Practice Exam 1

Which of the following is an example of a producer's fiduciary responsibilities?

A producer promptly forwarding premiums to the insurance company

What is the maximum amount that an insurer will pay under the equipment dealers pollution cleanup and removal extension of an inland marine policy?

$10,000 for all expenses incurred during a 12-month period

Transportation expenses are covered under a personal auto policy for

$20 per day for a maximum of $600

What is the basic limit for costs incurred at the place a vehicle is disabled provided by the towing and labor costs endorsement?

$25

Under the additional living expenses coverage, if a civil authority prohibits the insured from using the dwelling because of direct damage to a neighboring location from a peril covered in the insured's policy, loss would be covered for up to

2 weeks

Coverage under the builders risk form will end in all of the following situations EXCEPT

60 days after the construction has ended

What is the highest level of protection available under a Federal Crop insurance policy?

75%

Which of the following statements is true regarding the premium computation for workers compensation insurance?

A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis

Which of the following types of valuation works best for property whose value does not fluctuate much?

Agreed Value

An insured works outside the home. The insured's sister lives with him and cares for his four children. When the insured's home is severely damaged by fire, the family moves into an apartment while repairs are being made. The largest apartment available in the area has two bedrooms, so the insured's sister has to stay at a motel. How much will the HO-3 for pay for these additional living expenses?

All of the expense up to the coverage D limit

Crime insurance is usually written on what basis?

All-risk

In Pennsylvania all of the following classes of employees may be excluded from the requirement of being covered under Workmen's Compensation Insurance Coverage, EXCEPT

An employee engaged in seasonal agricultural labor that works 60 days in a calendar year

All of the following are conditions commonly found in the insurance policy EXCEPT

Insuring agreement

The additional living expense coverage on homeowners policies

Is intended to allow the family to maintain its normal standard of living

Which of the following does a producer NOT have the authority to do?

Issue Policies

Which of the following is true regarding the fire department service charge under the builder's risk form?

It is an additional coverage

The amount an insurer will pay under coverage D (Loss of use) depends on

The amount of coverage on the dwelling

The contents coverage on a homeowners policy would pay how much after the loss of one pair of golden candlesticks?

The difference in the actual cash value as a pair and as a single

A passenger in a friend's car is injured while getting into the car. Which of the following statements would apply if both the passenger and the driver had medical payments coverage under a personal auto policy?

The driver's policy would be primary

A mortgage company is named as a loss payee on the insured's homeowners policy, under the standard mortgage clause. If the insured suffers a loss due to a fire, which of the following is true?

The loss is payable to the insured and the mortgagee

What is not an insured for liability on a BAP?

The owner of a car the insurer borrows

Which of the following would determine minimum and maximum limits for FAIR plan rates?

The state

Which of the following is NOT a goal of risk retention?

To minimize the insured's level of liability in the event of a loss

How soon after the due date should the insurer pay the agent appointment fees?

Within 30 days

Which of the following is NOT found in a commercial package policy?

Certificate of authority

Which of the following property coverages would provide protection for contents damaged by fire?

Coverage C

An insurance company assures its new policy holders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act?

Fraud

Under which of the following circumstances can financial institutions share insurance coverage information with third parties, for the purpose of soliciting the purchase of insurance?

If a consumer does not sign and return the notice of disclosure within 30 days

What is not a consideration when paying an inland marine claim?

Market value when the property was first purcahsed

An insured owns and operates a commercial business. He has included a business income coverage form with his commercial package policy. When the insured's business is severely damaged by fire, the business income coverage will pay for

Net income plus continuing expenses of the business.

A participating insurance policy may do which of the following?

Pay dividends to the policy owner

HMS Toys carries more inventory from Oct. 1 to Dec. 31. Which of these would provide higher coverage limits during those months and lower limits the rest of the year?

Peak Season

The Insurance Consultation Services Exemption Act protects insurers from liability actions resulting from

Performing or failing to perform servies

In a dwelling policy, which of the following other structures would be covered?

Rented to a neighbor for use as a private garage

In property insurance, actual cash value is defined as which of the following?

Replacement cost at the time of loss, less depreciation

Which of the following kinds of property would be covered under a dwelling policy?

Rowboats

Which of the following is a formal program developed by an employer to fund its losses as an alternative to purchase the insurance?

Self-insurance

All of the following are unfair claims settlement practices EXCEPT

Suggesting negotiations in settling the claim

Which of the following symbols used in business auto coverage is correctly described?

Symbol 9 - nonowned autos only

Which of the following terms refers to a person's inability to work for a temporary amount of time?

Temporary total disability

Which of the following entities established the Do-Not-Call registry?

The Federal Trade Commission

Uncle Billy's burger bar was forced to close for 10 days in August when the power companies transformer was destroyed by lightning, and Uncle Billy was without electricity. Which of the following endorsements could be added to Billy's business owner policy that would provide protection against loss of income from such events?

Utility services - time element endorsement

A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT

Workers compensation coverage

The ABC Corporation has $100,000 of coverage on its building through insurance company A and $500,000 of identical coverage on the same building through insurance company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs and the pro rata method is used, how much will each insurer pay?

Company A will pay $16,000 ; Company B will pay $8,000

A plasterer has finished a job. What kind of liability coverage would protect him if the plasterer falls and hurts someone because he did not do his job correctly?

Completed operations

The difference in the contents coverage on an HO-3 and HO-5 is which of the following?

Contents are covered open peril on HO-5 and named peril on HO-3

The designation symbols used in commercial auto policies can be found in which policy section?

Covered auto

The farm liability additional coverage that excludes coverage for borrowed farm equipment is the

Damage to property of others coverage

An individual was just caught acting as an exclusive general agent - even though he is not properly licensed. Assuming that this occurred in a single day, what is the maximum penalty he faces?

A third degree misdemeanor and a $1,000 fine

Which of the following authorities monitors the financial strength of insurers?

Department of insurance

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer

An employee drives a company auto, but does not own a vehicle herself. What endorsement could be added to the insurance policy covering the company auto that would provide coverage to the employee when she drives someone else's car for personal use?

Drive other car coverage

The section of an insurance policy that details what perils are not insured against and what persons are not insured is known as the

Exclusions

The authority granted to an agent through the agent's contract is referred to as

Express authority

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

Implied

Which bonds are required by courts whenever someone seeks a court order stating that another person must or must not do something?

Injunction bonds

If a person is using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT

Physical damage

Under the personal auto policy, liability for bodily injuries resulting from the insured's use of a non-owned automobile is

Provided by the insured's policy on an excess basis.