insurance licensing
for a contract to be enforced by law, the purpose of the contract must be
legal and of public policy
what type of coverage does a homeowners policy include that a dwelling policy does not
liability
insurance is a contract by which one seeks to protect another from
loss
the process of determining the premium charged and how much insurance is required for a particular loss is called
loss valuation
The insured's house is located one mile from the county's new landfill and across the road from the entrance of a rock quarry. It would cost $150,000 to rebuild the house if something happened to it, but when the insured tried to sell it, the best offer he received was $80,000. The insurance company will insure the house for only $80,000. What method of valuation is used to insure this property?
market value
untrue statements on the application unintentionally made by insureds that, if discovered would alter the underwriting decision of the insurance company are called
minimal misrepresentation
which of the following does the term proximate cause refer to?
negligence that leads to an injury
when an insurance policy does not offer a continuation or replacement at its expiration date, it is considered
nonrenewal
duties of the insured found in property policy conditions include all of the following except
notify the insurer in the event of financial difficulty
under a dwelling policy which of the following clauses applies if an insured has lost one or two matching silver candlesticks
pair or set
an insured has a liability policy that sets the amount for all claims that arise from a single incident at $50,000. which type of liability does this insureds policy have?
per occurrence
a tornado that destroys property would be an example of which of the following
peril
the causes of loss insured against in insurance policy
perils
A sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is called
proof of loss
under section 1, homeowners insurance must include
proper coverage -section 1: property coverage -section 2: personal liability coverage
all of the following are considered parts of the policy structure EXCEPT
provisions
the federal fair credit report act
regulates consumer reports
what type of information would be found in a policys insuring agreement
renewal dates
which of the following is used in the formula for calculating the actual cash value of the property
replacement cost
in property insurance, actual cash value is defined as which of the following
replacement cost at the time of loss, less depreciation
in the property insurance, actual cash value is defined as which of the following
replacement cost at the time of loss, less depreciation
In case of a loss, the indemnity provision in insurance policies
restores an insured person to the same financial state as before the loss
insurance is the transfer of
risk
The endorsement that provides coverage for losses arising from sudden collapse of earth arising from underground limestone created by the action of water on rock formations is a/an
sinkhole collapse endorsement
an insured owns several buildings each at a different location and insured on a separate policy. what type of coverage does the insured have?
specific
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
the policy provision found in property insurance policies that prevent the insured from collecting twice for the same loss
subrogation
the transfer of an insureds right to seek damages from a negligent party to the insurer is found in which of the following clauses
subrogation clause
replacement cost coverage is provided in both the broad and special form dwelling policies when
the amount of insurance on the dwelling is at least 80% of its replacement cost at the time of loss
which of the following would not be considered a source of insurability information by an insured
the applicants marital status
How much is the premium for the dwelling under construction endorsement under the dwelling policy?
the average amount of insurance during construction
an insured owns large dog. the first day he has to leave the dog home alone to go to work, the insured comes back to find his $400 couch torn apart, his $100 coffee table chewed up, and yhis $50 window curtains shredded. the insured has personal property coverage under a special form dwelling policy. how much of the loss will the policy cover
$0 -damage from domesticated animals is not covered
the broad theft coverage endorsement on the dwelling form specifies all of the following limitations EXCEPT
$1000 on silverware -limit on silverware is $2,500
an insured has a special form dwelling policy written for $100,000 on a dwelling. The dwelling replacement cost is 115,000. fire causes $75,000 in damage to the dwelling, $15,000 damage to separate garage and kills 10 trees valued at $600 each. how much will the policy pay for the trees
$5,000 (the trees and shrubs are covered limited to not more than $500 for any on tree and not to exceed 5% coverage a in total
coverages
-$200 on money -$1,500 on securities -$1,500 on jewlery -$2,500 on silverware
within the first 60 days of coverage under the dwelling policy, how much notice is required for the cancellation policy
10 days
what is the max number of boarders per unit that would be allowed in the homeowners policy
2 -homeowners policy may insure a property that has no more than 2 families or 2 roomers or boarders per unit
within how many years of a loss may an insured bring a lawsuit against an insurer, according to the dwelling policy
2 years`
Coverage for water backup or sump pump overflow is excluded from the Dwelling Policy. However, with the purchase of the water backup and sump pump overflow endorsement, coverage for up to $5,000 in loss or damage can be provided for an additional premium. What is the deductible associated with this coverage?
250
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?
30 days
the removal coverage included in he broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long?
30 days
what is the maximum number of roomers or boaders for properties insured under the dwelling policy
5
If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person?
50,000
what is a material misrepresentation
A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
which law is the foundation of statistical prediction of loss upon which rates for insurance are calculated
law of large numbers
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT
Conditions -part of the policy structure
the declarations page of the homeowners policy provides all of the following except
a statement that earthquake damage is not covered
which part of an insurance policy covers claims related expenses incurred by an insured to protect damaged property from further loss or defense expenses
additional coverage additional coverage for specific loss expense
The basic dwelling form (DP-1) provides all of the following coverages without endorsement EXCEPT
additional living expenses
in which of the following types of property valuation will the policy pay full value as specified on the policy schedule, regardless of the insureds property's appreciation or depreciation
agreed value
which of the following types of property valuation will the will the policy pay the full value as specified on the policy schedule, regardless of the insured properties appreciated or depreciation
agreed value
all of the following would be eligible for coverage under the dwelling policy accept
all houses that have 5 residential units -up to 5 roomers and boarders -up to 4 residential units
The limited theft endorsement is intended for which type of property?
an apartment building in which the owner does not reside
in insurance, an offer is usually made when
an applicant submits an application to the insurer
with respect to the business of insurance, a hazard is
any condition or exposure that increases the possibility of loss
an insurer makes a change to broaden coverage in a dwelling policy while it is in effect, the changes will apply
automatically (if within 60 days)
in return for premium, an insurance company must
be fair in underwriting and pay covered losses
an insurance contract must contain all of the following to be considered legally binding except
beneficiarys concent
which of the following other coverages is not included in the basic form dwelling policy
breakage of glass
a insured is driving her car through a residential area when she loses control and crashes into her neighbors porch. the amount applies to total of damages for any bodily injury's property damage
combined single
the ABC corporation has $100,000 of coverage on its building through insurance company A and $50,000 of identical coverage on the same building through insurance company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs and the prorata method is used, how much will each insurer pay
company A will pay $16,000 and company B will pay $8,000
what term best describes the act of withholding material information that would be crucial to an underwriting decision
concealment
which of the following is not an essential element in an insurance contract
counter offer
which of the following statements is true concerning the special form dwelling policy?
coverage A is for all-risk perils and coverage C is for the broad form perils
which of the following is the fair rental value coverage in the dwelling policy
coverage D
An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today's prices. If the roof has been depreciating at $200 per year and his policy is ACV, how much will it pay toward the insured's new roof?
current replacement-(depreciation/acv) 5x200=1000 6000-1000
which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy
damage to the dwelling caused by lava or dust from a volcano eruption
the part of a policy that shows the amount of insurance, premium, and policy term is the
declarations
the part of a property policy that shows the amount of insurance premium and policy terms in the
declerations
which of the following dwelling policy forms primarily insures a structure on an actual cash value basis
dp-1
which of the following dwelling policy forms primary insures a structure on an actual cash value basis
dp-1
all of the following are characteristics of the dwelling policy except
dwelling must be owner occupied
an insured has four separate but identical policies written by different insurers to cover her 100,000 building. each policy is written for 100,000 and each has the pro rata liability other insurance clause. in the event of a total loss to the building, what would each insurer pay?
each policy would pay $25,000 of the loss each policy will pay its pro rata share of the loss, but not more than the amount of loss in total
which of the following would modify the original insurance contract by either adding or removing coverage
endorsements
which of the following protects consumers against the circulatory of inaccurate or obsolete personal or financial info
fair credit reporting act
which of the following would be named on the declarations page of a property or liability policy
first named insured
replacement cost is defined as
full replacement of property at its current cost, new, and without reduction for depreciation
which of the following is NOT covered by the condominium unit owners endorsement
furniture in the building
the policy conditions define
how parties to the contract must act following a loss
the policy conditions define
how parties to the coverage must act following a loss
When would a misrepresentation on an insurance application be considered fraud?
if it is intentional and material
under which of the following conditions can broad theft be added to the dwelling policy?
if the insurer is owner occupant of the dwelling
which insurance principles states that if a policy allows for greater compensation than financial loss incurred, the insured may only receive benefits from the amount loss
indemnity
what do individuals use to transfer their risk of loss to larger group
insurance
all of the following are factors in determination of actual cash value EXCEPT
insurance premium paid
all of the following are conditions commonly found in the insurance policy except
insuring agreement
a basic dwelling policy automatically provides coverage against fire, lightling, explosion, and
internal explosion
which of the following perils is covered under both the basic form and broad form dwelling policies
internal explosion
dwelling coverage includes all of the following except
land on which the dwelling is located
peril is the most easily defined as
the cause of loss insured against
the part of the policy that sets fourth the rules of conduct, duties and obligations of the parties is called
the conditions
which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information
the fair credit reporting act
if more than one person has an insurable interest in the property covered under a dwelling policy
the insurer will be laible for only the insureds interest in damaged property
in terms of parties to contract, which of the following does not describe a competent party
the person must have at least completed secondary education
when a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be
the proximate cause
on a Dp-3 dwelling property special form policy, the coverage provided for personal property is
the same as provided on the DP-2 broad form -although coverage A&B on a DP-3 are written on an open peril or all risk basis, the coverage for personal property is written on a named or specified peril
Liability imposed on one party as a result of the actions of another person is known as
vicarious liability
Both the broad theft and limited theft endorsements on the dwelling program exclude all of the following types of property EXCEPT
watercraft -canoes have limited coverage
in forming an insurance contract, hen does acceptance usually occur
when an insurer underwriter approves coverage