P&C practice exam #2

Loss of income coverage is insurance that provides for loss of income due to the interruption of business caused by a loss. For how long does the loss income coverage typically apply?

120 days

Libel, copyright infringement and slander are some of the offenses that are covered under what type of general liability coverage?

Advertising Injury

What does a surety bond guarantee?

Another party will fulfill its promise

Lindsay suffered a loss to her property after a major storm hit her town. Lindsey wanted her homeowners insurance to pay for the loss, but her insurance carrier wanted to deny the claim. The insurance carrier was looking to deny on the basis that Lindsey did not do enough to secure her property prior to the storm. If Lindsey and the insurance carrier cannot come to an agreement and wish to not proceed through the court system, what is another means they could use to determine fault?

Arbitration

Which cause of loss form provides coverage for property damage due to falling objects?

Broad

Ralph owned a local convenience store that was damaged by a fire. The building suffered extensive damage and took several weeks to repair. Once the building was repaired, it still took Ralph a few days to get his store up and running again. Assuming this loss was covered by insurance, which specific coverage would extend to pay the loss suffered during the couple of days after the repairs were complete but the store was still not 100 percent?

Business income coverage

Which type of insurance carrier is required under the Terrorism Risk Insurance Act (TRIS) of 2002 to write policies that will protect against acts of terrorism?

Commercial Insurers

Greg and Janelle Smith were shopping around for an auto insurance plan for their household. After meeting with several agents, they realized that a DUI on Greg's driving record was making the quotes on their premiums drastically higher than they expected. Greg and Janelle were meeting with their last agent to discuss prices and the agent failed to run their MVR. Greg and Janelle purchased their auto policy from this agent, secretly hoping the agent would not ask about the driving record. Greg and Janelle are guilty of what by hiding Greg's DUI charge?

Concealment

Erin is a renewal underwriter for ABC insurance. She was reviewing an umbrella policy for an operator who just turned 90 years old. According to ABS's guidelines, an insured is only eligible for limits p to $1 million if he or she is over the age of 89. Erin's insured currently has limits of $2 million. What will Erin need to issue to notify that his coverage is being restricted if she binds the renewal quote?

Conditional Renewal

Which type of insurance policy does not provide coverage for a bodily injury and property damage?

D&O

Which dwelling package form of insurance provides coverage for the dwelling broad form?

DP-2

Erin was planning on purchasing her first home in the next two years. She was researching which areas she would like to buy in as well as how much money she would need saved for a down payment. Erin's realtor told her to make sure her credit was excellent to get the best rate possible for her mortgage. If Erin wanted to check her credit score now, who would be responsible for the cost?

Erin

the roof on Randy's t-shirt store collapsed following a heavy storm. A lot of Randy's inventory was damaged, but he was able to salvage some merchandise. While his store was being repaired, Randy rented a storage unit in which to store his saved merchandise until the store was ready. This extra space expense may be paid by which coverage part of commercial property insurance?

Extra expense cocerage

which act requires notification to the insured, as well as an option to opt out, before providing the insured's personal information to a third party?

Gramm-Leach-Bliley

Which type of homeowners policy provides coverage for the dwelling on a broad form?

HO-2

Christine was moving to a new town for a job change and decided to rent a townhouse. Which type of homeowners policy should Christine purchase to protect her exposures as a tenant?

HO-4

which type of homeowners policy is designed for homeowners who own a house on the town's historic registry?

HO-8

Which organization is responsible for developing many of the standard policy forms and endorsements that make up an insurance policy?

Insurance service Office Inc.

Cole's house was destroyed by fire and was considered a total loss. Cole contacted his insurance company to asses the damage and hopefully receive a check to cover his damages. Cole was responsible for giving his insurance company a list of all damaged personal property lost from the fire. He knew his computer was in his car at the time of the fir and was not damaged, but Cole added the computer to the list to have the insurance company pay for a new one. which hazard is Cole guilty of committing?

Moral Hazard

Michael was running late for a meeting at his job and did not lock his car door. When he realized it was unlocked, Michael did not want to turn around to go back and lock the vehicle. Michael thought that if anything was stolen it was okay because his insurance would cover the loss. Which type of hazard has Michael committed by not going back to lock his car door?

Morale Hazard

Which type of government-funded insurance program will respond to direct damage from natural disasters, such as floods, to a building?

National Flood Insurance Program

Yolanda was injured while performing her daily duties at work. Under worker's compensation laws, will Yolanda have to prove her company was at fault for her injuries?

No, the majority of cases, injury claims at work will be payed without providing fault

Jen was a renewal underwriter for ABC insurance. Jen was reviewing a claim that just came into ABC for an insured she has serviced for five years. The claim's severity exceeded ABC's guidelines of reserve amounts and Jen was required by this guideline to stop writing the risk. What type of notice is Jen required to send to the insured to advise him that coverage would not be renewed?

Nonrenewal notice

Kelly was driving home from vacation when she was rear ended at a stop sign. The driver who hit Kelly had auto insurance, but at a very low limit. the limit the driver had not would not cover the extent of the damage to Kelly's vehicle. Which coverage, if Kelly had it on her own policy, would cover the difference between what the damage cost and what the at-fault driver's limits were?

Underinsured Motorist Coverage`

Gerry was driving to work one day when his car was hit by a driver who ran a red light. the driver who hit Gerry did not have insurance and Gerry was concerned over who would pay for the damage to his car. Gerry's agent told him his own insurance would cover the cost due to which coverage included in Gerry's policy?

Uninsured Motorist coverage

A commercial property floater is coverage designed for commercial exposures that do not retain at a fixed location. or which type of commercial exposure would you potentially purchase a commercial property floater?

a food cart that travels to a different location each week

Which type of coverage, afforded by some insurance policies, will cover all losses unless specifically noted as being an excluded loss?

all risks

Darrell's home suffered a fire loss in which most of his possessions were damaged. If Darrell's insurance carrier is requesting a list of all property damaged and its worth, what might the carrier demand if the worth of property is questionable?

an appraisal

Products-completed operations is coverage provided on a general liability policy. Where must the injury occur for products-completed operation liability to apply?

away from the insureds premises

A DP-1 policy provide coverage for the dwelling according to which cause of loss form?

basic form

Frank was an underwriter in the personal lines department. He received an application for a personal umbrella, which had all the required information, but the application was not signed. According to Frank's department guidelines, he could provide a temporary notice of coverage but could not fully issue the policy until the application was signed by the insured. What is the temporary notice of coverage known as?

binder

Under which type of arbitration is the decision final?

binding arbitration

Broad and basic forms both provide coverage on various homeowners policies. Which form, broad or basic, provides the most coverage against losses?

broad form

The DP-3 special form offers coverage for dwellings on an all-risks basis, but offers coverage to personals property under which cause of loss form?

broad named perils

Greg was involved in a car accident with another vehicle in which Greg was found to be at fault. which coverage under his auto insurance would pay for damage to the other vehicle?

collision coverage

An insurance policy will typically display the limit or limits available in one of two ways. Split limits is the approach to showing different limits to respond to bodily injury and property damage. Which approach shows only one limit to cover any loss, whether it is bodily injury or property damage?

combined single limit

in addition to coverage for the building itself, commercial property coverage also covers all the losses below EXCEPT:

commercial property coverage only covers loss to the building

replacement cost is a form of loss valuation in which the insured's property is replaced by which method?

cost to replace property with property of the same or equal value

Harry was involved in an accident in which a deer ran out in front of him in the road and into the front of Harry's vehicle. Harry's insurance included other-than-collision coverage subject to him paying the first $250 of any loss sustained. Harry's $250 payment requirement is known as which term in insurance?

deductible

Actual cash value is determined by subtracting which value from the replacement cost value of a specific piece of property?

depreciation value

while employer's liability coverage does require fault to be proven by the employee, the coverage has two advantages over worker's compensation coverage. which two types of claims would be covered under employer's liability coverage but not workers compensation coverage?

dual capacity claims and third-party-over claims

what is one of the primary coverages provided by a commercial crime policy?

employee dishonesty

Under which exception to the exclusive remedy approach are employees required to prove negligence on the part of their employer to receive compensation for an injury at work?

employer's liability

Errors and Omissions (E&O) insurance, which is a policy common in professional lines of insurance, was formed to primarily cover what types of losses?

financial losses

A personal articles floater can be a stand-alone policy or an endorsement to a homeowners policy to provide coverage for all of the following EXCEPT:

fixtures

Auto and trailer dealers should purchase which type of policy to cover their liability exposures?

garage keepers coverage

Rex was severely injured in an auto accident. Rex was not at fault and was in the process of suing the other party for damages. Included in the damages, Rex was asking for damages to be paid towards his pain and suffering. Under which type of damages are pain and suffering?

general damages

Supplemental payments are often needed immediately following a loss. Are supplemental payments in addition to the policy limits for CGL and business auto policies, or are the payments included in the limits available?

in addition to

Which type of insurance policy is designed to cover property in motion, regardless of the location?

inland marine policies

An insurance policy is made up of several parts. Which part acts as the agreement or contract between the insurance company and the policyholder?

insuring agreement

Stocks, bonds, mutual fund investments, patents, etc. are which type of property?

intangible property

The Peterson family has an insurance policy through ABC insurance. During the middle of the policy term, the Petersons purchased an additional vehicle and wanted this vehicle added to their policy. What would ABC insurance process to show an additional vehicle on their policy?

issue an endorsement

Beatrice owned a mobile home as a secondary property in a mountain resort campsite. Would Beatrice need to secure a stand-alone policy to cover her needs for this home or would an endorsement to her homeowners be sufficient?

it would depend on the carrier. Some will write with an endorsement, while others offer a stand-alone policy

Hillary was driving home from work one day when she rear ended another vehicle. The other driver was injured and needed medical attention. Which limit, under Hillary's split limit policy, would respond to cover the medical cost?

limit one

Andy was driving to work one day when he became distracted and hit another vehicle. Andy's insurance policy follows the split limit approach. Which limit would Andy's insurance policy use to determine the amount of coverage available for the property damage to the vehicle Andy hit?

limit three

Jason was in the market for a new car. His current car was starting to have repair issues, but it was till very much a usable vehicle. When Jason goes to trade in his car, which value does the dealership use to determine a staring point for how much his car is worth?

market value

Which cause of loss from will specifically list any and all perils the policy will provide coverage for?

named perils

Courtney was driving to an interview for a new job. She was running late and saw that the light had just turned red. Courtney proceeded through the red light because she did not want to waste time sitting at the traffic light, and she did not fully check to see if any other cars were around. A car, however, was driving through the intersection after seeing the light turn green, and this car and Courtney's collided. Courtney would be cited as he party at fault due to her being what?

negligent

when notifying the insurance carrier of a claim, does the insured have to submit the notice on a specific form or documentation?

no, a form, letter, or lawsuit could notify of a claim

ABC farms is a large, commercial farm that generates $10 million in revenue each year. ABC's operations include raising cows and pigs for late sale of their meat to local restaurants, a commercial store open to the public daily, as well as seasonal events. Would ABC farms be eligible for farmowners Insurance?

no, farmowners is for family-operated farms with minimal commercial exposure

Dwelling package policies provide coverage for numerous types of exposures. Are the exposures associated with farming covered adequately by a DP policy?

no, farms are excluded under all dwelling package forms

If it can be proven that there was willful negligence on the part of an employer, are employees barred from filing a tort claim due to an injury?

no, if the employer also does not obtain proper insurance coverage

Under garage keepers extra legal liability coverage, does liability need to be determined for coverage to apply?

no, liability does not need to be determined for coverage to apply

Griffin decided to spend the night camping with his friends in a wildlife reserve. This area is prohibited camping because it was known to house a large brown bear population. Griffin and his friends knew of the bear risk but still spent the night there. In the morning, Griffin woke up to a brown bear eating their food. When he tried to scare the bear away, the bear turned to attack Griffin. He suffered multiple cuts before his friends were able to scare the bear away from him. Would Griffin be allowed to sue the township for his injuries due to them happening inside the reserve?

no, strict liability would apply due to Griffin knowing the risk and still camping

does non-binding arbitration result in a final winenr?

no, the non-winning party does not have to accept the arbitrators decision

Under a DP (dwelling package policy), does the insured location have to be occupied by the owner of the property?

no, the property can be tenant occupied

if an insured wishes to rent a vehicle while traveling, would she need to purchase special insurance in order to drive a rental car?

no, the rental car would have coverage under the insured's primary auto policy

All of the following are exclusions under a medical malpractice insurance policy EXCEPT:

non-intentional acts

which cause of loss form will specifically list any perils the policy will not insure against?

open perils

in insurance, different policies are issued to protect against specific cause of loss. what is the term used to describe a cause of loss.

peril

Tiffany has an insurance policy through ABC insurance. Tiffany notified her carrier that she was moving from New Jersey to Florida and would like her policy to reflect this change. ABC was not licensed to write business in Florida and informed Tiffany that it would need to cancel her policy. What method would ABC use to cancel Tiffany's policy and return an unearned premium?

pro rata method

Brent owned multiple properties, vehicles, and couple of commercial locations. To cover all of Brent's exposures, he purchased a couple of different insurance policies. If Brent suffered a loss to one of his properties and more than one of his policies covered his loss, what could the insurance carriers do to determine which policy would pay?

proceed with arbitration

all of the following are ways in which an insured can interfere with subrogation EXCEPT:

provide the insurance carrier with complete documentation of the loss

Kelsey was booking a flight to visit her family in New York. Whenever a person travels, she runs a risk of loss due to the nature of travel. Which type of risk is Kelsey involved in by traveling in an airplane?

pure risk

Which type of automobile coverage would apply if an accident occurred and the insured needed to rent a vehicle for a temporary period of time?

rental reimbursement coverage

Andrea has her insurance policy through her local agent. Andrea's friend opened his own insurance agency and promised Andrea lower rates if she switched her policy to his office. When Andrea informed her current agent that she wanted her coverage cancelled, which method of cancellation will he use?

short rate method

Can a warranty be valid and enforced if not specifically written out in the contract?

sometimes a warranty only needs to be expressed or implied

Galen was severely injured in an auto accident in which she was not at fault. Galen required extensive medical care, including months of therapy, to recover from her injuries. If Galen were to sue, which type of damages would she sue for her medical costs?

special damages

Michael went out with a group of his guys friends for a night at the casinos. He planned on gambling most of the night in hopes to win money. Which type of risk is Michael involved in by gambling?

speculative risk

A car, a box of records, jewelry, and expensive clothing are all which types of property?

tangible property

the HO-5 type of homeowners policy provides coverage on all-risk basis for all exposures EXCEPT:

tenant's personal vehicle

Under garage keepers policy, liability on which party must be determined in order for coverage to apply?

the insured

what is covered under the second limit indicated in the split limits approach?

the maximum amount paid for all injured parties

The split limit approach is one wat in which insurance policy will show the limits of coverage available for that specific policy. If a policy is written with split limits, what does the first limit indicate?

the maximum amount paid to a single person

Frances was in the market for a secondary home at the beach. She saved up for years to purchase this house and when she was finally ready, Frances made an offer on a home. Before the sale can be completed, the mortgage company writing her home loan will need to run a credit check on Frances. Will Frances be responsible for paying for the credit check or will the seller of the home be responsible?

the mortgage company handles the costs of the credit check

Of the three parties that make up a surety bond, which party is the one that is on the receiving end of the promise made or the contract signed?

the obligee

A surety bond consists of three separate parties. Which party is responsible for carrying out the work or performance stated in the contract?

the principal

Elle's insurance policy is a claims-made policy written with effective dates of January 1 2013 - January 1, 2014. Her policy also states that and claim that occurs before January 1, 2013, is excluded regardless of the claim being reported during the policy period. What is January 1, 2013, known as in this case?

the retroactive date

Statutes of limitations are placed on claims for variety of reasons, and the length of the statute depends on the specific claim. What is the statute of limitations for filing a medical malpractice claim?

the statute is state specific

Which party in the surety bond contract is the party that is guaranteeing the work or performance of a second party?

the surety

exclusive remedy prohibits an employee from filing what type of claim against his employers?

tort liability

Name one way in which strict liability is different from negligence?

under strict liability, the nature or type of product is the issue for the claim

Which endorsement that may be added to a policy would suspend coverage if a building stood vacant over a specific period of time?

vacancy permit endorsement

All of the following perils are insured against under the basic cause of loss form EXCEPT:

weight of sleet

Howard was watching TV commercial that advertised, "A household cleaner which could get rid of any type of grease stain." Howard purchased this product to remove a grease stain he had on his garage floor. After many attempts at cleaning using this product, the grease stain still remained. Could Howard file a claim against the cleaning company because its product did not work?

yes, because the express warranty

Under a D&O policy, are defense cost covered within the policy limits?

yes, defense costs are included in the limit

Cutis was a 10 year-old who ws playing on his township's baseball team. While at practice one, Curtis was playing catch with a teammate when his ball struck a car windshield. The windshield was shattered and glass injured he person inside. This person sued Curtis's coach for her injuries and property damage. Could Curtis' coach be liable for this claim?

yes, if she can prove a vicarious liability

When Erin received her credit score, she noticed some errors on her report. There were a couple of delinquent charged listed on her report from a couple years ago that Erin knew were false. Is Erin allowed to file a dispute to fight the discrepancies on her report?

yes, if the dispute is with merit

Is liability a covered exposure under a commercial package policy?

yes, liability and property coverage

under employer's liability coverage, can an employee sue an employer in addition to collecting through a workers compensation claim?

yes, under a dual capacity claim