Property AND Casualty Final
Expenses of the Insurer
A major factor in determining insurance premiums
All of the following are factors in the Safe Driver Incentive Plan EXCEPT A. Age and sex of the principle operator B. Years of driving experience C. Pleasure, commuting, business, or farm use D. Rating territory
A. Age and sex of the principle operator
All of the following are true about Workers Compensation EXCEPT A. Benefits are paid only if fault can be determined B. Rehabilitation benefits are provided C. Medical benefits are paid 100% D. Income benefits are paid up to 400 weeks
A. Benefits are paid only if fault can be determined
Builders risk insurance covers buildings in the course of construction. It has a special provision concerning when coverage ends. Builders risk coverage would end when any of these occur EXCEPT A. Construction is completed B. The owner takes possession of the property C. Construction is abandoned with no intention to finish D. The policy expires
A. Construction is completed
All of the following are true about the NFIP EXCEPT A. Coverage is available for private residential property and contents only B. Coverage is available for private and commercial property and contents C. Coverage is available for removal up to 45 days D. Coverage is available in participating communities only
A. Coverage is available for private residential property and contents only
All of the following are true for resident NC agents EXCEPT: A. Maintain an office in NC B. Pay taxes in NC C. At least 18 D. Pass the required exam
A. Maintain an office in NC
Discrimination between individuals of the same class in the amount of premiums or rates charged for any policy of insurance or in the benefits payable thereon, or in any of the terms or conditions of such policy or in any manner whatsoever is A. Prohibited by law B. Common among insurers in select regions of the country C. Used in specific cases where formal underwriting is too impractical D. Considered prudent underwriting for all insurers
A. Prohibited by law
Which of the following is true about subrogation and assignment? A. Subrogation is the transfer of recovery rights, but assignment is the transfer of rights B. Assignment is the transfer of recovery rights, but subrogation is the transfer of rights C. Subrogation and assignment do not require written agreement of the insurer D. Subrogation and assignment can be overruled by the Commissioner of Insurance
A. Subrogation is the transfer of recovery rights, but assignment is the transfer of rights
Which of the following types of risk will result in the highest premium? A. Substandard risk B. Standard risk C. Preferred risk D. All risk pay equal premiums
A. Substandard risk
V has a home worth $250,000 insured for $200,000. The Standard 80% coninsurance clause applies. He has a loss of $20,000. Disregarding deductible, how much will be paid
$20,000
An insurer has just made the news because it is insolvent. Chris has had a $650,000 policy on his house with the insurer for 5 years. If Chris were to have a loss, what is the most that would be paid by the Guarantee Association?
$300,000
L was involved in an accident caused by B. L incurred injuries of $35,000 and property damage of $5,000. B had the NC minimum liability insurance required. Therefore, L will recieve total benefits of
$35,000
D has a building worth $200,000 insured for $120,000. The standard 80% coninsurance clause applies. He has a loss of $10,000. Disregarding deductible, how much will be paid by the insurer?
$7,500 $120,000/(200,000*80%) x $10,000
T has his car stolen and it is recovered 7 days later. He has Transportation Expense coverage of $15/day up to $450. How much will he receive in benefits
$75 (7-2) x $15 = $75 48 hours (2 day) waiting period
An agent in NC must report change of residency within
10 days
As of 2010, if an agent has only once license, he must complete CE in the following manner:
24 hours on a biennial basis
The Dwelling Form Coverage Extension (Additional Coverages) includes all of the following EXCEPT: A. Worldwide coverage for all personal property B. Debris removal, but not as additional charges C. Cost of repairs, but not as additional charges D. Trees, shrubs, and plants up to $500, but not losses from wind
A. Worldwide coverage for all personal property
A Surety Bond is designed to guarantee fulfillment of an obligation. All of the following are true EXCEPT A. losses are expected B. The bond is purchased by the Principal C. The Surety pays out if there is a claim D. The Obligee receives the claim payment
A. losses are expected
J decides to open his own burger stand and decides to name his flame-broiled burger the "Whomper". He probably is in danger of being sued by the owners of a similar product already on the market. If he is sued he would hope to have coverage for
Advertising Injury
With the PAP, all of the following would be considered a covered auto EXCEPT A. A non-owned auto furnished for the regular use of an insured B. A pickup with a GVWR over 10,000# C. A rental car D. a leased minivan
B. A pickup with a GVWR over 10,000#
An important distinction is the difference between vacant and unoccupied. Which is true? A. A vacant building has contents but no people B. A vacant building has no contents and no people C. An unoccupied building has no contents and no people D. An unoccupied building has contents and people
B. A vacant building has no contents and no people
Most insurers issue insurance policies for delivery in many states. Because each state regulates and mandates the requirement for policies delivered to their residents, instead of having a policy form for each state, the insurer attaches: A. Nothing B. Conformity with state statutes C. miscellaneous optional provisions D. waiver of other state requirements
B. Conformity with state statutes
Officers who manage stock insurance companies are A. Appointed by the Department of Insurance B. Elected by the stockholders C. Hired through an application process D. Appointed by other company officials
B. Elected by the stockholders
Regarding insurable interest: A. For life insurance, it is required at time of loss, and for property insurance at time of loss B. For life insurance, it is required at inception, but for property insurance at time of loss C. For life insurance, it is required at inception and for property insurance at time of inception D. For life insurance, it is required at time of loss, but for property insurance at time of inception
B. For life insurance, it is required at inception, but for property insurance at time of loss
B took his car into the shop to have brakes installed. When he arrived at the Day Care to pick up his child, the brakes failed and her ran into a fence. What type of coverage would apply? A. Premises Liability B. Garage Liability C. Home Day Care Liability D. Garagekeepers Liability
B. Garage Liability
The National Flood Insurance Program (NFIP) defines a flood as all of the following EXCEPT A. Mud flow or mudslide on normally dry land B. Normal erosion of shorelines C. Overflow of tidal or inland waters D. Unusual runoff or surface waters
B. Normal erosion of shorelines
When an insurance producer conducts business under any name other than the producer's legal name, he or she must A. Notify the appointing insurance company within 30 days of using the assumed name B. Notify the Commissioner before using the assumed name C. Notify the Commissioner within 10 days of using the assumed name D. Notify the Commissioner within 30 days of using the assumed name
B. Notify the Commissioner before using the assumed name
An Umbrella policy provides liability coverage above underlying coverage for auto, homeowners and boat liability. If there is no underlying coverage, benefits are paid above the A. Deductible B. Self-Insured Retention C. Liability Limit D. Deposit amount
B. Self-Insured Retention
The Boiler and Machinery coverage includes Expediting Expenses. It covers all of the following EXCEPT: A. Temporary repairs B. Temporary replacements C. Permanent repairs D. Permanent replacements
B. Temporary replacements
Concerning the Renter's policy HO-4 and the Condominium form HO-6 which of the following is true A. The HO-4 does not provide liability coverage B. The HO-4 does not provide dwelling coverage C. The HO-6 does not provide liability coverage D. The HO-6 does not provide dwelling coverage
B. The HO-4 does not provide dwelling coverage
Which of the following is true about examination of agent records by the Bureau? A. They may not be disclosed because of privacy concerns B. They may be disclosed at any time C. They may be disclosed only with a subpoena D. They may be disclosed after a 30 day "cooling off" period
B. They may be disclosed at any time
Within the Continuing Education requirements for all property and casualty agents, there is an additional requirement specifically regarding Flood coverage. Which of the following is true? A. Three hours of Flood coverage education are required every 2 years in addition to the regular CE requirements B. Three hours of Flood coverage education are required every 4 years within the regular CE requirements C. Three hours of Flood coverage education are required every 4 years in addition to the regular CE requirements D. Three hours of Flood coverage education are required every 2 years within the regular CE requirements
B. Three hours of Flood coverage education are required every 4 years within the regular CE requirements
R invited his neighbors to a cookout in his backyard. When the visitors arrived, R's dog bit T. This would be covered by R's Coverage E as A. Proximate cause B. Vicarious liability C. Pet liability D. Guest liability
B. Vicarious liability
Which of the following is NOT an essential element of an insurance contract? A. legal purpose B. incompetent parties C. consideration D. agreement
B. incompetent parties
Before any action against an agent's license may be taken the agent must
Be given the opportunity to be heard
Regarding Broad Theft and Limited Theft A. Broad Theft covers both owner-occupied and non-owner occupied dwellings on and off premises B. Limited Theft covers only non owner-occupied dwellings on and off premises C. Broad Theft covers only owner occupied dwellings on and off premises D. Limited Theft covers both owner-occupied and non owner occupied dwellings on premises only
C. Broad Theft covers only owner occupied dwellings on and off premises
Commercial General Liability includes A. Coverage A B. Coverage A and B C. Coverage A, B and C D. Coverage A, B, C, and D
C. Coverage A, B, and C
Which of the following would obtain a temporary license? A. Recent graduate of business school B. Nonresident agent who recently moved to NC C. Executor of estate of resident agent D. Person who recently passed agent exam
C. Executor of estate of resident agent
For negligence to apply, all of the following must occur EXCEPT A. Duty to act B. Breach of duty C. Intervening Cause D. Proximate Cause
C. Intervening Cause
A major difference between the Medical Payments benefits for homeowners and auto coverage is: A. Medical payments for homeowners covers the insured and others B. Medical payments for homeowners covers the insured only C. Medical payments for auto covers the insured and others D. Medical payments for auto covers others only
C. Medical payments for auto covers the insured and others
All of the following could be considered unfair trade practices EXCEPT: A. Publishing false information about a competitors financial status B. Promoting defamation of a competitors chief executive C. Providing insurance at rates below those of a competitor D. Distributing sales brochures that show dividends as guaranteed
C. Providing insurance at rates below those of a competitor
All of the following are true about the CGL Claims Made Form EXCEPT A. Coverage will only apply after the Retroactive Date B. The Basic ERP covers claims reported within 60 days after policy expiration for 5 additional years C. The Basic ERP covers claims that occur within 60 days after the policy expiration for 5 additional years D. The Supplemental ERP provides unlimited coverage, but must be purchased within 30 days after policy expiration
C. The Basic ERP covers claims that occur within 60 days after the policy expiration for 5 additional years
An insurance institution, agent, or insurance-support organization shall not disclose any personal or privileged information about an individual collected or received in connection with an insurance transaction unless A. The Commissioner deems such disclosure to be in the best interest of the insurance buying public B. The disclosure has been previously approved by the insurer C. The disclosure is with the written authorization of the individual D. Such information is considered to be nonpublic information
C. The disclosure is with the written authorization of the individual
All of the following are examples of adverse underwriting EXCEPT: A. The charging of a higher rate on the basis of information that differs B. Failure of an agent to place insurance coverage at the rate requested by the applicant C. The rescission of a policy D. A declination of insurance coverage
C. The rescission of a policy
R has traded in his old van for a new crossover. He had the old van covered for liability only. Which of the following is true about the coverage of the new car? A. The new car will be automatically covered for both liability and physical damage to the end of the policy period B. The new car will not be covered for liability until reported to the insurer within 30 days C. Thew new car will be covered for physical damage if reported to the insurer within 30 days D. The new car will not be covered unless reported to the insurer before it leaves the car lot
C. Thew new car will be covered for physical damage if reported to the insurer within 30 days
Under which of the following types of receipts is it that coverage begins immediately for a specified length of time even if the applicant is subsequently found to be uninsurable? A. Insurability conditional receipt B. Premium receipt C. Unconditional (binding) receipt D. Approval conditional receipt
C. Unconditional (binding) receipt
The Commissioner of Insurance can do all of the following EXCEPT: A. Examine insurers in person or through a representative B. Suspend an agent's license while an investigation is pending C. Waive policy provisions in favor of an insured D. Issue administrative orders to carry out the insurance laws
C. Waive policy provisions in favor of an insured
The special significance of an insurability conditional receipt is that it A. Serves as proof that the agent has determined the applicant to be fully insurable for coverage by the insurance company B. Is given by the agent only to applicants who fully prepay all scheduled premiums in advance of policy issues C. is intended to provide coverage on a date earlier than the date of the issuance of the policy D. Guarantees the applicant that a policy will be issued in the amount applied for in the application
C. is intended to provide coverage on a date earlier than the date of the issuance of the policy
The Yacht policy would cover all of the following EXCEPT A. policy holder runs over a hidden submerged object B. policy holder's trailer has a flat tire C. policy holder charges a church group $250 to take them to see a lighthouse D. policy holder hits a dock when pulling up in the marina
C. policy holder charges a church group $250 to take them to see a lighthouse
Workers Compensation benefits are not paid as primary and excess. Instead, the benefits are paid as equal shares. Applying this concept, K has two policies covering his employees for Workers Compensation. Company X provides $300,000 and Company Y provides $100,000 of coverage. If there is a $10,000 claim how will it be paid?
Company X and Y both pay $5,000 each
The dwelling form DP-3 automatically includes all of the following EXCEPT: A. Coverage A- Dwelling B. Coverage B - other Structures at 10% C. Coverage C- Personal Property at 50% D.. Coverage D - Fair Rental Value at 10%
Coverage C - Personal Property at 50%
All of the following apply to the Safe Driver Incentive Plan EXCEPT: A. A newly licensed driver may be surcharged even without any violations B. A minor accident with property damage only usually will not result in a surcharge C. A speeding violation of less than 10 miles over the limit usually will not result in a surcharge D. A conviction of failing to wear a seat belt will result in a surcharge for three years
D. A conviction of failing to wear a seat belt will result in a surcharge for three years
An insurance agent may have his license suspended for all of the following EXCEPT: A. Commingling B. Felony Conviction C. Rebating D. Above average commission
D. Above average commission
C's insurer has made all of the decisions regarding the provisions included in her policy. She finds an objectionable provision and wants to negotiate it with her insurer, but is not allowed to do so. Her only options are to reject the policy with the provision or accept the policy anyway. Which contract element does this describe? A. Unilateral B. Conditional C. Dictatorial D. Adhession
D. Adhession
For the Personal Lines policies, the cancellation requirements of the insurer must be A. 10 days notice for any reason within the first 10 days B. 10 days notice for any reason within the first 30 days C. After the first 30 days, 10 days for nonpayment of premium and 30 days for any other reason D. After the first 60 days, 10 days for nonpayment of premium and 30 days for any other reason
D. After the first 60 days, 10 days for nonpayment of premium and 30 days for any other reason
An agent license may be issued to which of the following: A. Corporation B. Individual C. Limited Liability Company D. All of the above
D. All of the above
With the PAP, an insured includes all of the following EXCEPT A. The named insured B. Any resident relative C. A child away at school D. Anyone using the car without permission of the insured or named insured
D. Anyone using the car without permission of the insured or named insured
A licensee decides to terminate his residency in this state. Which of the followings would be an appropriate action? A. Allowing the license to expire B. Notify the SEC C. Notify the Commissioner within 10 days D. Delivering the license to the Commissioner within 30 days
D. Delivering the license to the Commissioner within 30 days
All of the following could be considered unfair claim settlement practices EXCEPT: A. Requiring the insured to submit more than one claim form containing the same information B. Sending a settlement without explaining why it is less than the amount of the claim C. Compelling insureds to sue for benefits that a reasonable person would have expected D. Denying a claim after a proper investigation
D. Denying a claim after a proper investigation
The HO-4 policy is designed to cover all of the following EXCEPT A. Tenant's personal property B. Tenant's liability C. Dwelling improvements and alterations D. Dwelling damage from EC perils
D. Dwelling damage from EC perils
The perils covered by the SFP are A. Established at the time the policy is issued B. Fire, wind, lightning C. Wind, lightning and removal D. Fire, lightning and removal
D. Fire, lightning and removal
After the insured experiences a loss the "Duties of the Insured" include all of the following EXCEPT A. Protect the property against further loss B. Submit the questioning under oath C. Submit prompt notice to the insurer as soon as possible D. Furnish oral proof of loss within 60 days
D. Furnish oral proof of loss within 60 days
D has a classic Mustang in E's shop for a new paint job. The job is done at 430 on Friday afternoon. Then E decides to take the car to the beach and show it off for the weekend and deliver it to D on Monday. Unfortunately, E gets into an accident at the beach. What coverage would apply? A. Premises Liability B. Garage Liability C. Commercial Liability D. Garagekeepers Liability
D. Garagekeepers Liability
Crime Insurance covers all of the following EXCEPT A. Outgoing Forgery B. Outside Robbery C. Inside Robbery D. Incoming Forgery
D. Incoming Forgery
A Third Part Administrator of a self-insured worker's compensation plan does all of the following EXCEPT: A. enroll the group members B. collect premiums from group members C. Process claims of group members D. Insure the group members
D. Insure the group members
The Homeowner's policy has two sections. Section 1 and Section 2. Which of the following is included in Section 2? A. Dwelling B. Other structures C. Loss of Use D. Medical Payments
D. Medical Payments
NC requires motor vehicle operators to show Financial Responsibility in any of the following ways EXCEPT: A. Proof of coverage in the amounts of 30/60/25 B. Proof of qualified self-insurance C. Deposit of appropriate cash or securities with the DMV D. Post a bond of at least $100,000
D. Post a bond of at least $100,000
Which is true regarding obtaining underwriting sources? A. The insurer does not need to inform the applicant about how the information is gathered; informing only of the source is sufficient B. The insurer only needs to inform the applicant of how the information is being gathered; it is not necessary to disclose the sources C. It is illegal to obtain information from outside sources in order to determine applicants insurability D. The applicant must be informed of the sources contacted and how the information is being collected
D. The applicant must be informed of the sources contacted and how the information is being collected
The definition of underinsured motorist includes the following A. The at-fault driver had limits of 15/30/15 B. The at-fault driver was insured in the minimum limits but the insurer is insolvent C. The at-fault driver did not have insurance in the minimum limits D. The at-fault driver was insured in the minimum limits but less than the damages caused
D. The at-fault driver was insured in the minimum limits but less than the damages caused
The definition of uninsured motorist includes all of the following EXCEPT A. The at-fault driver had limits of 15/30/15 B. The at-fault driver was insured in the minimum limits but the insurer is insolvent C. The at-fault driver did not have insurance in the minimum limits D. The at-fault driver was insured in the minimum limits but less than the damages caused
D. The at-fault driver was insured in the minimum limits but less than the damages caused
The definition of uninsured motorists includes all of the following EXCEPT A. The at-fault driver had limits of 15/30/15 B. The at-fault driver was insured in the minimum limits but the insurer is insolvent C. The at-fault driver did not have insurance in the minimum limits D. The at-fault driver was insured in the minimum limits but less than the damages caused
D. The at-fault driver was insured in the minimum limits but less than the damages caused
Which of the following would be covered under Collision on the PAP? A. A home run baseball hits the car in the parking lot B. A vandal "keys" the car in the parking lot C. A flood sweeps the car into a tree D. The driver runs into a tree
D. The driver runs into a tree
The SFP Extended Coverages include all of the following EXCEPT A. Riot B. Explosion C. Vehicles D. Vandalism
D. Vandalism
Although there is some coverage for Personal Property under the Homeowner's policy Coverage C, a person might consider covering jewelry with the Personal Articles floater because unlike the standard homeowner policy this provides coverage for A. The insured only B. gusts only C. limited theft D. mysterious disappearance
D. mysterious disappearance
When W's hours were reduced at work, he found that it was necessary to switch his insurance policy from an annual premium payment of $500 to a quarterly premium payment of $132.50, which adds up to $530 for the entire year. This increase in total premium payout was necessary for the insurance company because: A. the increase is not necessary B. They do not have him premium to invest for a full year C. the insurance company incurs more expense in collecting quarterly premiums D. they do not have the premium to invest for a full year, and more expenses are incurred in collecting quarterly premiums
D. they do not have the premium to invest for a full year, and more expenses are incurred in collecting quarterly premiums
HO-3 covers
Dwelling on Open Peril basis and Personal Property on Named Peril basis
The Commissioner of Insurance gets into office by:
Election every 4 years
rebating
Giving the prospect anything of value as a condition of the sale
G is on the way to the office to turn in an insurance application that he completed last night. He suddenly discovers that the applicant made out the check to the agent. What should the agent do?
Immediately return the check to the applicant
If an agent mixes client funds with his own, the first thing the Bureau will probably do is
Issue a cease and desist order
Twisting
Misrepresenting a policy to convince someone to replace it
The disability provision that pays benefits for injuries 24/7
Occupational
The FAIR Plan provides coverage for
Property that cannot be insured in the voluntary market
Who receives dividends from a stock company?
Stockholders
The part of the policy that describes the parties to the contract, the policy period and the premium
The declarations clause
elimination period
The period of time that a person must wait for workers compensation benefits to begin after an injury
The purpose of the reinstatement provisions is
To determine the process for reactivating coverage once a policy has lapsed.
With Crime Insurance, to meet the definition of Burglary what must exist?
Visible marks
Under contract law, the actions by a party may intentionally and voluntarily give up a known right. When this occurs, it is known as creating a
Waiver
What is a statement that is guaranteed to be true, and if untrue may breach an insurance contract?
Warranty
Agent Z takes an application for a policy and accepts a check for the first premium. The application and check mailed to the insurer, who discovers the check is not signed. When will coverage for this policy go into effect?
When the policy is issued, delivered and premium is paid
An agent found representing an unauthorized company, even if the agent did not know the insurer was unauthorized, is guilty of
a misdemeanor
Workers Compensation provides coverage for
accidents and sickness at work
B failed to disclose a material fact on an application. What is B guilty of?
concealment
As deductible amounts increase, premium amounts change in what way?
decrease
If an insured changes his payment plan from monthly to annually, what happens to the total premium?
decreases
The period of time immediately following a disability during which benefits are not payable
elimination period
ACV formula
replacement cost - depreciation
The responsibility of making certain that an application for insurance is filled out completely correctly and to the best of his or her knowledge is the responsibility of whom?
the agent or producer
An insurer is attempting to determine insurability of an applicant and decides to obtain information from several different sources. Which entity must be notified of the investigation?
the applicant