Guarantee Exam 1

An agent suspects that his insurer is committing insurance fraud. Within how many days of that discovery must the agent report the fraud to the department of insurance? a) 10 days b) 15 days c) 30 days d) 60 days

d) 60 days

Which for insures both buildings and personal property on an open peril basis? a) HO-7 b) HO-3 c) HO-4 d) HO-5

d) HO-5

a personal umbrella policy may act as excess over any of the following insurance coverage policies except? a)homeowners section ll coverage b) auto liability coverage c) comprehensive coverage d) auto collision coverage

d) auto collision coverage

An executive is accused of sexual harassment. What type of coverage would respond? a) workers compensation b) hiring practices liability c) commercial general liability d) employment practices liability

d) employment practices liability

Which type of property is not movable? a)firm property b)transferable property c) fixed property d)real property

d) real property -personal property is property that is moveable, real property is not moveable.

Which homeowners form provides open peril coverage for dwelling (coverage a) and contents (coverage c)? A) Form 2 B) Form 3 C) Form 5 D) Form 8

C) form 5

A policy contains a consent to settle a loss provision, which requires the insurer to obtain the consent of an insured before the settlement of a claim. With this in mind what kind of liability policy does the insured most likely have? a) professional liability b) excess liability c)errors and omissions d) protective liability

a) professional liability

If the commissioner issues a cease and desist order that means the insurer must a) stop committing a particular violation b) terminate all producer appointments c)surrender its certificate of authority d) suspend all insurance transactions in the state

a) stop committing a particular violation

a driver who has an auto policy with limits of liability lower than required by state law would be considered a) an insured motorist b) an insolvent motorist c) an uninsured motorist d) an underinsured motorist

c) and uninsured motorist

to have insurable interest in the person or property covered by a property insurance policy, which of the following potential risks must the policy owner face? a) property damage b) illness c) financial loss d) physical injury

c) financial loss

Wagering on a sporting event is known as what type of risk? a) calculated b) simple c) pure d) speculative

d) speculative speculative risk= a chance to win, a chance to lose speculative risk= not insurable

When does the insurers duty to defend a suit or claim end in a commercial general liability policy? a) when defense costs equal the applicable limit of insurance b)when both loss payments and defense costs equal the applicable policy limit c) when the insured agrees to the settlement d) when loss payments equal the applicable limit of insurance

d) when loss payments equal the applicable limit of insurance

For an additional premium, the extended coverages written on the basic form dwelling policy would cover which of the following? a) vandalism b) glass breakage c) fire d) riot

d)riot

Which of the following exposures is not covered under the garage liability coverage form? a) contractual liability b) premises and operation liability c) products and complete operations liability d) auto liability

a) contractual liability

A golfer slices a tee shot and the ball goes through the window of a house beside the fairway. The broken glass is paid for by? a) the property coverage of the golf course b) the golfers homeowners liability coverage c) the homeowners property coverage on the house d) liability policy of the golf course

b) the golfers homeowners liability coverage

While engaged in a pick up soccer game in the neighborhood park the insured collides with another player, breaking his nose, Would the insureds homeowners medical payments cover the injury? a) no the insured was not negligent b) yes, medical payments coverage also applies off the insured premises

b) yes, medical payments coverage also applies off the insured premises

Which of the following terms describes nonmechanical sheet metal or plastic parts on the exterior of a motor vehicle? a) nonoriginal equipment manufacturer crash parts b) replacement parts c) after market crash parts d) vehicle modification parts

c) after market crash parts

Which commercial property form provides coverage for the insureds legal liability for property in his or her care, custody or control? a) builders risk b) extra expense c) legal liability d) glass coverage

c) legal liability

the obligation to compensate injured workers without regard to fault or negligence is known as A) Absolute liability B) employers liability C)elective liability D) compulsory liability

A) absolute liability

An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy has committed an illegal practice know as a) twisting b) fraud c) concealment d) misrepresentation

A) twisting

Which of the following risk would be eligible for coverage under a dwelling policy form? a)a duplex that is occupied by two families, each of which have a bedroom rented to a boarder b) single family dwelling occupied by a single person who operates a business of buying and selling firearms in the basement c) a single family dwelling that contains a beauty shop that employs three full time operators d) a single family dwelling that is located on farm premises

a) a duplex that is occupied by two families, each of which have a bedroom rented to a boarder

The equipment breakdown coverage form provides coverages for all of the following except? a) bodily injury liability b) expediting expenses following a covered loss c) damage to insureds property d) damage to property of others in the insureds care and custody

a) bodily injury liability -Equipment breakdown is a property form, it does not cover liability

To be valid an insurance policy must have all of the following except a) countersignature b) acceptance c) consideration d) offer

a) countersignature

The supplementary payments section of the commercial general liability policy would cover a) court costs assessed against the insured in a suit b) loss of the insureds earnings, up to $300 a day c)up to the policy limit for bodily injury or property damage

a) court costs assessed against the insured in a suit

An audit revealed the administrator for a pension plan has made investments that were not consistent with the risk tolerance set forth in the plan earnings for the past year are substantially below the average for comparable funds. The governing board wants to take action against the administrations. Commercial liability would the board need to proved for this risk? a)fiduciary liability policy paid by the pension fund b)personal injury liability c)personal injury liability d) fiduciary liability owned by the administrator

a) fiduciary liability policy paid by the pension fund

the commercial general liability coverage part a bodily injury and property damage provides coverage for which of the following? a) premises b) hired autos c) employers d) machinery

a) premises

All of the following are true regarding the fair credit reporting acts EXCEPT a) reports may be sent to anyone who request one b) insurers are not required to give customers a copy of the report c) it applies to credit reports ordered in connection with insurance, banking, and employment d)the customer must be notified if adverse action is taken as a result of a report

a) reports may be sent to anyone who requests one

all of the following are considerations in determining which states law applies when a worker is required to travel into another state and is injured while working in the other state except a) the insurer's chartered location or domicile b) place where the accident occurred c) the normal location where the employee works d) the state where the employee was hired

a) the insurer's chartered location or domicile

The insureds product under a commercial general liability policy does not include which of the following? a) vending machines rented to others b) containers furnished in connection with the product c) warranties made with respect to the fitness or quality of the product d)any goods or products manufactured by the insured

a) vending machines rented to other the renting of vending machines to others would be a contractual liability exposure

Under coverage B other structures a homeowners policy provides coverage for the other structures on the residence premises. Which of the following is not true?

any loss paid under coverage b reduces the coverage a limit of liability

if a producer allows his license to lapse, within what time period may the producer reinstate the same license? a) 1year b)2years c) 3years d)4years

b) 2years

Which of the following would not be eligible for coverage under a personal auto policy? a) a trailer owned by the insured b) a vehicle purchased 90 days ago c) a vehicle listed on the declarations page d) a nonowned temporary substitute vehicle

b) a vehicle purchased 90 days ago (should be 30 days)

a house insured with a homeowners policy has been blown off its foundation by a tornado. It must be demolished and removed so a replacement house can be built. Which of the following is true about debris removal? a) HO policies do not cover debris removal b) an additional 5% of the policy may be paid for debris removal c) because the full policy limit must be paid for the house, there is no coverage for debris removal d) it will be paid if the debris removal endorsement has been added

b) an additional 5% of the policy may be paid for debris removal Debris removal is part of the policy however when the amount of loss plus the cost to remove debris exceeds the policy limit and additional 5% of the limit may be paid for debris removal

Which of the following conditions is NOT included for farm liability in addition to the common policy conditions? a) liberation b) arbitration c) bankruptcy

b) arbitration

`When a named insured files a form with the application selecting a different level or absence of uninsured motorist coverage, this selection is valid a) until the named insured reaches age 65 b) for the life of that policy c) until the renewal of the policy d) for 1 year

b) for the life of the policy

fair rental value coverage in the dwelling policy is similar to which homeowners policy form? a) contents b) loss of use c) dwelling d) structure

b) loss of use

Which of the following clauses excludes assignment or granting of policy provisions to any person who repairs property for a fee? a) indemnity clause b) no benefit to bailee clause c)subrogation clause d)third party clause

b) no benefit to bailee clause

An insured is injured while driving his own car. Which of the following coverages will pay for the loss? a) part a- liability b) part b - medical payments c)part c- uninsured motorist d) part d- damage to your auto

b) part b - medical payments

In reference to insurable interest, which of the following is not an element of insurable risk? a) business b)personal c) blood D) financial

b) personal

You are at fault in an auto wreck out of state. How does your company adjust? a) by the other states highest form b) will not pay at all c) at least to the minimum required by state d) the limit of your policy, no matter what the other states minimum

c) at least to the minimum required by state

Which of the following is covered by auto other- than- collision (comprehensive) coverage? a)portable cd player b) awning attached to car for camping c) electric equipment required for the normal operation of the car d) radar detection

c) electric equipment required for the normal operation of the car

What are the two sources for workers compensation insurance? a) assigned risk plan and employer funded plan b) comprehensive fund and private market c) monopolistic state fund and competitive funds d) contributory and noncontributory funds

c) monopolistic state fund and competitive funds

An insureds diner suffered a fire loss. In addition to the damage caused by the fire, the floor covering had to be replace because of water damage it took 4 weeks for the repairs to be competed. The insured was without income for that period. The insureds policy includes both direct and indirect loss coverage. What part of the loss would be paid as indirect? a)both the loss of income and the cost of the floor covering b) the entire loss would be paid as direct loss by fire c) the loss of income for the time the diner was closed d)the cost of replacing the floor covering due to the water damage

c) the loss of income for the time the diner was closed

Under the property and casualty of a homeowners policy what may happen if it is discovered that the policyowner committed concealment or fraud? a) the insured may have the opportunity to reapply for the policy b) the policy will be voided only if the fraud was committed before a loss c) the policy may be voided d) the insurer may void the policy only if it gives the insured 10 days notice

c) the policy may be voided

Roger owned a grocery store and had a reporting form policy with a $100,000 limit for the stores inventory. The last report Roger submitted and showed a value of $50,000. The value increased to $75,000, and roger failed to submit his next report when due. What is the maximum ? a) $75,000 b) $100,000 c) $25,000 d) $50,000

d) 50,000