NY Property and Casualty Practice Test 1

A building valued at $200,000 is insured for $150,000 with an 80% coinsurance requirement and a $1,000 deductible. After the building is totally destroyed, incurring debris removal expenses of $10,000, how much will the Building and Personal Property Coverage Form pay?

$159,000 After a total loss, the policy will pay the face amount less the deductible, plus up to $10,000 for debris removal. The coinsurance requirement only penalizes the insured for not carrying insurance to value in the case of a partial loss.

Instead of revoking or suspending an insurance license, the Superintendent may impose an aggregate penalty of up to what dollar amount for all offenses?

$2,500

Policyholder S has an HO-5 policy with a $250,000 Coverage A limit. After a strong wind blows a mailbox into S's front picture window, causing $2,500 damage, S immediately buys $250 of wood and plastic sheeting to cover the damaged window and prevent further damage. How much will S's policy pay?

$2,750 When an insured's property is damaged by a covered peril, the Reasonable Repairs additional coverage pays the reasonable costs by the named insured to take necessary measures to protect the property against further damage. The policy would therefore pay the full amount of the loss to the window, plus the insured's cost in covering it to prevent further damage.

After a storm, ABC Bakery suffers the following losses: $500 in damage to a free-standing sign, $500 in damage to a fence, and $1,500 in damage to a decorative Japanese maple tree. How much will ABC Bakery's BOP pay for these losses if the policy includes an Outdoor Property extension?

$2000 The BOP's coverage extension will pay the full cost of the non-attached sign and the fence. The tree would only be covered up to $1,000.

The respective minimum limits of auto liability must be at least:

$25,000, $50,000, $10,000

Policyholder B has a PAP with limits of 100/300/50. In an accident for which B was liable, there were BI claims in the amounts of $80,000; $100,000; and $125,000; and PD claims of $20,000 and $35,000. How much will his policy pay?

$280,000 BI and $50,000 PD The BI claims of $80,000 and $100,000 will be paid in full. The $125,000 claim exceeds the per person limit and will only be paid up to $100,000, resulting in total BI payments of $280,000. The PD payments will be capped at the policy limit of $50,000 per accident.

Driver D slid into another car causing an accident in which three people in the other car were injured. Two injured parties claimed $15,000 in medical expenses, and the third person claimed $25,000. How much will D's insurance company pay if D's policy has 25/50 limits for bodily injury?

$50,000 The policy pays up to $25,000 for each person injured, but no more than $50,000 per occurrence, regardless of the number of persons injured. Therefore, the limit for this accident is $50,000.

Under the PAP, after a collision the insured is entitled to Transportation expenses up to:

$600

Under a Homeowners Policy, Coverage B is what percentage of Coverage A?

10

Before revoking a resident insurance producer's license, how many days' notice must the Superintendent provide to the licensee before holding a hearing?

10 days

How much notice to appear for a hearing is given by the Superintendent whenever a person is believed to have committed or is committing a defined violation?

10 days

Under a Dwelling Policy, an insured tenant may use up to what percentage of the Coverage C limit of insurance for a covered loss to improvements, alterations, and additions made at the insured's expense to that part of the described location occupied by the named insured?

10% An insured tenant may use up to 10% of the Coverage C limit for a covered loss to improvements, alterations, and additions made at the insured's expense to that part of the described location occupied by the named insured.

Insurance producers are required to complete how many continuing education credits during each biennial licensing period?

15

What is the minimum amount of notice an insurer must provide to a policyholder in advance of cancelling a commercial policy after it has been in effect for 60 days?

15 days

In New York, any child is considered a dependent under most types of insurance until attaining the age of:

19

Under the Workers' Compensation policy, the insurer may audit the insured's records for a period of how many years following policy termination?

3

Under the PAP, how long does an injured party have following an accident to report a Medical Payments claim?

3 years

The BOP covers property while it is being temporarily stored in another location for how many days?

30

An employer is required to file a completed ADR-2 form with the Workers' Compensation Board within:

30 days of the final disposition or settlement of a Workers' Compensation claim

Transportation Expenses coverage under the Personal Auto Policy begins how long after a covered auto has been stolen?

48 hours

Under the personal earthquake endorsement, all earth movements are considered a single occurrence if they occur within:

72 hours

All of the following are considered to be insured under a Homeowners Policy, except:

A 25-year-old friend who is living with an insured

A Mobile Home Insurance Policy is most similar to:

A Homeowners Policy

Which would be covered under the Business Auto Coverage Form?

A borrowed truck used in the insured's business

Which of the following statements is correct regarding consumer privacy requirements in New York?

A covered entity may be required to give each customer a notice of the right to opt out of disclosure

Which of the following property is covered under the Homeowners Policy?

A model airplane

The Homeowners Policy provides coverage for all of the following, except:

A motorized golf car being driven on a public beach In order for coverage to apply, a motorized golf car must be used on a golfing facility or within a private residential community for approved purposes.

Property insurance policies that apply coverage only to perils that are stated in the policy are considered to be written on:

A named peril basis

Which of the following workers would be covered by The Federal Employers Liability Act?

A railroad worker

Which of the following statements regarding crime coverages is correct?

A robbery policy would cover theft in the presence of an employee

Which of the following workers would be covered by the Jones Act?

A sailor injured by the negligence of others

Which statement about property insurance terminology is correct?

A spark that jumps from a fireplace and ignites a nearby rug would be deemed a hostile fire

Which of the following would be included in the definition of burglary?

A thief breaks down a door to enter store and steal merchandise

Which of the following losses would not be covered under a NFIP policy?

A water main in the street breaks, flooding the insured's basement

Paul is an agent for ABC Insurance Company, which has just issued a life insurance policy to Maria. In this transaction, who is known as the principal?

ABC Insurance Company

Dwelling Coverage D covers which of the following losses?

Access prevented by a civil authority because of a neighboring location's direct loss by a peril covered under the insured's policy

Personal Article Floater claims are normally settled on a(n):

Actual cash value basis with some exceptions

An insurance agent, broker, consultant, excess line broker, reinsurance intermediary or adjuster must do which of the following in order to receive any commission?

Actually place insurance coverage on behalf of insurer

Which statement is correct concerning the Agreed Value optional coverage under the Building and Personal Property Coverage Form?

Agreed Value coverage suspends the coinsurance requirement The Agreed Value optional coverage is used when insuring rare or unusual property, the value of which is difficult or impossible to determine. The coinsurance clause is suspended when this optional coverage applies. The insured and insurer agree on a value specified on the Declarations page.

The purpose of excess lines insurance is to:

Allow unauthorized insurers to issue policies in the state covering risks of a more unusual nature

Insurance Company C has decided that it is insuring too many homes in a particular area. Therefore, it decides to reinsure R's Homeowners Policy because of the high value of R's dwelling. The reinsurance contract can best be described as:

An agreement between Insurance Company C and the reinsurer

Which of the following autos is covered under Symbol 9 of the Business Auto Coverage Form?

An auto owned by the insured's employee while used in the insured's business

A claims adjuster would not pay which of the following Employers Liability claims?

An employee is injured while playing softball at a company picnic at a nearby park An injury must arise out of actual employment to provide cause for a claim under the Employers Liability section of the Workers' Compensation policy.

Which of the following correctly describes a Hyper Limits Excess Liability Policy?

An excess liability policy of commercial risk, public entity or professional liability insurance when written over an underlying policy or policies of at least $10 million

The insured would be required to pay which of the following in the event of a Workers' Compensation claim?

Any excess amounts incorrectly paid by the insurer

Under the Equipment Breakdown Protection Coverage Form EB 00 20 Endorsement, coverage for Newly Acquired Premises begins:

At the time the insured acquires the property

Of the Dwelling Policy forms, which one does not cover damage by burglars?

Basic Form (DP-1)

Coverage E of a Homeowners Policy would cover which of the following?

Bodily Injury to a guest caused by the insured's pet dog Coverage E of the Homeowners Policy provides Personal Liability coverage for bodily injury or property damage arising out of an occurrence, with certain limitations and exclusions. Injury caused by communicable disease and the sale of a controlled substance are both excluded under the policy.

Which of the following would not be covered by the Ordinance or Law endorsement.

Building code fines The Ordinance or Law endorsement applies if the enforcement of any building, zoning, or land use law results in a loss of value of the part of the building that is not damaged by a covered loss. No coverage is available for property that has not suffered a covered loss.

Which of the following is covered as business personal property under the BOP?

Built-in bookcases installed by a tenant Improvements and betterments include additions made a part of the building that the tenant occupies but does not own; including structures that the tenant made at their expense but cannot legally remove.

Which type of Commercial Auto policy would be best suited for a company whose employees used their own vehicles to make sales calls?

Business Auto Coverage Form The BAP covers owned, leased, hired, rented, or borrowed private passenger autos, trucks, trailers, and semi-trailers that are owned or used by the insured. This includes autos owned by employees while being used in the business.

What is the name for the termination of an insurance policy before the expiration date?

Cancellation Either party to the contract may cancel insurance policies before the expiration of the policy if the cancellation notice requirements are met.

Which of the following is included in Section III of the Businessowners Coverage Form?

Common Policy Conditions

Which of the following is an example of special damages?

Compensation to an injured party for actual medical expenses and loss of earnings

All of the following are methods of writing property insurance limits, except:

Concurrent coverage Specific, scheduled, and blanket are all methods of writing property insurance limits. Concurrent coverage applies to separate policies covering the same risk, such as a primary policy and an umbrella policy. It does not indicate a type of insurance limit.

In an insurance contract, the value that each party gives the other is called the:

Consideration Consideration can take the form of money, goods, a promise to do something, or anything else that changes the legal position of the party. A contract cannot exist without consideration being given by both sides.

Which of the following statements is correct concerning the Ordinance or Law CP 04 05 Endorsement?

Coverage B covers demolition costs

Policyholder M insures an owner-occupied, single-family residence under a Special Form Dwelling Policy (DP-3) with a limit of $100,000. If the dwelling is damaged in a fire, what policy coverage will pay for M's extra costs to stay in a motel and board M's pets while the fire damage is being repaired?

Coverage E pays for the necessary increase in living expenses incurred by the insured if the building is rendered unfit for its normal use.

Which of the following is true regarding the Products exposure of the CGL?

Coverage applies to the bodily injury (BI) and property damage (PD) the product causes but not to the product itself

Which of the following is correct concerning the Commercial Property Special Causes of Loss Form?

Coverage is provided for all losses except as specifically limited or excluded

Which of the following is true regarding Business Income Coverage under a BOP?

Coverage is provided for up to 12 months after the direct loss, with no limit on the amount of monthly indemnification, and no limit of insurance

Which of the following is true with regard to the Home Business Endorsement HO 07 01?

Coverage is provided on an aggregate limit basis

L has a Business Auto Policy covering autos used for L's small business. All of the following are an insured under L's BAP, except:

D, who owns a car L borrowed

Which of the following claims would be covered under the DP-3?

Damage by vandalism to a dwelling vacant for 30 days before the loss

The part of an insurance contract that varies with each individual policy, but is still a mandatory part of the policy, is the:

Declarations The Declarations section of the policy contains specific information about the insured, and thus will vary by policy, even when the type of coverage provided is the same.

Which of the following statements regarding deductibles is true?

Deductibles help reduce the number of frivolous or small claims

Under the Farm Property Coverage Form, the Special Causes of Loss form would insure against all of the following, except:

Dishonest or criminal acts, pollutants, or contaminants

Liability for use of which of the following vehicles is not covered by the Homeowners policy?

Dune buggy used on a public beach An owned vehicle designed for recreational use off public roads must be used on the insured premises for coverage to apply.

Choose the false statement about a Homeowners Policy.

Earth movement is covered in all Homeowners policies

All of the following are covered under the Basic Causes of Loss to the Farm Property Coverage Form, except:

Electrocution of Livestock

Which of the following relationships involves vicarious liability?

Employer and employee

Which of the following provides coverage for site owners and operators for third party claims due to a pollution event from a covered location?

Environmental Impairment Liability

The act of selling does not include:

Exchanging an insurance policy by any means, for money, on behalf of a licensed preferred provider organization

Which of the following crime coverages is not one of the 8 insuring agreements provided by the standard Commercial Crime Coverage Form?

Extortion Extortion coverage can be added by endorsement to the Commercial Crime coverage form.

Which of the following statements is correct with regard to the FAIR Plan?

FAIR plan policies are effective for one year The FAIR Plan is designed to provide a means to purchase basic property insurance when it cannot be obtained through standard or regular markets. Losses are paid by the insurance industry in the private sector. And property must be an insurable risk.

The Truckers Coverage Form is designed for:

Firms in the business of transporting goods or commodities

Disability benefits are subject to a waiting period of:

First 7 days of disability

T's office condominium is covered under a Condominium Commercial Unit-Owners Coverage Form. Which of the following is not covered on a primary basis?

Fixtures owned by the association In the event both the unit-owner's policy and the association's policy cover the fixtures, the unit-owner's coverage will be excess.

Losses that cannot be calculated objectively, such as pain and suffering or mental anguish, are considered:

General damages

Which of the following would not be covered under Coverage B?

Grain silo

Which of the following is considered a pre-paid health plan?

HMO Because HMO providers are paid a capitation fee rather than a fee based on the services provided, they are considered pre-paid health plans.

Which of the following statements is NOT correct concerning the basis of compensation for weekly wages?

If the injured employee is concurrently has more than one job at the time of injury, his/her average weekly wages will be calculated upon the basis of wages earned from the job he/she has had for the longer period of time

Temporary Total Disability may be described as:

Inability to return to any employment while recovering

Under the Workers' Compensation Policy, all of the following are true, except:

Injury caused by an accident occurring after the policy period expiration date will be covered

When an individual faces the risk of economic loss in the event of property damage, this indicates which of the following?

Insurable interest

Which of the following is not true about insurance?

Insurance covers intentional as well as unintentional losses

All of the following are common policy conditions under the CPP, except:

Interline endorsement Interline endorsements coordinate coverage contained in one part of the policy with other coverage parts to prevent duplication and are not considered a policy condition.

A peril is defined as which of the following?

It is the specific cause of loss

Which of the following statements is correct with respect to a certificate of authority?

It is unlawful for an insurer to transact any business in New York without a certificate of authority It is unlawful for an insurer to transact any business in New York without a certificate of authority. An insurer transacting business in New York without a certificate of authority is subject to a penalty of $1,000 for the first violation and $2,500 per subsequent violation.

Which statement about the BOP Utilities Services Time Element Endorsement is true?

It pays for loss of business income or extra expense at the described premises caused by the interruption of service at the described premises

Which of the following is the best explanation of liability insurance?

It provides protection in the event the insured's negligence causes bodily injury or property damage to others and the insured becomes legally obligated to pay damages

Which of the following is NOT covered under the Builders Risk CP 11 21 Endorsement?

Loss or damage by theft while construction is not in progress and there is no watchman on duty

Which statement is false regarding the Farm Property Coverage Form?

Losses from nuclear damage are covered.

Which of the following is not an exclusion under Section II of the Businessowners Coverage Form?

Medical payments to volunteer workers

Who is not an insured under the Commercial General Liability policy?

Members of a past partnership not listed in the Declarations

Which of the following describes the person that has care and custody of insured property outside the insured premises?

Messenger

Which of the business auto coverage forms provides insurance for a contract carrier that transports its own goods in addition to the goods owned by others?

Motor Carrier Coverage Form

Which of the following would not be covered under a Personal Auto Policy?

Motorcycle

The person specifically designated in the policy as the person with whom the contract of insurance has been made is considered to be the:

Named Insured The named insured is the entity with whom the insurance contract is made. When there is more than one entity designated as named insured in the policy, then contractual obligations are transacted with the first one designated, known as the first named insured.

The DP-3 provides what coverage for damage to the insured's dwelling due to a power failure when lightning strikes a power transformer 2 miles away?

No coverage

An agent is not considered to be holding a license for the purpose of controlled business as long as:

Not more than 10% of the total volume of premiums per year is derived from controlled business

The HO-5 personal property coverages are insured on which basis?

Open perils

The Business Auto Coverage Form is intended for which of the following businesses?

Owned, leased, hired or borrowed private passenger autos, trucks, trailers and semi-trailers

All of the following are excluded from the Workers' Compensation Law, except:

Part time employees Farm labor, domestic servants, and casual workers are excluded from the law in most states. Casual workers are those whose work is nonrecurring or irregular.

Which of the following statements about medical payments coverage is true?

Payments are made regardless of fault or negligence.

A primary liability policy is one that:

Pays first with respect to other policies

Which of the following endorsements to the Homeowners Policy adds coverage for injury resulting from libel, slander, false arrest, defamation, invasion of privacy and other such offenses that could result in a personal liability suit?

Personal Injury Endorsement

The following coverages are all found under Section I of the Homeowners Policy, except:

Personal Injury Liability Section I of the Homeowners Policy contains Property coverages. Liability coverages are set forth in Section II of the Policy.

Which of the following coverages is not included in a standard Homeowners policy?

Personal Injury liability

The Boatowners Policy does not cover which of the following?

Personal Property

ABC Industries contracts with municipal governments to build bridges, viaducts, and similar engineering projects. If workers from ABC Industries cause damage to a taxicab while pouring the foundation for a new overpass, which kind of liability exposure would this be an example of?

Premises and operations An insured business conducts its operations both at its own premises and elsewhere. If a business, or anyone acting on its behalf, causes bodily injury or property damage, the business may be considered legally liable for such injury or damage. CGL coverage is provided for the insured's legal liability for bodily injury or property damage arising out of the insured's premises or the insured's operations.

Information identifying the producer's role in sale and whether the producer will receive compensation from that sale prior to application is referred to as:

Producer Compensation Transparency

The Second Injury Fund does which of the following?

Reimburses benefits paid to an employee who previously received 260 weeks of disability benefits

The second injury fund for employers hiring previously injured employees:

Reimburses benefits paid to an injured employee that also suffered a previous permanent disability after 260 weeks of benefits

An agent has authority to do all of the following, except:

Represent the insured's interest An agent is primarily the representative of an insurer.

In respect to Section II of a Homeowners Policy, all of the following are true, except:

Section II losses are subject to a standard $250 deductible (Section II losses are not subject to a deductible.)

Which of the following is true regarding Personal Inland Marine Insurance?

Since moveable property is also known as floating property, the policies are sometimes known as floater policies

Which of the following statements is incorrect about Supplementary Payments under the CGL?

Supplementary payments apply to losses under all Section I coverages Supplementary Payments only apply losses insured under Coverages A and B. They are not applied to no fault Medical Payments, since these are issued without involvement of a suit.

Which of the following statements is false regarding the New York Automobile Insurance Plan?

The Automobile Insurance Plan provides automobile liability insurance when an insurer becomes insolvent

Regarding inland marine policies, which of the following statements is false?

The Bailees Customers Form covers the insured's property The Bailees Customers Form does not cover any property owned by the insured.

All of the following are true of a Homeowners Policy, except:

The HO-2 provides open perils coverage on the dwelling The HO-2 covers the dwelling and contents against the Broad Form Perils.

Which of the following is true about binders?

The amount of insurance is stated in a binder

The Workers' Compensation Policy Conditions Section includes which of the following?

The cancellation policy

Choose the false statement regarding the Value Reporting Form.

The insured is only required to report up to 80% of value of the property Reporting of 100% of values is required to guarantee that adequate insurance is being provided and charged.

Which of the following best describes the principle of indemnity?

The insured is restored to the same financial condition as prior to the loss, with no loss or gain

Which of the following would not be an insured under Section II of the Homeowners Policy?

The insured's tenant Roomers or boarders are not considered insureds, and would need to purchase their own liability policies.

All of the following statements regarding Commercial Umbrella Liability CU 00 01 are correct, except:

The insurer excludes interest awarded on judgments

Which of the following is true about the right of salvage?

The insurer has the right to take possession of damaged property after payment of a loss

Under the Businessowners Policy, if there is other insurance covering the same loss how will the policy respond?

The insurer will pay only for the amount of covered loss or damage in excess of the amount due from that other insurance

All of the following are elements of an insurable risk, except:

The loss may be catastrophic

Under a Commercial Crime policy written on a Loss Sustained Form, what is the latest date a covered loss can occur?

The policy expiration date

The provision that establishes the method by which coverage will be applied if other insurance applies to the loss, is sometimes called:

The pro rata liability provision

Which statement is false regarding the Building and Personal Property Coverage Form?

The standard deductible is $100 (it's $500)

Which of the following is false regarding the Mobile Equipment CA 20 15 Endorsement?

The vehicles described in the Schedule are considered mobile equipment

Which of the following statements regarding commercial crime coverage is correct?

Theft includes any act of stealing, including burglary and robbery

Choose the claim that is not covered under the Dwelling Broad Form (DP-2).

Theft of personal property at the insured premises There is no theft coverage in a dwelling policy.

Which of the following is true of supplementary payments under Part A of the Personal Auto Policy?

They are paid in addition to the liability limits of the policy

All of the following are true of Supplementary Payments under the CGL, except:

They reduce the limits of insurance

All of the following are true of liability policies, except:

They will cover damage to the insured's own property

Which section of the BAP provides coverage for autos in the care, custody and control of the insured?

This coverage is not provided under the Business Auto Coverage Form Coverage for loss or damage to a customer's vehicle in the insured's care is excluded under the BAP. It is found in Section III of the Garage Coverage Form.

Which of the following is false regarding Dwelling policies?

Trees, shrubs, and plants are covered for up to $2,500 total The limit for trees, shrubs, and plants is 5% of Coverage A, and no more than $500 for any one item.

Which of the following forms is designed to insure a single shipment of goods?

Trip Transit Policy

Which of the following does not pay regardless of fault?

Uninsured Motorist Bodily Injury

The resumption of operations condition requires that the insured do which of the following?

Use damaged property to resume operations. If the insured declines to use property to resume operations after a covered business income loss, the policy will reduce the amount of the business income loss payment for the resumption of operations that should have been made.

A building with no physical contents and no occupants is said to be which of the following?

Vacant

Fine arts and antiques are classes of property insured on a:

Valued basis Fine arts are typically insured on a valued basis, whereby the insured and insurer agree, at time of insuring, on an amount of insurance to be paid in the event of a loss.

Which of the following is not an example of a pure risk?

Wall Street's decline in the stock market

Employee M was hired by ABC Jewelers to guard and protect store property during its hours of operation. Under the terms of the Commercial Crime policy, Employee M would be known as a(n):

Watchperson

Which of the following best describes the reason to purchase an HO-8?

When insuring an older home that might create a moral hazard when insurance is written at replacement cost