Practice Test 11
Mr. Kessler has an auto policy with bodily injury limits of $15,000/$30,000. He injures two people in one accident. Mr.Brown receives injuries of $19,000. Mr.Jones receives injuries of $15,000. Legal expenses to defend Mr.Kessler total $10,000. How much is Mr. Kessler liable for after his insurance company makes its payment? a. $4,000 b. $15,000 c. $14,000 d. $19,000
a. $4,000
Which of the following plans provides insurance coverage to individuals who cannot obtain auto insurance through standard markets in South Carolina? a. Associated Auto Insurers Plan b. Contingency Plan c. Assigned Risk Plan d. Consortium Plan
a. Associated Auto Insurers Plan
Investment consultants should purchase which of the following policies to protect themselves from errors and omissions? a. professional liability b. owners and contractors protective liability c. premises and operations liability d. products and completed operations liability
a. professional liability
An insured who had a $500,000 primary liability policy purchased a $1 million Umbrella liability policy with a $2000 self-insured retention limit. Later, the insured allowed the required underlying primary policy with a limit of $500,000 to expire. A week after that, the insured became liable for a $100,000 loss that is not excluded by the provisions of either the primary underlying liability policy or the Umbrella policy. How will this loss likely be settled? a. the insured will be liable for the full $100,000 loss b. the umbrella policy will pay the full $100,000 loss c. the underlying policy will pay the full $100,000 loss d. the insured will pay $2,000 and the umbrella policy will pay the remainder of the loss
a. the insured will be liable for the full $100,000 loss
In which of the following situations would trees, shrubs, and other plants be covered by the Homeowners additional coverages? a. the insureds fruit trees are destroyed when an ember from a nearby brush fire lands on them and burns them b. the insureds shrubs are destroyed when a 100 year snow storm hits the area and the weight of the snow is so heavy, it snaps the branches c. the insureds 150 year old oak tree is pushed over by high winds d. the insureds fruit trees are ruined when snow and ice from a storm build up on the trees, causing large sections to break off and fall to the ground
a. the insureds fruit trees are destroyed when an ember from a nearby brush fire lands on them and burns them
Which of the following statements is NOT TRUE regarding the "period of restoration" for Business Income and Extra Expense coverage? a. the period of restoration ends when the policy period ends b. the period of restoration ends on the date the property is repaired, rebuilt, or replaced, or the date when the business is resumed at a new permanent location c. the period of restoration is not affected by the policy expiration date d. the period of restoration will not be increased due to the enforcement of any ordinance or law
a. the period of restoration ends when the policy period ends
An office building is limited in the number of stories it may contain and still be eligible for coverage under a standard BOP. This number is: a. five stories b. six stories c. four stories d. seven stories
b. six stories
An employee is covered under workers compensation in South Carolina and is injured on the job. The physician that is supplied to the injured worker is negligent and commits malpractice that results in further injury to the employee. What is the obligation of the employer under workers compensation law? a. the employer has no obligation, it is up to the employee to seek damages b. the consequences of the malpractice will be considered part of the injury and compensable c. an employer will be liable for malpractice by a physician or surgeon furnished to the employee d. workers compensation laws provide partial recovery as a result of malpractice and the consequences
b. the consequences of the malpractice will be considered part of the injury and compensable
Residential condominiums in the emergency program of the NFIP are covered by which of the following forms? a. the dwelling form b. the general property form c. the condominium emergency form d. the residential condominium building association policy form
b. the general property form
Under Coverage B of the BOP, how are exterior signs covered? a. they are covered for a limit of $500 b. they are listed as "property not covered" but they can be covered if they are scheduled on the policy. c. they are never covered d. they are covered up to the policys limit of liability, but the deductible applies
b. they are listed as "property not covered" but they can be covered if they are scheduled on the policy.
An insured has purchased BAP physical damage coverage against specified causes of loss. protection applies to all of the following perils EXCEPT: a. theft b. fire c. falling objects d. vandalism
c. falling objects
Which of the following would be considered "general damages" that could be awarded to a plaintiff in a negligence case? a. lost wages b. medical expenses c. pain and suffering d. vocational rehabilitation
c. pain and suffering
Which of the following statements describes the coverage provided under Coverage C of the Ordinance or Law Endorsement to a Commercial Policy? a. provides coverage for the cost to demolish and remove the undamaged portions of the building that must be destroyed due to an imposed ordinance or law b. provides coverage for the loss (the value) of the undamaged portion of the building that must be destroyed due to an ordinance or law imposed after the original building was constructed c. provides coverage for the increased costs to repair or rebuild to comply with current building, zoning, or land use ordinances or laws d. provides coverage for the cost of the building that suffered a direct physical loss
c. provides coverage for the increased costs to repair or rebuild to comply with current building, zoning, or land use ordinances or laws
Which of the following coverages is not provided under a CGL policy? a. contractual liability b. products liability c. personal injury liability d. pollution liability
d. pollution liability
South Carolina has a compulsory insurance and financial responsibility law. This law applies to: a. Automobile insurance b. Property and Casualty insurance c. Wind and Hail coverage d. Bonding and Surety Insurance
a. Automobile insurance
A document that temporarily obligates an insurance company to provide coverage while the issuance of a policy is pending is known as: a. a binder b. an application c. an endorsement d. a rider
a. a binder
An insured with auto limits of 10/20/10 causes bodily injuries to a third party of $8,000. After losing in court he has defense costs of $5,000. What is the insurance company's responsibility to pay? a. $8000 b. $5000 c. $13000 d. $10000
c. $13000
An insured owns a set of six drawing pens designed and used by Benjamin Franklin. Each pen is worth $1000 alone, but the set is worth $12,000. One pen is destroyed by a covered peril. Under the pair or set clause the insurance company will pay a maximum of what amount? a. $12,000 b. $1,000 c. $2,000 c. $7,000
c. $7,000
Which of the following expenses would be covered, in full or in part, by the "supplementary payments" section of the Personal Automobile policy? I. Bail bonds II. loss of earnings for attendance at trials or hearings III. post judgement interest IV. arbitrators fees a. I, II, and III only b. I and II only c. I and III only d. I, II, III, and IV
a. I, II, and III only
Paul had his roof inspected by a local contractor, after a strong storm with high winds and hail, passed through his neighborhood. The contractor found damage to the roof and gave Paul an estimate of $9850 to replace it. Paul filed a claim with his insurance company and the company promptly sent an adjuster to inspect the roof. The adjsuter's estimate to repair the roof came to $9650. How will the adjuster likely attempt to settle this claim? a. Negotiate the claim in an attempt to persuade Paul to agree to the lesser amount. b. Let the claim go to court because it is non-negotiable. c. Accept the estimate of Paul's contractor, because the difference between the two amounts is small enough to settle in Paul's favor. d. Reject the claim because the amount of the adjuster's estimate is the limit that the insurer will pay.
a. Negotiate the claim in an attempt to persuade Paul to agree to the lesser amount.
When a Personal Umbrella Policy covers a loss that the underlying policy excludes, there is an amount the insured must pay before the Umbrella policy is triggered. This amount is known as: a. a self insured retention b. a coinsurance clause c. a participation clause d. a limit of liability
a. a self insured retention
In connection with the bonding business which of the following statements is NOT true? a. a surety bond protects the principal from sustaining a loss b. ideally, underwritten surety bonds should not produce any loss c. court bonds are prescribed by the individual courts and not by the insurance companies d. a surety bond protects the obligee form sustaining a loss
a. a surety bond protects the principal from sustaining a loss
The insured has sustained a loss of income from a covered peril under his BOP. What deductible applies to loss of income? a. a time deductible of 72 hours b. the same deductible that applies to the building or contents coverage c. a $500 deductible d. no deductible
a. a time deductible of 72 hours
All of the following are examples of the types of exclusions found in professional liability insurance policies, EXCEPT: a. compensatory damages b. uninsurable exposures c. contractual liability d. exposures covered under other policies
a. compensatory damages
Coverage G under the Farm forms covers which of the following? a. covers barn, silos, fences b. covers unscheduled personal farm property c. covers scheduled personal property d. covers blanket buildings and contents
a. covers barn, silos, fences
A business insured under a Commercial General Liability policy has a general aggregate limit of $1,000,000 and an occurrence limit of $100,000. If today an injured party is awarded $100,000 what will the company's general aggregate limit and occurrence limit be tomorrow? a. general aggregate of $900,000; occurrence limit of $100,000 b. general aggregate of $1,000,000; occurrence limit of $100,000 c. general aggregate of $1,000,000; occurrence limit of $0 d. general aggregate of $900,000; occurrence limit of $0
a. general aggregate of $900,000; occurrence limit of $100,000
The Building and Personal Property coverage form provides coverage for all of the following types of property, EXCEPT: a. growing crops and lawns b. tenants improvements and betterments c. yard fixtures d. business personal property
a. growing crops and lawns
A person takes bank deposits to the bank every day for a business. In Commercial Crime insurance terminology, this person is known as a: a. messenger b. custodian c. cashier d. manager
a. messenger
All of the following items are given a "special limit of liability" under Coverage C of the Homeowners policies, EXCEPT: a. motorized land vehicles b. trailers c. jewelry d. watercraft
a. motorized land vehicles
The DP-3 Standard Dwelling form provides: a. open peril coverage on the dwelling and other structures and broad form peril coverage on contents b. broad form peril coverage on buildings and contents c. basic peril coverage only d. fire, lightning, extended coverage and vandalism and malicious mischief coverage only
a. open peril coverage on the dwelling and other structures and broad form peril coverage on contents
When an insurer files a declaratory judgement action with court of law, all of the following questions with be resolved by the court, EXCEPT: a. will the insurer become insolvent if they pay the claim as submitted by the insured? b. does the insuring agreement within the policy actually provide coverage for the loss claimed? c. is there another insurance policy that would be liable to pay part of the claim? d. has the Insured violated any policy condition that would void the coverage provided by the policy?
a. will the insurer become insolvent if they pay the claim as submitted by the insured?
Fly By Night Construction company has a CGL policy will coverage dates of 03/01/17 to 03/01/18. The per occurrence limit is $500,000 and the general aggregate limit is $1,000,000. The maximum that can be paid during the policy period on the insureds behalf is: a.$1,000,000 b. $500,000 c. $1,500,000 d. $2,000,000
a.$1,000,000
Maci has $500 cash destroyed by fire in her covered home. She files a claim under her standard Homeowners policy. How much will the policy pay on this claim? a. $500 b. $200 c. $0 d. The full limit of Coverage C
b. $200
Oliver Dogwood was in an auto accident which destroyed his car. While investigating the accident, Adjuster Doright found that Mr. Dogwood paid $1,000 for the vehicle. After checking with others he found the same vehicle with an asking price of $1,700, a retail price of $2,150 and a dealer price of $1,750. What amount will Mr. Dogwood receive? a. $1950 b. $2150 c. $1000 d $1700
b. $2150
Which of the following is the amount of additional coverage on the standardized homeowners forms for a Fire Department Service Charge? a. $1000 b. $500 c. $250 d. $750
b. $500
When an insured submits a claim under a Commercial Inland Marine policy, the insurer must pay the claim: a. Within 15 days b. Within 30 days c. Within 45 days d. Within 60 days
b. Within 30 days
Before the acts of September 11, 2001 in the United States, insurers: a. always excluded coverage for damage caused by terrorism b. did not exclude coverage, nor did they charge an extra premium to cover damages caused by terrorism c. did not exclude coverage, but always charged an extra premium to cover damages caused by foreign terrorists d. did not exclude coverage for damage caused by foreign or domestic acts of terrorism, but always charge and additional premium for this coverage
b. did not exclude coverage, nor did they charge an extra premium to cover damages caused by terrorism
Selena is a claims representative. She has reviewed and set the reserves for a claim. She asks her friend and fellow claims representative, Orville, to independently evaluate and set the reserve on the same claim file. Selena is using which of the following methods to set her claim reserves? a. expert system method b. average value method c. roundtable method d. individual case method
c. roundtable method
Which of the following would be covered under Business Auto Symbol 7? a. hired autos only b. non-owned autos c. specifically described auto only d. any auto
c. specifically described auto only
Which of the following statements regarding Commercial Auto coverage is NOT TRUE? a. a tractor-trailer combination is included in the definition of "auto" on the Business Automobile form b. owned private passenger autos are covered under the Motor Carrier form but are not covered under the Truckers form c. the definition of "trucker" and "motor carrier" are the same in both the Truckers form and the Motor Carrier form d. a motor carrier is engaged in transporting property or passengers
c. the definition of "trucker" and "motor carrier" are the same in both the Truckers form and the Motor Carrier form
Which of the following losses would be covered by the EC peril of "volcanic eruption" under a standard Dwelling form? a. the cracks in the ceiling of the dwelling due to the earthquake preceding a volcanic eruption b. the damage to an exterior patio from a large bolder that was dislodged due to an aftershock c. the exterior siding of the dwelling that was ruined by the ash that settled on it from the erupting volcano d. the cracked foundation of the covered dwelling resulting from the earthquake that caused the volcanic eruption
c. the exterior siding of the dwelling that was ruined by the ash that settled on it from the erupting volcano
Which of the following would NOT be covered under the HO-2 form? a. a neighbor damages the insureds fence with his vehicle b. a $500 diamond rings is stolen from the insured premises c. the insured hits and damages his fence with her car d. a log rolls out of the fireplace and causes fire damage to the rug
c. the insured hits and damages his fence with her car
All of the following are reasonable duties of care that are required of employers, EXCEPT: a. provide an adequate number of competent employees b. provide safe tools and equipment to workers c. warn workers of obvious dangers d. make and enforce rules for the safety of all workers
c. warn workers of obvious dangers
The insured has a CGL policy with a $600,000 aggregate limit and a $300,000 per occurrence limit. The insured has one claim for $400,000 and another separate claim for $200,000. After paying these two losses, how much of the aggregate limit will remain for future claims? a. $50,000 b. $600,000 c. $400,000 d. $100,000
d. $100,000 (600-300-200)
Lawrence's business is covered by a Business Auto policy and carries the required liability limit for his state of $30,000 for bodily injury to all persons. Lawrence drives the truck to another state where the financial responsibility limit is$50,000 for bodily injury to all persons. While in the other state, Lawrence has an at-fault accident and injures 3 people who sue for $60,000 in total damages. How much will Lawrence's Business Auto policy pay on this claim? a. $30,000 b. $60,000 c. $20,000 d. $50,000
d. $50,000
The standardized Dwelling form considers all eruptions of a volcano within a ______ period to be a single "occurrence" a. 24 hr b. 36 hr c. 48 hr d. 72 hr
d. 72 hr
The optional coverage for "Money and Securities" under a standard BOP provides for the loss of money and securities used in the insureds business as a result of all of the following, EXCEPT: a. theft b. disappearance c. destruction d. fraud
d. fraud
Tort law applies to all of the following, EXCEPT: a. liability arising from the commission of an unintentional tort b. liability arising from negligence c. liability arising from a breach of duty d. liability arising from breach of contract
d. liability arising from breach of contract
All of the following are included under the HO-3 "additional coverages" section of a Homeowners policy, EXCEPT: a. debris removal b. fire department service charge c. loss from specified perils to trees, shrubs, and plants d. loss of a good renter or a favorable lease agreement
d. loss of a good renter or a favorable lease agreement
