property with a limit of $100,000 at each location. Coverage will apply only for 30 days after the insured acquires the property or the end of the policy period, whichever comes first.

Surety agents must maintain records of all bail bonds executed. These records must be made available for inspection by the Commissioner for at least a) 1 year after issuance of the surety liability. b) 1 year after application for the surety liability. c) 3 years. d) 1 year after termination of the surety liability.

d) 1 year after termination of the surety liability. Surety agents must maintain records of all bail bonds executed, in sufficient detail to enable the Commissioner to obtain all necessary information concerning each transaction. These records must be made available for inspection by the Commissioner for at least 1 year after termination of the surety liability.

Insurers that cancel policies because of the property's location must file notice with the Commissioner how many days prior to the cancellation? a) 90 b) 15 c) 30 d) 60

d) 60 Insurers may not refuse to issue, cancel or non-renew property and casualty insurance policies based solely on the geographic location of the risk unless the insurer files a written notice with the Commissioner stating the location to be affected at least 60 days in advance of the action.

An insured couple owns a pontoon boat. Which situation would NOT be covered by their watercraft endorsement under their homeowners policy? a) The insured's granddaughter slips on the boat and needs stitches. b) A friend borrows the boat and has an accident with another boater. c) One of the insureds is taking the boat out and injures her grandson. d) A friend rents their boat and runs it into a neighbor's dock.

d) A friend rents their boat and runs it into a neighbor's dock. This endorsement provides liability protection for bodily injury or property damage caused by the ownership or use of watercraft (excluding when used to carry persons for a fee or when rented to others).

A businessowners policy is a) A special policy designed for large retail operations. b) Part of a commercial package policy. c) A monoline policy. d) A self-contained prepackaged policy.

d) A self-contained prepackaged policy. A businessowners policy is similar in structure to the personal lines homeowners policy except it covers a business exposure for both property and liability losses.

Which of the following types of agent authority is also called "perceived authority"? a) Express b) Implied c) Fiduciary d) Apparent

d) Apparent Apparent authority (also known as perceived authority) is the appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

Which of the following is the most precise synonym for an "admitted" insurer? a) Certified b) Licensed c) Legal d) Authorized

d) Authorized Insurers who meet the state's financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer. Those insurers who have not been approved to do business in the state are considered unauthorized or non-admitted. Most states have laws that prohibit unauthorized insurers to conduct business in the state, except through licensed excess and surplus lines brokers.

The extra expense coverage form provides a) Extra money for an insured whose accounts receivable records have been damaged. b) Additional money to pay for property damage losses at a covered location. c) Payment for unforeseen expenses an insured may incur while the business is shut down following a property damage loss. d) Coverage that will permit the insured to continue in business without interruption following a property damage loss.

d) Coverage that will permit the insured to continue in business without interruption following a property damage loss. Extra expense coverage is for money spent to minimize a business interruption after a direct property loss.

To avoid cancellation or nonrenewal of an auto policy due to the insureds' driving history, the insurer is permitted to a) Enroll the insured in a state approved driver's program. b) Assess a penalty of no more than 10% of the premium increase amount. c) Increase the premium without notice. d) Exclude certain drivers from coverage by name.

d) Exclude certain drivers from coverage by name. To avoid cancellation, nonrenewal or premium increase due to driving history of an insured under an automobile policy, the insurer is permitted to exclude certain drivers from the policy by name.

Which of the following is true of dwelling policy coverage? a) Exclusions only apply to broad policy forms. b) There are no exclusions in basic forms. c) Special forms only have special exclusions. d) Exclusions apply to all three policy forms.

d) Exclusions apply to all three policy forms. Dwelling policy forms contain several general exclusions that define the actual extent of coverage provided. These exclusions are found in all three dwelling forms: broad, basic, and special.

Which of the following losses would be covered by an unendorsed homeowners policy? a) Faulty or defective zoning b) Theft in a structure under construction c) Collapse caused by earthquake d) Fire or lightning

d) Fire or lightning Fire and lightning are included in the basic perils, which in turn are included in almost all homeowners policies. Earthquake coverage is only by endorsement. Theft in or to buildings under construction is not covered. If the insured's own acts, decisions, or failure to act causes the loss, it is not covered.

A house insured under a dwelling policy has been vacant for 70 consecutive days. Which of the following statements is true? a) Glass breakage as a result of vandalism is covered. b) Damage to glass building blocks is not covered. c) Loss by theft is covered. d) Loss by vandalism and malicious mischief is excluded.

d) Loss by vandalism and malicious mischief is excluded. After vacancy for more than 60 consecutive days, vandalism and malicious mischief (VMM) coverage is excluded under a dwelling policy.

Rates that are established based on the similarities of the risk with other risks are known as a) Experience rates. b) "A" rates. c) Merit rates. d) Manual rates.

d) Manual rates. Rates that are established by similarity of risk are manual rating or class rates.

Which of the following Personal Auto Coverages would pay for damage to a covered auto due to colliding with a deer? a) Collision coverage b) Property damage liability coverage c) Bodily injury liability coverage d) Other than Collision (Comprehensive coverage)

d) Other than Collision (Comprehensive coverage) Damage caused by contact with a bird or animals is paid under Other than Collision (Comprehensive).

All of the following property is insured under Coverage A of a farm policy EXCEPT a) Material on premises to be used for repair or alter the insured structure. b) A snowblower owned by the insured used to service the premises. c) The dwelling described in the declarations page. d) Personal lawnmower of a tenant used to service the described location.

d) Personal lawnmower of a tenant used to service the described location. Property belonging to a tenant is not covered.

Which workers compensation conditions states that the first named insured will act on behalf of all insureds under the policy? a) Transfer of your rights and duties (assignment) b) Inspection c) Cancellation d) Sole Representative

d) Sole Representative

Which of the following is covered under the physical damage coverage of a Personal Auto Policy? a) A covered auto which is seized and destroyed by a government authority b) A cellular phone located in a locked vehicle c) Custom furnishings or equipment in a pick up or van d) Sound reproduction equipment permanently installed in the covered auto

d) Sound reproduction equipment permanently installed in the covered auto Sound reproduction equipment is covered if installed by the manufacturer or installed later where the manufacturer would have installed the equipment.

Licenses expire every 2 years on a) January 1. b) December 31 of odd-numbered years. c) The anniversary of its issuance. d) The last day of the insurance producer's birth month.

d) The last day of the insurance producer's birth month. Producer licenses are issued for 2 years and expire the last day of the insurance producer's birth month.

Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value? a) They qualify for maximum compensation under the flood insurance program. b) They are excluded from the flood insurance policy. c) They are subject to a $1,000 deductible. d) They are automatically provided with replacement cost coverage.

d) They are automatically provided with replacement cost coverage. Single-family dwellings are automatically provided with replacement cost coverage if insured to at least 80% of the replacement value, or the maximum allowed under the regular flood insurance program.

An insured condominium unit owner wants to purchase fire and extended coverage for personal property and liability coverage for himself and his family members. He should purchase a) HO-2. b) HO-3. c) HO-4. d) HO-6.

d) HO-6. The H0-6 is designed specifically to provide both property and personal liability coverages for a condominium unit owner.