Personal Lines Final Exam
The insured has a $1,000,000 Personal Umbrella policy with a retention limit of $1,000. The insured suffers a $15,000 loss that is excluded by the underlying policy, but not the Umbrella. How much of this loss would be paid under the Umbrella? A. $0 B. $15,000 C. $16,000 D. $14,000
D. $14,000
Which of the following accurately describes the hourly prelicensing requirement which must be satisfies to obtain a property and casualty license in the state of Indiana: A. 20 hours B. 24 hours C. 30 hours D. 40 hours
D. 40 hours
The Commissioner of Insurance does not require a state licensing examination for which of the following: A. A resident producer B. A sole proprietor who is 19 years of age C. A Corporation desiring a producer's license D. A limited insurance agent selling travel accident insurance
D. A limited insurance agent selling travel accident insurance
A neighbor is bitten by your Labrador retriever and sues you for $100,000. Which of the following HO forms would cover the loss? A. HO2 B. HO3 C. HO4 D. All of the Above
D. All of the above
Which of the following conditions of a property policy describes the procedure for an insured to use in a disagreement with the insurer about the amount of a loss? A. Pro-rata liability B. Subrogation C. Audit D. Appraisal
D. Appraisal
The Basic Form in a Dwelling Policy automatically includes all of the follwoing coverages EXCEPT: A. Coverage A - Dwelling B. Coverage C - Personal Property C. Coverage D - Fair Rental Value D. Coverage E - Additional Living Expense
D. Coverage E - Additional Living Expense
Nicole has a Personal Auto policy with limits of 10/20/10 for liability coverage. She causes an accident that results in $12,000 bodily injury damages to the other driver and $5,000 in property damage to the other driver's car. How much would Nicole's policy pay for the the BI and PD losses? A. $15,000 B. $17,000 C. $10,000 D. $12,000
A. $15,000
Norm has a Personal Auto Policy with comprehensive and collision coverage. His vehicle is stolen and recovered 5 days later. If Norm claims transportation expense of $15 a day, how much will his policy pay? A. $45 B. $60 C. $75 D. $100
A. $45
The privacy notice must be issued to the policyowner every: A. 1 year B. 2 years C. 3 years D. 4 years
A. 1 year
How soon does flood insurance take effect? A. 30 days B. 31 days C. 60 days D. Immediately
A. 30 days
The insured would have Liability coverage under the Homeowner's policy while operating which of the following boats? (Assume ther are no endorsements attached to the policy): A. 8 foot boat with a 25 horsepower inboard-outboard motor owned by the insured B. 42 foot sailboat with no auxiliary power owned by the insured C. 15 foot boat powered by a 50 horsepower outboard motor that was purchased by the insured before the inception date and not reported to the insurer D. 8 foot boat with 26 horsepower outboard motor rented by the insured
A. 8 foot boat with a 25 horsepower inboard-outboard motor owned by the insured
An insurer that is organized under the laws of another state, but is authorized to conduct insurance business in the State of Indiana, best describes: A. A foreign company B. A domestic company C. An alien company D. A mutual company
A. A foreign company
Which of the following is not covered by the Personal Auto Policy? A. A portable GPS B. A factory installed stereo system C. Medical expenses the insured incurs due to an accident D. Physical damage caused by hitting a dear
A. A portable GPS
On an automobile policy application, an applicant states that she has had no accidents in the past 3 years. The statement is known as which of the following: A. A respresentation B. A warranty C. Concealment D. An appraisal
A. A representation
Which of the following situations does NOT create an insurable interest? A. Being named in someone's will as an heir B. Holding a mortgage or lien on property C. Having custody or control of someone else's property D. Owning property
A. Being named in someone's will as an heir
John has shingles delivered in his back yard to roof his home. A tornado blows them away. Which coverage under homeowners would pay for the shingles? A. Coverage A B. Coverage B C. Coverage C D. Shingles are not covered
A. Coverage A
An insurer incorporated and formed under the laws of the state in which it is domiciled is what type of company? A. Domestic B. Resident C. Foreign D. State
A. Domestic
A temporary license is given to which of the following? A. Employee of a disabled producer B. Next of kin of producer who is retiring C. Spouse of producer who has been terminated D. Anyone approved by the Commissioner
A. Employee of a disabled producer
A deductible is a usual feature in which of the following automobile coverages? I. Physical Damage II. BI and PD Liability III. Medical Payments A. I only B. II only C. III only D. I and III
A. I only
Pure risk means: A. Lose only B. Win only C. Win, lose D. None of the above
A. Lose only
Wich of the following would be considered insured for liability coverage under the Personal Auto Policy? A. The named insured's resident son while driving a neighbor's car B. The named insured's neighbor while taking the named insured for a drive in the neighbor's new car C. The named insured's cousin who, while visiting from another state, drives a car the named insured borrows from a neighbor D. Rock Oil Refiner, which provides a company-owned car to the named insured
A. The named insured's resident son while driving a neighbor's car
If an agent should fail to comply with the CE law: A. They could suffer revocation of their license B. They have 2 years to complete the courses missed C. There is only a monetary penalty D. There is no penalty
A. They could suffer revocation of their license
The definition of Risk is: A. Uncertainty regarding loss B. A chance of gain C. Uncertainty regarding gain or profit D. Intended unforseen damage to property for gain or profit
A. Uncertainty regarding loss
Yacht policies do not provide coverage for: A. Worker's compensation B. Hull damage C. Tender and life boat D. Factory installed equipment
A. Worker's compensation
Sally Smith calls her agent, Hubert Dufus, to purchase flood insurance. Agent Dufus explains to Ms. Smith that flood coverage can be purchased directly through the NFIP or through him. Should Ms. Smith choose to purchase coverage through Agent Dufus it is called the: A. Write your own program B. Create flood insurance program C. Flood insurance is not available through private insurers D. None of the Above
A. Write your own program
All of the following licensing requirements must be satisfies in order to receive a license to solicit insurance in this state EXCEPT: A. File a certificate of completion with the Commissioner of Insurance B. Complete an application on insurer prescribed forms C. Must pay the appropriate fee for each license issued D. Must pass a written examination
B. Complete an application on insurer prescribed forms
An insurance contract in which the applicant cannot bargain for terms and whose language is drafted completely by the insurance company is referred to as A. Unilateral contract B. Contract of adhesion C. Aleatory contract D. Executory contract
B. Contract of adhesion
Insurance was first arranged at Edward Lloyd's coffeehouse during the: A. 1500s B. 1600s C. 1700s D. 1800s
B. 1600s
The minimum limits of auto liability which must be provided in the State of Indiana are: A. 10/20/50 B. 25/50/10 C. 50/100/25 D. 100/300/50
B. 25/50/10
Which of the following statements best describes the term abandonment? A. An insurance company's refusal to have damaged property appraised B. A policyowner's demand for full payment from the insurer in exchange for a partially damaged item C. An insurer's demand for reimbursement from a third party who causes the insured's loss D. An insurer's refusal to pay a claim
B. A policyowner's demand for full payment from the insurer in exchange for a partially damaged item
Which of the following individuals shall be exempt from taking a state insurance examination? A. An individual who desires to solicit property insurance only B. A temporary licensee C. A person who was formerly licensed 4 years ago in another state D. An individual who would like to solicit liability insurance
B. A temporary licensee
The Property & Casualty Guarantee Association applies to: A. Risk Retention Groups B. Admitted insurers C. Alien companies D. Non-admitted insurers
B. Admitted insurers
The legal doctrine that holds that the parties to a contract to a contract may exchange unequal consideration is called: A. Adhesion B. Aleatory C. Alienation D. Unilateral
B. Aleatory
In All states, an UNENDORSED Personal Auto Policy's uninsured motorists coverage applies to what type of loss caused by an uninsured motorist? A. Property damage B. Bodily injury C. Personal injury D. Comprehensive
B. Bodily injury
Which of the following would NOT generally be included in the Supplementary Payments portion of a Liability Policy? A. Loss of earnings B. Damage to property owned by the insured C. First aid to others at the time of an accident D. Expenses the insured incurs at the company's request as part of an investigation or defense
B. Damage to property owned by the insured
What does the liberalization clause do? A. Limits coverage B. Expands coverage C. Excludes certain coverages D. Makes you vote Republican
B. Expands coverage
The plumbing in Mrs. Ward's home suddenly burst and the ceilings were damaged by water. Which of the following homeowner forms would cover the loss? A. HO1 B. HO2 C. HO4 D. HO7`
B. HO2
When coverage is provided under the DP-3 policy, which of the following statements regarding other structures coverage is CORRECT? A. It is included within the limit for Coverage A B. It is provided in addition to the limit for Coverage A C. It is not provided except by endorsement D. It is provided only when Coverage B is selected
B. It is provided in addition to the limit for Coverage A
Statements made in the application are considered: A. Warranties B. Representations C. Possible Concealments D. None of the Above
B. Representations
An HO2 form sets special coverage limits on all of the following items EXCEPT: A. Money B. Television Sets C. Jewelry D. Boats
B. Television Sets
If a producer completes all CE requirements and allow their license to lapse for less than 12 months: A. They may be required to repeat the CE requirement B. Their renewal fee will be 3 times more expensive C. They are placed on probation D. They must reapply for their license
B. Their renewal fee will be 3 times more expensive
An agent who offers a rebate to a prospective insured may be charged with a Class A misdemeanor and be subject to a fine of up to: A. $10,000 B. $2,000 C. $5,000 D. $6,000
C. $5,000
Any person who violates a cease and desist order may be subject to a civil penalty of not more than: A. $1,000 B. $10,000 C. $50,000 D. $25,000
C. $50,000
The basic deductible included in a flood insurance policy issued by the National Flood Insurance Program is: A. $100 contents/ $100 structure B. $500 contents/ $500 structure C. $750 contents/ $750 structure D. $1000 contents/ $1000 structure
C. $750 contents
The maximum amount of commission a producer may receive from controlled business in any 12 month period is: A. 50% B. 100% C. 25% D. 30%
C. 25%
An insurer owned by its policyholders who share profits in the form of dvidends, best describes: A. A stock company B. A domestic company C. A mutual company D. An authorized company
C. A mutual company
A sudden, unintended, and unexpected event is known as: A. Negligence B. Warranty C. Accident D. Occurrence
C. Accident
Hazards include which of the following: 1. Unintended oily rags stacked in a corner 2. A homeowner's carelessness because he has insurance A. 1 only B. 2 only C. Both 1 & 2 D. Neither 1 or 2
C. Both 1 & 2
The mortgage condition in a property policy: 1. Guarantees that the lending institutions may act for itself in paying a premium 2. Guarantees claim payments will be divided as the interests of the insurance and mortgagee appear A. 1 only B. 2 only C. Both 1 & 2 D. Neither 1 nor 2
C. Both 1 & 2
J drives L's car. Both J and L have a Personal Auto Policy. Which of the following statemetns is CORRECT concerning coverage if J causes and accident? A. J's policy only will pay for any damages B. L's policy only will pay for any damage C. L's policy is primary and J's is excess D. J's policy is primary and L's is excess
C. L's policy is primary and J's is excess
Which of the following is an example of a direct loss? A. Loss of rental income after a builing is destroyed B. Loss of income when a store must shut down following a theft C. Loss due to fire damage to a building D. Loss due to amounts spent on hotels following fire damage to a home
C. Loss due to fire damage to a building
All of the follwing must possess a certificat of authority in order to conduct insurance business in this state EXCEPT: A. Interinsurance exchange B. Domestic insurer C. Nonadmitted insurer D. Alien insurer
C. Nonadmitted insurer
All of the following are examples of types of insurance that a limited insurance agent would solicit EXCEPT: A. Baggage coverage B. Travel accident insurance C. Personal articles coverage D. Title insurance
C. Personal articles coverage
Damage to a temporary substitute vehicle driven by the insured would be insured under what coverage of the Personal Auto Policy? A. Property Damage Liability B. Unisured Motorist C. Physical Damage Coverage D. No coverage applies
C. Physical Damage Coverage
All of the following types of insurers may be authorized to conduct business in this state, EXCEPT: A. Domestic insurer B. Foreign insurer C. Surplus lines insurer D. Stock insurer
C. Surplus lines insurer
Which of the following is true about additional coverage? A. They are automatically included only if Medical Payments Coverage is purchased B. They are included for a minimum premium C. They are included at no extra cost D. They are optional on the part of the insured
C. They are included at no extra cost
Notice of nonrenewable must be provided by an auto insurer within how may days of the effective date: A. Ten B. Twenty C. Thirty D. Sixty
C. Thirty
Which of the following is an example of a pure risk? A. Deciding to manufacture a new drub B. Purchasing a piece of real estate C. Threat of fire damage to property D. Playing the lottery
C. Threat of fire damage to property
Once an individual secures auto coverage through the Indiana Auto Insurance Plain (AIP), coverage is provided for what period of time? A. 6 months B. One year C. Three years D. Five years
C. Three years
All of the following are an example of an Unfair Claimes Settlement Practice EXCEPT: A. Failing to adopt and implement reasonable standards for investigating claims B. Refusing to pay claims without conducting a reasonable investigation based on available information C. Failing to affirm or deny coverage within a reasonable time after a proof of loss statement has been filed D. Denying a claim because the insurance company had a bad production month
D. Denying a claim because the insurance company had a bad production month
Both the structure and the contents of a mobile home can be insured by purchasing: A. An unendorsed HO3 B. A businessowners policy C. An unendorsed DP3 policy D. Either a Mobile Home package policy or an HO2 or HO3 with the Mobile Homeowner's endorsement
D. Either a Mobile Home package policy or an HO2 or HO3 with the Mobile Homeowner's endorsement
The term insurable interest refers to the A. Relationship between an insured and his agent B. Charges a person pays when financing insurance C. Amount of insurance a person has D. Financial loss a person will suffer when an event occurs
D. Financial loss a person will suffer when an event occurs
A financial device for transferring or shifting risk from an individual or entity to a large group with the same risk is the definition of: A. Avoidance B. Retention C. Transfer D. Insurance
D. Insurance
Of the four coverage's provided under Section 1 of the Homeowner's policy, which one provides coverage against an indirect loss? A. Coverage A - Dwelling B. Coverage B - Other structures C. Coverage C - Personal Property D. Coverage D - Loss of use
D. Loss of use
Which of the following may be purchased by an insured to protect his property from destruction or damage as a result of the collapse of underground coal mines? A. Mine sibsidization B. Earthquake insurance C. Federal collapse insurance D. Mine Subsidence insurance
D. Mine subsidence insurance
Which of the following best expresses the differences between and HO1 and and HO3 in regards to the Part 2 (liability) section of the policy? A. An HO3 has higher bodily injury limits B. An HO3 has higher property damage limits C. An HO3 has higher medical payment limits D. None of the above
D. None of the above (There is no difference between the two)
The Personal Auto Policy's Medical Payments coverage would not provode protection for which one of the following? A. The insured B. Passengers in the insured's car C. The insured's family members D. Occupants of a car that was struck by the insured
D. Occupants of a car that was struck by the insured
An insurance consultant is a person who A. Sells insurance on behalf of an insurance company B. Negotiates insurance with one particular insurance company C. Holds the Certified Insurance Consultant designation D. Offers advice, counsel or opinion to policyholders for a fee
D. Offers advice, counsel or opinion to policyholders for a fee
All of the following are true concerning the Medical Payments to Others coverage EXCEPT it: A. Pays on a per person, per occurrence basis B. Is part of Section II of the Homeowner's policy C. Has a standard limit of $1,000 up to a maximm of $10,000 D. Pays to the family members of the Named Insured
D. Pays to the family members of the Named Insured
All of the following are powers and duties of the Commissioner of Insurance EXCEPT: A. Issues cease and desist orders for cause B. Issues certificates of authority to foreign companies C. Revokes the licenses of agents who break insurance laws D. Prosecutes agents who violate insurance laws
D. Prosecutes agents who violate insurance laws
The purpose of an insurance guaranty association is to: A. Protect policy holders in the event a company does not make a profit B. Guarantee claim payment to policyholders who feel they were treated unfairly C. Protect third-party climants from unfair claims settlement practices of insurers D. Protect the public by paying legitimate claims when the insurer is insolvent
D. Protect the public by paying legitimate claims when the insurer is insolvent
When an insurer sues a negligent third party to recover a loss paid to an insured, the company is exercising its right of A. Assignment B. Arbitration C. Estoppel D. Subrogation
D. Subrogation
The Commissioner of Insurance in the State of Indiana is appointed by which of the following: A. The chairman of the Banking & Insurance Commission B. He is not appointed, but elected C. The Attorney General D. The Governor
D. The Governor
Susie owns an HO2. Her hot water heater accidentally discharges 40 gallons of hot water onto her $1,800 fur coat. Under the terms of the policy, which of the follwing best describes what will happen when she files her claim? A. The company will deny the claim because this is not a covered peril B. The company will deny the claim because fur coats are not covered under the basic policy C. The company will pay only $1,000 because this is the limit for furs under any policy D. The company will pay the full amount of the claim less any applicable deductible
D. The company will pay the full amount of the claim less any applicable deductible
All of the following eligibility requirements for Homeowners are true EXCEPT: A. You must own it and live in it B. Coverage under each form depends on the type of dwelling, its use and its age C. In most states, no more than four families can occupy the dwelling D. The house must be a minimum of 1000 square feet and made of brick
D. The house must be a minimum of 1000 square feet and made of brick
The law of large numbers state that the larger... A. The number of insured, the more likely they will have losses B. A company, the more profit it will make C. The chance of loss, the higher the premium D. The number of insureds, the easier it is to estimate their losses
D. The number of insureds, the easier it is to estimate their losses
An agent who misrepresents a policy to convince an insured to replace an existing policy is an example of: A. Rebating B. Coercion C. Fraud D. Twisting
D. Twisting
Tommy Toole owns an HO3 with $100,000 liability limits. His neighbor is injured in Tommy's garage and files a lawsuit against Tommy. The court awards the neighbor $100,000 for his injuries. Additional costs include: $5,000 in defense costs, $200 in lost wages and travel during the 10-day hearing. Tommy's policy will pay which of the following? A. $100,000 B. $105,000 C. $105,500 D. $105,700 E. $105,200
E. $105,200