Iowa Property and Casualty Practice Questions(PROPERTY)

What monetary penalty may be imposed if a producer is transacting insurance business and is not licensed to do so?

$1,000 per violation

Doug owns a single-family home with a replacement cost value of $500,000 and contents valued at $250,000. What is the maximum amount of insurance he can buy under a standard flood policy?

$250,000 on the building and $100,000 on the contents

Which of the following factors would not be considered the nonrenewal of a commercial line insurance policy?

10 percent or more increase the premium

An insurer may not refuse to renew a personal lines insurance policy unless written notice of nonrenewal is given to the insured within how many days before the end of the policy period

30

Gordon, a producer licensed in Iowa, moves from Des Moines to Chicago, Illinois. Within how many days must he notify the Iowa Commissioner of his new residence?

30 days

A commercial line insurance policy or contract, which has not been previously renewed, may be canceled by the insurer if it has been in effect for less than how many days at the time notice of cancellation is mailed?

60 days

All of the following statements are true about applying for a nonresident producer's license in Iowa EXCEPT:

An applicant must establish residency in Iowa

Which one of the following losses would most likely be excluded by one of the maintenance or wear-and-tear exclusions in a property insurance policy?

Bees build a nest under the siding

Bernard's homeowners insurance policy refers to an "insured location." Which one of the following locations would NOT qualify as an insured location?

Bernard's office in a downtown building owned by his employer

Larry, Brian, Susan, and Jennifer work for AllPro Insurance Company in Iowa. Based on their job descriptions below, which of them is not acting as a producer?

Brian , who is a VP in All Pro's human resources department and does not receive commissions

Who regulates all insurers and producers conducting insurance business in Iowa?

Commissioner of Insurance

Which of the following correctly compares benefits and premiums of a flood insurance policy purchased directly from the National Flood Insurance Program (NFIP) and one purchased through a private insurer?

Coverage and premiums are the same from either source

Which form(s) value dwelling buildings on the basis of actual cash value?

DP 1

A pile of greasy rags in the attached garage of a wood frame house burst into flames, resulting in the total loss of the house by fire. Which of the following statements is correct?

DP 1,2,and 3

Excalibur Insurance Company sends periodic privacy notices to all customers to comply with which of the following federal laws?

Gramm-Leach Billry (GLB) Act

If an insurer believes that it has received a fraudulent insurance claim, which of the following must be notified?

Iowa Insurance Fraud Bureau

A seven-member governing committee administers the FAIR Plan. Which of the following does not elect one of those members?

Iowa Insurance Guaranty Association

Cherie rents a hotel room when the temperature in her house falls below freezing during an ice storm that causes a widespread power outage. How will her DP 3 policy treat the additional living expenses?

It will refuse coverage because of the loss arose from power failure that originated away from the residence premises

If the Bakersfield Property & Casualty Insurance Company has a very low volume of insurance policy sales, must it be a member of the Iowa Insurance Guaranty Association

Membership is mandatory

Some property in the storeroom of Corey's firm is rusted. It is not clear whether a water leak caused the rust. Corey's special causes of loss form might cover damage from a water leak, but not from wear and tear or normal aging. What will happen if Corey makes a claim on his property insurance policy?

The loss is covered unless the insurer shows that it is excluded

The business income and extra expense coverage in the businessowners policy has:

a 12-month maximum recovery period

Octavio's home and personal property are insured by a DP 3 policy. Which loss would this policy cover?

a ceiling damaged by water when an upstairs toilet overflows

If an umbrella insurance policy has been in effect for at least 60 days, it cannot be canceled without notice to the insured under any of the following conditions EXCEPT

a change in the limits, scope of coverage, or exclusions in one or more of the underlying policies.

An insurance company declines an application for insurance as applied for and instead proposes to issue a rated policy with a higher premium. What is that rated policy legally called?

a counteroffer

Nigel and Collette form N&C Company, a partnership that is the named insured in a businessowners policy. For purposes of liability coverage, who is NOT an insured?

a customer who sues N&C

Salvador's business does not own any vehicles, but Salvador sometimes rents a van to make deliveries. Most deliveries are made by employees who use their own cars. How should Salvador's businessowners policy be modified to address his auto liability exposures?

a hired auto and nonowned auto liability endorsement should be added

When completing an insurance application, Dusty intentionally lied about his age in order to obtain a lower rate. What is Dusty's lie technically considered?

a misrepresentation

Although a business with fluctuating property values can use the value reporting form, a business whose property values vary on a predictable, seasonable basis every year can avoid the need for periodic reporting by using:

a peak season endorsement

Coverage E (personal liability) of the homeowners policy provides a defense against liability claims at the insurer's expense when the claim:

alleges bodily injury or property damage caused by a covered occurrence

The large heating and air-conditioning systems Albert installs in commercial buildings are expensive, and Albert wants to make sure he has insurance on this equipment during the time when it is being installed. What kind of floater should Albert purchase?

an installation floater

An insurance producer whose actions are not authorized by the insurer but which the insurer accepts anyway is demonstrating:

apparent authority

Justine's producer's license lapses when she fails to fulfill her continuing education requirement. One year later, she decides to work as a producer again. Which of the following must she do first to reinstate her license?

apply for a new license

What must an insurance company do to make a producer its agent?

appoint the producer as its agent

Which of the following is not a requirement to obtain a resident producer's license?

appointment by at least two insurers

Although Todd and his insurer agree that his property claim is covered, they cannot agree on the damaged property's value. What clause in Todd's property insurance policy provides a method of resolving this dispute?

appraisal

How many days before the effective date of cancellation must an insurer provide an insured with notice of cancellation?

at least 30 days

Where do the definitions appear in an ISO businessowners policy?

at the end of the property section and at the end of the liability section

Bill's children have grown up and moved away, but the tree house that he built for them now draws other neighborhood children despite his handmade "No Trespassing" sign. If a neighbor's child is injured by falling from the tree house, Bill might be held liable for the child's injuries under what legal doctrine or principle?

attractive nuisance

Which of the following documents is required before an insurance company may transact insurance business in Iowa?

certificate of authority

Sally was seriously injured when she collided with Frank at an intersection. A court determined that the accident was 20 percent Sally's fault, so she was entitled to recover 80 percent of her damages from Frank. The defense was based on the doctrine of:

comparative negligence

Haley's new law office is in a commercial condominium unit she purchased. Which form is suitable for insuring her property?

condominium commercial unit owners coverage form

Butch's Meat Market loses electrical power during a flood. The business closes for several days, during which time there is no refrigeration and a large quantity of meat spoils. The loss of the meat is what type of loss?

consequential

A truck crashes into an insured's house. Before repairs can begin, the truck and damaged portions of the house must be removed. The additional coverage for debris removal in the homeowners insurance policy will:

cover only the expense of removing damaged portions of the house

Max buys an expensive commercial lawn mower for his landscaping business. The contractors' equipment floater he purchased to cover this mower will most likely have all the following features EXCEPT:

coverage for physical depreciation

Gertrude's will specifies that, upon her death, her son Dirk will be the executor of her estate. Coverage for Dirk's actions as the executor are described under what policy condition of the homeowners policy?

death

When meeting with a prospect to discuss insurance, Agent Tyler makes disparaging comments about the financial stability and reputation of a competitor to dissuade the prospect from purchasing its policies. Which unfair trade practice has Tyler committed?

defamation

QBS Insurance Company uses class rating to determine the premiums for its auto insurance policies, which means that the rate for every insured driver is:

determined by placing the driver and vehicle into a class with other similar drivers and vehicles

Which of the following actions would not subject a producer to license probation, suspension, revocation, or nonrenewal?

failure to meet sales goals

Which of the following acts does not constitute insurance fraud in Iowa?

forgetting to list a prior illness on an insurance application

The Iowa Insurance Commissioner is appointed for a term of

four years

Emory and a number of other members of his church buy insurance from a church-related organization that provides insurance to members of a particular religious body. What kind of organization is it?

fraternal benefit society

Nick let his producer's license lapse eight months ago after he failed to pay the renewal fee and fulfill continuing education requirements. What must he do to reinstate the license?

fulfill CE requirements and pay fees for renewal and reinstatement

A producer who disobeys a Commissioner's order to cease and desist from an illegal activity is not subject to which of the following?

imprisonment

Which of the following are the parties to an insurance agency agreement?

insurance company and agent

GHI Reinsurance Corporation is an insurance company that:

insures other insurance companies exceptionally large risks

Acting on reliable information, the Commissioner decides to take immediate action against two insurance companies suspected of illegally fixing premium rates for a class of insureds. Which disciplinary measure will the Commissioner take first?

issue a cease and desist order

The standard mortgage (mortgagee) clause in a property insurance policy covering real property does which of the following?

it ensures that the mortgage lender is paid if mortgaged property suffers a loss

To reduce insurance costs, Britney wants to replace her HO 3 policy with a standard dwelling policy. Although the premium will be lower, the dwelling policy will NOT include:

liability and theft coverage

Stephanie is hired by ABC Insurance Company's home office. She does not have an insurance producer's license. Which of the following duties may she perform for ABC?

mail company correspondence for the president

Making a false statement in an insurance policy application to obtain a benefit from the insurer is known as:

misrepresentation

Although it addresses common terms that apply to all commercial policy forms, the commercial policy conditions form does NOT include:

no benefit to bailee conditons

After receiving payment from the insurer for a claim he filed under his personal article floater for the loss of his expensive golf clubs, Robert found the clubs in a shed. What does the "recovered property" condition in Robert's inland marine policy require him to do?

notify the insurer and be prepared to return the claim payment

A homeowner who wants to protect his or her home against the risk of flooding can obtain coverage from which of the following?

only the National Flood Insurance Program

The Insurance Commissioner can take all of the following actions against a party believed to have violated the insurance code EXCEPT

order the arrest of the party

All the following are duties owed to a customer by an insurance producer EXCEPT:

overcome the customers objections to buying a reccomended product

An insured plants trees at the edge of his property to reduce road noise and ensure privacy. His homeowners policy provides limited coverage to replace one or more of these trees if it any are destroyed or damaged by:

passing motorists

Which of the following acts would not be considered rebating?

paying a personal visit to induce person to buy insurance

From an insurance perspective, the items inside a house, in a yard, and in a suitcase when the insured travels is considered to be:

personal property

The Farm Liability Coverage Form (FL 00 20) includes all the following basic coverages EXCEPT:

pollution liability

Which of the following is not a power granted to the Iowa Insurance Commissioner?

prosecuting individuals for violating the insurance laws

Which of the following would not be considered a prohibited rebate in an insurance transaction?

reducing premiums due to an insurers favorable claims experience

More than half of Darryl's home suffers tornado damage. Because the home did not comply with current building codes, Darryl must tear down the undamaged portion and rebuild it with more expensive components. The ordinance or law additional coverage in his HO 3 policy will NOT cover:

replacement cost of repairing the damaged portion of the home

One purpose of the Iowa FAIR Plan is to provide for an equitable distribution and placement of:

risk among insurers

The property and casualty underwriting process generally involves all the following steps EXCEPT:

risk analysis by the producer

In deciding not to own a car out of concern for the risks of accidents or theft, what risk management technique is a person employing?

risk avoidance

Purchasing an insurance policy is an example of

risk transfer

The FAIR Plan is considered a(n):

risk-sharing insurance association

With limited exceptions, all fire insurance issued in Iowa must be issued on a printed policy form known as the

standard fire policy

From a property insurance perspective, which of the following is NOT a basic type of construction?

steel

Making sure a recommended insurance product matches a customer's needs and circumstances means determining the product's:

suitability

In Iowa, which of the following persons is not required to have an insurance producer's license?

sven, who administers employee benefits for his employer

Lucy owns a variety of valuable items, including expensive jewelry, a collection of fine paintings, several mink garments, and her grandfather's restored DeSoto auto, which she drives on special occasions. A personal articles floater can be used to cover all of the following items EXCEPT:

the DeSoto

Colby mows lawns and shovels snow after high school to save money for college. He is insured under his parents' homeowners insurance policy. The liability coverage of this policy contains a business exclusion. What affect, if any, will this exclusion have on bodily injury or property damage claims against Colby as a result of his business activities?

the exclusion has no effect and Colby is covered

Olive's personal property is insured by a DP 3 policy. An earthquake breaks some dishes in her kitchen. Sparks from an overturned lamp start a fire that damages her apartment. Which loss does Olive's dwelling policy cover?

the fire damage but not the broken dishes

A pile of greasy rags in the attached garage of a wood frame house burst into flames, resulting in the total loss of the house by fire. Which of the following statements is correct?

the fire that destroyed the home was a peril

Which of the following correctly explains why insurance policies are contracts of adhesion?

the insurance company determines the wording of the policy

The doctrine of concurrent causation holds that if a loss involves more than one peril, and the insurance policy covers at least one of the perils, then

the insurance policy covers the entire loss

The errors and omissions coverage in an equipment breakdown policy is most likely to apply in which of the following situations?

the insured made a mistake in describing the property location on the application

Regarding the Farm Property-Farm Dwellings, Appurtenant Structure, and Household Personal Property Coverage Form (FP 00 12) policy, what does Coverage C-Household Personal Property of that form cover?

the insured owner's household personal property, but not farming supplies

An insurer must meet all of the following requirements to be a member of the FAIR Plan EXCEPT:

the insurer has written property insurance in Iowa for at least five years

In an auto policy that has split limits of 50/100/75, what does the "100" represent?

the maximum sum the insurer will pay to all injured persons

Freddy's dwelling policy has a governmental action exclusion. The insurer will use this exclusion if the loss arises because:

the sheriff takes control of the house after Freddy fails to pay taxes

All the following equipment is used on Mari's farm. Which item could Mari cover under a Mobile Agricultural Machinery and Equipment Coverage Form (FP 00 30)?

the tractor that pulls her hay wagon

How long is an insurance producer's license valid?

three years

With a named perils policy, which of the following statements correctly describes the burden of proof with respect to covering a loss?

to cover the loss, the policyholder has the burden of proof to show the loss was caused by a covered peril.

When comparing her insurance company's policies to those of Zenith Insurance, Melanie makes a misleading statement to convince an insurance prospect to terminate a policy with Zenith and buy one from Melanie's company. What prohibited practice has Melanie engaged in?

twisting

Melanie becomes intoxicated at a party and then Pierre persuades her to sell her car to him for $25. Pierre puts the terms in writing and both of them sign the document. The next day, Pierre goes to Melanie's house with the money and demands that she deliver the car to him. The agreement he made with her is:

unenforceable because one of the parties was incompetent

John let his 17-year-old daughter Ashley use his motorboat, knowing she was normally a responsible operator. On this evening, while fooling around, she collided with another boat causing injuries and property damage. Though John was not in the boat, he was found to be responsible for damages based on the doctrine of:

vicarious laibility

Dewey Insurance Company is a nonadmitted insurer that is on a state's white list. From this information, it seems most likely that Dewey:

writes excess and surplus lines insurance in that state

Which of the following is not within the powers of the Iowa Insurance Commissioner?

writing insurance laws