GA P&C Test set 2

The insured has suffered roof damage as a result of a tornado. He makes temporary repairs until permanent repairs can be made. He spends $1,500 for this work. How much, if any amount, will the DP-2 Dwelling policy pay on the repairs?

$1,500 EXPLANATION: The policy will pay all of the costs due to the "reasonable repairs" clause in the policy. This pays for the cost to make reasonable repairs in order to protect the property from further loss.

A covered commercial auto requires $700 in repairs because of damage done by a limb from a dead tree that fell on it. The auto's BAP physical damage coverage has a $100 comprehensive deducible and a $250 collision deductible. Assuming that the ACV and replacement cost of the vehicle is $700, the insurer will pay:

$600. EXPLANATION: Falling objects is a comprehensive loss and the deductible of $100.00 would apply.

Samantha, who is covered under a Standard Fire policy, has suffered a loss and submitted a claim. After the claim was paid, Samantha's insurance company has decided to take possession of the damaged property to sell it for its salvage value. The insurance company must provide Samantha with _______ notice.

30 days' notice.

Which of the following types of property would be covered by Coverage B of a standard, unendorsed Businessowners policy?

A copy machine that is leased by the covered business.

Which of the following businesses can cover their private passenger and commercial automobile exposures with a Business Auto policy?

A grocery store.

All of the following are characteristics of a principal that a surety will scrutinize during the underwriting process, EXCEPT:

Consideration. EXPLANATION: Consideration is NOT one of the characteristics a surety would look for in a principal during the underwriting process. Capability, character, and capital ARE characteristics a surety will be looking for in a principal.

Coverage G under the Farm forms covers which of the following?

Covers barns, silos, fences. EXPLANATION: Coverage G covers barns, outbuildings such as silos, fences, radio equipment and other farm structures that are not related to the dwelling.

Which of the following BEST DESCRIBES the function of a retroactive date in a Commercial General Liability policy?

It establishes the date when claims-made coverage begins.

State "financial responsibility" laws determine the amount of coverage that must be purchased and how insureds must prove coverage under which of the following Personal Automobile insuring agreements?

Part A. EXPLANATION: State financial responsibility laws regarding auto insurance determine the amount of coverage that must be purchased and the method used to prove coverage under Part A - Liability.

All of the following statements are TRUE regarding Section II - Liability of the Garage Coverage form, EXCEPT:

Provides coverage when an employee causes damage to a customer's vehicle.

What type of insurance is usually provided or subsidized by the state or federal government because it is not ordinarily available from private insurers?

Residual market insurance.

On the renewal date of her existing NFIP policy, the insured selects two additional coverages. Which of the following statements is TRUE about the insured's waiting period before the new additional coverages will take effect?

There is no waiting period.

The standardized Dwelling forms allow the insured to bring legal action against the insurer if they have complied with all policy provisions and the action is brought within:

2 years after the date of the loss.

Coverage for workers compensation coverage in Georgia is optional for which of the following?

A Partner or Sole Proprietor is correct.

Which of the following would be covered under Coverage A of a Farm insurance policy?

A structure attached to the dwelling.

Which of the following is a statement that is guaranteed to be the truth throughout the duration of the policy?

A warranty.

A person eligible but unable to obtain auto insurance in the voluntary market may do which of the following in Georgia?

Apply for coverage through the Georgia Automibile Insurance Plan.

To obtain an insurance agent, producer, or adjuster license, an applicant must be:

At least 18 years of age.

Which of the following statements BEST describes the reason it was necessary to create a federal flood insurance program in 1968?

Because other property policies routinely exclude flood from coverage..

Which of the following is not reflected in a privacy report?

Categories of medical information.

In the state of Georgia, making false statements as to the financial condition of any insurer is an example of:

Defamation.

The law recognizes two types of waivers. They are:

Express/implied.

Which of the following basic coverages are provided under a Standard Fire policy?

Fire, lightning and removal.

Coverage B of the Commercial General Liability policy will not cover claims involving the insured's distribution of material or information that violates any of the following statues, EXCEPT:

Insurance Fraud and False Statements (18 USC 1033; 1034).

The perils insured against by a Homeowners policy are contained within the:

Insuring Agreements.

All of the following are examples of unfair claim practices, EXCEPT:

Making claim payments and stating the coverage under which payment is made.

An "operations" claim as covered by the Commercial General Liability policy:

May occur on or off the premises.

How are crop insurance premiums calculated?

Number of acres per crop.

Which insuring agreement of the Personal Auto policy would provide coverage for the damage caused to the other driver's car, when the insured was at fault in an accident?

Part A - Liability.

In a Physicians Professional liability policy two separate errors cause several claims. How is the deductible determined?

Per Claim

All of the following are covered under the definition of money in commercial crime insurance, EXCEPT:

Proof of debt.

Any licensed agent or producer who acts for another licensed agent or producer in Georgia is known as a/an:

Subagent.

The broad evidence rule is used when:

The actual cash value of property is being determined..

The major difference between a Commercial Crime policy and a Government Crime policy is:

The coverage for Employee Theft under a Government Crime form can be applied on either a "per occurrence" basis or a "per employee" basis.

Under a surety bond, the party that is guaranteed that the principal will perform is known as:

The obligee.

Which of the following is most likely to be uninsurable?

The purchaser of a new home wants to protect herself from a possible drop in housing prices.

Under the Businessowners policy, for up to how many years can the insurer request to examine the books and records of an insured after the policy has expired?

Three years

With workers' compensation insurance, the insurer is considered to have received notice of a claim:

When the employer has notice of the claim.

The most significant change that occurs when a Mobile Home endorsement is added to a Homeowners policy is that:

the description of covered property is changed..

Parmelia is covered under two separate standardized Personal Automobile policies, with Part C limits under both policies set at $200,000. Parmelia is involved in an accident with an uninsured motorist and she sustains bodily injury damages for $262,320. How much will Parmelia receive when she submits a claim for these damages?

$200,000. EXPLANATION: Permelia will receive $200,000, because Part C does not permit the stacking of limits. She will only collect the highest limit of a single policy for uninsured motorists coverage.

Under the Motor Carrier Act of 1980, a vehicle hauling excess oil, explosives or nitrous gases is required to carry a minimum liability limit of:

$5,000,000. EXPLANATION: Although oil haulers are only required to carry $1,000,000, the key word here is "excess oil" and when followed up with "explosives" makes this freight hazardous requiring the $5,000,000 limit.

Nina has the "Preservation of Property" additional coverage included in her standard Businessowners policy. How long does coverage apply while the property is being stored at another location?

30 days from the day the property was first moved..

Title insurance would cover which of the following?

A claim for a hidden lien on his/her real property is presented to the insured.

A surety bond is:

A form of credit.

Sierra's home is located in a flood zone. In insurance terms, the location of Sierra's home is considered:

A hazard.

Acme Corp. requested three bids from different contractors for the construction of its new office building. Acme accepted the lowest bid from Corbett's Contracting and entered into a contract to have the office building constructed. After construction was completed, Corbett's presented Acme with a bill for construction costs over and above the amount of the bid that was agreed to in the contract. Which of the following types of bonds would protect Acme from paying the additional costs?

A performance bond.

Under the Gramm-Leach-Bliley Act, there is a "pretexting provision". What is the definition of "pretexting".

Accessing private information using false pretenses.

The federal crop program that covers the revenue of the entire farm as opposed to a specific crop is called:

Adjusted Gross Revenue

In situations where the insured and the insurer could disagree on the value of an item, it would be best to insure that item on a(n) __________ basis.

Agreed Value.

Which of the following is NOT a true statement regarding the agency relationship?

An agent is an agent for the third party contracting with the principal.

Which of the following best defines an "insured"?

An individual or entity that pays premiums in exchange for financial protection.

Monique lives in Texas and is covered under a standard Personal Automobile policy. Her policy was issued by Binders Keepers Insurance, a company that is domiciled in North Carolina and also transacts insurance in Texas, New Mexico, California, and Arizona. Binders Keepers has broadened their coverage under the policy without additional premium, as of April 1st. They are rolling out the change in coverage as follows: North Carolina - April 1stTexas - April 15thNew Mexico - April 20thCalifornia - April 30th North Carolina - April 1stTexas When can Monique expect her coverage to be broadened?

April 15th, because when a company broadens their coverage with no additional premium charge, it takes effect on the date it is implemented in an insured's state of residence.

An insured has purchased Coverage A and Coverage B of a standard Businessowners policy and the limit of insurance shown in the Declarations is 80% of the replacement cost value, how will losses be settled?

Both Coverage A and Coverage B will be settled on a replacement cost basis

Entering into any agreement to commit, or by any concerted action committing, any act resulting in or tending to result in unreasonable restraint of the business of insurance is an example of:

Coercion

Which coverage of a Homeowners policy would pay for damage to a neighbor's window caused by the insured?

Coverage E EXPLANATION: Coverage E - Personal Liability would pay for the property damage to others caused by the insured under a Homeowners policy.

The Homeowners forms exclude coverage for loss resulting from "earth movement" but the peril of "earthquake" can be added by endorsement as an insured peril for:

Coverages A, B, and C.

Before the acts of September 11, 2001 in the United States, insurers:

Did not exclude coverage, nor did they charge an extra premium to cover damages caused by terrorism.

Coverages A, B, C, and D of Section I of a Homeowners policy are (in order):

Dwelling; Other Structures; Personal Property (Contents); Loss of Use.

Part One of a standard workers' compensation policy states that the insurer agrees to defend at its expense any claim, proceeding or law suit against the insured employer:

For benefits payable by the insurer.

Which of the following best characterizes the difference between captive agents and independent agents?

Independent agents can represent more than one insurer, whereas captive agents represent only one insurer.

Which of the following is the definition of "title" as it relates to title insurance?

Legal right of real property.

Which of the following would NOT be covered by the Commercial General Liability policy?

Liability that the insured assumes in a contract.

Which of the following would be considered "economic losses" that could result in compensatory damages being awarded in a negligence case?

Medical expense and lost wages.

The unendorsed standard Garage Coverage form includes all of the following, EXCEPT:

Medical payments coverage for the insured.

A person takes bank deposits to the bank every day for a business. In Commercial Crime insurance terminology, this person is known as a:

Messenger.

A type of insurance that permits an insured to collect from his/her own insurance company, without proving the negligence of a third-party, is known as:

No-fault. EXPLANATION: No-fault insurance allows an insured to collect from his or her own insurance policy without the need to prove the negligence of a third-party. No-Fault Automobile policies and Workers Compensation coverage fall into the "No-Fault" category.

Which of the following is NOT covered under aircraft physical damage (hull) insurance?

Personal effects.

When a state is "monopolistic" with workers' compensation coverage, employers in that state are:

Required to purchase their workers' compensation coverage from the state-funded plan.

Horatio is a business owner who is part of a business owners group that are buying old commercial buildings in their small city and refurbishing them. Horatio has bought a beautiful historical building made mostly of wood. He installs a sprinkler system right away to prevent a fire. What risk management strategy is Horatio using?

Risk reduction.

A licensed agent in Georgia has sold a policy for an insurer that has not obtained a Certificate of Authority in Georgia. What could occur if the insured suffers a covered loss and it is denied by the company because it is not licensed in Georgia?

The agent could be held personally liable for the claim to the same extent as the insurer

The maximum amount a liability policy will pay for all occurrences taking place during the policy period, is known as:

The aggregate limit.

The Commissioner may revoke an insurance company's Certificate of Authority for all the following reason, EXCEPT:

The company pays all required fees on time. .

The Business Auto policy liability exclusion pertaining to pollution removes coverage for each of the following, EXCEPT:

The escape of pollutants caused by damage to the property containing them when the damage results from the use of a covered auto.

Which of the following would be an example of "impaired property" as defined by the Commercial General Liability policy?

The insured's component, when installed in the finished product of another business, causes the product to shut down.

Which of the following would be covered under the personal property (contents) coverage of an NFIP policy?

The insured's riding lawn mower kept inside an attached garage..

All of the following benefits are paid according to a state-mandated schedule of workers compensation benefits, EXCEPT:

Total partial disability.

Under the farm forms, a "half a head" of livestock is an animal that is:

Under one year of age and the most coverage that will be paid for that animal under the policy is $1,000.

Property with no occupants or contents is considered to be _______ whereas property with no occupants but with contents is considered to be _______.

Vacant/Unoccupied

All of the following statements are TRUE regarding the coverage of appurtenant structures covered by an NFIP policy, EXCEPT:

he Dwelling coverage form under the NFIP provides up to 10% of the building coverage limit for appurtenant structures as an additional amount of insurance.

Which of the following is TRUE regarding deductibles that pertain to Part D of the standardized Personal Automobile policy?

here are separate deductible amounts, chosen by the insured, for the "Collision" coverage and the "Other Than Collision" coverage.

Jim and Mary are celebrating their 50th wedding anniversary and are on a worldwide cruise. They carry a DP-3 policy with a personal property limit of $50,000. While off the coast of Africa the ship catches fire and their property is completely destroyed. How much, if anything, will they collect?

5,000.. EXPLANATION: The DP-3 policy provides for up to 10% of the insured's personal property limit anywhere in the world. Therefore, the policy would pay up to $5,000 on an actual cash basis.

All of the following are basic limits of a standard Commercial General Liability policy, EXCEPT:

50,000 Fire Damage Legal limit. EXPLANATION: The basic limit for Fire Damage Legal (Damage to Premises Rented to You) is $100,000, not $50,000.

A power surge sparks a small electrical fire in an office building. The electrical fire triggers the automatic sprinkler system and the water from the sprinklers, soaks the carpet and shorts-out all the computers, causing thousands of dollars in damage. The office must close for two months during repairs. The cost of renting a temporary office space while the physical damage to the office building is repaired is considered:

An indirect loss.

Under the provisions of the standard BOP policy, what happens when an insured fails to advise the insurance company that the insured's sprinkler system is inoperative beyond a 48 hour period?

Coverage for fire losses will be excluded.

Which of the following would NOT be excluded in the Coverage A - Exclusions section of the Commercial General Liability policy?

Damage from a fire caused by the insured in his rented office space..

All of the following statements are TRUE regarding the perils of the Homeowners forms, EXCEPT:

Fire or lightning is a named peril covering the buildings and other structures under an HO-4 form. EXPLANATION: Fire or lightning is NOT named peril covering the buildings and other structures under an HO-4 form because this form does not cover the building or structures, it only covers the personal property of renters and tenants.

The Georgia Insurance Commissioner has the power to issue temporary licenses under certain circumstances. How long may a temporary license remain active?

Six months and can be renewed for up to 15 months.

When determining if an injury or illness is compensable under a workers' compensation policy, which of the following is the criteria used?

That the injury or illness arose out of and in the course of the employment.

All of the following claims would be excluded under the Homeowners Watercraft Endorsement, EXCEPT:

The bodily injury suffered by the insured while he was operating the covered watercraft, loses his balance and hits his head on the floor of the boat.

Mary intentionally trips her neighbor while the neighbor is trespassing on the insured's property. Although the neighbor is not injured, Mary gives the neighbor $500 in cash to settle any potential liability claim. How will Mary's insurance company most likely respond in this situation?

The insurer will deny liability coverage because Mary's action was intentional. EXPLANATION: Intentional acts are excluded and the company will deny the claim. The only exception to this exclusion is when the insured is attempting to use reasonable force to protect themselves or their property.

Underinsured motorist coverage provides first-party protection to an insured after an accident in which of the following situations?

The other driver has insufficient liability limits and is "at-fault". .

The insured has a communication failure at his premises due to a lightning strike at the phone company. The insured's phone system is damaged and he is out of business for four days. Which endorsement is necessary to provide coverage for the loss of business income?

Utility Services - Time Element.

The standard Personal Automobile policy provisions state that the insurance company has subrogation rights against any person permitted to use a covered auto, under all coverages, EXCEPT:

Part D. EXPLANATION: The insurer would not have subrogation rights under Part D - Physical Damage, because this coverage applies to the insured that is covered by the company. Part D specifies that any person who has permission to drive the covered vehicle is considered an insured and cannot be subrogated against. This caveat does not apply to any other coverage of the Personal Automobile policy.

If an insurer or agent/adjuster is using a prohibited contract or agreement, the Commissioner will issue a cease and desist order. What could happen if the offender fails to comply?

The Commissioner can revoke the Certificate of Authority or license.

The Mobile Home endorsement may be attached to which of the following Homeowners forms?

The HO-2 or HO-3 only.

An insured who had a $500,000 primary liability policy purchased a $1 million Umbrella liability policy with a $2,000 self-insured retention limit. Later, the insured allowed the required underlying primary policy with a limit of $500,000 to expire. A week after that, the insured became liable for a $100,000 loss that is not excluded by the provisions of either the primary underlying liability policy or the Umbrella policy. How will this loss likely be settled?

The insured will be liable for the full $100,000 loss. EXPLANATION: Because the insured allowed the required underlying policy to expire, he is responsible for the $100,000 loss. The Umbrella policy does not recognize a reduction in the underlying limits nor the non-renewal of underlying coverage as a trigger to cover the claim.

Which of the following types of bonds guarantees that all project materials will be paid in full by the contractor upon completion of the project?

Payment bond.

All of the following would be excluded under Part D of a Personal Auto policy, EXCEPT:

Permanently-installed GPS systems. EXPLANATION: Permanently installed electronic equipment such as sound systems and GPS devices are covered, but no custom equipment is covered in a van unless an endorsement for this coverage is attached to the policy and an additional premium is paid. (Remember, radar detectors are excluded.)

A professional liability policy can be:

Purchased separately for an additional premium.

Jerusha has her business automobiles covered under a Business Auto policy. She has purchased a new business automobile recently but was not required under her policy provisions to report her newly acquired auto. Based on this information, which BAP symbol is listed on the Declarations page of Jerusha's policy?

Symbol 1. EXPLANATION: When Symbol 1 is listed on the Declarations page, the insured is not required to report "newly acquired autos" to the insurer. This is because Symbol 1 covers "any auto".