Property and Casualty

The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the a)Exclusions .b)Declarations. c)Insuring agreement. d)Conditions.

Insuring agreement.

Losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected is the definition of which of the following terms? a)Occurrence b)Peril c)Hazard d)Accident

Occurrence

What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy? a)Binder policy b)Named peril policy c)Open peril policy d)Specified peril policy

Open peril policy

Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages? a)Normal b)General c)Special d)Tort

Special

Which of the following IS considered a work-related injury/occupational disease under Workers Compensation law? a)Mike works for Ace Construction Company. He is walking through the job site without a hard hat and is struck on the head by a falling brick. b)Tom works as a painter in an auto body shop. The chemicals from the paint aggravate Tom's asthma to the point that he must be hospitalized for several days. c)Greg is injured in a car accident while driving to work at 7:45 one morning. d)Mary falls down a flight of stairs at her office building; at the hospital, it is discovered that she is intoxicated.

Tom works as a painter in an auto body shop. The chemicals from the paint aggravate Tom's asthma to the point that he must be hospitalized for several days.

Which of the following policies will help an auto dealership cover most of its liability exposures? a)A businessowners policy b)A garage liability coverage c)A motor carrier coverage form d)A commercial general liability policy with a crime endorsement

A garage liability coverage

What term includes damage where the insured peril was the proximate cause of loss? a)Indirect loss b)Consequential loss c)Negligent loss d)Direct loss

Direct loss

Elaborate homes and those with detailed designs or decorative architecture with replacement costs greater than ACV or market value are insured on a)HO-8. b)HO-8 with an inflation guard endorsement. c)HO-3. d)HO-3 with an HO-15 endorsement.

HO-8.

Workers compensation coverage would NOT pay for which of the following? a)In-home medical devices b)Physical therapy c)Prescriptions d)Travel expenses

In-home medical devices

A property insurance policy that insures a commercial building on a replacement cost basis includes the ordinance or law coverage endorsement. This endorsement will cover all of the following expenses EXCEPT a)Ordinance with which the insured was required to comply prior to the loss. b)Loss to the undamaged portion of the building. c)Any increased cost of repairs or reconstruction. d)Demolition and removal cost.

Ordinance with which the insured was required to comply prior to the loss.

Which method of loss valuation is contrary to the basic concept of indemnity? a)Functional replacement cost b)Market value c)Agreed value d)Replacement cost

Replacement cost

Which one of the following symbols used in business auto coverage is correctly described? a)Symbol 9 - nonowned autos only b)Symbol 1 - owned auto only c)Symbol 2 - owned autos subject to no-fault d)Symbol 7 - hired autos only

Symbol 9 - nonowned autos only

Surety bonds are written for a definite limit called a)The bond penalty. b)Indemnity limit. c)The limit of liability. d)Loss costs.

The bond penalty.

Which of the following circumstances would be EXCLUDED under medical payments coverage of a personal auto policy? a)The insured's mother is injured while exiting from the insured vehicle. b)The insured is struck by another vehicle while crossing the street. c)The insured is injured while driving his motorcycle on his resident premises. d)The insured's friend is injured in an accident while riding as a passenger in the insured's car.

The insured is injured while driving his motorcycle on his resident premises.

When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be a)The proximate cause. b)The direct cause. c)Strict liability. d)An intervening cause.

The proximate cause.

If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to a)$350. b)$500. c)$750. d)$1,000.

$500.

If a policy is cancelled due to nonpayment of premium, how many days' advance notice must the insurer give the policyholder before cancellation? a)7 days b)30 days c)15 days d)10 days

10 days

If the premiums for a policy will be increased by more than 15 percent, how much warning must the insured get? a)60 days b)45 days c)30 days d)15 days

45 days

The employee theft crime policy includes a coverage extension that applies to employees temporarily outside the coverage territory for up to a)30 days b)60 days. c)90 days. d)120 days.

90 days.

In a personal auto policy, the medical payments coverage is similar to a)Accident insurance, because it pays medical expenses regardless of fault. b)Accident insurance, because it has the same limits. c)Bodily injury coverage, because it pays the insured's doctor bills. d)Bodily injury coverage, because it provides legal protection if the insured causes injuries to others.

Accident insurance, because it pays medical expenses regardless of fault.

Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as a)Rescission. b)Nonrenewal. c)Cessation. d)Cancellation.

Cancellation.

An insurance producer just sold an insurance policy to his sister. What kind of business is this? a)Personal b)Controlled c)Illegal d)Internal

Controlled

Which of the following property coverages would provide protection to contents damaged by fire? a)Coverage D b)Coverage A c)Coverage B d)Coverage C

Coverage C

Which of the following statements is true regarding the premium computation for workers compensation insurance? a)The premium is set at the beginning of the policy period and will not change .b)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. c)The premium basis for workers compensation insurance varies by the type of industry in which the insured is involved. d)The insured pays a guaranteed premium based on an estimated value of the annual income received.

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.

An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay? a)Each policy will pay $25,000 of the loss. b)Each policy will pay the total policy limits of $100,000 c)The first policy written will pay $75,000, and the other three policies will contribute proportionately to pay for the remaining $25,000. d)The policy with the earliest effective date will pay the entire loss, and the other policies will pay nothing.

Each policy will pay $25,000 of the loss.

What type of coverage do umbrella policies provide? a)Property coverage for the basic perils of fire, wind, and hail b)Primary coverage for risks that are difficult to insure c)Excess coverage over an underlying or primary policy d)Property coverage for those who do not qualify for homeowners insurance

Excess coverage over an underlying or primary policy

The inspections and surveys condition in a businessowners policy a)Allows the insurer the right to inspect the insured's premises b)Validates that the insured is in compliance with state and federal guidelines. c)Obligates the insurer to make annual safety inspections. d)Guarantees that all working conditions are safe and healthful.

Allows the insurer the right to inspect the insured's premises.

Which of the following is NOT covered under accounts receivable coverage form? a)Interest on loans required to offset uncollectible amounts pending payment of the insurance proceeds b)Sums due the insured that are uncollectible due to a covered loss c)Expenses to reestablish the records, if possible, and collection expenses that are in excess of normal costs d)Any loans required to offset uncollectible amounts

Any loans required to offset uncollectible amounts

Workers compensation rating is developed by applying a rating bureau job classification rate to each a)$250 of payroll. b)$500 of payroll. c)$1,000 of payroll. d)$100 of payroll.

$100 of payroll.

The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to a)$250,000 b)$100,000. c)$150,000. d)$200,000.

$250,000

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 a)90 days. b)1 week .c)2 weeks. d)1 month.

2 weeks.

Under the conditions of a Film Coverage Form, how long must the insured maintain records of each production? a)7 years after production completion b)1 year after production completion c)3 years after the policy expires d)5 years after the policy expires

3 years after the policy expires

An insured with a homeowners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. The removal coverage applies for a)5 days b)30 days. c)60 days. d)90 days.

30 days

How many days before a policy is nonrenewed must an insurer deliver or mail written notice to the insured? a)15 days b)20 days c)30 days d)10 days

30 days

If an agent changes his residence address, within how many days must the agent notify the Commissioner of the change? a)10 days b)15 days c)30 days d)60 days

30 days

If an insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis at both locations for a)60 days. b)90 days. c)5 days. d)30 days.

30 days

What is the coinsurance requirement for a theatrical property floater under an Inland Marine policy? a)100% b)50% c)75% d)80%

80%

If a policy has been in effect for at least 60 days or is due for renewal, a cancellation may only be effected for which of the following reasons? a)Two or fewer claims against the policy in the preceding 36 months b)A change in the risk that substantially increases the hazard insured against c)Lack of supporting business with the insurer d)Change in the insurer's underwriting guidelines that is not approved by the Commissioner

A change in the risk that substantially increases the hazard insured against

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. The insurer is hoping that this advertising will help to eliminate the competition and therefore create a monopoly. Which of the following best describes this act? a)Legal, provided that the other insurers are paid royalties for the usage of their names b)Illegal c)This is legal, provided that the information can be verified d)Legal, if the Guaranty Association endorses it

Illegal

The insured's house is located one mile from the county's new landfill and across the road from the entrance of a rock quarry. It would cost $150,000 to rebuild the house if something happened to it, but when the insured tried to sell it, the best offer he received was $80,000. The insurance company will insure the house for only $80,000. What method of valuation is used to insure this property? a)Market value b)Actual cost value c)Replacement cost d)Functional replacement cost

Market value

Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called a)Blanket coverage. b)Described coverage. c)Specific coverage. d)Schedule coverage.

Specific coverage.

How are surety bonds different from insurance? a)Surety bonds are issued by the government; insurance is issued by private companies. b)Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses. c)Insurance guarantees specific duties or obligations will be fulfilled; surety bonds pay for losses .d)Surety bonds guarantee that losses will be paid; insurance pays for obligations to be fulfilled.

Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses.

The medical payments coverage in a personal auto policy will pay reasonable medical expenses for all of the following EXCEPT a)The insured is injured while exiting a friend's mobile home. b)The insured is injured by a motor vehicle while crossing the street. c)The insured's child sustains injuries when the car she is in accidentally rolls down a hill. d)A friend is injured while driving the insured's vehicle with permission.

The insured is injured while exiting a friend's mobile

Under the limits of insurance provision found in the Physical Damage Coverage Form in a Commercial Auto policy, how much will an insurer pay to repair or replace a covered auto? a)The greater of the actual cash value or the cost to repair or replace a covered auto b)The lesser of the replacement cost value or the cost to repair or replace a covered auto c)The greater of the replacement cost value or the cost to repair or replace a covered auto d)The lesser of the actual cash value or the cost to repair or replace a covered auto

The lesser of the actual cash value or the cost to repair or replace a covered auto

All of the following are true statements regarding the supplementary payments of a commercial general liability policy EXCEPT a)They pay defense costs even after the aggregate limit has been reached. b)They pay all expenses incurred by the insurer. c)They pay pre-judgment and post-judgment interest .d)They pay all reasonable costs incurred by the insured in helping to investigate or defend a claim.

They pay defense costs even after the aggregate limit has been reached.

Which of the following best expresses the purpose of a stated value contract? a)To pre-establish the amount of coverage available for property items that are difficult to value b)To ensure that the principle of indemnification applies c)To establish the value of property subject to loss by theft or robbery d)To provide a maximum limit for which the insurance company may become liable in casualty losses

To pre-establish the amount of coverage available for property items that are difficult to value

The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information a)Within 30 days. b)Within 60 days. c)As soon as practical. d)Within 45 days.

Within 45 days.

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 a)Boiler and machinery coverage b)General liability coverage c)Workers compensation coverage d)Crime coverage

Workers compensation coverage