P&C licensing

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

$15,000, $30,000, $5,000

Reasonable medical expenses incurred and reported within how many years following an accident are covered under Medical Payments coverage of the commercial general liability)

1 year

Choose the statement that is incorrect regarding the NJIUA.

10% of the insurers authorized to write direct property insurance in the NJIUA are waived from membership (Every insurer must be a member of the Association as a condition of the insurer's authority to continue to transact the business of insurance in New Jersey.)

Policyholder L owns a dwelling, and rents the detached garage to tenants. The premises are insured under a DP-3 with a Coverage A limit of $100,000. How much is the detached garage insured for if damaged by a covered claim?

10,000 (The Coverage B limit of insurance is 10% of the Coverage A limit.)

The Earthquake endorsement to the BOP provides that coverage continues for how long after a policy expires?

168 hours

Under the Workers' Compensation policy, the insurer may audit records pertaining to the policy for up to how many years after the policy period ends?

3 years

Under the Commercial Building and Personal Property Coverage Form, the building is considered vacant, unless at least what percentage of the square footage is rented or is used to conduct operations?

31 %

All of the following would be included in the definition of 'insured location', except:

A 5-family dwelling in which the insured lives in one of the units, including the structures and grounds (Eligible residential dwellings are those containing one to four residential units and no more than 2 roomers or boarders per family.)

Other than collision (Coverage for collision with a bird or animal is provided under Other Than Collision coverage.)

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

Which of the following is true regarding liability insurance?

A liability policy provides coverage for unintentional torts (A liability policy is intended to provide protection in the event the insured's negligence causes bodily injury or property damage to others for which the insured becomes legally obligated to pay damages. Liability is an unintentional tort. Neither intentional torts nor criminal acts are covered by a liability policy.)

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

A motorcycle (Generally, vehicles that have fewer than 4 wheels are excluded from coverage.)

All of the following are true regarding a nonresident license, except:

A nonresident licensee may be authorized for any line of insurance for which the licensee is not authorized in his/her home state (A nonresident licensee may only be authorized for the line(s) of insurance for which the licensee is authorized in his/her home state.)

60 (A notice of nonrenewal must be mailed or delivered by the insurer to the insured no less than 60 days and no more than 90 days prior to the expiration of the current policy.)

A notice of nonrenewal must be mailed as least _______ days prior to the expiration of the policy.

Servicing carrier

A participating insurer that will accept PAIP assignments from another insurer is called a:

Not less than 30 days or more than 120 days prior to expiration or cancellation

A policy may not be nonrenewed or cancelled unless written notice has been delivered to the insured:

What is required before a risk may be submitted to a surplus lines agent?

A producer must try to place the risk with 3 authorized insurers

Straight (A straight bill of lading doesn't contain a value limitation for the cargo being shipped, meaning the carrier is legally responsible for the full value of transported goods while it is in the carrier's care.)

A value limitation for a shipment is not included in which type of bill of lading?

Under the Commercial Property policy, debris removal and fire department service charge coverage are examples of:

Additional Coverages

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

All living expenses incurred when a dwelling becomes uninhabitable after a covered loss (The policy does not cover all living expenses, only necessary additional living expenses.)

Policies are standardized (Ocean Marine policies are generally unregulated and there is no 'standard' policy.)

All of the following are true of Ocean Marine Insurance, except:

Malfunction is included in the definition of breakdown (The definition of breakdown does not include malfunction, including adjustment, alignment, calibration, cleaning, or modification.)

All of the following are true of the Equipment Breakdown Protection Coverage Form, except:

The HO-2 pays for losses on an open peril basis (The HO-2 pays all losses on a broad form (Named Perils) basis.)

All of the following are true of the HO-2, except:

Each party assumes that they can rely on the statements of the other party

An insurance contract is said to be a contract of utmost good faith, because:

How frequently is the Exportable List reviewed?

Annually (The Commissioner holds an annual hearing to review and determine what will be included on the Exportable List.)

Of the following, which is covered under Part D - Coverage for Damage to Your Auto?

As long as a new car is added to the policy within 14 days, comprehensive and collision will be covered.

Which of the following is not accurate regarding the NJ automobile residual market for the Personal Automobile Insurance Plan (PAIP)?

As long as the applicant is a NJ resident, an out-of-state car registration is not acceptable (

___________ is not covered by the CGL Coverage B - Personal and Advertising Injury.

Breach of contract

Satellite dish located on the premises (Outdoor fences, radio or television antennas, satellite dishes, and its lead-in wiring, masts or towers are excluded under the BOP.)

Choose the item that is not covered under the BOP.

$50,000 (Regardless of the individual claim amounts, because the total of the individual claims ($83,000) exceeds the per accident limit of $50,000, the insurer's liability is limited to $50,000 for all three claimants.)

Claimant A has bodily injuries in the amount of $49,500; claimant B, $19,500; and claimant C $14,000 arising out of a 4-car accident caused by the insured, whose PAP carries limits of 25/50/10. What will the insurer pay?

ABC Industries contracts with municipal governments to build bridges, viaducts, and similar engineering projects. If a bridge completed in the prior year by ABC Industries were to collapse, which kind of liability exposure would this be an example of?

Completed operations (When a business performs services or work, such as installation, construction, or repair, it's vulnerable to lawsuits and claims resulting from improper or defective workmanship. This exposure typically begins after the insured's operations have been completed and the insured leaves the job site. Injury or damage must occur away from the premises the insured owns or rents.)

What is the correct term for a secondary loss that occurs as a result of a direct loss from a covered peril?

Consequential Loss (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 would not be covered under an Installation Floater?

Construction equipment (The Installation Floater is designed to cover materials that will be installed in a newly constructed or renovated building. Construction equipment owned any maintained by the installer would be covered under the Equipment Dealers Floater.)

Which of the following insurance forms is designed for the person who has the potential for a liability exposure caused by negligent acts of the contractor or subcontractor he hires to make repairs, construction, or alterations?

Contingent liability (Contingent liability is liability imposed because of accidents caused by persons other than employees for whose acts an individual, partnership or corporation may be responsible. For example, an insured that hires an independent contractor can, in some cases, be held liable for his negligence.)

In which section of the BOP would coverage for outdoor property be found?

Coverage extensions

Which of the following statements regarding types of property loss is false?

Direct losses include additional living expenses (Additional living expenses are an indirect loss, not a direct loss.)

Which of the following statements best describes the Other Insurance condition on a standard property insurance policy, when two separate property policies provide coverage for the same loss?

Each policy pays its pro rata share of the loss (The Other Insurance condition specifies the process to be followed when more than one policy covers the same loss. For property insurance, losses are settled on a pro rata basis, where each policy pays no more than its pro rata share of the loss.)

Which of the following relationships involves vicarious liability?

Employer and employee (Employers are assigned liability for the acts of their employees.)

Auto insurers must issue an identification card to each insured as evidence of insurance. It is prohibited to stack uninsured and underinsured motorist coverage limits for multiple autos insured under the same policy. Rates for uninsured and underinsured motorist coverage may not be based on the insured risk's class or territory.

Every liability policy must provide no-fault PIP coverage benefits to pedestrians injured by the named insured

Which of the following is not included in the definition of Money under Commercial Crime Coverage?

Evidence of debt (Money includes coins, currency, bank notes, travelers checks and money orders. Evidences of debt are not negotiable items._

Automobile insurance cannot be cancelled by the insurer for which of the following reasons?

Excessive at fault accidents within 5 previous years (An insurer may non-renew, but not cancel, an automobile policy if the insured had 2 or more at-fault accidents, violations for 4 or more eligibility points, or failed to maintain coverage without a lapse is the 5 years preceding the expiration of the policy.)

$5,000 per violation

For a first-time violation of a cease and desist order, the Commissioner may impose a penalty of up to:

Damage caused by the insured during a heated argument (Losses caused by the insured (intentional losses) are not covered.)

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

Which of the following would be included in the definition of Business Personal Property under the Building and Personal Property Coverage Form?

Furniture and machinery owned by the insured (Business Personal Property covers only personal property owned by the insured, plus the insured's interest in improvements and betterments the insured has made to rented real property.)

All of the following are considered implied warranties, except:

General Average (Implied warranties aren't always written into the contract, but are generally understood by all parties and binding upon them. Examples of implied warranties include no deviation in voyage, legality, and seaworthiness.)

Domestic employee coverage can be found through which of the following?

Homeowner policy

72 hours

How long after a loss before the Period of Restoration begins for Business Income coverage?

$20,000 (The Coverage E limit of insurance is 20% of the Coverage A limit.)

How much will the Dwelling Policy pay for living expenses after a dwelling insured for $100,000 Coverage A is damaged by a fire?

Optional coverages (Optional coverages must be shown as applicable in the Declarations and include outdoor signs, money and securities, employee dishonesty, and equipment breakdown.)

In which section of the BOP would coverage for equipment breakdown be found?

Which of the following covers equipment during transportation, unloading and installation up to the point control is given to the buyer?

Installation Floater

A chain of events may be broken by which of the following, thus freeing the defendant from liability?

Intervening cause (An intervening cause breaks a natural and continuous sequence of events that are necessary to establish negligence.)

Which of the following is true regarding the Personal Liability Supplement?

It provides coverage for claim expenses, first aid expenses and damage to property of others

Which of the following is NOT considered a special risk?

Medical malpractice (Medical malpractice insurance is not considered a special risk.)

Which of the following is covered under Section II of the Businessowners Coverage Form?

Medical payments to volunteer workers

Which of the following correctly describes the practice of twisting?

Misleading an insured in order to induce them to terminate or exchange an existing policy for a different one

An insurer that is not approved by the state Department of Insurance to transact insurance is called which type of insurer?

Non admitted

Which of the following is not true about the Home Business endorsement?

Only property damage is covered (The endorsement provides both business property and liability coverages for an eligible home business.)

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

Payments made under this section reduce the limits of the policy (Payments for Supplementary Payments do not reduce the limits of the policy.)

Which of the following is not an exclusion under the Umbrella policy?

Personal injury (Other Umbrella policy exclusions include employment practices liability, Workers' Compensation and employer's liability, war and terrorism, and expected or intentional injury.)

$20,000 (The Coverage E is 20% of Coverage A.)

Policyholder N insures his owner-occupied home under a dwelling property policy (DP-3) with a limit of $100,000. If the dwelling is damaged in a fire, what is the limit of insurance that will apply to Coverage E, Additional Living Expense?

The person whose responsibility it is to fulfill the obligation of a surety bond is the:

Principal

Which of the following is true with regard to requirements for filing rates and policy forms?

Rates must be filed at least 30 days before use and policy forms must be filed at least 30 days prior to becoming effective

Which of the following is covered under PIP coverage?

Resident relative driving insured's car

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

Section II provides no defense in the event of a groundless, false, or fraudulent claim (The policy provides for defense of any claim to which Coverage applies, even if groundless, false, or fraudulent.)

Which of the following is not covered under the Valuable Papers and Records Floater?

Securities (Money and securities are not covered under the Valuable Papers and Records Floater.)

Paul vs. Virginia (In 1869 the Court ruled the insurance industry was not subject to the commerce clause of the Constitution.)

The Court ruled the insurance industry was not subject to the commerce clause in the Constitution in which of the following court cases?

Per fire limit

The Damage to Premises Rented to You coverage under the Businessowners Policy is subject to which of the following limits of liability?

Fire, lightning, explosion, riot, civil commotion and aircraft

The Outdoor Property Extension under the Building and Personal Coverage Form insures against which perils?

Property damage liability to property in the insured's care

The Personal Umbrella Policy does not provide coverage for which of the following?

Personal property of others

The Replacement Cost optional coverage of the Building and Personal Property Coverage Form applies automatically to all of the following types of property, except:

Under Section II of the Homeowners Policy, a one or two family dwelling where the insured resides in one of the units, including other structures and grounds at that location, is defined as:

The Residence premises

Collision damage to another vessel when the insured is liable (A Collision and Running Down Provision is contained in the standard Hull Policy to cover liability incurred for damage to another vessel or structure.)

The Running Down Clause would cover which of the following claims?

U.S. vs. South-Eastern Underwriters Association

The Supreme Court in which case reversed an earlier court decision by ruling that insurance was subject to federal regulations?

Which of the following statements about a property policy is false?

The coinsurance clause makes the policy more costly

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 defines short rate cancellation?

The insured will receive less than the full amount of the unearned premium

Choose the true statement regarding Out of State Coverage in the Personal Auto Policy.

The limit of liability will be the same as the coverage provided in the home state or the minimum liability requirements in the state where the covered auto is being used, whichever is greater

FOB (Free on Board) point of destination is best described as which of the following?

The seller is responsible for the property being transported until it has been delivered (FOB - Point of Destination is a shipping term that indicates the seller is obligated to transport property and will be responsible for loss or damage to transported property until proper delivery has been made.)

Which of the following statements is false with regard to cancellation/reinstatement of a license?

There is no fee for reinstatement of a license

Theft of stock certificates (Personal property and valuable records are automatically covered under the policy. Theft of money and securities by an employee would be covered under the employee dishonesty optional coverage.)

Under the BOP, the Money and Securities Optional Coverage would cover which of the following?

The applicant gave oral consent prior to the test (The insurer must have the applicant's prior written consent to take the test and if the applicant wants to be informed of the test results.)

Under which of the following circumstances can an insurer NOT use a genetic test?

Authorizes an insurer to transact insurance business

What is the purpose of a Certificate of Authority?

Covered on an open perils basis (The outdoor signs optional coverage provides coverage on an open perils basis, for all outdoor signs at the described premises.)

When a proper entry is made on the Declarations Page of a BOP, the optional coverage for outdoor signs would be:

Functional Replacement Cost (Functional Replacement Value represents the cost to replace property with other property that performs the same function with similar efficiency, although the replacement property is not identical to the property being replaced.)

When a property insurance policy states that damaged property will be replaced with other property that performs the same function with similar efficiency but is not identical to the damaged property, the policy is written on which of the following bases?

Direct loss (Water damage is a direct loss to the property.)

When firefighters extinguish a house fire with water, the water damage is considered a(n):

Symbol 1 (Symbol 1 includes any auto, whether owned or not by the insured if it is used in the insured business.)

Which Business Auto Symbol is the most broad of all Symbols?

Second injury fund (The Second Injury Fund pays that portion of the loss attributed to the prior disabling injury. The purpose of the fund is to relieve an employer of the portion of claims related to prior injuries that are simply made worse by the employee's current work. This is part of the policy but something provided on a state-by-state basis.)

Which coverage is not included in a Workers' Compensation policy?

Electrical and mechanical equipment used in the utilization of energy (Catalysts insulating and refractory material, and equipment manufactured by the insured for sale are not included as covered equipment.)

Which of the equipment is covered under the Equipment Breakdown Protection Coverage Form?

Dwellings used for incidental business (Farm property is not eligible, mobile homes must be permanently attached to the foundation, and only incidental business are covered if dwelling is primarily residential.)

Which of the following are eligible to be insured under a Dwelling Policy?

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

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

It applies when the insured yacht is in storage and allows a return of premium due to the lower risk

Which of the following describes the Lay Up Warranty under the Yacht Policy?

Uninsured Motorist Bodily Injury ( The other party must be legally responsible for bodily injury to an insured that arises out of ownership, maintenance, or use of an uninsured motor vehicle in order for this coverage to apply.)

Which of the following does not pay regardless of fault?

Backdating (Backdating the age of an insured by no more than 6 months to save age is not an example of a prohibited practice.)

Which of the following is NOT an example of a prohibited practice?

Promptly acknowledging communications pertinent to a claim

Which of the following is NOT an unfair claims practice?

With the Occurrence form it doesn't matter when the loss is reported, but the date the loss occurred must be during the policy period.

Which of the following is false about the CGL's two coverage forms?

Completed additions, fixtures, including outdoor fixtures, permanently installed machinery and equipment

Which of the following is included in the building coverage provided by the Building and Personal Property Coverage Form?

Inflation guard (Inflation Guard is an optional coverage, not a coverage extension.)

Which of the following is not a coverage extension under the Building and Personal Property Coverage Form?

Vehicle is pledged as security for the repayment of a loan (A financed automobile is sold at retail without full payment of the purchase price which is extended to the purchaser as credit or the title is retained, but a vehicle provided as security for a loan is not financed.)

Which of the following is not considered a financed automobile?

Glass breakage (Specified perils include fire, lightning, or explosion; theft; windstorm, hail, or earthquake, flood, mischief or vandalism, and the sinking, burning, collision or derailment of a conveyance transporting the covered vehicle.)

Which of the following is not covered under the BAP specified causes of loss coverage?

Theft (Theft coverage is only available by endorsement.)

Which of the following is not covered under the Dwelling Broad Form (DP-2)?

The Damage to Property of Others duplicates coverage that is included in Section I (The Damage to Property of Others Additional Coverage supplements the Property Damage Liability Coverage by providing limited Coverage for damage, caused by the insured, regardless of negligence. Coverage does not apply to property damage covered under Section I of the policy.)

Which of the following is not true concerning Section II of the Homeowners Policy?

Valuable Papers and Records Coverage Form (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.)

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

Coverage becomes effective after a 24-hour waiting period (Coverage usually become effective after a 30-day waiting period; some exceptions apply.)

Which of the following statements about the National Flood Insurance Program is false?

The Commissioner may issue a notice of a hearing, providing 15 days' notice (The Commissioner may issue a notice of a hearing, providing 10 days' notice.)

Which of the following statements is NOT correct regarding the powers and duties of the Commissioner?

Every insurer must be a member of the association as a condition of the its authority to transact insurance (The FAIR Plan is designed to provide an adequate market 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. Property must be an insurable risk.)

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

The insured may file a written complaint with the New Jersey Department (The insured may not file a written complaint with the New Jersey Department when the policy is cancelled for nonpayment of premium.)

Which of the following statements is false regarding cancellation for nonpayment of premium?

In order to qualify for a federal loan, the property owner must purchase flood insurance if the property is located in a flood area

Which of the following statements is true regarding the eligibility of flood insurance?

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

Which of the following statements regarding crime coverages is correct?

An employee is injured while driving a covered auto (Workers' Compensation insurance would cover the injuries of employees.)

Which of the following would be not covered by a Business Auto Policy?

This coverage is available by endorsement only (Commercial auto policies do not automatically provide medical payments coverage, which must be added by endorsement.)

Which section of the BAP provides auto medical payments coverage?

Damage to Premises Rented to You (The aggregate limits do not apply to losses that involve Damages to Premises Rented to You.)

Which type of loss does not reduce an aggregate limit within the Businessowners Coverage Form - Section II?

Absolute liability (Some activities are so inherently dangerous that they are bound by the principle of Absolute Liability, which states that no degree of care taken by the insured can defend against a charge of negligence.)

Z is a distributor of natural gas. While connecting gas to B's house, an explosion occurs and the house is destroyed. Z's defense is that B did not turn off the pilot light on her furnace before the hookup as instructed by the company. The court ruled that the activities of connecting gas lines were so dangerous that Z's defense did not relieve its liability. What legal principle is applicable in this case?