FIN 475 Quiz #3

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23) What happens to the premiums for yearly renewable term insurance as an insured gets older? A) They increase at an increasing rate. B) They increase at a decreasing rate. C) They decrease at a constant rate. D) They remain level.

13) Smith is Manager of ABC Department Store. Jones, ABC's Security Director, visited Smith to ask some questions. During questioning, Smith admitted that he stole $10,000 in merchandise. He was disciplined, but not fired. The loss was not reported to the insurer. Six weeks later, Smith was observed on a surveillance camera stealing over $50,000 in jewelry from ABC. ABC immediately reported the loss to its crime insurer. Which ISO crime coverage condition may prevent ABC from collecting for this loss? A) termination as to any employee B) discovery form C) loss sustained form D) loss sustained under prior insurance

13) The transfer of all ownership rights in a life insurance policy can be accomplished through a(n) A) absolute assignment. B) irrevocable beneficiary designation. C) incontestable clause. D) participating-policy provision.

14) An employee of Nelson Manufacturing was injured by a defective machine Nelson purchased from Clark Corporation. The employee's tort action against Clark was successful. Clark, in turn, sued Nelson, alleging that Nelson failed to provide proper operating instructions to the employee. This claim (Clark vs. Nelson) is covered under Part Two of Nelson's worker compensation and employer liability policy. Such claims are called A) third-party over cases. B) absolute liability cases. C) joint and several liability cases. D) mass tort cases.

21) A bond that guarantees that the person responsible for the property of another will faithfully exercise his or her duties is called a A) fiduciary bond. B) performance bond. C) court bond. D) contract bond.

31) Jerry built a home in a flood plain. He did not purchase flood insurance. Recently, a noted meteorologist predicted torrential rains for the area for the next 7 days. Jerry attempted to purchase flood insurance through the National Flood Insurance Program. Which flood insurance provision is likely to block Jerry's efforts to obtain coverage for protection against the predicted torrential rain? A) waiting period B) definition of covered flood C) deductible D) insurance limit

34) David Florrell started a public accounting firm. David is concerned that accountants on his staff may give incorrect accounting advice, and the accounting firm may be sued. What type of liability insurance should David purchase to protect against such claims? A) errors and omissions insurance B) directors and officers liability insurance C) general liability insurance D) employers liability insurance

39) The exterior walls, the roof, and the plumbing, heating and air conditioning systems of a residential condominium can be insured through the purchase of which of the following forms? I. Condominium association coverage form II. Condominium commercial unit-owners coverage form A) I only B) II only C) both I and II D) neither I nor II

42) Tim purchased a 10-payment whole life insurance policy 15 years ago. Tim would like to donate this paid-up policy to a charity. Under which policy provision can Tim transfer all ownership rights in the policy to the charity? A) absolute assignment B) extended term nonforfeiture option C) reinstatement D) collateral assignment

6) Which of the following statements about the needs approach for estimating the amount of life insurance to purchase is (are) true? I. It involves an analysis of various family needs which must be met if a family breadwinner dies. II. Its use is appropriate only if a person currently has no life insurance protection. A) I only B) II only C) both I and II D) neither I nor II

9) A contingent beneficiary in a life insurance policy has the right to A) receive the policy proceeds if the primary beneficiary dies before the insured. B) share the policy proceeds with the primary beneficiary. C) change the beneficiary designation under specified circumstances. D) exercise policy rights if the insured is incapacitated.

9) The head teller of a bank embezzled $50,000 from the bank. Which insuring agreement in a financial institution bond is designed to cover such losses? A) Insuring Agreement A-Fidelity B) Insuring Agreement B-On Premises C) Insuring Agreement C-In Transit D) Insuring Agreement D-Forgery or Alteration

1) In the ISO Commercial Crime Coverage form, theft is defined as the A) unlawful taking of property to the deprivation of the insured. B) unlawful taking of property from the care and custody of a person by someone who has caused or threatens to cause bodily harm or who has committed an unlawful act witnessed by that person. C) unlawful taking of money or securities through the alteration of a negotiable instrument. D) unlawful taking of property from inside the premises by someone who unlawfully enters or leaves the premises as evidenced by marks of forcible entry or exit.

1) The phrase "general liability" is used to refer to the legal liability of a business arising from all of the following EXCEPT A) employees injured on the job. B) defective products. C) liability assumed by contract. D) completed operations.

1) Which of the following is included in the common declarations page of a commercial package policy? I. A description of the insured property. II. A listing of the causes-of-loss that are covered by the policy. A) I only B) the policy period. C) the premium paid. D) the policy cancellation provisions.

10) Which of the following statements about the change of plan provision in a life insurance contract is (are) true? I. A change to a lower premium policy results in a refund of the difference in the cash values of the two policies. II. A change to a higher premium policy requires evidence of insurability. A) I only B) II only C) both I and II D) neither I nor II

11) A provision included in a claims-made commercial general liability policy provides coverage for claims filed after the policy has expired. This provision is called a(n) A) extended reporting period provision. B) agreed amount endorsement. C) retroactive date provision. D) per-occurrence limit clause.

11) Which of the following statements about the assignment of a life insurance policy is true? A) The insurer must be notified of any assignment or the death proceeds will be paid to the named beneficiary. B) Under an absolute assignment, the only right transferred to a new owner is the right to change the beneficiary designation. C) As long as a collateral assignment exists, a creditor will receive the entire death benefit even if the loan has been repaid. D) Assignment may be made only with the permission of the insurer and the beneficiary.

12) When the capital retention approach is used to determine how much life insurance to purchase, all of the following are subtracted from total assets to calculate the capital available to produce income EXCEPT A) investments in stocks and bonds. B) non-income producing capital such as autos and the value of the home. C) the amount of money needed to payoff the mortgage. D) auto loans and credit card debt.

12) Which of the following statements about assignments of life insurance policies is (are) true? I. Under a collateral assignment, the policyowner assigns a life insurance policy to secure a loan. II. Under an absolute assignment, only limited ownership rights in a policy are transferred. A) I only B) II only C) both I and II D) neither I nor II

12) Which of the following statements about workers compensation insurance is (are) true? I. Under the workers compensation part of the policy, the insurer agrees to pay the benefits required by the workers compensation law of any state listed in the policy declarations. II. The employers liability part of the policy provides workers compensation benefits when employees are working in states other than those listed in the policy declarations. A) I only B) II only C) both I and II D) neither I nor II

14) All of the following statements about yacht insurance are true EXCEPT A) Property damage coverage includes damage from insects, weathering, and wear and tear. B) Liability coverage includes the cost of raising, removing, or destroying a sunken or wrecked yacht. C) Coverage can be added for maritime workers covered by the United States Longshoremen and Harbor Workers Compensation Act. D) Medical payments coverage pays for medical expenses because of accidental bodily injury.

15) Which of the following statements about the extra expense coverage form is (are) true? I. It provides coverage for the increased cost that must be paid to continue operations during a period of restoration. II. It provides coverage for lost business income if a key customer or key supplier experiences a loss. A) I only B) II only C) both I and II D) neither I nor II

17) The purpose of adding garagekeepers legal liability coverage to the Garage Coverage Form is to A) eliminate the care, custody, and control exclusion under the policy. B) eliminate the contractual liability exclusion under the policy. C) add workers compensation coverage for persons working in the garage business. D) add comprehensive and collision coverage for vehicles held for sale.

17) Which of the following forms is used to insure buildings that are under construction? A) builders risk coverage form B) floor plan coverage form C) new construction coverage form D) labor and materials coverage form

18) Which of the following statements about federal flood insurance is true? A) It is available even if property has been previously flooded. B) It is unavailable in high-risk flood areas. C) It is available only for residences, not for businesses. D) Waiting periods are not used in the federal flood insurance program.

19) All of the following statements about business income insurance are true EXCEPT A) Business income is defined as total sales that would have been made if the loss had not occurred. B) Payroll is considered a continuing normal operating expense. C) Business income insurance does not cover the physical damage caused by a peril which created the interruption in business. D) The business income coverage form can be purchased with a coinsurance requirement.

19) Bill is attempting to determine how much life insurance to purchase. He has two dependent children and his wife does not work outside of the home. An advisor suggested that Bill should consider Social Security benefits when doing his life insurance planning. One concern in this regard is the period after Social Security benefits to a widow terminate until they resume again. This period is called the A) blackout period. B) dependency period. C) emergency period. D) readjustment period.

19) The basic purpose of FAIR plans is to provide A) property insurance to persons who cannot obtain it in normal markets. B) automobile insurance to persons who cannot obtain it in normal markets. C) health insurance to persons who cannot afford it in normal markets. D) workers compensation insurance to employers who do business in several states.

19) Tracy is a trust officer at a bank. One of her responsibilities is to manage funds that have been set aside for the benefit of minor children. What type of bond guarantees that Tracy will faithfully execute her required duties in this capacity? A) fiduciary bond B) public official bond C) court bond D) performance bond

19) Which of the following statements is (are) true concerning the self-insured retention (SIR) under a commercial umbrella liability policy? I. The SIR applies to claims covered by the umbrella policy but not by any underlying insurance. II. The SIR only applies to those claims for which the underlying policy has paid first, and the umbrella policy is paying on an excess basis. A) I only B) II only C) Both I and II D) Neither I nor II

21) A dividend option that allows the policyowner to purchase 1-year term insurance is referred to as the A) fifth dividend option. B) policy loan dividend option. C) paid-up additions dividend option. D) family protection dividend option.

21) Reimbursement for spoilage of frozen food caused by failure of a refrigeration unit at a frozen foods processor can be covered under A) equipment breakdown insurance. B) extra expense insurance. C) builders risk insurance. D) inland marine insurance.

22) Appliance World sells small appliances. The store purchased an ISO crime coverage policy. Last night, someone used a crowbar to pry open a locked door, leaving marks of forced entry. The thief took a number of appliances. The loss that Appliance World suffered would be called A) burglary. B) shoplifting. C) larceny. D) robbery.

24) All of the following statements about the interest settlement option are true EXCEPT A) The minimum guaranteed interest rate is usually equal to the prime rate. B) The interest can be paid monthly, quarterly, semiannually, or annually. C) The beneficiary may be allowed to withdraw part or all of the proceeds. D) The beneficiary may be allowed to change to another settlement option.

27) All of the following are considered to be instrumentalities of transportation and communication for purposes of inland marine insurance EXCEPT A) trains. B) tunnels. C) transmission lines. D) television towers.

29) HRC Company purchased an unendorsed ISO Commercial General Liability (CGL) policy. All of the following claims would be covered under the CGL policy EXCEPT A) workers compensation liability. B) property damage liability. C) personal and advertising injury liability. D) bodily injury liability.

30) Carolyn is considering the purchase of a large (60-foot) boat. She called her insurance agent to see if she needs a separate policy for the boat. The agent said that a special category of insurance policies was designed to insure large watercrafts. These policies are called A) yacht insurance policies. B) flood insurance policies. C) floater policies. D) Dwelling Property 3 (special form) policies.

30) State X hired Build-Right Construction to build a bridge. State X required that construction be completed within 2 years after the contract was signed. Les Johnson is the president of Build-Right. State X required that Build-Right's promise to perform be guaranteed by a third party. Build-Right purchased a performance bond from Rock Solid Indemnity. The bond requires Rock Solid to be responsible if Build-Right does not have the project completed on time. In this scenario, which party is the obligee? A) State X B) Build-Right Construction C) Les Johnson D) Rock Solid Indemnity

30) Which of the following statements about life insurance cash values is (are) true? I. Cash values are a result of the level premium method of purchasing life insurance. II. The cash value of a policy must always exceed the policy's legal reserve. A) I only B) II only C) both I and II D) neither I nor II

33) Which of the following statements about endowment insurance policies is (are) true? I. The face amount is paid if the insured dies during the policy period or at the end of the policy period if the insured is still alive. II. The use of endowment insurance has increased in recent years because of its favorable tax treatment. A) I only B) II only C) both I and II D) neither I nor II

34) Insurer A began to provide crime insurance coverage for JKL Company three months ago. Insurer B provided coverage up until the time Insurer A's coverage became effective. Forty-five days after the effective date of Insurer A's coverage, a loss was discovered that occurred while Insurer B was providing coverage. The loss would have been covered under Insurer A's policy had it been in effect the previous period. Which policy provision in the current Insurer A policy would make Insurer A responsible for this loss? A) loss sustained during prior insurance not issued by us B) termination as to any employee C) extended reporting period D) loss sustained form

35) Which of the following statements about accelerated death benefits riders is (are) true? I. Under a terminal illness rider, after a partial payment is made to the insured, there is a reduction in the face amount of insurance, cash value, and premiums. II. Benefits under a long-term care rider are for home health care only. A) I only B) II only C) both I and II D) neither I nor II

36) Inter-Ocean Transfer owns 12 large cargo ships which transport goods. Inter-Ocean Transfer can obtain physical damage insurance on these vessels by purchasing A) hull insurance. B) cargo insurance. C) protection and indemnity insurance. D) freight insurance.

37) All of the following are ISO personal umbrella liability policy exclusions EXCEPT A) liability arising out of uncompensated board service for a nonprofit organization. B) liability arising out of expected or intentional injury. C) liability arising out of business operations. D) liability arising out of operation of watercraft not covered by an underlying policy.

37) All of the following statements describe the flexibility available to the owner of a universal life insurance policy EXCEPT A) Policy loans are permitted on an interest-free basis. B) The frequency of premium payments can be varied. C) The death benefit can be increased with evidence of insurability. D) Premium payments can be any amount provided there is sufficient cash value to keep the policy in force.

37) Which of the following statements concerning directors and officers liability insurance (D&O) is true? I. D&O policies usually cover the personal liability of directors and officers. II. D&O policies exclude coverage for claims brought by employees and by stockholders. A) I only B) II only C) both I and II D) neither I nor II

39) All of the following statements about current assumption whole life insurance are true EXCEPT A) It is a form of participating whole life insurance that pays annual dividends. B) An accumulation account is credited with an interest rate based on present market conditions and company experience. C) Under the low-premium version, the premium is subject to change after an initial guaranteed period. D) Under the high-premium version, the premium may vanish after a period of time.

39) Bruce lied about his health history when he purchased a life insurance policy. He died 3 years after the policy was issued. Which life insurance policy provision will require the life insurer to pay the beneficiary even though Bruce lied on the application? A) incontestable clause B) entire contract clause C) ownership clause D) change-of-plan provision

4) Which of the following statements about the building and personal property coverage form is (are) true? I. A limited amount of coverage is provided for pollutant cleanup and removal at the described premises if the release or discharge of the pollutant results from a covered cause of loss. II. Fire department service charges are specifically excluded because they are a normal cost of doing business. A) I only B) II only C) both I and II D) neither I nor II

40) Which of the following statements about an indeterminate-premium whole life insurance policy is (are) true? I. It permits the insurer to adjust premiums based on anticipated future experience. II. It allows policyholder dividends to be used to lower premiums. A) I only B) II only C) both I and II D) neither I nor II

51) Dave purchased a life insurance policy. The policy is nonparticipating and the cash values are based on the insurer's present mortality, investment, and expense experience. After 2 years, the insurer will recalculate the premium based on the mortality, investment, and expense experience at that time. Dave purchased A) current assumption whole life. B) variable life insurance. C) universal life insurance. D) variable universal life insurance.

54) Which statement is true concerning the economic problem of premature death in the United States? I. The economic impact of premature death of the breadwinner varies for different types of families. II. Increased life expectancy has increased the economic problem of premature death over time. A) I only B) II only C) both I and II D) neither I nor II

6) Which of the following statements about the eligibility requirements for insuring mobile homes by endorsing a homeowners policy is (are) true? I. The mobile home must be designed for year-round living. II. The mobile home must be located in a fenced area with security guards. A) I only B) II only C) both I and II D) neither I nor II

7) Which of the following losses would be covered under a Commercial General Liability Policy that has no endorsements? I. The named insured rented a building and an employee of the named insured negligently started a fire at the rented building. II. The cost to recall defective products A) I only B) II only C) both I and II D) neither I nor II

9) In addition to the named insured, all of the following are insureds under the Commercial General Liability Policy EXCEPT A) suppliers of products to the named insured's business. B) the insured's employees while acting within the scope of their employment. C) the manager of the insured's real estate. D) partners of the named insured.

24) The personal umbrella policy covers personal injury. All of the following are considered personal injury EXCEPT A) invasion of privacy. B) property damage. C) defamation of character. D) slander.

10) Which of the following is (are) covered under a claims-made policy? I. Claims arising out of occurrences which take place during the policy period, regardless of when the claim is made II. Claims first reported during the policy period, provided the event occurred after any retroactive date stated in the policy A) I only B) II only C) both I and II D) neither I nor II

13) All of the following statements about the boatowners package policy are true EXCEPT A) Physical damage coverage for the boat is usually written to cover all losses except those losses specifically excluded. B) Liability coverage is provided for bodily injury only. C) Some policies provide optional uninsured boaters coverage. D) Medical payments coverage for water-skiers is available under the policy.

15) Julian, age 45, would like to determine how much life insurance to purchase using the human life value approach. He assumes his average annual earnings over the next 20 years will be $40,000. Of this amount, $20,000 is available annually for the support of his family. Julian will generate this income for 20 more years and he believes that 5 percent is the appropriate interest (discount) rate. The present value of one dollar payable for 20 years at a discount rate of 5 percent is $12.46. What is Julian's human life value? A) $184,600 B) $249,200 C) $360,800 D) $400,000

18) Which of the following statements about the condominium commercial-unit owners coverage form is (are) true? I. It provides coverage for the unit owner's proportionate financial interest in the condominium building. II. It provides coverage for the business personal property of the unit owner. A) I only B) II only C) both I and II D) neither I nor II

22) All of the following are nonforfeiture options found in cash value life insurance policies EXCEPT A) cash value. B) reduction of premiums. C) reduced paid-up insurance. D) extended term insurance.

29) State X hired Build-Right Construction to build a bridge. State X required that construction be completed within 2 years after the contract was signed. Les Johnson is the president of Build-Right. State X required that Build-Right's promise to perform be guaranteed by a third party. Build-Right purchased a performance bond from Rock Solid Indemnity. The bond requires Rock Solid to be responsible if Build-Right does not have the project completed on time. In this scenario, which party is the principal? A) State X B) Build-Right Construction C) Les Johnson D) Rock Solid Indemnity

38) Cal purchased a whole life policy 6 years ago. The policy requires annual premium payments. Cal forgot to pay the premium that was due 2 weeks ago. He wonders if his life insurance is still in force. Which life insurance policy provision is designed to keep the policy in force for a short time even if the premium payment is late? A) waiting period B) grace period C) guaranteed purchase option D) reinstatement clause

41) A whole life insurance policy in which premiums are reduced for an initial period (e.g. 3 years) and are higher thereafter is an example of a A) level-term policy. B) modified life policy. C) limited-payment whole life policy. D) variable life policy.

45) Which of the following statements about industrial life insurance (also called home service life insurance) policies is true? A) Most policies have a face value exceeding $100,000. B) Most industrial life insurance policies are cash value coverage. C) Industrial life insurance is group term insurance coverage marketed to employers. D) This popular product accounts for over 40 percent of the life insurance sold today.

46) Malcolm would like to purchase life insurance. He is concerned that he might need additional life insurance in the future and that he might be uninsurable at that time. What provision can Malcolm add to his life insurance policy that will permit him to purchase additional life insurance at specified times in the future without providing evidence of insurability? A) double indemnity rider B) guaranteed purchase option C) waiver-of-premium provision D) accelerated death benefits rider

5) Which of the following coverages are provided by an unendorsed ISO Dwelling Program form? I. Theft of personal property II. Named-perils coverage for personal property A) I only B) II only C) both I and II D) neither I nor II

50) Which of the following statements is/are true regarding exclusions in life insurance contracts? I. Life insurance policies are remarkably restrictive, including numerous exclusions. II. A life insurer may exclude death attributable to certain activities or hobbies disclosed on the application. A) I only B) II only C) both I and II D) neither I nor II

53) Which of the following statements about variable universal life insurance is (are) true? I Variable universal life insurance has fixed premium payments. II. Variable universal life insurance allows the policyowner to decide where the premiums are invested. A) I only B) II only C) both I and II D) neither I nor II

1) Which of the following statements about the ownership of a life insurance policy is (are) true? I. Under the ownership clause, the policyowner and beneficiary equally share all contractual rights in the policy while the insured is living. II. The policyowner can designate a new owner by filing an appropriate form with the insurance company. A) I only B) II only C) both I and II D) neither I nor II

10) An armed robber pulled a gun on a teller at the Fourth National Bank. He made off with over $10,000 in cash. Which insuring agreement in a financial institution bond is designed to cover such losses? A) Insuring Agreement A-Fidelity B) Insuring Agreement B-On Premises C) Insuring Agreement C-In Transit D) Insuring Agreement D-Forgery or Alteration

11) Which of the following statements about the capital retention approach for determining life insurance needs is (are) true? I. It assumes that life insurance proceeds will be liquidated to provide income to survivors. II. It requires the preparation of a personal balance sheet. A) I only B) II only C) both I and II D) neither I nor II

11) Which of the following statements is (are) true concerning the value reporting form? I. Failure to report accurately suspends coverage. II. If the insured underreports the property values at a location, and a loss occurs at that location, recovery is limited to the proportion that the last value reported bears to the value that should have been reported. A) I only B) II only C) both I and II D) neither I nor II

12) Reasons why an insured might add a scheduled personal property endorsement to a homeowners policy include which of the following? I. To lower the premium by limiting the perils covered II. To obtain higher limits for certain personal property A) I only B) II only C) both I and II D) neither I nor II

12) Which of the following types of forms is used to insure fluctuations in business personal property? A) accounts receivable coverage form B) a value reporting form C) difference in conditions insurance D) inland marine marine insurance

15) Jack, owner of Jack's Bar and Grill, was robbed while attempting to deposit receipts at the bank's night depository. Jack had purchased an ISO commercial crime coverage form. This loss would be covered under which insuring agreement? A) Inside the Premises-Theft of Money and Securities B) Outside the Premises C) Money Orders and Counterfeit Currency D) Inside the Premises-Robbery or Safe Burglary of Other Property

17) Sarah is using the needs approach to determine how much life insurance to buy. Her cash needs are $30,000, her income needs are $140,000,and special needs are $100,000. Sarah has the following assets: $20,000 in bank accounts, $30,000 in retirement plans, and $40,000 in investment accounts. Sarah owns no individual life insurance. She is covered by a $50,000 group life insurance policy through her employer. Based on this information, how much additional life insurance should Sarah purchase? A) $80,000 B) $130,000 C) $150,000 D) $160,000

19) Which of the following statements about dividend options is (are) true? I. The interest on dividends left to accumulate with the insurer is not considered to be taxable income. II. Paid-up additions are additional units of whole life insurance. A) I only B) II only C) both I and II D) neither I nor II

2) In the ISO Commercial Crime Coverage form, robbery is defined as the A) unlawful taking of property to the deprivation of the insured. B) unlawful taking of property from the case and custody of a person by someone who has caused or threatens to cause bodily harm or who has committed an unlawful act witnessed by that person. C) unlawful taking of money or securities through the alteration of a negotiable instrument. D) unlawful taking of property from inside the premises by someone who unlawfully enters or leaves the premises as evidenced by marks of forcible entry or exit.

2) Liability arising out of work performed by independent contractors is referred to as A) contractual liability. B) contingent liability. C) care, custody, and control liability. D) customer's liability.

2) Perils insured under Dwelling Property 1 (basic form) include which of the following? I. Earthquake II. Smoke A) I only B) II only C) both I and II D) neither I nor II

2) Which of the following items is (are) contained in the common policy conditions page of the commercial package policy? I. The policy period. II. A provision describing the insurer's right to audit the insured's books and records. A) I only B) II only C) both I and II D) neither I nor II

20) When using the needs approach, several "special needs" should be considered. One special need is money to cover unexpected events, such as major car repairs, dental bills, or home repairs. Money set aside for this purpose is called a(n) A) estate clearance fund. B) emergency fund. C) readjustment period fund. D) mortgage redemption fund.

20) Which of the following statements about the typical commercial umbrella policy is (are) true? I. The policy is designed to cover only those loss exposures specifically excluded by the underlying insurance contracts. II. The policy is excess over the required underlying coverages. A) I only B) II only C) both I and II D) neither I nor II

20) Which of the following statements concerning FAIR plans is (are) true? I. All property is eligible for coverage regardless of physical condition. II. Losses and expenses are shared by insurers who participate in a plan. A) I only B) II only C) both I and II D) neither I nor II

21) Jan purchased a boat owners package policy. While using his boat, he negligently hit a pier. A person standing on the pier fell and was severely injured. Which of the boat owners package policy coverages will respond to a lawsuit filed as a result of this negligent act? A) physical damage coverage B) liability coverage C) medical expense coverage D) uninsured boaters coverage

23) Which of the following statements describes a Difference in Conditions (DIC) Policy? A) It is a type of commercial umbrella liability policy. B) It is an all-risk policy that covers perils not insured by basic property insurance contracts. C) It is designed to cover indirect losses for which the insured has direct damage coverage. D) It is used to settle disputes when an insured has more than one insurance policy with differing policy provisions.

24) All of the following statements about a surety are true EXCEPT A) A surety theoretically expects no losses to occur. B) The principal is the party who agrees to answer for the debt, default, or obligation of another party. C) The surety has the legal right to recover a loss payment from the defaulting principal. D) There are three parties to a surety bond: the principal, the surety, and the obligee.

24) Which of the following statements about ocean marine insurance coverages is (are) true? I. Hull insurance limits coverage to the breakdown of a ship's machinery and equipment. II. Protection and indemnity insurance provides liability insurance to the ship owner for bodily injury and property damage to third parties. A) I only B) II only C) both I and II D) neither I nor II

25) All of the following are implied warranties in ocean marine insurance EXCEPT A) seaworthiness. B) clear title. C) no deviation from planned course. D) legal purpose.

26) A cashier at Food World Supermarket accepted a phony $100 bill. Which ISO commercial crime coverage is designed to cover such a loss? A) Forgery or Alteration B) Money Orders and Counterfeit Paper Currency C) Inside the Premises-Theft of Money and Securities D) Inside the Premises-Robbery or Safe Burglary of Other Property

26) Which of the following statements about a decreasing term insurance policy is true? A) The face amount of the policy decreases during the policy period, and the premium increases. B) The face amount of the policy decreases during the policy period, but the premium remains level. C) The premium decreases during the policy period, but the face amount remains constant. D) Both the premium and the face amount of the policy decrease gradually over the policy period.

26) Which of the following statements about ocean marine insurance is true? A) The coverage is narrow and excludes perils of the sea. B) Hull insurance includes collision liability covering the ship's owner if the ship collides with another ship. C) Protection and indemnity (P&I) insurance covers the shipper of goods for cargo losses. D) A particular average loss is a loss incurred only if a ship is totally lost or destroyed.

27) Executives of a Fortune 500 firm blocked an acquisition attempt by a larger company. When the stockholders learned they could have made large profits had the acquisition not been blocked, they filed a lawsuit against the executives of the firm. What type of liability insurance protects the executives of the organization against such suits? A) dram shop liability insurance B) directors and officers liability insurance C) employers liability insurance D) employment related practices liability insurance

27) The purchase of term insurance is justified by which of the following circumstances? I. The insured wants to save money through the policy for a specific need. II. The insured has a temporary need for life insurance protection. A) I only B) II only C) both I and II D) neither I nor II

28) ABC Company purchased an ISO Commercial General Liability Policy. The agent who sold ABC the coverage noted that the coverage trigger in this policy was different from the trigger in the previous policy. The new policy covers only those claims which are first reported during the policy period, provided the event occurred after a retroactive date. This type of policy is known as A) extended reporting coverage. B) claims-made coverage. C) accident only coverage. D) occurrence coverage.

28) Al's Electric Service is an electric contracting company in Metro City. The owner of the company, Al Richards, posted a bond guaranteeing that all work performed by his company will comply with local building codes. This bond is an example of a A) fiduciary bond. B) license and permit bond. C) contract bond. D) judicial bond.

29) A firm wishing to insure a single shipment of merchandise sent by a common carrier would purchase a(n) A) annual transit policy. B) trip transit policy. C) bailee's liability policy. D) equipment floater.

29) Martin would like to insure valuable personal property limited in coverage by his homeowners policy. Martin has two options. He can purchase the coverage through a separate personal articles floater policy or he can add an endorsement to his homeowners policy. The endorsement is called the A) extended coverage endorsement. B) scheduled personal property endorsement. C) personal injury endorsement. D) replacement cost endorsement.

3) A customer was injured when a furnace exploded following its faulty installation by a heating and cooling business. For the heating and cooling business, this is an example of A) contingent liability. B) completed operations liability. C) products liability. D) contractual liability.

3) All of the following are perils covered under Dwelling Property 2 (broad form) EXCEPT A) weight of ice, snow, or sleet. B) flood. C) sudden and accidental damage from an artificially generated electrical current. D) freezing of a plumbing or heating system.

3) All of the following information is needed to calculate a person's human life value EXCEPT A) the person's average annual earnings over his or her productive lifetime. B) the person's estimated annual Social Security benefits after retirement. C) the person's cost of self-maintenance. D) the number of years from the person's present age to the expected retirement age.

30) Which of the following statements about the businessowners policy is (are) true? I. It is designed to meet the insurance needs of large manufacturing firms. II. It is a package policy designed to meet the basic property and liability needs of an insured in a single contract. A) I only B) II only C) both I and II D) neither I nor II

31) All of the following statements about ordinary life insurance are true EXCEPT A) Premiums are level throughout the policy period. B) The face amount of the policy is paid if the insured lives to age 65. C) There is a build-up of cash value that can be borrowed by the policyholder. D) It offers the policyholder the flexibility to meet a wide variety of financial objectives.

32) In a surety arrangement, the party who benefits from the bond if the bonded party fails to perform is the A) principal. B) obligee. C) fidelity. D) surety.

32) Which of the following statements about a typical accidental death benefit rider is (are) true? I. Death must occur within 14 days of the covered accident. II. The accidental death must occur prior to some specified age. A) I only B) II only C) both I and II D) neither I nor II

32) Which of the following statements is true concerning the ISO employment-related practices liability form? A) coverage is provided without a co-payment provision B) legal defense costs are included as part of the policy limit C) wrongful termination is excluded from coverage D) liability to employees is excluded from coverage

33) Frank purchased a building in a run-down area of a city. When Frank was unable to obtain property insurance in the voluntary insurance market, an agent suggested that he contact a state pool created in the 1960s that makes property insurance available in riot-prone areas. The state pool the agent referred to is called a(n) A) unsatisfied judgment fund. B) FAIR plan. C) guaranty fund plan. D) assigned risk plan.

36) The practice of buying the life insurance policy of a terminally ill insured at a discount is referred to as a A) collateral assignment. B) viatical settlement. C) catastrophic illness conversion. D) grace period transaction.

36) Which of the following statements about universal life insurance is (are) true? I. The interest rate credited to the cash value at the time the policy is issued remains fixed for the life of the policy. II. A monthly deduction is made from the policy's cash value for the cost of insurance protection. A) I only B) II only C) both I and II D) neither I nor II

36) Which of the following statements is (are) true with respect to the treatment of legal defense costs under the ISO Commercial General Liability policy? I. Legal defense costs usually are counted against the policy limit. II. Once the insurer has paid out the applicable limit of liability, the insurer's duty to defend ends. A) I only B) II only C) both I and II D) neither I nor II

37) Al was named the beneficiary in his mother's life insurance policy. His mother died during the contestable period. The insurer denied payment, citing a material misrepresentation on the application. Al believes the insurer should pay the claim because the misrepresentation occurred on the application, and the application is not part of the formal agreement between the insurer and the policyholder. Which provision protects the insurer by making the application part of the formal agreement between the parties to the contract? A) incontestable clause B) entire contract clause C) ownership clause D) reinstatement clause

37) An Inter-Ocean Transfer cargo ship was forced to jettison some cargo in heavy seas. The various interests in the voyage at the time the property was jettisoned were: Value of Ship=$2.0 Million, Value of Lumber and Wood Chips=$1.0 Million, Value of Iron Ore=$2.0 Million. If $400,000 worth of iron ore was jettisoned, for how much of this amount would Inter-Ocean Transfer be responsible under general average? A) nothing B) $160,000 C) $200,000 D) $400,000

38) Which of the following statements about a variable universal life insurance policy is (are) true? I. There is a minimum guaranteed interest rate for the cash value. II. The policyowner has a variety of investment options for the investment of premiums. A) I only B) II only C) both I and II D) neither I nor II

38) Which of the following statements is (are) true with regard to an unendorsed ISO Dwelling Form? I. Each form provides $100,000 in personal liability coverage. II. The Dwelling 3 form provides broader property coverage than the Dwelling 1 form. A) I only B) II only C) both I and II D) neither I nor II

4) Amy purchased a life insurance policy with the intent of committing suicide to pay all the debts that were burdening her family. If she commits suicide 9 months after the policy is purchased, and the insurer is able to prove that her death was a suicide, how much will be paid by the insurance company? A) nothing, because the policy is void B) the premiums paid for the policy C) the policy's cash value D) the face value of the policy

4) To calculate a human life value, it is necessary to deduct certain costs from a person's average annual earnings. These costs include A) funeral costs. B) income taxes. C) investment income. D) pension benefits after retirement.

4) Which of the following statements is (are) true with regard to the ISO commercial crime coverage forms? I. The discovery version only covers losses which occur during the policy period. II. The loss-sustained version covers losses which occur during the policy period and the loss is discovered during the policy period or within one year after the policy expires. A) I only B) II only C) both I and II D) neither I nor II

40) A navigation error caused a cargo ship to run aground on a reef. The ship, valued at $1.5 million, was carrying $1.5 million in grain and $1.5 in electronic devices. The ship sustained $150,000 in physical damage. If this loss is a "particular average" loss, how will the loss be settled? A) the owners of each of the three interests are responsible for $50,000 B) the owner of the ship is responsible for the entire $150,000 loss C) the two cargo owners are each responsible for $75,000 of the loss D) the owner of the ship is responsible for the first $100,000 of the loss, and the two cargo owners are each responsible for $25,000 of the loss

41) Becky is considering the purchase of a whole life policy on her own life. She is concerned that if she becomes disabled, paying premiums will become a burden. Which provision can Becky attach to her life insurance policy to address this concern? A) guaranteed purchase option B) waiver-of-premium provision C) accidental death benefit rider D) accelerated death benefits rider

43) Which of the following statements about second-to-die life insurance is (are) true? I. The insurance is a form of endowment coverage. II. The premium is lower than the combined cost of purchasing a life insurance policy on each insured. A) I only B) II only C) both I and II D) neither I nor II

44) Lionel purchased a $200,000 ordinary life insurance policy when he was 25 years old and had significant life insurance needs. Now Lionel is 50. His mortgage is almost paid-off and his children have left home and are financially independent. Lionel no longer wants to pay premiums, but he would like to have some permanent life insurance in force. Which nonforfeiture option could Lionel employ to meet these objectives? A) cash value B) reduced paid-up insurance C) paid-up additions D) extended term insurance

46) Michael wants to make sure that life insurance proceeds are available to pay his outstanding mortgage balance if he dies. He purchased a type of life insurance in which the amount of coverage gradually declines, just as his outstanding mortgage balance gradually declines. This type of life insurance is called A) modified life insurance. B) decreasing term insurance. C) re-entry term insurance. D) current assumption whole life.

1) Which of the following types of families is likely to have the least need for a large amount of life insurance? A) a blended family B) a traditional family C) a single person family D) a sandwiched family

48) Which of the following statements is (are) true concerning the automatic premium loan provision? I. Unlike other policy loans, interest is not charged on automatic premium loans. II. The basic purpose of an automatic premium loan is to prevent a life insurance policy from lapsing. A) I only B) II only C) both I and II D) neither I nor II

55) Which of the following statements is true regarding the results of studies by LIMRA and New York Life Insurance Company on the adequacy of life insurance owned by households in the United States? I. The average household is adequately insured against the risk of premature death. II. The average household is significantly underinsured against the risk of premature death. A) I only B) II only C) both I and II D) neither I nor II

6) Which of the following statements about the provisions of the building and personal property coverage form is (are) true? I. A separate deductible must be satisfied for each building damaged in the same occurrence. II. Under the replacement cost option, there is no deduction for depreciation. A) I only B) II only C) both I and II D) neither I nor II

7) Bert purchased a life insurance policy 4 years ago. He inadvertently stated that he was 1 year younger than his actual age. If Bert dies today, how much will the insurance company pay? A) nothing B) less than the policy face value C) the policy face value D) more than the policy face value

8) What is the length of the readjustment period which is considered when the needs approach is used to determine the amount of life insurance to own? A) 3 to 6 months B) 1 to 2 years C) until the youngest child reaches age 18 D) until the surviving spouse reaches age 65

9) Under the needs approach, when is the dependency period of a surviving spouse assumed to end? A) 1 or 2 years after the breadwinner's death B) when the youngest child reaches age 18 C) when the surviving spouse reaches age 65 D) when the surviving spouse dies

10) Which of the following statements about the causes-of-loss special form of the ISO commercial package policy is (are) true? I. The causes-of-loss special form insures against risk of direct physical loss. II. The causes-of-loss special form excludes loss caused by earthquake. A) I only B) II only C) both I and II D) neither I nor II

10) Which of the following statements about various coverages under a Personal Articles Floater is (are) true? I. Each item of jewelry is described and is insured for a specified amount. II. Stamp and coin collections can be insured on a blanket basis. A) I only B) II only C) both I and II D) neither I nor II

14) The building and personal property coverage form provides several optional coverages. Under one optional coverage, no deduction is taken for depreciation when settling a covered loss. This optional coverage is called A) extra expense. B) agreed value. C) replacement cost. D) inflation guard.

17) In the context of a surety agreement, the party who agrees to answer for the debt, default, or obligation of another party is called the A) principal. B) obligee. C) surety. D) fidelity.

18) All of the following statements about aviation insurance are true EXCEPT A) Physical damage coverage can be written on an "all-risks" basis. B) Liability coverage also applies to bodily injury arising out of the premises where the aircraft is stored. C) Liability coverage applies to liability assumed by contract. D) Aviation insurance is a highly-specialized market with relatively few insurers.

22) All of the following statements about liability coverage under the Businessowners Policy are true EXCEPT A) Liability arising out of personal injury is covered as part of the insuring agreement. B) Medical payments coverage is provided. C) Employees acting within the scope of their employment are excluded from coverage. D) Coverage is included for the legal costs of defending the insured.

22) One inland marine coverage form is the accounts receivable coverage form. In which of the following cases would the purchaser of this form be indemnified through the coverage? A) If the purchaser cannot pay amounts owed because the purchaser has become insolvent. B) If the purchaser cannot pay amounts owed because the purchaser has suffered an insured physical damage loss. C) If the purchaser cannot collect accounts receivable because of the destruction of records. D) If the purchaser cannot collect accounts receivable because the purchaser extended credit to a poor credit risks.

25) Graham is a cashier at a convenience store. A customer pulled a gun on him, and said that he would shoot Graham unless he gave him all the money in the cash register. This crime, which is covered under the ISO commercial crime coverage form, is called A) extortion. B) murder. C) robbery. D) burglary.

26) A-1 Electrical Service is an electrical contractor that employs 14 electricians. A-1 faces many loss exposures. One general liability exposure arises out of faulty work that A-1 electricians may perform for customers at their homes or businesses. This liability exposure is known as A) premises and operations liability. B) products liability. C) completed operations liability. D) contingent liability.

30) Ted Thomas is risk manager of XYZ Company. He is concerned his company might be sued by current or former employees alleging wrongful termination, failure to promote, racial or gender discrimination, or sexual harassment. What type of liability insurance can Ted purchase to cover these types of claims? A) workers compensation insurance B) employer liability insurance C) employment-related practices liability insurance D) directors and officers liability insurance

34) The cost-of-living rider typically bases increases in the policy face value on changes in the A) gross national product. B) interest rate for short-term U.S. government securities. C) consumer price index. D) national wage level.

35) One type of commercial property insurance excludes perils which are covered by the basic coverages. Some businesses buy this coverage to fill coverage gaps, including flood and earthquake, and to cover property in other countries. This type of insurance is called A) protection and indemnity insurance. B) building and personal property coverage form. C) difference in conditions insurance. D) builders risk coverage form.

35) Tina purchased a personal umbrella policy with a $1 million limit. Her insurer required her to carry liability limits of 250/500/50 under her auto insurance policy. The personal umbrella policy was written with a $1,000 self-insured retention. Tina was responsible for an auto accident in which the other driver was severely injured. The other driver's bodily injuries were $400,000 and the property damage was $20,000. How much will the insurer pay under Tina's umbrella policy? A) nothing B) $149,000 C) $150,000 D) $170,000

9) Which of the following statements about the Personal Articles Floater is (are) true? I. It is designed to cover several classes of personal property. II. Coverage is written on an "open perils" (all-risks) basis. A) I only B) II only C) both I and II D) neither I nor II

1) Which of the following statements about Dwelling Property 1 (basic form) is true? A) Coverage on the dwelling is written on a replacement cost basis. B) The full amount of personal property coverage applies to property away from the insured premises. C) Coverage for fair rental value of the dwelling is subject to both an overall maximum and a monthly maximum. D) "All-risk" coverage is automatically provided for both the dwelling and personal property.

11) A Pony Express Armored Car was transporting bank receipts from six branch banks to the main bank. A group of robbers staged a daring robbery. They forced the armored car off the road, shot two guards, and took over $120,000 in cash. Which insuring agreement in a financial institution bond would cover the stolen money in this case? A) Insuring Agreement A-Fidelity B) Insuring Agreement B-On Premises C) Insuring Agreement C-In Transit D) Insuring Agreement D-Forgery or Alteration

11) Which of the following statements about types of property covered under the Personal Articles Floater is true? A) Golfer's equipment is covered only in the United States. B) Furs are covered on a blanket basis without the necessity to schedule individual items. C) A higher premium must be paid to insure musical instruments if they are played for pay. D) Coverage for silverware and goldware is not available under the Personal Articles Floater.

13) Which of the following statements about the business income coverage form is true? A) Business income is defined as gross earnings before taxes. B) Payroll is excluded unless it is specifically added. C) The form covers loss of business income and extra expenses incurred during restoration. D) The form can be used by a manufacturing operation only.

14) Which of the following statements about life insurance policy loans is true? A) Loans are only permitted for specific reasons listed in the policy. B) They are forgiven if the insured dies before the loans are repaid. C) The policyowner must pay interest on a life insurance policy loan. D) They must be repaid on the basis of a schedule determined at the time of the loan.

15) All of the following statements about the automatic premium loan provision in a life insurance policy are true EXCEPT A) Its purpose is to prevent a policy from lapsing because of nonpayment of premium. B) The premium loan requires interest to be paid at a stated contractual rate. C) If the provision is used, the insured must show evidence of insurability to resume regular premium payments. D) The policy proceeds will be reduced if the premium loans are not repaid by the time of death.

16) What major feature distinguishes a participating policy from a nonparticipating policy? A) the availability of a waiver-of-premium provision B) the existence of settlement options C) the payment of dividends D) the method by which beneficiaries can be named

16) Which of the following statements about the liability coverage of the Business Auto Coverage Form is (are) true? I. The insurer agrees to defend the insured and pay all legal defense costs arising out of an accident involving a covered auto. II. The insured is covered for property damage and bodily injury arising out of the use of a covered auto. A) I only B) II only C) both I and II D) neither I nor II

17) Sources of life insurance dividends include which of the following? I. Excess interest earned on the assets necessary to maintain legal reserves II. Favorable mortality experience A) I only B) II only C) both I and II D) neither I nor II

18) Which of the following statements about surety bonds is (are) true? I. The surety has a legal right to recover a loss payment it made on behalf of a defaulting principal. II. The obligee is the party who benefits from the bond if the principal fails to perform. A) I only B) II only C) both I and II D) neither I nor II

2) The human life value is defined as the A) present value of a deceased breadwinner's future gross income. B) future value of a deceased breadwinner's past earnings. C) present value of the family's share of a deceased breadwinner's future earnings. D) future value of the family's share of a deceased breadwinner's future earnings.

2) Which of the following statements about the entire contract clause is true? A) It allows the insurer to change the policy terms without the insured's consent. B) It specifies that all statements in the application are considered warranties. C) It specifies that the life insurance policy and the attached application constitute the complete agreement between the parties. D) It prevents the insurance company from contesting a policy after it has been in force for two years during the lifetime of the insured.

20) Advantages of selecting the paid-up additions dividend option in a life insurance policy include which of the following? I. Evidence of insurability is not required to purchase additional insurance. II. The additions are purchased at net rates without loading for expenses. A) I only B) II only C) both I and II D) neither I nor II

20) Which of the following statements about the equipment breakdown protection coverage form is (are) true? I. The covered cause of loss is a breakdown of covered equipment, including boilers, machinery, and electrical and mechanical equipment. II. It provides coverage for the reasonable cost of expediting permanent repair or replacement of damaged property. A) I only B) II only C) both I and II D) neither I nor II

20) Which of the following statements about various types of surety bonds is true? A) A judicial bond guarantees that a public official will faithfully perform his or her duties for the protection of the public. B) A payment bond guarantees that the bonded person will appear in court. C) A license and permit bond guarantees that the bonded party will comply with all the laws and regulations governing his or her activities. D) A bid bond guarantees that the principal will complete a construction project on time.

21) Which of the following losses is generally covered under a commercial umbrella policy? A) liability arising out of workers compensation laws B) liability arising out of pollution C) liability arising out of use of a business auto. D) the cost of recalling defective products

23) Which of the following statements about nonforfeiture options found in life insurance policies is true? A) Under the reduced paid-up option, the paid-up policy is term insurance. B) Under the extended term option, the amount of term insurance is less than the face value of the surrendered cash value policy. C) Under the reduced paid-up option, no additional premiums must be paid. D) Unless the policyowner has selected another nonforfeiture option, the cash value option goes into effect automatically.

25) Which of the following statements about errors and omissions insurance is (are) true? I. It is purchased by professionals to protect against claims arising for negligent acts, errors, and omissions. II. It is designed to meet the needs of stock brokers, attorneys, engineers, architects and other professionals who give advice to clients. A) I only B) II only C) both I and II D) neither I nor II

25) Which of the following statements about life insurance settlement options is true? A) Under the fixed period option, the beneficiary normally has the right to make partial withdrawals in case of emergency. B) Under the fixed period option, any remaining proceeds revert to the insurer if the beneficiary dies before the end of the fixed period. C) Under the fixed amount option, the beneficiary can be given the right to increase or decrease the fixed amount. D) Under the fixed amount option, any interest credited in excess of the guaranteed rate increases the amount of each periodic payment.

27) Disadvantages of life insurance settlement options include which of the following? I. Higher yields can often be obtained elsewhere. II. Life income options have limited usefulness at younger ages. A) I only B) II only C) both I and II D) neither I nor II

28) All of the following statements about inland marine forms are true EXCEPT A) A mail coverage form covers securities in transit by first-class mail, registered or certified mail, or express mail. B) A commercial articles coverage form is used to insure photographic equipment and musical instruments. C) A jewelers block coverage form is used by individuals to insure jewelry limited in coverage by the homeowners form. D) The signs coverage form covers neon, mechanical, and electrical signs.

28) Steve and Mary are art collectors. They own lithographs, etchings, and vintage photographs valued at over $100,000. Steve and Mary display their art collection at their home. They can insure this valuable personal property through a A) title insurance policy. B) dwelling property form. C) personal articles floater form. D) personal umbrella policy.

29) The net amount at risk for an ordinary life insurance policy is the difference between the A) present value of future benefits and the present value of future premiums. B) face amount of the policy and the total premiums that have been paid. C) face amount of the policy and the legal reserve. D) annual premium and the annual policyholder dividend.

31) Which of the following statements about the guaranteed purchase option is true? A) It is usually available with term insurance policies. B) The premium when an option is exercised is based on the insured's age at the time the original policy was issued. C) The option permits the insured to purchase specified amounts of life insurance in the future even if the insured has become uninsurable. D) If a guaranteed purchase option expires without being used, it can simply be exercised at a later date.

32) Renee is risk manager of XYZ Company. She purchased a Commercial Package Policy for her company and added one of the optional coverages. This option suspends the coinsurance clause and substitutes a new agreement covering any loss in the same proportion that the limit of insurance purchased bears to a value specified in the declarations. This provision is known as A) waiver of inventory coverage. B) inflation guard coverage. C) agreed value coverage. D) replacement cost coverage.

33) Frank's property insurance requires periodic reporting of inventory values. Frank believes he can save money by under-reporting the inventory. Last period, Frank reported $200,000 when the value was really $400,000. Shortly after filing the report, when the value was $500,000, the inventory was destroyed. How much will Frank's insurer pay, assuming no deductible? A) nothing, as underreporting voids coverage B) $200,000 C) $250,000 D) $400,000

33) Jenkins Company purchased a commercial umbrella policy with a $10 million limit and a $100,000 self-insured retention. The insurer required Jenkins Company to carry a $1 million per-occurrence limit on its general liability policy and a $1 million per-occurrence limit on its business auto policy. Jenkins purchased these required limits. A Jenkins driver was negligent while operating a company vehicle and killed another motorist. The court ruled that Jenkins must pay $5 million. How much of this amount will be paid by the umbrella policy? A) $1.0 million B) $3.9 million C) $4.0 million D) $5.0 million

33) Reasons for NOT purchasing an accidental death benefit rider include which of the following? I. Most people die as a result of a disease rather than from an accident. II. The economic value of a human life is not increased if death occurs because of an accident. A) I only B) II only C) both I and II D) neither I nor II

35) All of the following statements about universal life insurance are true EXCEPT A) Interest is credited to the policy's cash value each month. B) Any withdrawal of a policy's cash value reduces the amount of the death benefit. C) Interest credited to a policy's cash value is taxable for the policyowner in the year credited. D) The policyowner can add to a policy's cash value at any time subject to policy guidelines.

35) Holiday DeCor Company is insured by a commercial general liability policy (CGL). Holiday DeCor rented a storage facility for one month to store some excess inventory. While visiting the storage facility, a Holiday DeCor employee discarded a cigarette. The resulting fire severely damaged the storage facility. Which statement is true regarding coverage of this damage under the CGL? A) There is no coverage as the damage occurred at a rented premises. B) There is no coverage because property damage liability is excluded. C) The damage is covered under the fire legal liability coverage. D) There is no coverage because an employee of Holiday DeCor caused the loss.

36) Tina purchased a personal umbrella policy with a $1 million limit and a $1,000 self-insured retention. Her insurer required her to carry a $300,000 liability limit under her homeowners policy. Tina was held responsible for slandering a public official. The public official won a $100,000 judgment against Tina. The insurer that wrote Tina's homeowners policy denied coverage. How much will the insurer pay under Tina's personal umbrella policy? A) nothing B) $49,000 C) $99,000 D) $100,000

42) Which of the following statements about policies sold to preferred risks is (are) true? I. Preferred risks are people whose mortality experience (deaths per thousand at a given age) is expected to be more favorable than average. II. Insurers require preferred risks to purchase at least a minimum amount of life insurance, such as $250,000. A) I only B) II only C) both I and II D) neither I nor II

45) Jane purchased a life insurance policy on her own life and named her daughter, Cheryl, the beneficiary. Cheryl has a history of not managing money well. Jane wants the death benefit paid to Cheryl in monthly installments over 20 years. Which settlement option should Jane pre-select for Cheryl? A) lump sum B) fixed amount C) fixed period D) interest option

47) Carl would like to purchase life insurance. He would also like to invest in a mutual fund. An agent told Carl about a form of life insurance in which Carl could select where the saving component is invested. This form of life insurance has fixed premiums and the cash value is not guaranteed. This type of life insurance is called A) universal life insurance. B) current assumption whole life. C) variable life insurance. D) indeterminate-premium whole life.

48) Tamara purchased a term insurance policy when she had high life insurance needs and limited income. Now Tamara can afford whole life insurance. What term life insurance provision will permit Tamara to switch her term insurance to whole life insurance without having to show that she is still insurable? A) renewal provision B) tax-free exchange provision C) conversion provision D) free look provision

49) Life insurance policy proceeds can be paid to a trustee upon the death of the insured. All of the following statements about having the proceeds paid to a trustee are true EXCEPT A) Use of a trustee provides flexibility with regard to the timing and amount of the payments. B) Trustees are often used when the beneficiary is a minor child or an adult with diminished mental capacity. C) The trustee is not permitted to accept a fee for rendering services. D) The trustee does not guarantee investment results.

5) A burglar took some blank checks during a break-in at XYZ Company. He was careful to make sure that the theft would be difficult to discover. Three months later, he wrote himself a check for $20,000 and signed the company treasurer's name on the check. After the check was cashed, the loss was discovered. Which commercial crime coverage form would cover this loss? A) Inside the Premises-Theft of Money and Securities B) Money Orders or Counterfeit Currency C) Forgery or Alteration D) Outside the Premises

5) Which of the following exposures is covered under a Commercial General Liability Policy with no endorsements? A) liability arising out of seepage of pollutants B) employment-related practices liability C) personal injury liability D) aircraft liability

50) Ann is considering the purchase of a life insurance policy with these characteristics: flexible premium payments, the insurance and savings components are separate, the interest rate credited to the savings is tied to a market interest rate but a minimum rate is guaranteed, and a monthly administrative fee is charged. Ann is considering buying A) whole life insurance. B) variable life insurance. C) universal life insurance. D) current assumption whole life.

52) Which of the following $100,000 whole life insurance policies, issued by the same company to a man age 32, would require the highest first-year premium? A) continuous premium (ordinary) life B) whole life paid-up at 65 C) 10-payment whole life D) 20-payment whole life

6) All of the following are ISO commercial crime coverage exclusions EXCEPT A) dishonest acts committed by a named insured or partner of the named insured. B) indirect loss resulting from covered losses. C) theft committed by an employee of the named insured. D) losses from unauthorized trading in stocks and bonds.

7) One of the additional coverages under the building and personal property coverage form is "increased cost of construction." The coverage is payable if A) a skilled artisan is needed to duplicate the construction of the damaged property. B) a labor strike or materials shortage increases construction costs. C) an ordinance or building code increases the cost of construction. D) the materials necessary to rebuild the damaged structure are more expensive than ordinary building materials.

7) The purpose of an estate clearance fund is to pay all of the following EXCEPT A) burial expenses. B) estate administration expenses. C) education costs. D) installment debts.

7) Which of the following statements about mobile home insurance is (are) true? I. Coverage for the mobile home may be written on either a replacement cost basis or an actual cash value basis, depending on how much the mobile home has depreciated. II. An additional coverage pays, up to a specified dollar limit, for the cost of transporting the mobile home to a safe place when it is endangered by a covered peril. A) I only B) II only C) both I and II D) neither I nor II

8) All of the following are characteristics of most inland marine floater policies EXCEPT A) The insurance can be tailored to the specific type of personal property insured. B) The insured can select higher limits of coverage than are available under an unendorsed homeowners policy. C) Coverage is normally written on a named-perils basis. D) Covered property is insured anywhere in the world.

8) What is the effect of the optional agreed value provision in the building and personal property coverage form? A) It provides replacement cost coverage. B) It increases insured values along with inflation. C) It suspends the coinsurance clause. D) It reduces the deductible to $50.

8) Which of the following is covered under an unendorsed Commercial General Liability Policy? I. False arrest of a customer wrongly accused of shoplifting. II. Publication of material which violates an individual's right to privacy. A) I only B) II only C) both I and II D) neither I nor II

8) Which of the following statements about beneficiary designations is true? A) A primary beneficiary is entitled to the death proceeds of a life insurance policy only if the contingent beneficiary dies before the insured. B) If a revocable beneficiary designation is used, the insured must obtain the beneficiary's permission to exercise most policy rights. C) The effect of a class beneficiary is to divide death proceeds equally among the members of a particular group. D) Naming the insured's estate as primary beneficiary is the best way to avoid probate expenses, inheritance taxes, and claims of creditors.

8) Which of the following statements is (are) true with respect to financial institution bonds? I. Fidelity Coverage covers losses resulting from the dishonest acts of employees. II. Financial institutions usually insure their crime exposures through financial institutions bonds. A) I only B) II only C) both I and II D) neither I nor II

surety involves three parties. II. Insurers usually do not have the right to recover a loss payment from an insured, while a surety does have the legal right to recoup a loss payment. A) I only B) II only C) both I and II D) neither I nor II

18) All of the following are common dividend options found in participating whole life insurance policies EXCEPT A) reduction of premiums. B) dividend accumulations. C) purchase of paid-up insurance. D) purchase of insurance company stock.

18) Richard is using the capital retention approach to determine how much life insurance to purchase. Richard would like to provide $35,000 per year to his family, forever, if he dies. The assets that he has today will provide $25,000 in annual income without the liquidation of these assets. If life insurance proceeds can be invested to earn a 5 percent annual return, how much life insurance should Richard purchase to fund the additional income needed to meet the $35,000 annual income goal? A) $10,000 B) $100,000 C) $150,000 D) $200,000

22) Which of the following statements about yearly renewable term insurance is (are) true? I. It requires evidence of insurability for renewal. II. It is most appropriate when an insured needs lifetime protection. A) I only B) II only C) both I and II D) neither I nor II

26) Which of the following statements about life income settlement options is (are) true? I. Under a joint-and-survivor life income option, payments cease at the death of the first annuitant. II. Under a life income with period certain, a contingent beneficiary is guaranteed a minimum number of payments regardless of when the primary beneficiary dies. A) I only B) II only C) both I and II D) neither I nor II

27) William would like to insure his home. He does not want theft or personal liability coverage on the dwelling. William should purchase a A) Homeowners 3 Policy. B) Dwelling Property 1 Form. C) Dwelling Property 2 Form. D) Dwelling Property 3 Form.

30) Which of the following statements about the guaranteed purchase option is true? A) An insured usually has 24 months to exercise an option. B) The option cannot be exercised until the insured reaches age 40. C) The amount of life insurance that can be purchased at each option is limited to 10 percent of the face amount of the basic policy. D) The additional coverage can be purchased without demonstrating insurability.

31) All of the following statements about the businessowners policy are true EXCEPT A) Coverage for business personal property includes coverage for leased personal property which the named insured has a contractual responsibility to insure. B) The amount of insurance on the buildings increases by a stated percentage each year. C) Additional coverages include pollutant cleanup and removal. D) The policy must be written with a deductible of at least $2,000 for property losses.

32) Which of the following statements about limited-payment life insurance is true? A) It is a form of term insurance. B) It matures at the end of the premium-payment period. C) The premium decreases each year during the premium-payment period. D) Its use may be appropriate if a person wants paid-up life insurance during retirement.

38) Jennifer was just asked to serve on the Board of an insurance company. Jennifer is concerned that if the company is mismanaged, the policyowners, stockholders, and employees might sue the management team. What type of liability insurance will protect Jennifer from such claims if she accepts a position on the insurance company's Board? A) commercial general liability insurance B) employment-related practices liability insurance C) workers compensation and employer liability insurance D) directors and officers liability insurance

49) Alex, age 26, purchased a 20-payment whole life insurance policy. After Alex has made 20 premium payments, his life insurance policy is considered A) matured. B) reduced. C) expired. D) paid-up.

5) Which of the following statements about the grace period in a life insurance contract is (are) true? I. It is usually between 90 and 180 days in duration. II. If the insured dies during the grace period, the death benefit is reduced by 50 percent. A) I only B) II only C) both I and II D) neither I nor II

10) The period during which a surviving spouse is ineligible for Social Security benefits is referred to as the A) emergency period. B) readjustment period. C) dependency period. D) blackout period.

12) Fifth National Bank decided to loan $200,000 to Fred Franklin. As collateral for the loan, Fred posted stock certificates. When Fred defaulted on the loan, Fifth National tried to sell the stock. They discovered the stock certificates were stolen from someone else. Which insuring agreement in a financial institution bond is designed to cover such losses? A) Insuring Agreement B-On Premises B) Insuring Agreement C-In Transit C) Insuring Agreement D-Forgery or Alteration D) Insuring Agreement E-Securities

13) All of the following are reasons for an employer to purchase employers liability insurance EXCEPT A) to cover the suits of injured employees of small employers in states where workers compensation is not mandatory for small employers. B) to cover suits arising from injuries or diseases which are not covered under workers compensation laws. C) to cover third-party over cases that arise from injuries to an employee. D) to cover suits by employees who seek damages for discriminatory labor practices.

13) Disadvantages of the capital retention approach include which of the following? I. Assets are often liquidated too quickly. II. It underestimates the amount of life insurance needed. A) I only B) II only C) both I and II D) neither I nor II

14) National Bank believed it had been properly authorized to transfer $250,000 to the off-shore account of one of its corporate customers. The authorization was fraudulent, however, and the transferred funds were stolen. Under which commercial crime coverage insuring agreement would such a loss be covered? A) Money Orders and Counterfeit Currency B) Forgery or Alteration C) Outside the Premises D) Funds Transfer Fraud

14) Tom and Nancy Boyle provide financial support for their two children. In addition, they provide financial support for Tom's aged father and Nancy's aged mother. The Boyle family can be described as a A) blended family. B) single-parent family. C) two-income earner family. D) sandwiched family.

15) All of the following are coverage options under the physical damage coverage in the Business Auto Coverage Form EXCEPT A) comprehensive coverage. B) specified causes-of-loss coverage. C) collision coverage. D) property damage liability coverage.

15) All of the following statements about the federal flood insurance program are true EXCEPT A) Under the write-your-own program, each insurer services the policies it writes. B) The regular portion of the program allows the purchase of higher amounts of coverage than are available under the emergency portion of the program. C) The program is designed to be financially self-supporting for the average historical loss year. D) The maximum amount of coverage that can be written on any single dwelling is $25,000.

16) In the context of a surety agreement, the party who agrees to perform certain acts or fulfill certain obligations is called the A) fidelity. B) obligee. C) surety. D) principal.

16) Jessica is an agent for LMN Life Insurance Company. She met with Brad, who was interested in purchasing life insurance. Jessica explained the various uses of life insurance, including income for Brad's wife during the 1- or 2-year period following Brad's death. This period is known as the A) dependency period. B) estate clearance period. C) blackout period. D) readjustment period.

16) Which of the following statements about coverage under the federal flood insurance program is (are) true? I. Subsidized coverage is available for contents, but not for dwellings. II. A $10,000 deductible applies to each loss. A) I only B) II only C) both I and II D) neither I nor II

16) XYZ, Inc. would suffer serious financial consequences if either of its two major customers were shut down and could not purchase XYZ products. Which of the following types of consequential loss protection would provide protection against this exposure? A) leasehold interest B) extra expense C) marine insurance D) business income from dependent properties

17) All of the following are considered floods under the federal flood insurance program EXCEPT A) the overflow of tidal waters. B) the accumulation of surface water after a heavy rain. C) a mudslide caused by an accumulation of water after a heavy rain. D) wind-driven rain which enters a dwelling through storm-damaged doors or windows.

21) Most family heads need substantial amounts of life insurance. However, with limited income, money spent on life insurance reduces the amount of discretionary income available for other high-priority needs. What an insured person gives up when he or she purchases life insurance instead of using the premium dollars for other purposes is called the A) estimated cost of life insurance. B) net cost of life insurance. C) real (inflation-adjusted) cost of life insurance. D) opportunity cost of buying life insurance.

22) Which of the following statements about title insurance is true? A) A premium must be paid annually to keep the policy in force. B) The policy term runs for 20 years or the length of the insured's mortgage loan, whichever is shorter. C) The policy guarantees that the owner will keep possession of the property if a defect in the title is discovered. D) The policy provides protection against title defects occur prior to the effective date of the policy.

23) All of the following are covered under the liability coverage of a businessowners policy EXCEPT A) personal injury liability B) bodily injury liability C) advertising liability D) professional liability

23) Which of the following statements about a typical personal umbrella policy is (are) true? I. Losses covered under the basic underlying policies are paid on a pro rata basis by the umbrella policy. II. Losses not covered by the basic underlying contracts are subject to a self-insured retention which typically is at least $25,000. A) I only B) II only C) both I and II D) neither I nor II

24) All of the following statements about term insurance are true EXCEPT A) The insurance provides protection for a specified period of time. B) Most policies can be renewed for additional periods without evidence of insurability. C) Most policies can be converted to a permanent life insurance policy. D) Most policies have a cash value that is refunded when coverage ceases.

24) Which of the following statements about physicians, surgeons, and dentists liability insurance is true? A) Liability coverage is restricted to accidental acts. B) The policy eliminates the need for medical practitioners to purchase general liability insurance. C) The insurer must obtain the consent of medical practitioners before the insurer can settle claims. D) The policy covers the physician for the negligent acts of an employee.

25) All of the following statements about the conversion of a term policy are true EXCEPT A) Under an attained age conversion, the premium is based on the insured's attained age at the time of conversion. B) Under an original age conversion, the policyowner must pay a financial adjustment in addition to the premium for the new policy. C) Most insurers require original age conversion to take place within a specified period (5 years, for example) of the issue of the term policy. D) Evidence of insurability is required before a conversion is permitted.

25) George has a personal auto policy with a per-person liability limit of $300,000. He also has a personal umbrella policy with a limit of $2,000,000 and a self-insured retention of $1,000. How much will be paid by each policy if a person wins a judgment of $500,000 against George as a result of bodily injury arising from the auto accident? A) The auto policy will pay nothing, and the umbrella policy will pay $449,000. B) The auto policy will pay nothing, and the umbrella policy will pay $500,000. C) The auto policy will pay $300,000, and the umbrella policy will pay $199,000. D) The auto policy will pay $300,000, and the umbrella policy will pay $200,000.

26) All of the following are commonly excluded by personal umbrella policies EXCEPT A) acts committed with the intent to cause bodily injury or property damage. B) professional liability. C) aircraft liability. D) libel, slander, and other types of personal injury.

27) XYZ Insurance Company markets a wide range of coverages. One type of coverage provides monetary compensation if a bonded party fails to perform certain acts. This coverage is called A) property insurance. B) liability insurance. C) fidelity bonding. D) surety bonding.

28) A legal reserve in life insurance is a result of A) premium taxes payable by life insurance companies being postponed during the early policy years. B) dividends being paid to policyowners. C) inadequate premiums in the early policy years being subsidized by investment earnings. D) excess premiums in the early policy years being invested at compound interest.

28) Which of the following statements about the waiver-of-premium provision is true? A) Because the probability of becoming disabled exceeds the probability of premature death, the cost to include this provision is usually prohibitive at younger ages. B) Premiums are usually waived if the insured becomes partially disabled. C) Life insurance protection continues in force during a period of disability, but dividends cease and cash values are reduced. D) The disability must occur before a stated age, such as 65, for premiums to be waived.

29) All of the following are requirements that must be satisfied before premiums are waived under a waiver-of-premium provision EXCEPT A) The insured must furnish proof of disability to the insurer. B) The insured must be disabled before some specified age, such as age 60 or 65. C) The insured must satisfy the definition of disability. D) The insured must satisfy a 2-year waiting period.

3) All of the following are covered under the building and personal property coverage form EXCEPT A) the insured's stock and inventory when located inside the insured building. B) equipment used to service the insured building. C) the insured's use interest in improvements and betterments if the insured is a tenant. D) a manufacturing building owned by a key customer or key supplier of the insured.

3) All of the following are reasons an insurer can contest a policy after the contestable period has ended EXCEPT A) The beneficiary purchased the policy with the intent of murdering the insured. B) An insurable interest did not exist at the inception of the policy. C) The applicant had someone else take the medical examination required for policy approval for her. D) The policyowner concealed a material fact at the time of application.

3) In the ISO Commercial Crime Coverage form, safe burglary is defined as the A) unlawful taking of property to the deprivation of the insured. B) unlawful taking of property from the care and custody of a person by someone who has caused or threatens to cause bodily harm or who has committed an unlawful act witnessed by that person. C) unlawful taking of money or securities through the alteration of a negotiable instrument. D) unlawful taking of property from within a locked safe or vault by someone who enters the safe or vault as evidenced by marks of forcible entry upon the exterior.

31) Medical malpractice insurance written on a claims-made basis can leave a surgeon vulnerable to malpractice claims if the surgeon retires, changes insurers, or drops coverage. A provision can be added to the claims-made form that protects the surgeon for future claims arising from incidents that occurred while the claims-made policy was in force. This provision is called a(n) A) cut-through endorsement. B) drop-down endorsement. C) agreed amount endorsement. D) extended reporting period endorsement.

31) State X hired Build-Right Construction to build a bridge. State X required that construction be completed within 2 years after the contract was signed. Les Johnson is the president of Build-Right. State X required that Build-Right's promise to perform be guaranteed by a third party. Build-Right purchased a performance bond from Rock Solid Indemnity. The bond requires Rock Solid to be responsible if Build-Right does not have the project completed on time. In this scenario, which party is the surety? A) State X B) Build-Right Construction C) Les Johnson D) Rock Solid Indemnity

32) Which of the following statements is (are) true about the National Flood Insurance Program? I. You can't purchase flood insurance through this program if your property is located in a high-flood-risk area. II. Coverage is not available for any property which has been flooded previously. A) I only B) II only C) both I and II D) neither I nor II

33) Tenth National Bank extended a $2 million loan to ABC Development Company. Tenth National accepted a mortgage on a building as collateral for the loan. The mortgagee's signature on the loan, however, was a forgery. The resulting loss is covered by which financial institution bond coverage? A) Insuring Agreement A -- Fidelity B) Insuring Agreement D -- Forgery or Alteration C) Insuring Agreement D -- Securities D) Insuring Agreement G -- Fraudulent Mortgages

34) All of the following statements about variable life insurance are true EXCEPT A) The premium is level and guaranteed not to increase. B) The death benefit varies according to investment experience. C) The policyowner has the option of investing the cash value in several investment accounts. D) Cash surrender values are guaranteed.

34) Len is considering the purchase of a home. As a home is a large investment, Len wants to make sure that there are no liens, easements, or other encumbrances preventing him from an unchallenged right to possess and enjoy his property. Len can protect this right through the purchase of A) extended coverage insurance. B) replacement cost insurance. C) personal umbrella insurance. D) title insurance.

34) Rick is risk manager of Herald News, a daily newspaper in a competitive market. Rick wants to make sure that if Herald's printing facility is damaged or destroyed, the paper will continue to be published. What type of insurance can Rick purchase to cover the added cost of continuing to print the paper after a physical damage loss has occurred? A) contingent business income coverage B) product liability insurance C) business income from dependent properties coverage D) extra expense coverage

38) Tom opened a store in a mall. His store is located between a theater and a department store. Tom counts on the theater and department store to generate walk-in business at his store. While his store has been successful, Tom knows that if either or both of the other businesses closed, his store would suffer an economic loss. What type of dependent property situation is illustrated in this scenario? A) contributing location B) recipient location C) manufacturing location D) leader location

4) Section I of the Commercial General Liability (CGL) Policy provides coverage for all of the following exposures EXCEPT A) bodily injury liability. B) advertising injury liability. C) medical payments. D) automobile liability.

4) Which of the following statements about Dwelling Property 3 (special form) is (are) true? I. Personal property is covered on an "open perils" (all risks) basis. II. The dwelling and other structures are covered only for those perils specifically named in the policy. A) I only B) II only C) both I and II D) neither I nor II

40) Which life insurance policy provision specifies that it is the policyowner, and not the insured or beneficiary, who possesses all contractual rights while the policy is in force? A) nonforfeiture options B) entire contract clause C) incontestable clause D) ownership clause

43) Beth purchased a participating life insurance policy 6 years ago. Her life insurance needs have increased, but she has developed a medical condition that makes it impossible for her to purchase more life insurance at affordable premiums. Which dividend option makes sense for Beth to use given her medical condition? A) cash B) apply to premium C) dividend accumulations D) paid-up additions

44) Which of the following statements about savings bank life insurance is true? A) The maximum amount that a depositor can purchase is $50,000. B) The maximum amount of insurance that a depositor can purchase is limited to the amount of money on deposit in his or her savings account with the savings bank. C) The objective of savings bank life insurance is to provide protection to the bank in case a borrower dies before a loan is repaid. D) The objective of savings bank life insurance is to provide low-cost insurance to consumers by holding down expenses.

47) Which of the following statements is (are) true concerning settlement options? I. A straight life annuity provides the lowest periodic income of all the life income options. II. Fixed-period and fixed-amount are life income options. A) I only B) II only C) both I and II D) neither I nor II

5) All of the following are defects which limit the usefulness of the human life value approach in determining the correct amount of life insurance to purchase EXCEPT A) The effects of inflation are ignored. B) Other sources of income for survivors are ignored. C) Earnings are assumed to remain constant. D) Earnings during the individual's productive lifetime are ignored.

5) All of the following are extensions of coverage under the building and personal property coverage form EXCEPT A) newly acquired or constructed property. B) valuable papers and records. C) personal property temporarily off the premises. D) currency and securities.

51) A life insurance policyowner may no longer need life insurance. Such a policyowner may sell the policy to a third party for more than its cash value. The purchaser becomes the new beneficiary and is responsible for subsequent premium payments. Such a financial transaction is called a(n) A) collateral assignment. B) accelerated death benefits rider. C) absolute assignment. D) life settlement.

6) All of the following statements about the requirements to reinstate a lapsed life insurance policy are true EXCEPT A) Evidence of insurability is required. B) The lapse must have resulted from other than the surrender of the policy for its cash value. C) All overdue premiums must be paid along with interest from the premium due dates. D) The policy must be reinstated within 1 year.

6) Bay Gallery has a Commercial General Liability Policy with no endorsements. All of the following claims would be covered under the policy EXCEPT A) An artist sued the gallery for slander after an employee of the gallery said the artist's work looks like it was painted by an intoxicated monkey. B) A customer is injured when a painting falls from the wall and strikes the customer. C) A customer is injured after falling on a slippery floor at the gallery. D) A painting owned by a private collector on loan to the gallery was damaged by a gallery employee.

7) Bernice is an underwriter. She is reviewing a commercial crime coverage application. The coverage will be written using the discovery form. Bernice is concerned that a large undiscovered loss may exist prior to the policy's inception date. Which provision should Bernice add to the policy to protect against liability for such previous losses? A) extended reporting endorsement B) loss sustained during prior insurance provision C) waiver of inventory provision D) retroactive date endorsement

9) All of the following causes of loss are included in the causes-of-loss basic form of the ISO commercial package policy EXCEPT A) fire. B) lightning. C) explosion. D) flood.

however, he would like "open perils" (all-risks) coverage on the dwelling. William should purchase a A) Homeowners 3 Policy. B) Dwelling Property 1 Form. C) Dwelling Property 2 Form. D) Dwelling Property 3 Form.

23) Which of the following statements is (are) true with respect to the differences between insurance and surety bonds? I. Insurance is a two-party contract II. Insurers usually do not have the right to recover a loss payment from an insured, while a surety does have the legal right to recoup a loss payment. A) I only B) II only C) both I and II D) neither I nor II

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