Property and casualty guarantee exam 2

What injury is less physical than those covered under bodily injury liability? a) Personal injury liability b) Personal invasion liability c) Feeling liability d) Emotional iniurv liability

a) Personal injury liability

Which of the following actions does NOT constitute false advertising? a) Using names that disguise the true nature of a policy b) Stating that dividends are not guaranteed c) Misrepresenting the terms of a policy d) Representing an insurance policy as a share of stock

b) Stating that dividends are not guaranteed

Coverage C in homeowners policy forms offers all of the following EXCEPT a) Coverage for property located at another residence premises. b) Coverage for loss of use. c) Worldwide coverage. d) Coverage for property of others.

b) Coverage for loss of use.

Which statement best describes agreement as it relates to insurance contracts? a Each party must offer something of value. b) One party accepts the exact terms of the other party's offer. c) The intent of the contract must be legally acceptable to both parties. d) All parties must be capable of entering into a contract.

b) One party accepts the exact terms of the other party's offer.

If a mortgagee is named in a mortgagee clause, how would a property policy pay claims on a home damaged in a fire? a) The mortgagee may only receive loss reimbursement if the mortgagee brings an action against the insured. b) The mortgagee would receive loss reimbursement. c) The insured is considered a co-claimant and receives loss reimbursement from the mortgagee. d) Only the insured would receive loss reimbursement.

b) The mortgagee would receive loss reimbursement.

Which of the following would NOT generally be included in the supplementary payments portion of a liability policy? a) Cost of first aid to others at the time of an accident b) Expenses the insured incurs, as part of defense, at the company's request c) Loss of earnings due to the accident d) Damage to property owned by the insured

d) Damage to property owned by the insured

In Businessowners policies, a deductible does NOT apply to which of the following additional coverages? a) Debris removal b) Preservation of property c) Forgery or alterations d) Fire department service charge

d) Fire department service charge

Which of the following provisions is usually found in homeowners policies and provides a replacement cost settlement to policyholders who carry adequate insurance? a Coinsurance b) Actual cash value c) Pro rata d) Insurance to value

d) Insurance to value

An aleatory contract is based on what kind of exchange? a) Equal amounts for pay in and pay out b) Balanced benefits c) Exchange of equal obligations d) Unequal exchange of values

d) Unequal exchange of values

Space Age Rockets makes model rocket supplies and has 12 employees. The company is located in Atlanta, GA. Georgia has compulsory workers compensation laws. Space Age's owner thinks that his company is too small and unprofitable to carry the workers comp plan mandated by the state. Possible consequences of noncompliance include all of the following EXCEPT a Forced payment of billing for services rendered by any private insurer that "binds" coverage based on an employee's request for coverage. b) Closure of the business as a public nuisance by state officials. c) Payment for injuries in monetary amounts stipulated by the state with respect to workers compensation plans. d) Payment of fines and penalties as dictated by state compliance authorities.

a Forced payment of billing for services rendered by any private insurer that "binds" coverage based on an employee's request for coverage.

What part of the insurance contract describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured? a Insuring agreement b) Exclusions c) Declarations d) Conditions

a Insuring agreement

Which of the following is most likely INELIGIBLE for coverage under the businessowners policy? a) An auto mechanic shop b) A fast-food restaurant c) A retailer with gross annual sales of $100,000 d) An office with total floor area of 5,000 square feet

a) An auto mechanic shop

The commercial crime coverage that would cover losses resulting from the theft of money, securities and other property by emplovees is a) Employee theft. b) Funds transfer fraud. c) Forgery or alteration. d) Inside the premises - theft of money and securities.

a) Employee theft.

An insurer's right to take possession of property after having paid for the loss is referred to as the right to a) Salvage. b) Exchange. c) Retain. d) Replace.

a) Salvage.

All of the following are true about the cancellation provision of a commercial insurance policy EXCEPT a) The insurer is required to provide proof that the insured received the cancellation notice prior to cancelling the policy. b) The insurer is required to give advance notice of its intended cancellation to the insured. c) The insurer may cancel the policy by mailing or delivering written notice of cancellation to the first named insured.

a) The insurer is required to provide proof that the insured received the cancellation notice prior to cancelling the policy.

When is the company responsible for actions of its agents? a) Whenever the agent is acting within the conditions of the contract b) Whenever the agent is licensed c) Always: the agent's actions are presumed to be those of the company d) Never: agents represent clients, not companies

a) Whenever the agent is acting within the conditions of the contract

A trucking company has a $1 million umbrella policy in place. The businessowner agrees to maintain a 200/500/100 limit on auto liability, and a personal liability of $400,000. After a car accident, the business is sued. Injuries are awarded to a single injured party in the amount of $300,000. It turned out that the business actually carried only 100/250/50 auto liability limits. What is the total amount the umbrella policy will pay? a) $50,000 b) $100,000 c) $200,000 d) $300,000

b) $100,000

Georgia drivers must keep proof of financial responsibility for a) 6 months. b) 1 year. c) 5 years. d) Until they purchase a new vehicle.

b) 1 year.

When a hearing regarding an insurance matter is requested, all parties must receive a) 10 days' notice. b) 15 days' notice. c) 30 days' notice. d) 60 days' notice.

b) 15 days' notice.

A driver completed a defensive driving course and received a policy with a discounted premium in 2021. In what year will this discount expire? a) 2023 b) 2024 c) 2026 d) 2031

b) 2024

How many hours of continuing education must licensees complete every renewal period on the subject of ethics? a) 2 b) 3 c) 5 d) 10

b) 3

With regard to homeowners Section II, which of the following does NOT meet the definition of insured location? a A secondary residence acquired by the insured during the policy period b) A plot of farmland owned or rented by the insured c) A meeting hall rented to the insured to hold a reception for his daughter's wedding d) A cabin rented to the insured for use on a family vacation

b) A plot of farmland owned or rented by the insured

An insurer must be fair in underwriting and must pay all covered losses of any insured. For the faithful execution of these duties, an insurer has the right to a) Implement strict guidelines for the initiation of claims against all policies. b) Accept the payment of premiums for all policies currently in force. c) Use flexible underwriting standards so as to exclude higher-risk insureds. d) Employ any and all resources available to avoid paying legitimate claims.

b) Accept the payment of premiums for all policies currently in force.

Under a commercial general liability policy, which of the following is NOT considered mobile equipment? a) The bulldozer used by an excavating company b) An automobile used as a compan car by a real estate company c) A combine used on a farm d) The Department of Transportation's resurfacing equipment

b) An automobile used as a compan car by a real estate company

When agents, brokers, or solicitors handle premiums for an insurer, they are acting in which capacity? a) Natural person b) As a fiduciary c) As a managing general agent ( MGA) d) Legal representative with power of attorney

b) As a fiduciary

For which of the following reasons may an insurer refuse to renew a property insurance policy after it has been in effect for more than 60 days? a) Two claims against the policy in the preceding 36 months that are not attributable to the negligent or intentional acts of the insured b) Change in risk which substantially increases a hazard c) Lack of supporting business with the insurer d) Change in the insurer's underwriting guidelines that is not approved by the Commissioner

b) Change in risk which substantially increases a hazard

Which of the following elements of an insurance contract requires payment of premium? a) Offer and acceptance b) Consideration c) Legal purpose d) Competent parties

b) Consideration

All of the following are considered insured under the hired and nonowned auto liability endorsement added to a businessowners policy EXCEPT a) The first named insured b) The owner of a nonowned vehicle. c) Any person using a hired auto with the insured's permission. d) An executive officer operating a nonowned vehicle.

b) The owner of a nonowned vehicle.

When an insured's gardener was spraying weeds in his lawn, he failed to notice that the wind was drifting the spray into the neighbor's yard where he damaged their flower bed. The insured was found to be legally liable for this damage. This is an examble of a Gross negligence. b) Vicarious liability. c) Intervening cause. d) Comparative negligence.

b) Vicarious liability.

An insured has $5,000 of medical coverage under a personal auto policy at the time of a covered accident. The insured and 3 passengers are injured. The insured's medical expenses are $8,000. The first passenger's total $4,000; the second passenger's total $6,500; and the third passenger's total $1,200. How much will the policy pay under the medical payments coverage? a) $5,000 b) $8,000 c) $15,200 d) $19,700

c) $15,200

Using the pro rata method, if a property is covered by Company A for $20,000 and Company B covers the same property for $40,000, how much will Company A pay on a $24,000 loss? a) $20,000 b) $12,000 c) $8,000 d) $0

c) $8,000

The businessowners liability coverage form will cover medical expenses incurred and reported within what maximum time period after the accident? a) 90 davs b) 6 months c) 1 vear d) 3 years

c) 1 year

What is the maximum period for a temporary license in this state? a) 30 days b) 3 months c) 6 months d) 1 year

c) 6 months

What is the maximum number of days that binders for temporary insurance may be valid in this state? a) 30 davs b) 60 days c) 90 days d) 180 days

c) 90 days

Which of the following statements is CORRECT regarding the replacement cost coverages under the businessowners policy (BOP)? a) Damage of property belonging to others is indemnified on the same replacement cost basis. b) There are no coinsurance requirements for the BOP. c) An 80% insurance-to-value requirement is in place. d) A coinsurance percentage varies from risk to risk and will be found on the declarations page.

c) An 80% insurance-to-value requirement is in place.

How often will the Commissioner examine domestic insurers? a) Once every 3 vears b) Biennially c) At least once every 5 vears d) Annually

c) At least once every 5 vears

You are at fault in an auto wreck out of state. How does vour company adjust? a) By the other state's highest form b) Will not pay at all c) At least to the minimum required by that state d) The limit of your policy, no matter what the other

c) At least to the minimum required by that state

An insured's limit of liability applies to a total of damages for bodily injury and property damage resulting from one accident, which may be used in any combination of amounts, not to exceed the single limit. What type of limit does this insured have? a Aggregate b) Per occurrence c) Combined single d) Split

c) Combined single

An executive is accused of sexual harassment. What type of coverage would respond? a) Hiring practices liability b) Commercial general liability (CGL) c) Employment practices liability d) Workers compensation

c) Employment practices liability

Insurance contracts are unilateral in nature. What does that mean? a) All parties to the contract exchange something of value. b) A promise is made only at the time of policy application. c) Only one party makes a promise. d) The insured must make a promise to pay the premium.

c) Only one party makes a promise.

Who may extend the length of a binder issued in Georgia? a) The insurer b) The agent c) The Commissioner d) The policyholder

c) The Commissioner

An insured lives in an area that has rolling hills and lots of trees. The pathway up to his house has been known to be covered with ice during the winter months as well. One day, while delivering the morning mail, a postman slipped and fell on the insured's pathway injuring his back and head. The insured will be liable for a) A personal injury claim by the postal service. b) The lost wages for the postman while he recovers. c) The bodily injuries sustained by the postman. d) Criminal negligence since the path was clearly unsafe.

c) The bodily injuries sustained by the postman.

Due to appreciation, the amount of insurance on a business is less than 80% of its actual value on the date of the loss. Which of the following is true? a) The full amount of the loss less any deductible is paid. b) The policvholder is responsible for twice the amount of the deductible. c) The coinsurance penalty applies. d) The policy pays nothing.

c) The coinsurance penalty applies.

When does the federal emergency flood insurance program go into effect? a Annually for the flood season b) When mandated by the president of the United States c) When a community applies for the program d) As soon as the flooding occurs

c) When a community applies for the program

Coverage D, additional living expenses, is intended to a) Pay a set amount per day. b) Pay hotel costs but not the cost of meals or transportation. c) Pay all expenses incurred by a family who cannot use their home because of a covered loss. d) Allow the family to maintain their normal standard of living.

d) Allow the family to maintain their normal standard of living.

Workers compensation rating is developed by applying a rating bureau job classification rate to which of the following? a) Noncash compensation b) Minimum wage c) Job title d) Payroll

d) Payroll

Businessowners liability coverage automatically includes all of the following liability coverages EXCEPT a) Contractual. b) Host liquor. c) Product. d) Pollution.

d) Pollution.

Which of the following is NOT a cause of loss form for commercial property coverage? a) Special b) Basic c) Broad d) Specific

d) Specific

All of the following are TRUE regarding the cancellation condition of a policy EXCEPT a) The insured may cancel the policy at any time by mailing a written notice of cancellation to the company. b) The insurer may cancel the policy by mailing a written notice to the first named insured only. c) The insurer is required to give advance notice of its cancellation to the insured. d) The insurer must provide proof that the insured received the notice.

d) The insurer must provide proof that the insured received the notice.

All of the following are considerations in determining which state's law applies when a worker is required to travel into another state and is injured while working in the other state EXCEPT a) Place where the accident occurred. b) The normal location where the employee works. c) The state where the emplovee was hired. d) The insurer's chartered location or domicile.

d) The insurer's chartered location or domicile.

The insured's product under a commercial general liability policy does NOT include which of the following? a) Containers furnished in connection with the product b) Warranties made with respect to the fitness or quality of the product c) Any goods or products manufactured by the insured d) Vending machines rented to others

d) Vending machines rented to others