ExamFX Test simulator- missed questions
What is the maximum allowed value of a gift that an agent can give to an insured without violating the regulation on rebating?
$25
A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss?
$30,000
Which of the following is the basic auto liability limit required for bodily injury or death to any one person in any one accident?
$30,000
A premium discount is the term that describes when an insured owes a total standard premium greater than
$5,000
If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person?
$50,000
Using the pro rata method, if a property is covered by Company A for $20,000 and Company B covers the same property for $40,000, how much will Company A pay on a $24,000 loss?
$8,000
What is a required notice of cancellation of a homeowner's policy to the insured?
10 days
The date of "maximum medical improvement" is defined as the earliest of the date that, based on medical probability, further medical improvement to an injury can no longer be reasonably anticipated, or
104 weeks
A temporary license in this state is valid for
180 days
Under Business Personal Property Limit- Seasonal Increase, if no % is specified in the declarations, seasonal fluctuations will automatically increase the limit for business personal property by:
25%
Under the additional coverages of a business owners policy, property removed to protect it from loss will be covered at another location for up to
30 days
As specified in the protective safeguard endorsement added to the business owners policy, if the automatic sprinkler system is shut down due to freezing conditions, the insured does not need to notify the insurance company as long as the system is restored within
48 hours
An insured is the owner of a clothing boutique. She has a Floor Plan Merchandise Floater to cover the property that is financed until it is sold. At closing time a month ago, she noticed that very expensive dresses had been stolen. However, she did not file a report to her insurance company until recently. How much will her insurer pay for this loss?
90% of the limit written
Which of the following is NOT a possible penalty for a violation of the Insurance Code?
A fine up to $100,000
Which of the following policies will help an auto dealership cover most of its liability exposures?
A garage liability coverage
A tornado that destroys a property would be an example of what?
A peril
With regard to homeowners Section II, which of the following does not meet the definition of insured's location?
A plot of farmland owned or rented by the insured
What are common carriers required to issue to every shipper that it transports goods for?
A uniform bill of lading
What is a sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage that is neither expected nor intended called?
Accident
Which of the following would be added for coverage under a property policy by an endorsement?
Additional Insureds
Under the Garment Contractor Floater of an Inland Marine policy, coverage while the property is in transit between the insured and the subcontractor is usually written on which basis?
All-risk
Which of the following applicants will be able to obtain an adjuster's license without taking the state examination?
An applicant who is renewing a license
The second Injury Fund will pay the benefits in which of the following situations?
An employee with a previous injury suffers a second injury that causes the disability to be more serious
When would uninsured motorist coverage apply under a personal auto policy?
An insured is involved in an auto accident with another motorist who is at fault and does not have any insurance
What is a foreign insurer?
An insurer with a home office in another state
An individual licensed as an agent must notify the Texas Department of Insurance, on a monthly basis, of all of the following EXCEPT:
Any change in business name
Two individuals licensed as an agent must notify the Texas Department of Insurance, on a monthly basis, of all of the following EXCEPT:
Any change in business name
In Texas, how is the Commissioner of Insurance placed in office?
Appointed by the Governor for term of 2 years
A policy condition that stipulates how the amount of damaged or lost property will be determined if the insured and the principal do not agree on the value of a property loss is known as:
Appraisal
Which of the following clauses establishes the procedure for determining the amount of a loss when the insurer and the insured cannot agree on the value of property or amount of loss?
Appraisal clause
Which of the following describes the transfer of a legal right or interest in an insurance policy?
Assignment
Insurable interest in a property policy must be proven:
At the time of loss
Answers to questions in an insurance application are called representations and, as such, they are
Believed to be true to the best of the applicant's knowledge
Which of the following components is NOT part of a policy structure?
Benefits
Which of the following would NOT be covered under the liability section of a personal auto policy?
Bodily injury caused by the insured's negligence while driving a three-wheel-all-terrain-vehicle
The HO-4 form designed for tenants covers losses on what basis?
Broad peril
To legally transact insurance in this state, an insurer must obtain which of the following?
Certificate of Authority
How is a professional liability policy written?
Claims-made
An insured is driving her car through a residential area when she loses control and crashes into a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have?
Combined single
A producer who fails to separate premium monies from his own personal funds is guilty of
Commingling
To obtain a Texas producer license, an applicant must do all of the following EXCEPT
Complete prelicensing training
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT
Conditions
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
Consideration
Which of the following elements of an insurance contract requires payment of premium?
Consideration
Which of the following property coverages would provide protection to contents damaged by fire?
Coverage C
Which of the following is NOT true about earthquake coverage?
Coverage is commonly provided through a federally funded program
The extra expense coverage form provides
Coverage that will permit the insured to continue in business without interruption following a property damage loss.
Which of the following would be covered under a business liability insurance policy?
Damage to a watercraft while on shore at the insured's premises
A sworn statement must usually be furnished by the insured to an insurer, and must include what information about the occurrence and the amount of indemnity claimed?
Date and Description
During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of
Defamation
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?
Discrimination
The commercial crime coverage that would cover losses resulting from the theft of money, securities and other property by employees is
Employee Theft
Which of the following would modify the original insurance contract by either adding or removing coverage?
Endorsements
What policy would a business owner whose business fills scuba tanks most likely need to insure unfired pressure vessels and compressors?
Equipment Breakdown
What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations?
Experience modification factor
Which of the following is NOT available in a package policy?
Fire legal liability
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?
Foreign
Replacement cost is defined as
Full replacement of property at its current cost, new and without reduction for depreciation.
In insurance transactions, fiduciary responsibility means:
Handling insurer funds in a trust capacity
All of the following are requirements for applicants for a Risk Manager license in Texas EXCEPT:
Have at least 2 years of insurance experience
Under the employee theft coverage, when a covered employee is found to have participated in a dishonest act, the coverage for that employee will terminate
Immediately
In liability insurance policies, supplementary payments are made:
In addition to the limit of liability
Which of the following provisions is usually found in homeowners policies and provides a replacement cost settlement to policyholders who carry adequate insurance?
Insurance to value
Persons covered under an insurance policy, whether named or not, are known as the
Insureds
Which of the following perils is covered under both the basic form and broad form dwelling policies?
Internal explosion
A policy condition that states if a policy is broadened with no additional premium, then the expanded coverage will be automatically applied to all policies of the same type is known as:
Liberalization clause
All of the following are types of adjuster's licenses available in the state EXCEPT
Life and health claims adjuster
A license who, for a fee or commission, offers to examine a life insurance policy, and gives advice regarding the policy, is known as?
Life and health insurance counselor
Under the dwelling policy, Coverage C - Personal Property is
Limited to covering a servant's property while at the insured location
Which of the following is true regarding business liability and medical payments coverage?
Loss of electronic data is excluded under a business liability policy.
Fair rental value coverage in the dwelling policy is similar to which homeowners policy form?
Loss of use
The insured's house is located one mile from the county's new landfill and across the road from the entrance of a rock quarry. It would cost $150,000 to rebuild the house if something happened to it, but when the insured tried to sell it, the best offer he received was $80,000. The insurance company will insure the house for only $80,000. What method of valuation is used to insure this property?
Market value
Guaranteeing future dividends is considered to be an unfair or deceptive act known as
Misrepresentation
An insurance company that is owned by the policyholders is called a
Mutual insurer
All of the following statements are FALSE regarding garage physical damage coverage except:
No coverage is provided for any auto stored for more than forty-five days at a location not shown in the declarations
During renovations to a home, a roof opening is left exposed. A heavy rainstorm causes $20,000 of damage to the interior of the home. How much would the HO-2 policy pay for damages?
Nothing
Losses caused by continuous or repeated exposure to conditions resulting in injury persons or damage to property that is neither intended nor expected is the definition of which of the following terms?
Occurrence
How is the premium paid for the businessowners policy?
One indivisible premium
What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy?
Open peril policy
What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk?
Other insurance
What sublimit in a liability policy sets the maximum amount that will be paid for all claims arising from a single accident?
Per occurrence
Policy limits are the maximum amount an insured may collect, or for which an insured is protected under the terms of the
Policy
The declarations section in a homeowners policy provides all of the following information EXCEPT:
Policy exclusions
The commercial general liability Coverage Part A- Bodily Injury and Property Damages provides coverages for which of the following?
Premises
Which of the following liability exposures is most likely for a small specialty clothing retail boutique?
Premises liability exposure
Pertaining to insurance, which of the following is an example of a producer's fiduciary responsibility?
Promptly forwarding premiums to the insurance company
All of the following are considered parts of the policy structure EXCEPT
Provisions
For which of the following actions can an agent's license be suspended or revoked?
Rebates of premiums
What is designed to assume risks that are generally unacceptable to the normal insurance market?
Residual market
The amount of loss the insured is willing to absorb without insurance protection is known as:
Self-insured retention
A property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use what loss valuation method?
Stated amount
An insurance agency could purchase an errors and omission insurance policy which would provide protection in the event of any of the following events EXCEPT
The agency loses commission income from policies that were not issued by the insurer
The amount an insurer will pay under the Coverage D (Loss of Use) depends on
The amount of coverage on the dwelling
In a liability policy with split limits of 25/50/25, which # is the maximum amount that would be payable in the event of damage to a person's property?
The amount of the third number, $25,000
A small appliance manufacturer in the state provides products around the globe. A customer in Switzerland is injured using one of its products. If the appliance manufacturer is found liable for the damages, why would its commercial general liability policy cover the customer's claim for bodily injury?
The appliance was manufactured in the U.S.
A small appliance manufacturer in this state provides products around the globe. A customer in Switzerland is injured using one of its products. If the appliance manufacturer is found liable for the damages, why would its commercial general liability policy cover the customer's claim for bodily injury?
The appliance was manufactured in the U.S.
Surety bonds are written for a definite limit called
The bond penalty
A parking garage owner completed major renovations to a parking garage just prior to selling it to another company. Three months later, overhead concrete fell onto cars in the second floor level. Under the garage coverage policy conditions, which of the following is true?
The damage occurred when the concrete fell
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays
The excess over the self-insured retention
An insurer filed a new policy form and endorsements with the Commissioner 60 days ago. The insurer has not heard back from the Commissioner. What can the insurer assume?
The form has been approved
Losses that result from the freezing of a plumbing system while the dwelling is vacant would be EXCLUDED under a homeowner's policy UNLESS:
The insured had drained the plumbing system
An insurer may cancel a homeowners insurance policy that has been in effect for more than 60 days for any of the following reasons EXCEPT:
The insured submits a claim against the policy
With respect to commercial auto policies, the Garage Coverage Form provides liability protection for all of the following EXCEPT:
The insured's business income losses due to personal injury
Who is NOT an insured for liability on a BAP?
The owner of a car the insured borrows
If an insurance policy has the additional coverage provision, how does it affect the policy premium?
There is no additional premium
An agent explains the details of a life insurance policy to a client. The agent does not realize, however, that the state has recently rewritten two of the provisions. As a result, the agent inadvertently misrepresents the policy, making it more attractive than it really is. What best describes this situation?
There is no misconduct
The insured's product under a commercial general liability policy does NOT include which of the following?
Vending machines rented to others
Which of the following exclusions applies to both personal injury and advertising injury in the business owners policy?
Willful violation of the penal statute or ordinance committed by the insured
What type of losses is NOT covered by the personal injury protection (PIP) in auto policies?
Workers Compensation
For a contact to be enforceable by law, the purpose of the contract must be
legal and not against public policy
An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?
misrepresentation
The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information
within 45 days
