Insurance Exam
The part of the insurance contract that describes the cover perils and the nature of coverage of the contractual agreement between the insure and the insured is called the?
-Insuring Agreement-
Commissioner must examine all authorized insurers at least once every .. ?
- 5 Years-
All of the following are conditions commonly found in the insurance policy EXECPT?
-Insuring Agreement- *it provides information on the policy's coverage. Conditions state the legal obligations and duties of the parties to the contact
Which of the following best describes a misrepresentation?
-Issuing sales material with exaggerated statements about policy benefits-
The Dwelling Broad Form (DP-2) insures against all of the following perils, EXPECT? A. Theft B. Damaged caused by burglars C. Breakage of glass that is part of the building, storm door or window D. Accidental discharge or overflow
A. Theft
Which statement is an accurate description of life insurance policy dividends? A.They are not taxable and are not guaranteed B.They are paid as return of premium to policyowners by stock insurers C.They are guaranteed to be paid and they are taxable as income D.They are likely to be larger in nonparticipating policies
A.They are not taxable and are not guaranteed
Which of the following terms refers to solicitation, negotiation, effectuation or advising related to an insurance contract? A.Insurable Interest B.Insurance transaction C.Advertising D.Rescission
B.Insurance transaction
Which of the following is NOT required to be included on an insured's proof of financial responsibility card? A.Name of the insurer or agent B.Mailing address of the insured C.Telephone number of the insure or agent D.Mailing address of the insurer or agent
B.Mailing address of the insured
An insured tenant may use up to what percentage of Coverage C to improve the premises? A. 5% B. 20% C. 10% D. 0%
C. 10%
An insurance company that is owned by the policyholder is called a ..? A.Fraternal insurer B.Stock Insurer C.Reciprocal Insurer D.Mutual Insurer
D. Mutual Insurer
Assuming both parties agree on the amount payable how many days must the insurer pay the claim?
—60 Days —
Medical & funeral expenses, pays per person per accident, for accidents up to 3 years ... ?
- Part B; Medical Payments-
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
- Warranty-
A person who violates a cease and desist order will be penalty?
-$1,000 for each violation or $5,000 for all violations-
The broad theft coverage endorsement on the dwelling form doesn't not cover
-$1,000 on silverware-
Commissioners term in office ??
-2 Years-
An agent completed a CE course in 2019. Until what year must the agent keep the records of completion?
-2023 , 4yrs must the agent keep the records of completion-
Commissioner will notify of renewal at least —??— days before the date?
-30 DAYS-
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be?
-Authorized-
Which of the following is a mandatory part of an insurance policy that varies with each individual policy?
-Declarations-
The owner of a small restaurant submits a claim to his insure after a loss due to fire. The insure's investigation finds a police report that shows that a fire may have been of suspicious origin? The insurer can do which of the following?
-Delay an acceptance or rejection decision-
Which of the following statements would be correct if an insured failed to maintain the underlying limits are required by a personal umbrella policy?
-The insured would be responsible for the amount required as underlying limits in the event of a claim-
All of the following statements concerning coinsurance are true EXCEPT ... ? A.The coinsurance formula will also be applied to total losses B.It is used to help adequacy and equity in rates C.The insured agrees to maintain insurance equal to some specific percentage of the value of the property D.If the insurance carried is less than required the insurance may not cover the whole loss
A.The coinsurance formula will also be applied to total losses In the event of a total loss, the coinsurance clause does not operate and the face amount of the policy is paid
What type of information would be found in a policy's insuring agreement
-Renewal Dates-
Which of the following exclusions would specifically fall under Coverage E? A.Bodily injury to a residence employee B.Falling objects C.Land D.Contractual Liability
D.Contractual Liability
An insurance company that is incorporated outside the United Stated .. ?
-Allen Insurer-
All of the following are considered unfair of deceptive acts in connection with the sale of insurance EXECPT?
-Attempting to settle a claim in which liability is clear-
The proof of loss statement must be ?
-In Writing ONLY-
A personal umbrella policy may act as excess over any of the following insurance coverage policies EXCEPT? A.Auto collision coverage B.Homeowners Section II coverage C.Auto liability coverage D.Comprehensive personal liability
A.Auto collision coverage
Guaranteeing future dividends is considered to be an unfair or deceptive act known as.. ? A.Misrepresentation B.Churning C.False financial statements D.Rebating
A.Misrepresentation
When a vehicle travels to another state the limits to a policy ... ?
- DO NOT CHANGE -
An insurance company that is incorporated in another state
- Foreign Insurer-
Which of these is defined as the maximum limit of coverage available under a liability policy during a policy year, regardless of the number of claims that may be made or the number of accidents that may occur?
-Aggregate limit of liability-
Who are members of the Texas Windstorm Insurance Association?
-All authorized property insurers-
An insurer publishes intimidating brooches that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?
-Illegal under any circumstance-
Which of the following occupations would NOT directly help to qualify someone for the office of Commissioner of Insurance?
-Insurance Agent-
All of the following are factors in the determination of Actual Cash Value EXECPT?
-Insurance Premium Paid-
To pre-establish the amount of coverage available for property items that are difficult to value
-Stated Value Contract-
Misleading comparison of policies to persuade insured to cancel or switch policies??
-Twisting-
A participating insurance policy may do which of the following? A.Pay dividends to the policyowner B.Provide group coverage C.Pay dividends to the stockholder D.Require 80% participation
A.Pay dividends to the policyowner
Which of the following losses would NOT be covered by a homeowner's policy? A.A $800 outboard motor destroyed by hail B.A coin collection valued at $500 lost in a fire C. A $550 utility trailer blower away by a tornado D.A stolen silver tea set worth $2,000
B. A coin collection valued at $500 lost in a fire
Which of the following is NOT a line of authority for an insurance producer to obtain a license? A.Personal lines B.Commercial Property C.Variable life products D.Credit
B. Commercial Property
Which of the following is true regarding a risk retention group? A.It is a benefit society formed to provide insurance for members of an affiliated lodge B.It is company owned by the stockholders that provides nonparticipating policies C.It is a liability insurance company owned by its members D.It provides suppose for the underwrites and is not an insurance company
C. It is a liability insurance company owned by its members
All of the following would be considered an insurance transaction EXCEPT ... ? A.Advising a policyholder regarding a claim B.Negotiating coverage C.Obtaining an insurance license D.Soliciting a policy
C. Obtaining an insurance license
An insurer may decline to renew a Homeowners policy if the insured has filed how many claims under the policy in any 3-year period? A. One B. Two or more C. Three or more D. Five or more
C. Three or more
Which of the following is NOT required to accompany a notice of cancellation on an automobile insurance policy? A.Notice of insured's right to complain to the Director B.Refund of any unearned premium C.A 30-day waiver of coverage D.Reason for cancellation
C.A 30-day wavier of coverage
How does insurance distribute the financial consequence of individual losses? A.It transfers the risk to associates of the insured B.It transfers the risk to a small number of persons insured C.It transfers the risk to all persons insured D.It retains the financial consequences
C.It transfers the risk to all persons insured
Policy limits are the maximum amount an insured may collect, or for which an insured is protected under the terms of the .. ? A.Conditional receipt B.Application C.Policy D.Insuring Agreement
C.Policy
All of the following are true of Dwelling Special Form, EXECPT? A. Mobile homes are not eligible B. The dwelling must be used principally for residential dwelling purposes C. Losses to the dwelling are paid on a replacement cost basis D. Both the dwelling and contents are covered on an open peril basis
D. Both the dwelling and contents are covered on an open peril basis. Only the dwelling is covered on an open perils basis
How often must organizations consult the National Do Not Call Registry? A.Once every 6 months B. On the first Monday of every month C.Once a year D.Every 31 days
D. Every 31 Days
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 Payment C.Part C-Uninsured Motorist D.Part D-Damage to Your Auto
Part B-Medical Payment
A participating insurance policy may do which of the following?
Pay dividends to the policyowner
The amount an insurer will pay under Coverage D(Loss of Use) depends on .. ? A.The length of time the dwelling in uninhabitable B.The amount of coverage on the dwelling C.How long a dwelling has been occupied D.If the dwelling is owner-occupied or rented out
B. The amount of coverage on the dwelling
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays .. ? A.A percentage of the loss as described on the declarations B.The excess over the self-insured retention C.The amount specified in the policy under the additional coverage provisions D.The amount in excess of the underlying policy deductible
B. The excess over the self-insured retention
The insurer may cancel the policy by mailing written notice to the insured at least —??— days prior to the effective date of cancellation?
-10 DAYS-
When a dwelling policy is cancelled for nonpayment of premium, the insurer must give notice within how many days of the cancellation?
-10 Days-
The hearing must be held no later than the __??__ day after the date the commissioner receives request?
-10th Day-
Residential structures, including individual condominium units and their contents are insured by what part of the National Flood Insurance Program?
-Dwelling Policy Form-
The risk of loss may be classified as
-Pure risk & Speculative risk-
Rates for earthquake coverage in property policies are generally determined by which of the following? A.The number of lines on the property B.The age of the dwelling C.The type of construction D.County property taxed
C.The type of construction
Which of the following perils is not covered under the Dwelling Broad Form? A. Vehicle damage to the dwelling B. Burglary Damage C. Weight of ice and snow D. Smoke damage from industrial operations
D. Smoke damage from industrial operations
Which of the following would be considered a covered auto on your personal auto policy (PAP)? A.Your pickup truck used for deliveries of your retail business B.Your farm tractor C.Your farm wagon being towed by your tractor D.Your farm wagon being towed by your pickup truck
D. Your farm wagon being towed by your pickup truck
With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto? A.A vehicle leased to the named insured for 12-months by a leasing company B.A vehicle that is titled and insured by the named insured but is driven principally by the named insured's son, who is resident of the household C.A vehicle rented for the insured's personal use D.A vehicle that is titled to another person, but is being used with permission by an insured
D.A vehicle that is titled to another person, but is being used with permission by an insured
A personal umbrella policy may act as excess over any of the following insurance coverage policies EXCEPT ?? A.Homeowners Section II Coverage B.Auto liability Coverage C.Comprehensive Personal Liability D.Auto Collision Coverage
D.Auto Collision Coverage
The exact, direct, uninterrupted cause of the loss is the ... ? A.Actual cause B.Intervening cause C.Absolute cause D.Proximate cause
D.Proximate cause
An insured has a liability policy that sets the amount of all claims that arise from a single incident at $50,000. Which type of limit of liability does the insured's policy have?
-Per Occurrence-
Under the personal auto policy, liability for bodily injury resulting from the insured's use of a nonowned automobile is ?
-Provided by the insured's policy on a excess basis-
What type of damages may be awarded be the court to creat disincentives that discourage behavior that is deemed highly undesirable by society?
-Punitive-
For which of the following actions can an agent's license be suspended or revoked?
-Rebates Of Premiums-
Which of the following is included under the physical damage coverage of a personal auto policy?
-Sound reproduction equipment permanently installed in the covered auto-
A homeowner sells his house to a friend. The friend wants to keep the homeowner's current policy in effect. Under the assignment provision, which of the following is most likely?
-The homeowner will need to get written consent from the insurer before the policy can be reassigned-
The Limited Theft Coverage endorsement to the DP is used under which of the following circumstances? A. The dwelling has been vacant for more than 60 days B. The insured dwelling is tenant-occupied C. The insured dwelling is owner-occupied D. Coverage is desired of off-premises property
B. The insured dwelling is tenant-occupied Owner-occupied dwellings should use the Broad Theft Endorsement
Temporary License are not renewable and cannot be issued more than once in any ... ???
-6 Month Period, 180 DAYS-
Insurers must file all rates & forms for Commissioner's approval within how many days??
-60 DAYS-
Insurers must file all rates and forms for Commissioner's approval within how many days?
-60 Days-
With respect to auto insurance, the term owned autos includes all of the following EXCEPT?
-A pick up van titled to and used in the named insured's business-
In which the value of property is determined using the replacement cost of property of like kind and quality, minus depreciation. The original cost is not a factor
-Actual Cash Value (ACV)-
Under the dwelling policy, if an insurer chooses to repair or replace damaged or lost property, it must inform the insured within how many days of receiving proof of loss? A.10 Days B.30 Days C.45 Days D.60 Days
B. 30 Days
Which statement based describes agreement as it relates to insurance contracts? A.Each party must offer something of value B. One party accepts the exact terms of the other party's offer C. The intent of the contract must be legally acceptable to both parties D.All parties must be capable of entering into a contract
B.One party accepts the exact terms of the other party's offer
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
The amount of loss the insured is willing to absorb without insurance protection is known as.. ? A.Limit of liability B.Self-Insured Retention C.Maximum deductible D.Stop Loss
B.Self-Insured Retention
An insured's building has an actual cash value of $200,00, and he insured the property of $120,000 with an 80% coinsurance clause. A $40,000 loss occurs how much will the policy pay?
-$30,000 only 75% -
In the premiums collect by an insurer participating in the WYO flood program are insufficient to cover losses, which of the following would be true? A.Federal insurance administration will remove the insurer from the NFIP B.The insurer will be reimbursed for the excess costs by the NFIP C.The insurer must cover the loss out of its surplus D.The insurer must apply for disaster relief funds
B.The insurer will be reimbursed for the excess costs by the NFIP
A Texas resident agent seeking to sell insurance to customers in another state needs? A.A foreign agent's license in that state B.A resident license in that state C.A Certificate of Authority in that state D.A nonresident license in that state
D. A nonresident license in that state
Which of the following is covered under a dwelling policy? A.Freezing plumbing systems B.Flood or surface water C.Structures used for commercial manufacturing D.Fire caused by an earthquake
D. Fire caused by an earthquake
All of the following are true regarding physical damage coverage EXCEPT?
-The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle- the limit of liability is the *LESSER* of the ACV
4 Elements of a legal contract
-1)Agreement; Offer/application 2.)Consideration; premium, payment 3.)Competent Parties; legal age, mentally able 4.)Legal Purpose; not against public policy-
An insured is applying for a casualty insurance policy. One of the conditions of the policy allows the insurance company to inspect the insured's books at the end of the policy term to make sure sufficient premium has been collected for the exposure she plans to insure. Which condition is part of the insured's policy?
-Deposit of premium audit-
An insurance company that is incorporated in this state. Most cases the company's home office is in the state in which it was formed... ?
-Domestic Insurer-
All of the following are true regarding deposit premium EXCEPT?
-It is 50% for the actual premium-
Which of the following types of property would be covered in homeowners coverage forms?
-Landlord furnishings in an on-premises apartment- Covered up to $2,500
Which of the following best describes a misrepresentation .. ?
-Making a maliciously critical statement that is intended to injure another person-
What type of property does a Personal Floaters policy cover?
-Movable personal property, wherever it may be located-
Which method of loss valuation is contrary to the basic concept of Indemnity?
-Replacement Cost-
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called ?
-Specific Coverage-
When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as
-Stated Amount-
All of the following are unfair claims settlement practices EXECPT?
-Suggesting negotiations in settling the claim-
Trailers being towed by an insured auto are automatically cover for .. ?
-Uninsured Motorist Coverage-
Which of the following statements would be correct if an insured failed to maintain the underlying limited as required by a personal umbrella policy? A.The insured would have to pay the self-insured retention limit B.The insured would be responsible for the amount required as underlying limited in the event of a claim C.It would have no effect on the umbrella policy D.The policy will be cancelled
B. The insured would be responsible for the amount required as underlying limited in the event of a claim
Which of the following would NOT be eligible for coverage under a personal auto policy? A.A non-owned temporary substitute vehicle B.A trailer owned by the insured C.A vehicle purchased 90 days ago D. A vehicle listed on the declaration page
C. A vehicle purchased 90 days ago
Coverage D, additional living expenses, is intended to .. ? A.Pay hotel costs but not the cost of meals or transportation B.Pay all expenses incurred by a family who cannot use their home because of covered loss C. All the family to maintain their normal standard of living D.Pay a set amount per day
C. All the family to maintain their normal standard of living
What is designed to assume risks that are generally unacceptable to the normal insurance market? A.Multi-Risk Plans B.Limited risk capacity C. Residual Markets D.All-risk plans
C.Residual markets
Which of the following entities is considered the principal? A.The director of the insurance company B.The head of the Department of Insurance C.The insurer issuing a policy D.The producer or agent soliciting the policy
C.The insurer issuing a policy
The part of a property policy that shows the amount of insurance, premium, and policy term is the .. ? A.Insuring Clause B.Conditions C.Endorsements D.Declarations
D.Declarations The Who,What,When,Where & how much insurance and premium are stated in the policy Declarations
What is the maximum period of time the Commissioner may revoke your agents license? A. 12 month B. 2 years C. 5 years D.There is no maximum time period
D.There is no maximum time period