Missed Exam Questions 1

The insured has a CGL policy with a $600,000 aggregate limit and a $300,000 per occurrence limit. The insured has one claim for $350,000 and another for $100,000. How much of the aggregate limit will remain for future claims?

$200,000. How much will REMAIN

Under the "emergency program" the National Flood Insurance Program will insure a single family residence for up to:

$35,000 Under the "regular program" the limit can be up to $250,000.

Two customers are injured when a fire sweeps through the hardware store. Medical expenses cost $8,000 for one customer and $3,000 for another. A suit against the hardware store results in an award of $40,000 damages to one customer and $25,000 the other. The hardware store's CGL policy has a per occurrence limit of $50,000, medical payments of $5,000 each person and a general aggregate of $100,000. How much will the insurer pay?

$50,000.

A building is insured for $500,000. A covered fire occurs, costing the insurer $100,000 in repairs. During the same policy period, a second fire occurs. What limit exists for the second loss?

$500,000 Insurance policies generally pay the limit of liability on a per-claim or per-occurrence basis. If a covered loss occurs, the limit is automatically restored for future losses within the same policy period. Therefore $500,000 would be available for the second fire, even though $100,000 had been paid for a previous loss.

If an insured carries Coverage C (contents) under a dwelling (not homeowners) form, how much coverage applies on a worldwide basis?

10% of the coverage C limit.

The mandatory recoupment of the federal share through policyholder surcharges under Terrorism Risk Insurance Program Reauthorization Act of 2015 was increased from 133% to:

140%

The HO-3 policy covers loss to personal property caused by:

17 listed perils

What is the maximum number of weeks an injured employee, covered by workers compensation coverage, receive loss of wages for a permanent partial disability?

350 weeks

What is the percentage of weekly wages for the total disability benefit?

70% For total disability, the benefit is a percentage of weekly wages, subject to stated minimum and maximum dollar amounts. In Oklahoma, the percentage is 70% of the average weekly wages

An adjuster applicant moving to Oklahoma is not required to take the licensing examination to become a resident adjuster if he applies for the license within ____ after establishing legal residence in Oklahoma.

90 days.

Who is not an insured under the CGL form?

A person who helps an employee load a truck as a favor Not an employee even volunteers are covered

What is the definition of a rental vehicle under the personal auto policy?

A rental vehicle is considered to be a non owned vehicle for coverage purposes under the personal auto policy.

Replevin bond

A replevin bond guarantees that if property is in the possession of party A is determined to belong to party B and the court orders its return to party B, party A will do so. Party A would first have to obtain an attachment bond, also required by the court, in case the property was wrongfully repossessed.

The Jones Act:

Allows members of crews to sue the ship-owner for injuries caused by the ship owner's negligence.

Which of the following most closely describes a claim reserve?

An amount expected to be ultimately paid on an open claim.

Which of the following situations would be covered by liability insurance under a personal auto policy

An insured who rents a private garage, backs his car in and damages the garage. Normally, the liability section of the personal auto policy excludes damages to property in the care and custody of the insured. This would include the insured's property and the property of others. The policy makes an exception and provides coverage to a residence or private garage rented to the insured.

A blanket employee dishonesty bond will:

Blanket employee bonds do not list the names of the employees. They are all covered under the form.

In a liability situation, more than one policy will share equally in the loss until the lowest policy limit is exhausted and continue in that fashion until all policy limits are exhausted. This is known as:

Contribution by equal shares If more than one policy is involved in a liability situation, "contribution by equal shares" will require each policy to share in the loss up to the lowest limit of insurance which at that point, that lowest limit policy is exhausted and excused. The remaining companies continue to share the loss equally until each policy is exhausted.

Which of the following is NOT true regarding the legal effect of a mistake in an insurance contract?

Coverage can be voided by the insurer under any circumstance involving a mistake.

An insured auto dealer has purchased garage policy physical damage coverage against specified causes of loss. Which of the following losses will not be covered by the policy?

Damage resulting from the collision of the truck carrying a covered auto with another vehicle. A specified cause of loss is named perils coverage and collision is not one of the named perils. Collision is a separate physical damage coverage requiring the upset of the covered vehicle, or its impact with another vehicle or object.

Bob and Pete's Used Cars has purchased a garage policy with dealers physical damage on the cars owned by the dealership at its location. Pete goes to an auto auction 150 miles away, purchases vehicles and drives them back to the dealership. Which endorsement, if any, is necessary to cover this exposure?

Dealers Drive Away Collision The "dealers drive away collision" endorsement eliminates the 50 miles coverage limitation on dealers physical damage provided that the points of origin, destination, and value must be stated on the last inventory report submitted to the insurer and the value on the report needs to be significant enough to cover the value of the cars being transported over the 50 mile coverage radius.

Freight insurance.

Freight insurance covers only the shipping fees. Damage to the cargo is covered under a cargo form. Some coverage is also included under the protection and indemnity coverage legal liability.

Ocean marine protection and indemnity (P&I) coverage usually insures the ship owner against liability for all of the following EXCEPT:

Hull coverage is required to cover the damage to the ship. P&I provides legal liability coverage for injuries and certain types of damages. Damage to another ship is not covered under the P&I coverage. Coverage can be provided under the hull coverage form for this coverage to other vessels. This is called the "running down clause".

A ship has negligently collided with another ship and caused severe damage. What coverage would apply to cover this claim?

Hull insurance with the "running down clause" would respond to cover this claim.

When someone dies without a will they are said to have died:

Intestate When an individual dies intestate, he or she left no will.

An insured has reported a claim late that occurred over one year ago and now seeks defense representation and coverage under his automobile policy. What should the adjuster do?

Issue a reservation of rights letter to the insured In this case since the facts are not clear and probably no witnesses or police reports and a lack of physical evidence, the adjuster should issue a "reservation of rights" letter to the insured.

Under the commercial auto policy with respect to physical damage to a covered vehicle, which of the following is true regarding diminution of value?

It is specifically excluded A decrease in the value because of an accident is not a covered loss in most states. The policy excludes this decrease in value when a covered vehicle has been damaged and causes a decrease in value even though it has been repaired. GA does others don't

Under the CGL policy, all of the following are "insured contracts" as defined by the policy, EXCEPT:

Land and mine surveyor agreements The CGL policy contains a contractual liability exclusion, which eliminates coverage for risks of others that the insured assumes in any written contract except an "insured contract." A land and mine surveyor agreement is not an "insured contract." The other three are covered as "insured contracts."

What is not considered case law?

Law based on new trials yet to be decided. Case law is law based on prior cases that have been previously decided. It would not apply to new trials yet to be decided.

Which of the following would not be considered a "first party" coverage under the personal auto policy?

Liability Liability is considered to be "third party coverage." The other coverages pay the insured (the first party) under the policy.

The National Flood Insurance Program will reimburse for loss of use of a home if it is flooded for:

Loss of use is not covered under the NFIP policy Loss of use coverage is not provided by NFIP under either the Emergency or Regular Programs.

A legal duty owed is proven and breach of legal duty owed is also present. This would be a definition of:

Negligence or a tort

A Commercial General Liability form provides automatic coverage for newly acquired organizations for up to:

Newly acquired organizations are covered for up to 90 days.

Which of the following policies would be used to cover imports and exports

Ocean marine Ocean marine pertains to import and export risk, including the cargo being shipped as well as the vessel transporting goods or people

An employee who injured his shoulder and could no longer perform his/her original job but was rehabilitated to perform another job would be classified under which type of disability?

Permanent partial .

Losses caused by all of the following are covered under the National Flood Insurance Program, EXCEPT:

Sewer backup Most insurance carriers now offer sewer backup coverage. This type of loss is not considered to be a flood loss.

Who is the principal in a bid bond?

The Contractor. The surety is bonding the contractor who is the principal.

The National Flood Insurance Program will pay which of the following amounts to assist with moving of property to safety when there is imminent flood danger?

The NFIP provides $1,000 of coverage to move property to safety, but that amount decreases the coverage limit payable for damaged property.

An insured carries an unendorsed HO-2 policy. He has suffered a partial loss to his dwelling and the authorities have advised him that the property cannot be repaired and must be demolished. What will the insurer pay?

The cost of the value of the damaged property plus 10%. The HO-2 form as well as HO-3 and HO-5, contain the "ordinance or law" coverage which pays an additional 10% of the damaged property building loss. Unless the insured purchases the "Ordinance or Law Increased Amount of Coverage Endorsement," this is all the insured would be paid for Coverage A, dwelling plus the negotiated damages for the partial loss. This coverage does not apply to personal property.

Which of the following workers compensation claims would be honored in case of the injury to an employee?

The employee injured while assuming a job for which he/she was not properly trained would be paid.

If a vehicle has been stolen, which of the following steps is the insured immediately required to take according to the conditions clause in the personal auto policy?

The insured is required to notify the police immediately in case of the theft of a covered auto. The insured is also required to notify the police in case of a hit and run auto accident.

All of the following are necessary for liability coverage to apply under the personal auto policy, EXCEPT:

The insured must not have been drinking It is not necessary that the insured not have been drinking alcohol at the time of the accident. Coverage would still apply.

Under the "regular program" a flood insurance policy will insure a single family residence for up to:

The limit under the regular flood program is $250,000. Under the emergency flood program the dwelling is covered for only $35,000.

An insured has purchased a personal watercraft policy with liability limits of $300,000 and medical coverage in the amount of $5,000. The boat accidentally tips over and both the insured and a friend are injured. Who would be covered under the medical payments coverage?

The medical payments coverage applies to all occupants of the boat, including the insured and family members.

Under the supplementary payments section of a CGL policy, which of the following is true?

The policy specifies a limit for the cost of bail bonds in the amount of $250. The other items do not contain specific limits, but coverage is provided.

An insured carries a general liability policy and has hired a trucking company to transport equipment to the business location. The trucking company carries a commercial auto policy. The insured loads a piece of machinery onto the truck and fails to secure it properly. The trucking company is transporting the cargo and it falls off the truck and hits another car. Which policy or policies would cover this claim?

The trucking company's commercial auto policy would cover the claim..

A physicians, surgeons, and dentists' professional policy would cover which of the following?

This policy would cover claims for malpractice against the medical professionals and members of the staff. Premises liability is not covered, nor is coverage for criminal acts.

In property and casualty insurance, what is the function of loss reserves?

To pay the expected future obligations of existing policies

The insured carries an unendorsed DP-3 dwelling policy on his home and personal contents. While traveling abroad someone broke into the home and stole $200 in cash, a shotgun valued at $1,000, and other household items valued at $2,000. Damage caused by the burglars is $1,500. Assuming no deductible applies to their coverage how much would be paid?

$1,500. The DP-3 only provides damage to covered property caused by the burglars. Theft is excluded under the DP-3 unless endorsed with the theft endorsement.

The insured carries a personal auto policy providing a bodily injury limit of $50,000 each person with a multiple injury limit of $100,000. He injures two occupants in another vehicle. Their injuries total $60,000 for Mr. Jones and $50,000 for Mrs. Jones. The insurance company spent $40,000 in defense and investigation costs. How much will the insured's policy pay?

$140,000 The per person limit is $50,000. The most that can be paid is the $100,000 multiple injury limit plus the $40,000 to defend and investigate the claim. The costs to defend and investigate are supplementary coverages and are in addition to the policy limits.

A homeowner who moves into a new house and discovers that it has several major defects may seek a claim against the contractor's:

Although the homeowner may have a tort and a valid claim against the contractor, neither coverage applies because the damages do not involve either bodily injury or property damage.

All of the following are true statements regarding an apprentice adjusters license in Oklahoma, EXCEPT:

An apprentice license is good for one year An apprentice adjuster license is only valid for six months in Oklahoma.

Which of the following vehicles is considered a temporary substitute auto under a personal auto policy?

An auto loaned by the garage while the vehicle of the insured is being repaired. . This is as per the policy provision as respects to the definition of a substitute vehicle.

Which of the following is not specifically considered an unfair trade practice under the insurance code of most states?

Appointment of producers by unauthorized insurers. Although an unauthorized insurer cannot legally transact insurance in the state, there is no specific provision prohibiting the appointment of producers by such an insurer.

If a person is found guilty of violating USC Section 1033 regarding Federal Fraud and False Statements, the Attorney General may do which of the following?

Assess a civil penalty in the amount the person received or offered for the prohibited conduct or $5,000 whichever is greater..

If coverage for towing and labor costs is included in a personal auto policy, labor costs will be covered only if the labor is performed:

At the place of disablement.

A valid contract must contain all of the following, EXCEPT

Be a written instrument.

Which of the following defines claims covered under the CGL policy for products/completed operations?

Claims are covered if they occur away from premises owned or operated by the insured. If they occur on the premises it is considered to be a premises liability claim. If they occur while operations are being performed, it is considered to be an operations liability claim.

Joe Taylor has the automobile coverages listed below under a personal auto policy. Select the coverage that would apply when Mr. Taylor runs over a log and damages his auto.

Collision. Since the vehicle was in motion and struck the log this would be a collision loss.

Betty Jones claims that the bicycle manufactured last year by Daryl Lanier's firm was the cause of her daughter's accident. Which of the following coverages would have provided protection for Mr. Lanier?

Commercial General Liability

What information would not normally be found on an insurance binder?

Conditions and general exclusions will be stated in the actual insurance policy. An insurance binder legally represents the policy while it is being prepared by the insurer. Binders typically contain only the policy specifications and the insured parties.

Which of the following is NOT considered to be an unfair claims settlement practice?

Denying a claim that is not covered by the policy..

Henry works for Better Burger, Inc. As part of his compensation package, he is supplied with a company vehicle which he is allowed to take home each evening. Henry wants to make sure that the liability coverage under his personal auto policy covers him while driving the company car. What coverage should the agent add to his policy?

Extended Nonowned Liability coverage.

What is the exception to a flood insurance claim being paid on an ACV basis?

Flood claims on dwellings insured to 80% of replacement value or the maximum limit permitted by the flood insurance program are paid on a replacement cost basis.

Which of the following would be an "uninsured motor vehicle"?

Hit and run applies to uninsured

A ship has suffered damage and sunk. Which of the following would respond to cover the loss of the ship?

Hull Insurance.

All of the following statements regarding the Motor Carrier Act of 1980 are correct, EXCEPT:

It requires truckers to certify that they are able to meet financial obligations arising from physical damages of their trucking operations.

What is the purpose of a liability insurance policy's severability clause?

It states that the coverage under the policy applies separately to each insured as if they were the only insured.

All of the following make a property insurance policy an indemnity contract, EXCEPT:

Liberalization is a clause that automatically upgrades an insured's policy when the company has made a change without a premium charge that broadens coverage on the same types of policies issued after the insured's policy was issued.

Which of the following liability coverages may require the insured's consent before the insurance company settles and pays a loss?

Medical professional liability This usually applies to medical professional liability insurance. Today, most companies do not include this clause in their policies.

A motor vehicle liability policy issued in Oklahoma:

Motor vehicle liability policy means an "owner's policy" or an "operator's policy" of liability insurance, certified as proof of financial responsibility, and issued, except as otherwise provided, by an insurance carrier duly authorized to transact business in this state, to or for the benefit of the person named therein as insured.

Oliver Dogwood was in an auto accident which destroyed his car. While investigating the accident, Adjuster Doright found that Mr. Dogwood paid $1,000 for the vehicle. After checking with others he found the same vehicle with an asking price of $1,700, a retail price of $2,150 and a dealer price of $1,750. What amount will Mr. Dogwood receive?

Mr. Dogwood will receive $2,150 plus any sales tax. The insured is required to pay retail price plus sales tax.

In the event of a catastrophe, the Oklahoma Insurance Commissioner may declare an emergency to exist, and in the event of such a declaration, the Commissioner may issue an emergency adjuster license to any resident or nonresident applicant. Which of the following is statements is NOT TRUE regarding the emergency adjuster license?

Must be a licensed adjuster in Oklahoma or another state that reciprocates with the state. The person does not have to be a licensed adjuster to obtain the emergency license.

Under a CGL policy, which would not qualify for coverage under the definition of "bodily injury"?

Personal Injury Personal injury is not bodily injury as defined by the policy. Personal injury involves claims such as wrongful eviction, defamation of character, malicious prosecution, etc.

What is the purpose of the "sue and labor clause" in ocean marine insurance?

Pertains to protecting the ship and other property from further damage..

An insured purchases two homeowner policies from two different insurance companies. If a covered loss occurs, on what basis will the loss be settled by each of the insurers?

Pro rata basis Each company will pay its pro-rata share of the loss. This means the percentage of coverage (the total amount of insurance carried) that each company provides on the risk.

The Motor Carrier Act of 1980:

Requires trucking operators to file proof of pollution liability insurance..

In the ocean marine insurance, which of the following is considered to be the most important implied warranty?

Seaworthiness. All of the responses are implied warranties in ocean marine insurance. The most important is considered to be the seaworthiness of the vessel.

A policy's appraisal clause is used to:

Settle disputes concerning the amount of loss.

If a bond is called upon for payment, which party pays out the face amount of the bond?

Surety The surety (the insurer) pays out the face amount of the bond to the oblige in the event that the bond is called. In that event, the surety will have "right of recourse" against its own principal.

The guarantee of an obligation is the subject of:

Surety bonds. The purpose of the surety bond is to guarantee the performance of the principal

Which of the following dwelling forms provides replacement cost coverage for dwellings and "other structures?"

The Broad and Special Forms only. If the insured carries a limit of at least 80% of the replacement cost value on the dwelling and the other structures, the broad and special dwelling forms provide replacement cost settlement on the dwelling and other structures. The basic dwelling form provides actual cash value only.

The insured carries an HO-3 homeowner policy. He has complied with the 80% to value provision for replacement cost dwelling coverage. He suffers a fire loss. Which of the following property is NOT covered on a replacement cost basis?

The carpeting is not covered on a replacement cost basis. This coverage can be obtained by attaching the "personal property replacement cost" endorsement.

Personal Injury coverage insures against liability for:

The definition of Personal Injury is offenses arising from libel, slander, defamation, invasion of privacy, and wrongful eviction.

The doctrine of reasonable expectations is based primarily on:

The doctrine of reasonable expectations is a part of contract law where the insured can reasonably expect coverage to apply without having to read the contract.

experience modification factor

The experience modification factor is determined by a mathematical formula. This formula takes into account many items, including the actual losses and premiums of an employer for the last four years (excluding the most recent year) and the expected losses for employers doing the same kind(s) of work. Annual sales are not a component of the formula.

Which of the following statements about a mortgagee's rights under the dwelling property basic form (DP-1) is incorrect?

The mortgagee may abandon the insured property to the insurance company. Neither the insured nor the mortgagee may abandon the insured property to the insurance company in case of a loss.

John does not own a vehicle and borrows a friend's car and has an accident. John carries named non-owned auto coverage. Which of the following applies to the accident?

The named non-owned auto coverage is excess coverage.

Robert boards his dog at a kennel while he is on vacation. While at the kennel, the dog bites a meter reader. How would Robert's HO-3 policy respond to the meter reader's request for repayment of his emergency room costs?

The policy stipulates that "Medical Payments to Others" applies if caused by an animal owned or in the care of the insured either on or off the insured's premises. This could also develop into a liability claim if the insured is brought into a law suit.

Which of the following losses would be covered under garagekeeper's legal liability coverage?

Theft of a customer's AM/FM stereo radio permanently installed..

Henry is the first named insured on a $1 million umbrella liability policy. His wife, Dorothy, is also an insured. Both Henry and Dorothy were sued for $1 million in separate, unrelated suits by separate third parties. Both insured's lost their suits on the same day. In this possible but rare situation, if the umbrella policy is applicable and the self-insured retention is not applicable:

These are two separate unrelated third party claims and each would be covered up to the policy limit provided the combined losses do not exceed the "aggregate" limit of the policy.

Under the Motor Carrier Act, how long are goods being transported covered for loss?

Until they are unloaded and placed in a designated place.. The goods are covered until they are properly delivered to their destination and accepted.

Collision is referred to as colliding with another object or _____of the vehicle.

Upset or rollover

When someone dies without a will, their assets will be handled by a court appointed:

When an individual dies intestate, he or she left no will. An intestate death requires a person be appointed by the court to administer the estate and also requires that this administrator secure an administrator's bond.

The HO-4 provides ____ coverage on the dwelling and ____ peril coverage on personal property.

no / broad The HO-4 (Tenants form) insures tenants - people who do not own the building where they reside. It provides no coverage for the dwelling and broad peril coverage on the personal property.