P&C comprehensive exam

The minimum per-person BI limit for auto coverage in Arizona is:

A)$25,000 B)$15,000 C)$10,000 D)$50,000 B-The required auto liability limits in Arizona are $15,000/person and $30,000/occurrence for Bodily Injury, and $10,000/occurrence for Property Damage.

A self-insured employer is required to purchase a guaranty bond in the amount of ___________.

A)$500,000 B)$50,000 C)$100,000 D)$250,000 C -A self-insured applicant must also submit an application for authority to self-insure, file an indemnity agreement, provide a financial statement, and make a security deposit with the Commission.

A binder cannot be effective beyond the policy issue date or _______ days, whichever is shorter.

A)120 B)90 C)30 D)60 B- Binders can be made orally or in writing and cannot be effective beyond policy issue or 90 days, whichever is shorter.

Under a BOP, the insurer may examine and audit the insured's books and records at any time during the policy period and up to what duration after policy expiration?

A)3 years B)5 years C)7 years D)1 year A-The insurer may examine and audit the books and records as they relate to the policy during the policy period and up to 3 years afterward.

Within how many working days must an Arizona insurer acknowledge the receipt of a claim notice?

A)45 B)30 C)10 D)20 C-Arizona insurers must acknowledge the notice of a claim within 10 working days.

In the event of premium increase, change in deductible, reduction in limits or substantial reduction in coverage, the insurer must give the insured notice of at least ____ days before the expiration date of the policy.

A)45 -In the event of premium increase, change in deductible, reduction in limits or substantial reduction in coverage, the insurer must give the insured notice of at least 30 days before the expiration date of the policy.

Under an HO-3 policy, what is the coinsurance requirement?

A)90% B)80% C)75% D)50% B-If Coverage A is less than 80% at the time of a loss to the dwelling, a penalty will be applied to the partial dwelling loss claim payment.

Which statement about insurance information and privacy protection is TRUE?

A)An insurer may not investigate criminal or fraudulent activity B)Personal information may be disclosed over the telephone at any time C)Personal information may be given to a third party at any time D)An insurer must provide written privacy protection disclosures D)Insurers must provide all disclosures about privacy protections in writing.

Choose the false statement about paying and sharing commissions:

A)An unlicensed person cannot accept a commission for negotiating insurance B)Renewal commissions cannot be paid to a person who is no longer licensed on the renewal date C)Commissions paid to producers are negotiated with the insurers that they represent D)An insurer must pay commissions for selling insurance to only licensed persons B)Renewal or other deferred commissions can be paid to a person for selling, soliciting, or negotiating insurance in Arizona if the person was required to be licensed, and was licensed, at the time the sale, solicitation, or negotiation of insurance occurred.

Which provision specifies that no coverage applies if the loss benefits a person who has care, custody, or control of the insured's property?

A)Appraisal B)Claim Settlement C)Assignment D)No Benefit to Bailee D-The No Benefit To Bailee provision specifies that no coverage applies if loss payment benefits a bailee.

Which of the following is not one of the limits of liability provided by the CGL?

A)Bodily injury limit B)General aggregate limit C)Personal and advertising injury limit D)Medical expense limit A- There is no unique limit for bodily injury losses, though payment for such losses would be subject to other policy limits, such as the per occurrence limit, the general aggregate limit, the products-completed operations aggregate limit, or the medical expenses limit.

Using the insurance producer's license principally to provide insurance that covers the life, property, or insurable interests of the licensee, family members, employer or employees, is known as:

A)Commingling B)Controlled business C)Commission sharing D)Coercion B-Using a producer's license for specifically providing insurance for the licensee, family members, employer, or employee is known as controlled business.

Which of the following is not one of the liability exposures of the CGL?

A)Completed operations B)Advertising injury C)Premises and operations D)Products B-The primary exposures covered by the CGL are premises and operations liability, product liability, completed operations liability, and contingent liability.

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

A)Coverage E is written on a single limit basis B)Section II provides coverage for damage to the insured's property C)Cemetery plots, burial vaults and vacant land are insured locations D)The language in Section II is the same in all Homeowners Policies B-Coverage for the insured's property is provided in Section I.

Which statement is false regarding Supplementary Payments under the Commercial General Liability policy?

A)Coverage only applies to Coverages A and B B)The cost of bail bonds is included up to $250 C)Payments made under this section reduce the limits of the policy D)Claim related expenses are included C- Payments for Supplementary Payments do not reduce the limits of the policy.

Which of the following violates the Gramm-Leach-Bliley Act?

A)Disclosing a customer's nonpublic personal information without consent B)Refusing to disclose a customer's nonpublic personal information to non-affiliated third parties C)Allowing customers to opt-out of the sharing of their nonpublic personal information D)Providing an annual disclosure notice A-Unless permitted to do so by law, financial institutions may not share nonpublic personal information without a customer's consent.

Which of the following is true regarding a negligence claim?

A)Every accident resulting in bodily injury or property damage is due to a negligent act B)In every accident there is one or more negligent parties C)An uninjured party to an accident is presumed to be negligent D)The claimant must demonstrate that the actions of the insured were the direct or proximate cause of the claimed injury or damages D-Accidents can occur that are the fault of no one. For one party to be able to collect damages from another, arising from an accident, the claiming party must prove negligence on the part of the other party.

All of the following are considered an insured under the Commercial General Liability Coverage Part to the Commercial Package Policy, except:

A)Executive officers, but only with respect to their duties as the insured's officers or directors B)Members of a past partnership not shown as a Named Insured in the Declarations C)Employees other than executive officers, but only for acts within the scope of their employment D)Anyone named in the Declarations B- No person or organization is an insured that is not shown as a Named Insured in the Declarations

Which of the following is included in the Telemarketing Sales Rule?

A)Immediately disconnect callers who ask not to be called again B)Set limits on the time a telemarketer can call consumers C)Require the telemarketer have a script to read to consumers D)Suggest payment guidelines for the sale of certain services B- In addition, the Rule requires telemarketers make disclosures, prohibit misrepresentation, prohibit calls to a consumer who has asked not to be called again, and set payment restrictions for the sale of certain goods and services.

Which of the following is not an example of personal injury?

A)Infringement of copyright B)Misappropriation of a title or slogan C)A broken leg D)False arrest C- A broken leg is an example of bodily injury, not personal injury.

Which of the following is true about the Dwelling Policy Special Provisions - Arizona endorsement?

A)Intentional loss to property applies to a loss caused by domestic violence B)The insurer can subrogate against the person who caused domestic violence C)Fire department service charges are covered D)The insurer has 60 days to pay a covered property loss B-An insured receiving payment for a loss caused by domestic violence cannot waive the insurer's right to subrogation against the perpetrator of the violence.

Which Commercial Property form provides coverage for an indirect loss?

A)Legal Liability Coverage Form B)Building and Personal Property Coverage Form C)Commercial Glass Coverage Form D)Business Income Coverage Form D-The two indirect loss forms to the Commercial Property Coverage Part are the Business Income Coverage Form and the Extra Expense Coverage Form.

All of the following are true regarding medical expenses coverage under the BOP, except:

A)Medical expenses incurred within one year of the date of the accident are covered B)Payment of medical expenses is made regardless of who is at fault C)The policy excludes funeral expense D)Accidents on premises the insured owns or rents, or due to the insured's operations are covered C-Medical expenses coverage pays necessary medical, surgical, x-ray and dental services, including prosthetic devices; and necessary ambulance, hospital, professional nursing and funeral expenses.

In Surety bonding, the party to whom the surety is answerable is the:

A)Obligee B)Obligor C)Guarantor D)Surety A-The Obligee is the party for whose benefit the bond is written.

The Director is responsible for:`

A)Penalizing individuals for failing to obey a subpoena B)Passing insurance laws C)Enforcing insurance laws D)Writing insurance laws C-The Director is responsible for enforcing the insurance code that is written and passed by the legislature. The courts will penalize individuals for failing to obey a subpoena.

Hull insurance on an ocean marine policy covers the vessel for which of the following?

A)Physical damage B)Cargo damage C)Liability D)Seaworthiness A-Hull coverage covers physical damage to the vessel and is written on a named perils basis which includes perils of the sea, jettison, piracy, fire and explosion, and lightning.

Which of the following is not a requirement that a business entity must comply with in order to become licensed?

A)Provide the Director names of all employees B)Ensure that employees who act as a producer are licensed C)Identify a licensed producer who will be responsible for compliance D)Ensure that all officers, directors, and partners are licensed D)A business entity must ensure that any officer, director, or partner who acts as an agent be licensed.

Which of the following statements is false concerning Section II of a Homeowners Policy?

A)Section II provides no defense in the event of a groundless, false or fraudulent claim B)Bankruptcy of an insured does not relieve the insurer of its obligations C)Section II protects the insured against third party claims D)Payment of a medical payment is not an admission of legal liability A-The policy provides for defense of any claim to which Coverage applies, even if groundless, false or fraudulent

Which Cause of Loss form for the Commercial Property Coverage Part will cover loss of sales merchandise due to a burglary?

A)The Broad Form B)The Special Form C)The Broad Form and The Special Form D)There is no burglary coverage provided by the Commercial Property policy B-The perils of Burglary and Theft are not excluded under the Special Form.

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

A)The Contractor Equipment Floater Form is usually written on an open peril basis B)The Bailees Customers Form covers the insured's property C)The Installation Floater Policy provides coverage while the property is in transit and during installation D)The Accounts Receivable Coverage Form is a controlled or standardized form B- The Bailees Customers Form does not cover any property owned by the insured.

Which of the following would be covered under a BOP?

A)The insured violates a contract with a competitor agreeing not to advertise in their zip code B)One of the insured's employees is injured on the job C)One of the insured's products is recalled due to a mechanical imperfection D)The insured is sued for injury to a competitor caused by an advertisement D-Businessowners liability coverage includes bodily injury, property damage, medical expense, and personal and advertising injury which would cover injury due to an offense arising out of the insured's business. Product recall, breach of contract, and employee injury are excluded.

All of the following are covered under Section II of the Homeowners Policy, except:

A)The insured's liability for damages to property of others B)The insured's liability for bodily injury to others C)Property of the insured D)Medical expenses for an accident arising out of the premises or non-business activities of an insured C-Loss or damage to the insured's property would be covered under Section I, Property.

All of the following are true about extended reporting periods, except:

A)The supplemental tail requires an annual premium B)The basic extended reporting period does not increase the policy limits C)The basic extended reporting period allows a claim to be reported after the policy period for a specified number of days D)Under the supplemental tail, the insured must request coverage within 60 days after the end of the policy term Oops! The correct answer was A. A-The supplemental extended reporting period has a one-time premium.

Which statement is true of Section I of a Homeowners Policy?

A)Theft of a boat while away from the premises is covered B)A special limit of $1,500 limit applies to watercraft C)Coverage on utility trailers is limited to $2,000 D)Coverage is provided on owned golf carts and owned snowmobiles off premises B-A limit of $1,500 applies to watercraft of all types, including their trailers, furnishings, equipment, engines, and outboard motors. Loss resulting from wind or hail is excluded unless in a fully enclosed building.

What type of policy can broaden coverage and increase the limits of the underlying insurance?

A)Umbrella B)Contingent Liability C)Difference in Conditions D)Legal Liability Coverage A- An umbrella policy can cover losses not provided for in the underlying policy

When must a licensee notify the Director that he/she is acting as a life settlement broker?

A)Within the first 30 days of acting as a broker B)60 days before acting as a broker C)30 days before acting as a broker D)Within the first 60 days of acting as a broker A- A producer that is licensed with a life line of authority is deemed to meet the licensing requirements to operate as a life settlement broker. Within the first 30 days of operating as a broker, the licensee must notify the Director that he/she is acting as a broker.

An administrative penalty of ______ was fined by the Director instead of suspending the producer license.

A-$250 -In lieu of license suspension the Director can discipline by ordering a payment of an administrative penalty of up to $250 per violation, or $2,500 per violation if the person should have known that his actions could result in license suspension or revocation.

The Director of Insurance may issue a temporary insurance producer license for a period not exceeding how many days, without requiring an examination if necessary to service insurance contracts in certain specified circumstances?

A-180

In Arizona, Workers' Compensation Temporary Total Disability benefits are payable up to what percentage of the employee's wage?

A-66.67% -For temporary total disability, the benefit amount is 66 2/3% of the employee's monthly wages and is paid during the period of disability. In addition, the compensation for temporary total disability is paid for a specified period of time, depending on the type of disability.

Which of the following statements regarding using an assumed business name is NOT correct?

A-A trade name must be lawfully registered B-An assumed business name may not be misleading or deceptive C-A producer may use an assumed name at any time D-The Director may deny the use of an assumed name C-In order to use an assumed name, the producer must notify the Director before it can be used because the Director may deny the use of the assumed name.

Which of the following is not one of the Director's duties?

A-Examining Insurers B-Establishing new insurance law C-Conducting investigations D-Issuing Certificates of Authority B-The Director is responsible for enforcing the insurance code. The state legislature writes and passes all statutes but the Director may issue administrative rules and regulations to help enforce those statutes.

Reasonable expenses and charges for the cost of the Director's examination will be paid by:

A-The examiner B-The examinee C-The examiner's revolving fund D-The Arizona State Treasury C-The Director has the authority to examine the affairs, transactions, accounts, records, and assets of authorized insurers as deemed necessary. The Director must examine each domestic insurer at least once every 5 years. The expense of the examination will be paid by the examiner's revolving fund.

Choose the false statement about a producer's place of business and insurance records.

A-The producer must keep all records for any transaction for 3 years B-The producer must make his records available to the Director any time within the 3 years C-A business entity insurance producer must have at least 3 insurance producers licensed in each place of business D-A producer must keep transaction records at the producer's principal place of business C-A business entity insurance producer must have at least 1 insurance producer individually licensed for the appropriate lines of authority in each office or place of business in which the business entity transacts insurance in Arizona.

If a first party claim is not paid within how many days after the receipt of adequate proof of loss, the insurer must pay interest from the date the claim is received?

B-30 -If a first party claim is not paid within 30 days after the receipt of adequate proof of loss, the insurer must pay interest from the date the claim is received.

The insurer's right to recover payment under Medical Payments does not apply to the first _________ paid.

B-5,000

In Arizona, Workers' Compensation Disability benefits are payable if a disability is longer than how many days?

B-7 -An injured worker is not eligible for disability income compensation for the first 7 days after an injury. If the disability extends beyond this waiting period, benefits are payable starting on day 8. If the disability continues for a week beyond the waiting period (14 days) benefits are paid retroactively from the start of the disability.

An insurance producer must notify the Director of Insurance in writing within how many days after any material change to the information filed with the Director?

C)30 An insurance producer must notify the Director of Insurance in writing within 30 days after any material change to the information filed with the Director.

A licensing candidate must be at least _____ years of age to be licensed.

C-18

All of the following are types of Professional Liability Insurance, except:

D)Commercial umbrella insurance D- An umbrella typically does not cover professional liability.

A licensed producer was using another name to transact insurance in New Mexico, but the New Mexico Division of Insurance fined him $1,000. Within how many days must he notify the Arizona Director of Insurance?

D-30

The Federal Trade Commission amended the Telemarketing Sales Rule

Telemarketers and sellers are required to search the registry at least once every 31 days and drop from their call lists the phone numbers of consumers who have registered. Telephone solicitation calls to a customer's home before 8 a.m. or after 9 p.m. are prohibited. Anyone making a telephone solicitation call to a customer's home must provide their name, the name of the entity on whose behalf the call is being made, the purpose of the call, the nature of goods being sold, and a telephone number or address where the entity may be contacted.

The Federal Trade Commission amended the Telemarketing Sales Rule

give consumers a choice about receiving or stopping unnecessary sales and telemarketing calls. A consumer can add their phone number to a Do Not Call List (only a phone number is required, not a social security number). It is illegal for most telemarketers or sellers to call a number listed on the National Do Not Call Registry. Companies must update their list at least once every 31 days.

Under a Mobile Home policy, if the mobile home is insured under Coverage A for $70,000, how much coverage would ordinarily apply to personal property under Coverage C?

A)$28,000 B)$42,000 C)$35,000 D)$30,000 A-Under the Mobile Homeowners Policy, Coverage C (Personal Property) is generally written at 40% of Coverage A, instead of 50% under the Homeowners Policy. 40% of $70,000 = $28,000.

Within how many days must a producer notify the Director that the address of his business office has changed?

A)15 B)21 C)30 D)45 C-A licensee must notify the Director in writing within 30 days of any change in the licensee's name, resident address, and/or business address.

In the event of nonrenewal or cancellation of commercial risks for reasons other than nonpayment of premium, the insurer must give the named insured ______ days' notice.

A)60 B)10 C)45 D)30 C-In the event of nonrenewal and cancellation of commercial risks, the insurer must give the insured 45 days' notice. Cancellation for nonpayment requires 10 days' notice.

Which vehicle would not be eligible for a Business Auto Coverage Form?

A)A forklift used in the business B)A private passenger auto that is used in the business C)A trailer that is used to carry a backhoe D)A van that is used by a delivery firm A-Being mobile equipment, a forklift is not eligible for auto coverage, other than by endorsement

Which of the following is not an eligible vehicle for coverage under the Personal Auto Policy?

A)Automobile B)Van C)Pick-up with gross vehicle weight of 12,000 lbs. D)SUV C

An insured accidentally backs into the neighbor's son on his skateboard. The son has medical expenses and there is damage to the skateboard. Which sections of the insured's policy will pay?

A)Bodily injury and collision B)Bodily injury and property damage C)Medical payments and collision D)Medical payments and property damage B-Bodily injury liability coverage would pay the medical expenses and property damage liability would pay for the skateboard.

Bodily injury liability coverage includes all of the following, except:

A)Breach of contract B)Mental anguish C)Lost wages D)Medical bills A-Bodily Injury coverage covers physical injury, sickness or disease sustained by a person including death resulting from any of these. Breach of contract does not fall under this definition.

The following are all additional coverages under a Homeowners Policy, except:

A)Collapse B)Governmental Action C)Property Removed D)Loss Assessment B-Governmental action is an exclusion; not an additional coverage.

Choose the false statement regarding Flood Insurance.

A)Coverage is provided for damage to growing crops B)Damage to money and securities is excluded C)Coverage is not provided for indirect loss D)Areas must have established and approved a flood control plan A-Coverage for growing crops is excluded.

All of the following statements about the Fine Arts Floater are true, except:

A)Coverage is written on a replacement cost basis B)It has a 90-day automatic coverage for newly acquired items C)It covers such items as paintings, rare manuscripts and antiques D)Coverage applies only to scheduled items A-Fine Arts Floater coverage is written on a valued basis.

Which statement is false regarding uninsured motorist coverage under a Personal Auto Policy?

A)Covered persons include the named insured, family members and any other person occupying the covered auto B)Coverage does not apply to a vehicle used primarily for use off public roads C)Coverage does not apply to any vehicle being used to carry property or persons for a fee D)Coverage includes injuries suffered by someone using a covered vehicle without permission D-Coverage does not apply when a person is using the vehicle without permission.

For an antique insured under a Personal Articles Floater, coverage would not be provided for damage caused by:

A)Damage caused by the insured during a heated argument B)Vandalism caused by a guest C)Flood D)Theft A

Under the Other Insurance condition, when two property policies cover the same property, how is a loss apportioned?

A)Each policy will pay an equal share of the loss B)The first policy will pay up to its limits; then the second policy acts as excess coverage C)Each policy will share proportionately according to the total insurance D)Neither policy will pay because of overinsurance C-For a property policy, the Other Insurance clause generally states that two policies covering the same loss will pay proportionally to their limits of insurance.

All of the following are Optional Coverages under the Businessowners Policy, except:

A)Employee dishonesty B)Outdoor signs C)Money and securities D)Personal property of others that is in the insured's care, custody and control D-Coverage for property that is in the care, custody or control of the insured is not an optional coverage.

Bodily Injury may include which of the following?

A)False Arrest B)Loss of Earnings C)Slander D)Invasion of Privacy B

Which of the following clauses protects the interests of the loss payee?

A)Mortgagee clause B)Loss settlement clause C)Loss payable clause D)Abandonment clause C

Which of the following is an insured's duty in the event of loss under the PAP?

A)Refer the claim adjuster to an attorney B)Promptly notify the police in the event of a hit-and-run accident C)Contact the at-fault party D)Call the police if legal papers are received B-The insured must cooperate with the insurer, promptly notify the insurance company of a loss, and immediately send legal papers to the insurer.

Of the following boats, which can be added to the Homeowners Policy for liability protection?

A)Rented pontoon boat to entertain business clients B)Private yacht owned by the insured C)Racing cruiser D)20' sailing boat D- Coverages E and F don't apply to bodily injuries sustained from operation of a watercraft that is: An inboard motorboat owned by an insured, except while in storage; An inboard motorboat with more than 50 horsepower, rented by an insured; An outboard motorboat with more than 25 horsepower, rented by an insured; Sailing vessels 26 feet or more in length, owned or rented by an insured.

Who is the obligee on a Fidelity Bond?

A)The surety B)The court C)The employer D)The employee C

Which Statement is true regarding a Difference In Conditions Policy?

A)There is no standard form B)There is always a coinsurance clause C)There is a pro rata clause D)The standard deductible is $250 A

Which of the following would be covered by a law firm's professional liability policy?

A)A lawyer causes property damage when visiting a client's home B)A lawyer causes bodily injury to a witness C)An angry client sideswipes a lawyer's car D)A client sues a lawyer for purposely losing his case D-Professional Liability Insurance protects professionals from losses that arise specifically out of their professional conduct. It covers losses other than BI or PD, such as: Fraud or breach of contract, Conflict of interest, Malpractice or neglect, Government investigation, and Errors and omissions.

All of the following are true about liability, except:

A)A loss may take place over a period of time rather than all at once B)Liability policies pay costs incurred by an insured to sue negligent third parties C)Breach of contract is not considered an act of negligence D)The burden of proof is on the injured party to prove that the other party was negligent B-Liability policies pay the cost to defend the insured against suits by third parties. They do not cover the costs of lawsuits initiated by the insured against negligent third parties.

Under Section II of the Homeowners Policy, an employee whose duties are related to the maintenance or use of the residence premises, is defined as:

A)A residence employee B)An incidental business C)A boarder D)A contract employee A-'Residence employee' means any employee of an insured, whose duties are related to the maintenance or use of the residence premises. These duties include household and domestic services, such as those of a gardener or nanny. The definition also includes a person who performs similar duties elsewhere that are not related to any business of the insured, such as a person hired to paint the insured's house, as so long as the insured doesn't own a business that paints houses

All of the following are insured's duties after a loss under a property policy, except:

A)Abandoning the property to the insurer B)Giving notice of loss as soon as possible C)Furnishing inventory of damaged property D)Submitting to examination by insurer A- The insured may not abandon property to the insurer.

Under the Building and Personal Property Coverage Form, when is abandonment allowed?

A)Abandonment is allowed whenever the insured and insurer fail to reach agreement on the amount of a loss B)Abandonment is never allowed C)Abandonment is allowed only in the cases of total loss D)Abandonment is allowed only after written notice to the company B

Which of the following pays the cost of replacing papers and records that are important for the continuation of business?

A)Accounts Receivable Coverage Form B)Commercial Articles Coverage Form C)Business Property Coverage Form D)Valuable Papers and Records Coverage Form D-Valuable papers and records coverage provides insurance for the destruction of valuable papers and records by a covered cause of loss. Examples of covered property include maps, blueprints, manuscripts, films, illustrations, abstracts, deeds, books, mortgages, etc. Money and securities are NOT covered.

When a producer exceeds the authority expressed in the agency contract and the insurer does not take action, which of the following types of authority is created?

A)Actual B)Implied C)Express D)Apparent D

Which property would be settled for its actual cash value even if the Personal Property Replacement Cost Loss Settlement Endorsement is attached to the HO-3 policy?

A)Appliances B)Antiques C)Carpeting D)Outdoor equipment B-Property that cannot be replaced, such as souvenirs, antiques, and paintings are not eligible for the replacement cost coverage.

Which of the following defenses against negligence reduces damages in proportion to the degree of negligence?

A)Assumption of Risk B)Statute of Limitation C)Contributory Negligence D)Comparative Negligence D-Comparative negligence provides that the damages recoverable by each party to the suit be reduced in proportion to that party's degree of negligence.

Which type of liability limit applies to Medical Payments coverage?

A)Combined B)Per occurrence C)Aggregate D)Per person D-Medical payments coverage for all types of policies pays on a 'per person' limit

Plaintiff K was injured after losing control of his skis on a slope with well-marked signs indicating the degree of difficulty. What legal defense is available to the ski resort to avoid liability for the injury?

A)Comparative negligence B)Statute of limitations C)Contributory negligence D)Assumption of risk D-When a person participates in an activity where a certain type of injury is known to be probable, that person's rights of recovery are barred or diminished under the doctrine of Assumption of Risk.

Which term describes the situation when two policies covering the same property contain different coverages?

A)Concurrent causation B)Nonconcurrency C)Blanket coverage D)Coinsurance B

Upon the passing of a licensing examination, the director will issue what type of license to the applicant pending completion of his/her background investigation?

A)Conditional B)Probationary C)Temporary D)Permanent A-Upon the passing of a licensing examination, the director will issue a conditional license to the applicant pending completion of the background investigation. On completion of the background check and depending on the results, the commissioner may issue a permanent or probationary license.

The Farm Liability Coverage Form provides all of the following coverages, except:

A)Contractual liability B)Bodily injury C)Advertising injury D)Property damage A-Contractual liability is specifically excluded.

Which of the following is not a contingent liability exposure?

A)Contractual liability exposure B)Owners and Contractors Protective liability exposure C)Liability exposure of insured's sub-contractors D)Premises liability exposure D-Contingent liability exposures exist when the insured is held liable for the actions or failure of actions of others.

While working together on the roof of a barn, the insured's neighbor fell off and broke his ankle. Which of the following is true about the resulting claim under the insured's Farm policy?

A)Coverage J - Medical Payments will not cover the neighbor's medical expenses unless the insured's negligence caused the accident B)There would be no coverage for this injury under any part of a Farm Policy C)The neighbor's medical expenses are only payable under a Workers' Compensation insurance policy D)Coverage J - Medical Payments is no-fault coverage and will pay for necessary medical expenses that the neighbor incurred regardless of negligence D

Which of the following statements is correct regarding the Commercial Articles Coverage floater?

A)Coverage is only provided for property while on the insured's premises B)Property is covered on land and at sea C)The policy is written on a named perils basis D)It covers property used for business purposes D-Commercial articles coverage provides insurance for fine arts, cameras, musical instruments, and their related equipment when used for business or commercial purposes. Like all inland marine polices, coverage is for property away from the insured's premises, is written on an open perils basis for property on land.

Choose the statement that is false regarding the Business Auto Coverage Form.

A)Coverage is primary on owned autos and excess on non-owned autos B)Medical payments coverage may be added by endorsement C)Coverage may be written on owned private passenger autos D)Uninsured Motorist Coverage is included in Section II C-Section II of the BAP is liability and does not provide Uninsured Motorist coverage, which is available by endorsement only.

All of the following are true of the Commercial Builders Risk Coverage Form, except:

A)Covered perils are specified by attaching a separate causes of loss form B)Coinsurance applies to Builders Risk at the percentage listed on the declarations C)Coverage is excluded for lawns, trees and plants D)Liability coverage is included in the form D-There is no liability coverage in a Builders Risk policy.

Under Part A of the Personal Auto policy, which of the following would be covered?

A)Damage to a parked car B)Damage to property being transported by the insured C)Damage to the home the insured owns D)Damage to a neighbor's lawn mower in the care of the insured A-Liability coverage is not provided for: Damage to property owned, being transported, or in the care of the insured.

Property damage covered by a liability policy includes which of the following?

A)Damage to tangible property, including loss of use of that property caused by the insured's negligence B)Damage to the insured's products arising out of the products C)Damage to property of others in the insured's care, custody, or control D)Damage to property owned by, or leased to, the insured A-Liability policies cover legal liability arising from physical damage to tangible property of others, including loss of use of that property, caused by the acts of an insured.

Which of the following statements regarding deductibles is true?

A)Deductibles reduce the total amount of insurance available B)Deductibles tend to increase premiums C)Deductibles apply only to larger losses D)Deductibles help reduce the number of frivolous or small claims D-The Deductible is the amount of each loss that the insured must bear before the policy responds to the loss. Deductibles eliminate the expense of processing small claims, resulting in reduced premiums.

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

A)Demolition B)Building code fines C)Increased cost of repair D)Clearance B-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.

The Gramm-Leach Bliley Act was responsible for which of the following?

A)Deregulation of the trucking industry B)Establishment of privacy protection for consumers C)Enforcement of fraudulent insurance acts D)Regulation of investment companies B-The Gramm-Leach Bliley Act also allowed the merger of banks, securities companies, and insurance companies.

Which of the following is a legal liability imposed without demonstrated negligence?

A)Direct Liability B)Contingent Liability C)Vicarious Liability D)Absolute Liability D-Because of the high degree of hazard associated with some risks, no degree of care is sufficient to fulfill the responsible party's duty to the public. In such cases, the responsible party is legally liable even when no negligent act is committed. The principle conferring this liability is known as absolute or strict liability.

Which of the following perils is not insured against by the Special Causes of Loss form under the Farm Property policy?

A)Dishonest or criminal acts B)Weight of Snow or Ice C)Freezing of plumbing D)Falling objects A-The Special Form is an Open Perils form, which covers all causes of loss not excluded. Criminal acts of the insured are always excluded.

Which of the following is not an element of negligence?

A)Duty of care B)Forseeable consequence C)Assumption of risk D)Proximate cause C-The elements of negligence are: Duty of care, violation of the duty of care, proximate cause, and damages that are foreseeable. Assumption of risk is a defense against negligence, rather than an element of it.

Under Part F of the Personal Auto Policy, which of the following is correct when there are two or more auto policies issued by the insurer on the same auto?

A)Each policy will share equally in the loss B)This policy will be excess if the other policy is in a different insurer C)The maximum that will be paid is equal to the limit of the policy with the higher limit of liability D)Each policy will pay the loss independently of the other C-The Two or More Auto Policies provision of the Personal Auto Policy is intended to prevent the stacking of limits if more than one policy issued by the insurer applies to the same accident

Which kind of agent enters into agreements with more than one insurer?

A)Exclusive B)Independent C)Captive D)Direct B-An independent agent may represent many insurers at the same time.

In commercial liability policies, the word 'tail' is synonymous with:

A)Extended reporting period B)Endorsement C)Supplementary payments D)Retroactive date A-If a claims-made policy is not renewed or replaced, the claims-made form contains a provision for the extension of time during which claims must be reported. This time frame is called an extended reporting period or tail coverage.

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

A)Extortion B)Money Orders and Counterfeit Money C)Forgery or Alteration D)Computer Fraud A-Extortion coverage can be added by endorsement to the Commercial Crime coverage form.

The endorsement providing evidence of financial responsibility for motor carriers is know as:

A)Form MCS-900 B)Form MCS-80 C)Form MCS-90 D)Form MCS-60 C-Form MCS-90 provides evidence of financial responsibility, on behalf of the motor carrier, to the Interstate Commerce Commission (ICC). The endorsement must be included on all policies, and a policy must meet the financial responsibility requirements of the Department of Transportation.

Which form is designed for Tenants?

A)HO-8 B)HO-2 C)HO-4 D)HO-3 C-The HO-4 form is intended for tenants of rental dwellings and apartments

All of the following statements is correct about a Homeowners Policy, except:

A)Home schooling is covered under a Homeowners Policy B)A Homeowners Policy will not cover theft of a boat away from premises C)Coverage D of a Homeowners Policy covers additional living expenses D)Coverage D of a Homeowners Policy includes loss of income from an incidental business D- Coverage D does not cover loss of income from an incidental business.

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

A)If either the insurer or the insured submits a written demand for appraisal, each will choose and pay for his or her own appraiser B)Coverage does not apply to money or securities C)The Peak Season Endorsement can be provided for a specified increase for a certain period D)The standard deductible is $100 D-The standard deductible is $500.

In property insurance, the principle that gives the insurer the right to take possession of damaged property after paying the loss is known as:

A)Indemnity B)Right of Salvage C)Vacancy D)Abandonment B-Property insurance policies give the insurer the option to take all or any part of damaged property at an agreed or appraised value, a right known as salvage.

The Personal Articles Floater is used to do which of the following?

A)Insure personal property on a blanket basis B)Provide replacement cost coverage on personal property C)Replace Coverage B of the Homeowners Policy D)Insure individual personal property on a scheduled basis D-The Personal Articles Floater is used to insure personal property on a scheduled (or itemized) basis. Articles covered under this floater are no longer covered under Coverage C of the Homeowners Policy.

The part of a property policy that gives basic information such as the named insured, a description of the property, the location of the property, and the amount of premium involved, is known as the:

A)Insuring Agreement B)Policy Provisions C)Declarations D)Conditions C-The Declarations contain the information that is specific to the individual and property being insured.

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

A)Interline endorsement B)Cancellations C)Changes D)Examinations of books and records A- 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 second negligent act that interferes with the chain of events leading to a loss is known as a(n):

A)Intervening cause B)Foreseeable consequence C)Tort D)Loss of consortium A-An Intervening cause prevents or limits recovery from the wrongdoer when a second, distinctly separate negligent act occurs after the original negligent act, but before damage occurs, and interferes with the chain of events that brings about the loss. The intervening cause must be unexpected and unforeseen.

After a lightning storm, the electrical transformer in B's town fails and she has no electricity for 3 days. The damage caused by the loss of electricity:

A)Is provided as 10% of Coverage C B)Is covered for the Coverage A amount C)Is not covered D)Is limited to 10% of Coverage A C-Damage from power failure that takes place away from the insured premises is excluded under the dwelling forms.

Which of the following is true about an aggregate limit?

A)It is a lifetime limit B)It applies per occurrence C)It applies to losses from all occurrences within a specified policy period D)It replaces the per occurrence limit for each loss C-Aggregate limits apply to loss from all occurrences during the policy period.

Which of the following is true regarding the Yacht Policy?

A)It is designed for boats that can be towed by automobiles B)It has navigational limits that describe the area where the yacht is allowed to operate C)It covers damage to the hull and fittings. Liability coverage may be attached by endorsement D)It is written on an Inland Marine form B-The Yacht policy is designed for larger vessels such as yachts, excursion vessels, etc. It is written on an Ocean Marine Form and includes Hull, Protection and Indemnity, Medical Payments and Jones Act coverages.

Which of the following claims would be covered under the Personal Injury Endorsement attached to an HO-3 Policy?

A)Liability arising from publication of material that violates another person's right of privacy B)Liability arising out of disputes between insureds C)Civil activities for which the insured is paid D)Injury related to a business engaged in by the insured A-All are excluded under the unendorsed HO policy. The Personal Injury endorsement adds coverage for non-physical injuries to others, including invasion of privacy.

When using a neighbor's lawnmower, the insured strikes a large rock and causes $2,000 in damage to the neighbor's automobile. Which policy section of the insured's Homeowners policy may pay for part of the damage?

A)Loss of use B)Personal liability C)Dwelling, since the lawnmower is equipment used to service the residence D)Personal property B-Section II Coverage E provides personal liability coverage for property damage to others due to actions of the insured. Under the additional coverage Damage to Property of Others, the limit is $1,000 of coverage.

Which of the following indicates a disrupted chain of events that frees the defendant from liability?

A)Lost cause B)Intervening cause C)Concurrent causation D)Proximate cause B-Intervening cause breaks a natural and continuous sequence of events that are necessary to establish negligence.

Which of the following coverages is not provided by the Personal Liability endorsement?

A)Medical payments to others B)First aid expenses C)Defense costs D)Injury caused to a regular resident of the dwelling D-Liability coverage applies to expenses incurred by residence employees, but not the named insured or regular residents of the named insured's household.

A Businessowners policy would cover which of the following?

A)One of the insured's employees is injured on the job B)One of the insured's products was recalled due to a mechanical imperfection C)The insured is sued for injury to a competitor caused by one of their advertisements D)The insured signed a contract with a competitor agreeing not to advertise in that zip code C-Businessowners liability coverage includes bodily injury, property damage, medical expense, and personal and advertising injury which would cover injury due to an offense arising out of the insured's business

A bird hits and breaks a windshield of an insured vehicle. This is covered under which of the following coverages of the PAP?

A)Other than collision B)Collision C)Liability D)Supplementary payments A-Coverage for collision with a bird or animal is provided under Other Than Collision coverage.

If the amount of liability insurance coverage is divided between bodily injury and property damage claims, the policy limits are which of the following?

A)Per Person Limits B)Combined C)Per Occurrence D)Split Limits D

The most a policy will pay for a loss arising out of any one accident regardless of overall policy limits, is known as the:

A)Per occurrence limit B)Per person limit C)Split limit D)Aggregate limit A-The per occurrence limit represents the most the policy will pay for all losses arising out of any one occurrence, regardless of other policy limits.

To which disability would a scheduled benefit apply?

A)Permanent Total B)Temporary Partial C)Permanent Partial D)Temporary Total C-A scheduled benefit applies to specific permanent partial injuries, such as a specific dollar amount for the loss of a hand.

Which statement is false regarding the Farm Liability Coverage Form?

A)Personal injury includes damages arising out of false arrest, malicious prosecution, libel and slander B)Medical payments do not provide coverage for anyone eligible for Workers' Compensation C)Medical payments would provide coverage for a neighbor who is injured while working the insured's livestock on a volunteer basis D)Medical payments provide coverage only when the insured is legally liable D-Medical payments cover injuries even if the insured is not liable. A neighbor with whom the insured is exchanging help, without remuneration, would be covered under medical payments.

Under the Building and Personal Property Coverage Form, coverage applies to all of the following, except:

A)Personal property used to service and maintain the building B)Materials that are within 75 feet of the premises C)Windstorm damage to outdoor signs not attached to the building D)A tenant's interest in a built-in wall cabinet C-Outdoor signs not attached to the building are excluded except for limited coverage under Outdoor Property, which does not cover wind losses.

Which coverage is not an Additional Coverage under the Businessowners Coverage Form?

A)Pollutant clean up and removal B)Equipment breakdown C)Business income and extra expense D)Increased cost of construction B-Equipment Breakdown is an Optional Coverage, not an Additional Coverage.

All of the following are methods of complying with Workers' Compensation laws, except:

A)Private insurers B)Employee contribution plans C)Self-insurance D)State Assigned Risk Plans B-There is no Workers' Compensation plan that involves employee contributions.

What type of liability policy requires the injured party to collect benefits from his/her own insurance as if it were first-party coverage, eliminating the process of determining negligence?

A)Pro rata B)No fault C)Excess D)Absolute liability B-Under a no-fault liability policy, the injured party collects insurance benefits from his or her own insurance as if it were first-party coverage, thus eliminating the process of determining negligence or legal liability.

Liability coverage under the BOP includes coverage for:

A)Product recall B)Bodily Injury to an employee arising in the course of employment C)Property damage to impaired property D)Bodily injury or property damage D-Property damage to impaired property, the recall of products, and bodily injury to employees are all exclusions under the Businessowners Coverage Form Section II - Liability.

All of the following are true of Section II of the Businessowners Coverage Form, except:

A)Property damage liability coverage applies to property that the insured owns, rents and occupies B)A personal injury loss must be committed in the coverage territory during the policy period C)Bodily injury coverage does not apply to rendering or failure to render professional services D)Employees are considered insureds with respect to their activities as employees A-Property damage liability does not apply to any property the insured owns, rents, or occupies. Property damage liability is third party coverage, not first party.

Which is the best description of punitive damages?

A)Punitive damages are assessed as a punishment for extremely objectionable conduct by a negligent party B)Punitive damages are assessed in addition to specific damages for the benefit of low-income plaintiffs C)Punitive damages are so limited as to be punitive toward the plaintiff D)Punitive damages are limited to disfigurement and mental anguish A-Punitive Damages are an award to an injured party, in addition to compensatory damages, intended to discourage a wrongdoer from repeating negligent acts or omissions.

Which of the following incidents would not be considered theft?

A)Quarterly inventory shows a shortage of 3 stock items B)A cashier being handed a threatening note to hand over all the cash in the cash register C)Missing merchandise and a broken store window discovered by a manager when opening the store for the day D)Merchandise stolen while the store is open and caught on video tape A-An inventory shortage does not imply any act of stealing.

An alarm system installed in a home is considered which of the following ways to manage risk?

A)Retention B)Reduction C)Avoidance D)Transfer B

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

A)Return to the building within 60 days B)Replace damaged property on a reimbursement basis C)Use damaged property to resume operations D)Submit a proof of loss within 30 days C-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.

Which of the following terms best describes the crime of taking of property from inside the premises or a locked safe or vault by a person who commits forcible entry?

A)Robbery B)Theft C)Shoplifting D)Burglary D-Burglary involves trespassing and entering or exiting a locked premises. Robbery involves direct confrontation and the use of force. Shoplifting is not defined in a policy, but it is covered under theft, which is a general term for larceny.

A secondary loss that occurs as a result of a direct loss from a covered peril is considered:

A)Secondary Loss B)Provisional Loss C)Delayed Loss D)Consequential Loss D-The direct loss to the property is the damage to the property caused by an insured peril. The indirect, or consequential, loss is further financial loss that results from the loss of use of the damaged property.

Which of the following is true regarding Section II of the Homeowners Policy?

A)Section II of the HO-4 (Tenants Form) is modified to adapt to the Tenant's exposures B)Section II is the same in all Homeowners Forms C)Section II of the HO-6 is modified to adapt to the exposures of the Condominium unit owner D)Section II of the HO-3 (Special Form) has broader coverage than Section II of the HO-2 (Broad Form) B-Since the liability exposures of individuals and families have little to do with their mode of residence, Section II is the same in all Homeowners Policy forms.

All of the following are common law defenses against negligence, except:

A)Statute of Limitations B)Contributory negligence C)Assumption of risk D)Intervening cause A-The Statute of Limitations is a statutory defense, not a common law defense.

Choose the property that is not settled on a replacement cost basis under the Building and Personal Property Coverage Form.

A)Stock held for sale that is shown on the Declarations B)The building listed in the Declarations C)Personal property of others D)The insured's business personal property C-Property of others is valued on an Actual Cash Value basis, unless otherwise specified.

Which statement is false regarding inland marine policies?

A)The Accounts Receivable Coverage Form is a controlled form B)The Installation Floater provides coverage while the property is in transit and during installation C)The Bailees' Customers Form covers the insured's property when he/she has property of others in his/her care, custody and control D)The Contractor Equipment Floater is usually written on an open peril basis C-The Bailees' Customers Form does not cover any property owned by the insured.

Which of the following is true of a Dwelling Form?

A)The Broad Form covers the cost to repair defective plumbing B)The Special Form covers the building and other structures on an open perils basis C)The Basic Form covers the contents on an open perils basis D)The Basic Form covers the contents against theft B

Which of the following is true of a Dwelling Form?

A)The Broad Form covers the cost to repair defective plumbing B)The Special Form covers the building and other structures on an open perils basis C)The Basic Form covers the contents on an open perils basis D)The Basic Form covers the contents against theft D-A producer has apparent authority when he/she exceeds his/her contractual authority, and the insurer does nothing to intervene.

Employee W suffered a work-related back injury at a previous job. After being hired by a new company, W fell down a flight of stairs at work and reinjured his back? Which of the following is true regarding Employee W's benefits?

A)The Second Injury Fund will pay compensation to the extent the prior disabling injury contributed to the second injury B)The new company's Workers' Compensation carrier will pay the entire loss C)The Second Injury Fund will only pay compensation for the new injury minus any prior claim D)The new company's Workers' Compensation carrier will not pay for any of the loss A

Which statement is true concerning Dwelling policies?

A)The Special Form insures the dwelling on an open perils basis, and insures the contents against the broad form perils B)The Basic Form pays for losses to the dwelling on a replacement cost basis C)100% of Coverage C applies to worldwide coverage D)The Special Form automatically covers the contents against the peril of theft A

Short rate cancellation occurs when:

A)The insured cancels the policy mid-term B)An insurer cancels the policy mid-term C)A policy is flat cancelled D)The policy is non-renewed A-When the insured cancels a policy before the expiration date, a short rate cancellation is issued and the insurer retains a portion of the unearned premium to cover costs.

All of the following are true of the supplemental extended reporting period, except:

A)The insurer may cancel it after the premium has been paid by the insured B)It must be purchased within 60 days after the end of the policy C)It is an optional extended reporting period of unlimited duration D)The one time premium may not exceed 200% of the annual premium for the coverage part A-Once the premium has been paid, the Supplemental Extended Reporting Period Endorsement cannot be cancelled.

Which of the following crime forms covers a loss of money that occurs because a threat to cause bodily harm was made to the uninsured who was kidnapped?

A)Theft or Dishonesty B)Outside the Premises C)Extortion D)Forgery or Alteration C-Extortion can be added to the crime policy as an endorsement and covers a loss of money, securities, or property because of a threat to cause bodily harm to persons who were kidnapped, or allegedly kidnapped, or cause damage to the insured premises or property inside the insured premises.

Under the PAP, a temporary substitute would be covered if used:

A)To test drive new models B)While an insured auto needs servicing C)Because the insured's auto is an automatic, and his/her daughter wants to learn to drive manual D)To pick up a new refrigerator that won't fit in the family car B-A temporary substitute is a covered auto as long as an owned car is out of normal use due to breakdown, repair, servicing, loss, or destruction.

Physical damage coverage under a Business Auto Coverage Form includes all of the following, except:

A)Uninsured Motorist Coverage B)Specified Causes of Loss C)Collision Coverage D)Comprehensive Coverage A-The three types of physical damage coverage under the BAP are collision, comprehensive, and specified perils. Uninsured Motorist is a separate coverage added by endorsement.

A CGL policy with a general aggregate limit of $300,000 and a per-occurrence limit of $100,000 would have how much remaining after paying a claim for a $200,000 loss, and subsequently a second claim for a $100,000 loss?

A)Zero B)$200,000 C)$300,000 D)$100,000 D-The first claim would only be paid up to the per occurrence limit of $100,000. The second claim would paid in full. Combined, the two claims could reduce the aggregate by $200,000, leaving only $100,000 available for all other claims in the policy period.

Medical expenses of the Farm Liability Coverage Form provide coverage if the accident is reported within

A- 3 years