Practice Test

An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage?

$14,000 (no more than $5,000 per person)

what is the maximum allowed value of a gift that an agent can give to an insured without violating the regulation on rebating?

$25

An insured hits a deer and crashes his car into a tree. The total damage to the vehicle is $6,000. How will this loss be covered?

$6,000 would be paid under other-than-collision coverage

conditions commonly found in the insurance policy are

- cancellation and nonrenewal - subrogation - appraisal

what would NOT be covered under the Film Coverage Form?

- deterioration of a film - exposure of a negative film to light - electrical erasure of a tape - use of developing chemicals - cutting - printing of film

what is the minimum percentage of a licensee's total volume of premiums in a calendar year that must come from business other than controlled business?

25%

The Mail Coverage Form is always written on a reporting form basis; after the end of each reporting period shown in the declarations, reports are due within

30 dyas

percentage of the death benefit is paid to the spouse and to the children?

50% to spouse, 50% to the children

Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred to protect damages property from further loss, or defense expenses?

Additional coverage

a policy condition that stipulates how the amount of damaged or lost property will be determined if the insured and the principal do not agree on the value of a property loss is known as

Appraisal

purpose is to protect consumers against the circulation fo inaccurate or obsolete information

Fair Credit Reporting Act

Who might receive dividends from a mutual insurer?

Policyholders

Peril is most easily defined as

The cause of loss insured against

which of the following statements is true concerning a bonded contractor who defaults on a construction performance contract?

The obligee may engage another contractor and then seek reimbursement from the surety

With respect to auto insurance, the term owned autos does not include

a pickup or van titled to an used in the named insured's business (not allowed to be used primary for business unless it is farming)

the declarations page of the homeowners policy provides all of the following information EXCEPT

a statement that earthquake damage is not covered (that would be in the policy form

what type of liability would a person who owns wild animals have?

absolute

all property losses under the basic form are settled on an

actual cash value (ACV) basis

transporting autos coverage can be purchased under the business auto physcial damage form for an

additional premium

the insurer will not be responsible for paying further claims or no longer pays to defend after what limit has been reached?

aggregate limit

crime insurance is usually written on what basis?

all-risk

Which of the following is NOT covered under accounts receivable coverage form?

any loans required to offset uncollectible amounts

establishes the procedure for determining the amount of a loss when the insurer and the insured cannot agree on the value of property or amount of loss?

appraisal clause

What is used when an insured and insurer cannot agree on how to settle a claim

arbitration

the transfer of a legal right or interest in an insurance policy

assignment

in return for a premium, an insurance company must

be fair in underwriting and pay covered losses

Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as

cancellation

to legally transact insurance in this state you must have a

certificate of authority

which of the following is an additional coverage that is covered by the broad causes of loss form?

collapse

An insured is driving her car through a residential area when she loses control and crashes into a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have?

combined single

a single dollar limit of liability applying to the total of damages for bodily injury and property damage combined resulting from one accident or occurrence

combined single

a professional who wants coverage for all liability exposures should purchase what form of liability insurance?

commercial general and professional

A producer who fails to segregate premium monies from his own personal funds is guilty of

commingling

state the legal obligations and duties of the parties to the contract

conditions

Employment practices liability insurance (EPLI) would NOT cover claims arising from

deliberate law violation

a condition that allows an insurer to inspect the insured's books at the end of the policy term to make sure sufficient payment has been collected for the exposure

deposit premium audit

professional liability coverage protects the insured against legal liability resulting from

errors and omissions

a mobile homeowners policy is structured the same as a

homeowners policy

in liability insurance policies, supplementary payments are made

in addition to the limit of liability

All of the following statements describe the concept of strict liability EXCEPT

it is imposed on defendants engaged in hazardous activities

Property in transit by registered mail is covered under the

jewelers block extension

For a contract to be enforceable by law, the purpose of the contract must be

legal and not against public policy

would workers compensation statutes provide coverage for an employee of a medical facility who suffers from a common cold?

no, because it is not specific enough to that environment for it to be considered casual

Duties of the insurer found in property policy conditions include all of the following EXCEPT

notify the insured in the event of financial difficulty

all of the following woudl be considered an insurance transaction EXCEPT

obtaining an insurance license

Rental Reimbursement is only available if the policy includes which coverage?

other than collision coverage

what clause states that if only one item of a set has been lost, the insurer is not obligated to pay the total value of the set

pair or set clause

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

The party to a surety or fidelity bond who promises to fulfill the obligation is the

principal

who would participate in a Write Your Own (WYO) flood insurance program?

private insurers that wish to write and service National Flood Insurance policies on a no risk-bearing basis

under the coverage of this liability policy, the insured may require the insurer to defend claim

professional liability

Pertaining to insurance, what is the definition of a fiduciary responsibility?

promptly forwarding premiums to the insurance company (fiduciary refers to a position of trust. when an agent is handling the premiums that belong to an insurance company, they are acting in a fiduciary capacity)

A sworn written statement that must be furnished by the insured to the insurer before any loss under a policy can be paid is called

proof of loss

full replacement of property at its current cost, new and without reduction for depreciation

replacement cost

an amount of insurance scheduled in a property policy which is not subject to any coinsurance requirements in the event of a covered loss

stated amount

Surety bonds are written for a definite limit called

the bond penalty

an employee is entitled to impairment income benefits beginning

the day after the employee reaches maximum medical improvement

When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays

the excess over the self-insured retention `

an employee may be eligible for supplemental income benefits upon

the expiration of the impairment income benefit period

An agent receives an emergency Cease and Desist Order for chronically misrepresenting his insurance policies. The agent knows that he did not commit the violations stated in the Emergency Cease and Desist Order. He wants to contest the charges in a court hearing. Which of the following is true?

the hearing must be held within 10 days of receiving a request, unless both parties agree to a later date

Losses that result from the freezing of a plumbing system while the dwelling is vacant would be EXCLUDED under a homeowners policy UNLESS

the insured had drained the plumbing system or have made reasonable efforts to maintain heat in the insured building

the coinsurance clause does not operate and the face amount of the policy is paid in the event of a

total loss