Personal Lines Practice Test

A tort is always unintentional

All of the following are TRUE regarding torts EXCEPT

They offer better contracts at lower rates

All of the following are correct for excess lines carriers EXCEPT

after a car crash you have to rent a replacement vehicle.

All of the following are examples of direct loss EXCEPT

subsidies, loss sharing or excess coverage

The Terrorism Risk Insurance Act and the National Flood Insurance Program are similar by providing which of the following?

D. Without the owner's consent

Theft is the taking of another's property: A. while threatening bodily harm B. While inflicting injury upon the owner C. After forcible entry into the premises D. Without the owner's consent

Misrepresentation

When an agent tries to convince a policyholder to replace an existing policy to buy another one, what are they practicing?

Owned autos only

When an insured selects Symbol 2 on the automobile declarations, indicating coverage for any auto titled to the insured, which of the following automobile types will be covered?

168 hours

A single earthquake constitutes all shocks that occur within which time period?

A. Fraternal

A social organization which is licensed to issue insurance ONLY to its members is an example of which type of insurer? A. Fraternal B. Mutual C. Reciprocal D. Stock

Negligence

Absolute liability can be imposed by law and exist in the absense of which of the following?

Insured

After a loss occurs whose duty is it to complete a proof of loss?

Lowering the premium

All of the following actions require post notification under the Fair Credit Reporting Act EXCEPT

identity theft protection is a standard feature of most insurance policies.

All of the following are TRUE regarding identity theft EXCEPT

damage caused by acts of civil disobedience and riots.

All of the following are common exclusions in a liability policy EXCEPT

A stranger who takes the car without permission

All of the following are considered an insured under the liability part of a personal auto insurance policy EXCEPT

bodily Injury to an insured?s nonresident family member or relative.

All of the following are exclusions are found under the personal auto policy Part A liability coverage, EXCEPT

the company cannot afford to insure its risks

All of the following are reasons a company would decide to self-insure EXCEPT

Cost of damages

All of the following are used to establish negligence EXCEPT

insuring an engagement ring given to fiancée.

All of the following demonstrate insurable interest EXCEPT

it is a written or verbal agreement confirming the policy.

All of the following is TRUE regarding a certificate of insurance EXCEPT

the policy can be issued alone without an underlying liability policy.

All of the following is TRUE regarding an umbrella policy EXCEPT

Liability arising out of business pursuits

All of the following situations represent additional personal liability exposures that can be met with an umbrella policy EXCEPT

Collectible gold coind

All of the following types of personal property are covered under Coverage C EXCEPT

Someone who is incarcerated

All of the following would be considered to be incompetent to enter into a contract EXCEPT

Mortgage expense

All of the following would be eligible expenses after a loss under Coverage E Additional Living Expense EXCEPT

Policy Exclusions

All of the following would be found on a declarations page EXCEPT

the insurer participation in the assigned risk program is mandatory

All the following are TRUE regarding assigned risk plans EXCEPT

rental reimbursement until claim is settled by insurance

An insured has transportation expenses coverage under Part D of the personal auto policy when involved in a collision. Coverage provides which of the following?

An endorsement or rider attached to the policy

Changing conditions on a policy currently in force requires:

a referee makes the final decision as to the value (an UMPIRE makes the final decision)

Following is FALSE about the appraisal condition

Which word describes an insurance company incorporated outside of the state in which it is doing business?

Foreign

acreage the insured is renting for cash crop farming and livestock.

Homeowners Coverage E personal liability applies to liability or property damage arising from all of the following insured locations EXCEPT

Arbitration includes other disagreements besides disputes of value.

How does the arbitration condition differ from the appraisal condition?

More than 60 consecutive days

How long is the broad theft coverage endorsement invalid if the property is vacant?

10

How many business days does a business have to honor a requested email opt-out according to the 2003 CAN-SPAM Act?

C. Losses are payable in the same proportion that this insurance bears to the total amount of fire insurance

If an insured with a dwelling policy has other coverage, which is true? A. The proceeds are divided between the mortgagee and mortagor B. The proceeds are divided among all those who have an insurable interest C. Losses are payable in the same proportion that this insurance bears to the total amount of fire insurance D. The amount of premium earned is prorated to the length of time the policy has been in force

B. Sonic boom of an aircraft

In the causes of loss, basic form of the commercial property policy, the explosion coverage includes damage from A. Rupture of a pressure relief device B. Sonic boom of an aircraft C. Bursting of a building due to water expansion of its contents D. Airborne volcanic blast

DP-3

In which of the following DP forms is the dwelling covered under open perils and the personal property on a named peril basis?

with a HO-8 Modified Coverage form.

Mobile homes can be insured in all of the following ways EXCEPT

Which of the following makes use of market value in determining loss valuation?

Property is evaluated for what it sells for at the time of the loss.

The applicant is seeking a transaction greater than $150,000.

The Fair Credit Reporting Act permits consumer reporting agencies to include applicant information about bankruptcies MORE than 10 years old under which of the following circumstances?

financial institutions must have a privacy policy in place

The Gramm-Leach-Bliley Act was enacted to protect consumer's right to privacy and made mandatory which of the following?

D. Freezing

The business auto coverage form covers losses from all of the following under comprehensive EXCEPT: A. Fire B. Vandelism C. Theft D. Freezing

Definitions

The description of the insured will be found in which part of an insurance policy?

the benefit can exceed the policy limitations when the deductible is paid.

The following is true regarding deductibles EXCEPT

$250,000

The insured causes an accident in which three persons are injured. One person claims $50,000, the second claims $100,000, and the third claims $250,000. The insured has a combined single limit of $250,000 liability on his automobile policy. What is the sum total the policy will pay?

A. An uncle who resides with the insured

Under a Homeowner's policy, the definition of an insured includes which of the following? A. An uncle who resides with the insured B. A guest of the insured C. A relative of the insured, visiting for the day D. The insured's neighbor who comes to visit

C. It does not provide for an additional amount of coverage

Under the other structures coverage of the broad form dwelling policy, all of the following are true, EXCEPT A. It provides a 10% extension of coverage B. It provides coverage for a tool shed C. It does not provide for an additional amount of coverage D. It covers a private garage rented for storage of a car

Which of the following standards is an agent violating by providing insurance to an insured at a lower or higher premium than another insured in identical circumstances?

Unfair Discrimination

A homeowners policy

Watercraft and boatowners who wish to insure for values over $1,500 can find coverage in all of the following EXCEPT

coverage for personal property of a condominium owner

What coverage does the HO-6 form provide?

information that may change the insurer's interest in issuing the policy if known at the time of the application

What does a misrepresentation involve that could void a policy?

It prevents the insured from abandoning property before being reimbursed.

What does the abandonment condition state?

An agent submits a new insurance application to be read.

What does the term consideration refer to in an insurance contract?

Grave Markers

What is NOT covered for named perils under Coverage B

Consideration

What is another term used to describe the premium payments?

Nonpayment of premiums

What is generally accepted as a condition for which an insurer is allowed to cancel a policy?

Hazard

What is it called if someone plugs too many electrical cords into a single outlet?

If the named insured dies

What is the only exception under an assignment condition that transfers a policy with written consent of the insurer?

Avoidance

What method of risk management is being utilized when a person chooses not to drive because of the risk of having an automobile accident?

Agreed Value

What policy provision specifies a certain value that will meet the coinsurance requirement?

pay the claim, and then sue the party responsible for the damage

What will an insurer do when a policy is in subrogation?

comprehensive

When the insured's child spills red juice on the carpet of insured's covered automobile, which of the following coverages will apply?

A vehicle leased for less than 6 months

Which IS NOT considered an owned auto for personal automobile insurance

HO-8

Which homeowners form is most appropriate for older homes with replacement values that may far exceed their market values?

the loss is produced by an unnatural and broken series of events.

Which is FALSE regarding proximate cause

premiums cost less for vacant or unoccupied property due to lower risk.

Which is FALSE regarding vacancy and unoccupancy

Coverage is triggered for smoke damage to siding caused by repeated acts by insured's neighbor.

Which is TRUE when the insured's limits of insurance apply per occurrence?

Promise

Which is another term for offer and acceptance?

Surcharge Disclosures

Which is not a prohibited disclosures under the Fair Credit Reporting Act

Electronic equipment permanently installed in the auto.

Which of the following are covered under Part D- coverage for damage to your auto of the personal auto policy?

Warranties

Which of the following are defined as a part of the policy and can void the policy if they are breached, whether the breach was intentional or unintentional?

replacement value far exceeding market value

Which of the following conditions best describes the type of home that the HO-8 modified coverage form was designed for?

It describes property covered and perils insured.

Which of the following describes why the insuring agreement is the heart of an insurance policy?

Structures other than the dwelling

Which of the following does Homeowners Special form (HO-3) cover that Homeowners Broad form (HO-2) does not?

Coverage is in place immediately

Which of the following does a binder of coverage guarantee?

Insurable interest in the property

Which of the following gives a mortgagee rights at the time of loss?

Damage by ice to outdoor radio and television antennas and aerials

Which of the following is EXCLUDED as a covered loss under the DP-3 coverage?

calls from or on behalf of political campaigns or organizations and charities

Which of the following is EXEMPT from the Telemarketing Sales Rule that established the National Do Not Call Registry?

cancelling automobile insurance because of lack of previous accidents

Which of the following is an example of risk retention?

Both parties are found to have contributed to the loss.

Which of the following is correct for comparative negligence?

Breakage of Glass

Which of the following is covered by the Homeowners Broad form (HO-2) insurance?

In excess of the limit

Which of the following is how defense costs are paid in relation to the limit of insurance under the personal auto policy for bodily injury and property damage part A-liability coverage?

It limits the exposure of individual insurers and the insurance industry as a whole.

Which of the following is one of the objectives of the Terrorism Risk Insurance Act of 2002?

It establishes which insurance products banks and bank subsidiaries may provide as principal.

Which of the following is one of the ways the Gramm-Leach Bliley Act affects the insurance industry?

D. They are NOT standardized within the industry

Which of the following is usually true about commercial umbrella liability policies? A. They limit protection to $1,000,000 B. They are endorsements to general liability policies C. They are considered primary policies D. They are NOT standardized within the industry

The insured's legal representative takes over the policy.

Which of the following policy assignment rights occurs when the named insured dies?

Theft

Which of the following property crimes also includes the unlawful taking of property by stealth?

company has the option to repair to pre-loss condition

Which of the following situations under dwelling policy conditions describe how the insurance company will settle a loss?

Riot or Civil Commotion

Which of the following would be covered perils under the DP-1 Basic policy form?

Freezing or road damage

Which peril IS NOT specifically listed in the policy as being other than collision losses

Coinsurance

Which policy condition encourages policyholder to insure to at least 80% of replacement value to avoid a penalty with partial losses?

it is standard coverage in a dwelling policy.

Which statement is INCORRECT regarding personal liability coverage?

Morale Hazard

Which type of hazard is an example of a person who increases the chance of loss through carelessness or by irresponsible actions?

a loss for which there is no protection under the policy terms

Which type of loss does an exclusion describe?

C. A customer of the named insured

Who would be covered under the medical payments section of the commercial general liability policy, if injured on the insured's premises? A. A tenant of the named insured B. The named insured C. A customer of the named insured D. An individual hired by the named insured

The policy is contingent on an uncertain event.

Why is an insurance policy an aleatory contract?

The contract insures a person against loss of property, not property itself

Why is an insurance policy considered a personal contract?

less depreciation

With what method are losses settled on an actual cash value (ACV) basis?

All of the following are examples of conduct of an agent that is regulated by Department of Insurance EXCEPT

misappropriation or conversion of funds by an insurance agent