Property and Coverage Guarantee Exam

A licensee who, for a fee or commission, offers to examine a life insurance policy, and gives advice regarding the policy, is known as?

Life and health insurance counselor

An example of an alien insurer doing business in this state os one formed under the laws of

Mexico

An insurance company that is owned by the policyholders is called a

Mutual insurer

Among the applicants in the same class and life expectancy, which of the following factors can be used to influence premium rates?

Occupation

All authorize property and casualty insurers must be members of all of these organizations EXCEPT

Texas department of insurance

Claims from which of the following types of insurance will be covered by the Texas property and casualty insurance guaranty association?

Workers compensation

What type of losses is NOT covered by the personal injury protection (PIP) in auto policies?

Workers compensation

Which of the following would be considered a covered auto on your personal auto policy?

Your farm wagon being towed by your pickup truck

An insured and his spouse were traveling down an icy road and hit a sign, accumulating $1,350 damage to their car. They have a $250 deductible. They already collected on a $1,500 claim earlier this year. How much will they collect on this claim?

$1,100

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 passengers total $4,000; the second passengers total $6,500; and the third passengers total $1,200. How much will the policy pay under the medical payments coverage?

$15,200

An insured was judged at fault in an automobile accident. He has the 100/300 bodily injury coverage. There other individuals were injured in the vehicle hit by the insured. They were awarded damages of $150,000, $75,000 and $75,000. What amount, if any, was not covered by his insurance policy?

$50,000

Insureds covered under a Mobile Homeowners Policy move their mobile home to prevent it from being damaged by a fire. What is the maximum amount the policy will pay for this?

$500

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?

$8,000

According to the Section 1 - Property of the Businessowners policy definitions, what is the term for insured's business activities occurring at the described premises?

Operations

Which provision defines how the policy will respond if there is other valid insurance written on the same risk?

Other insurance

An insured is injured while driving his own car. Which of the following coverages will pay for the loss?

Part B - Medical Payments

Workers compensation rating is developed by applying a rating bureau job classification rate to which of the following?

Payroll

What sublimit in a liability policy sets the maximum amount that will be paid for all claims arising from a single accident?

Per occurrence

Which of the following is the cause of loss?

Peril

In reference to insurable interest, which of the following is NOT an element of insurable risk?

Personal

The garage coverage form is written to cover the insurance needs of an insured in the business of selling, repairing, servicing or storing automobiles. Which of the following coverages are not included in a garage policy?

Physical damage on a customer's auto

To be valid, an insurance policy must have all of the following EXCEPT

Policy exclusions

What statement must an insurer receive before it will pay benefits for a loss?

Proof of loss

Which of the following would NOT be covered by commercial inland marine policies?

Property lost due to a military action

The purpose of the Fair Credit Reporting Act is to

Protect consumers against the circulation of inaccurate or obsolete personal or financial information

When an insurer pays for the cost to exchange damaged property with new property of similar kind and quality, it is called

Replacement cost

The equipment breakdown coverage form values loss on a/an

Replacement cost basis

For an additional premium, the extended coverages written on the basic form dwelling policy would cover which of the following?

Riot

Which of the following types of property would be covered under Coverage C - Personal Property in a dwelling policy?

Rowboats

An insurer's right to take possession of property after having paid for the loss is referred to as the right to

Salvage

The amount of loss the insured is willing to absorb without insurance protection is known as

Self-insured retention

Wagering on a sporting event is an example of what type of risk?

Speculative

Which of the following is NOT a classification of a hazard?

Speculative

Upon payment for a loss, the insured is obligated to surrender to the insurer the right to sue a negligent third party. This is called

Subrogation

When an insurer acquires the insured's rights against a third party for the purposes of receiving indemnification for loss, this is called

Subrogation

Which of the following symbols in a business auto policy indicates that coverage for newly acquired vehicles applies if the insurer already covers all autos owned by the insured?

Symbol 7

Although a businesowners policy (BOP) will cover fire damage legal liability, which of the following statements is true?

The general aggregate does not apply to fire damage legal liability

Which of the following would NOT be covered by uninsured motorist coverage?

The insured causes a head-on collision with the car of an uninsured motorist

An insured was backing his car out of the driveway and hit a fire hydrant. The automobile sustained $1,300 of damage to the bumper. The insured's auto policy has a $500 deductible. Which of the following is true?

The insured is reasonable for the first $500 of any claim that he makes on his policy

An insured is at fault in an auto accident, damaging the insured's own car. The damage to the car is covered by

The insured's collision coverage

All of the following are true about the cancellation provision of a commercial insurance policy EXCEPT

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

Which of the following best depicts the law of large numbers?

The larger the proof of risks under study, the more accurate the predictions will be

An insured rents out a bedroom in his residence for $50 per week. The residence is badly damaged by fire. During the three weeks required to repair the fire damage, the insured pays $900 in rent for a short-term apartment, and the renter is forced to find other accommodations. Disregarding any extra expense for meals, how much would an HO-3 will pay under Coverage D?

$1,050

Which of the following elements of an insurance contract requires payment of premium?

Consideration

Which of the following is NOT covered by the DP-2?

Damage to pets, birds, or fish

To determine the actual cash value of an insured property, what must be deducted from the current replacement cost?

Depreciated value

If a fire in the kitchen and spreads to the upstairs bedroom, resulting in the destruction of furniture, what type of loss has occurred?

Direct

What are the two types of utility services endorsements?

Direct damage and time element

The federal act that provided more favorable benefits for interstate railroad workers by allowing the insured worker to sue the employer for for negligence is the

Federal Employers Liability Act (FELA)

To have insurable interest in the person or property covered by property insurance policy, which of the following potential risks must the policy owner face?

Financial loss

Lost Treasures has a guard dog in a fenced lot to protect the salvage yard. The dog scared a passerby, who now claims that it was a traumatic experience and that he now suffers from recurring nightmares. A claim for personal injury of $5,000 is filed against Lost Treasures. Why will the personal and advertising injury liability section (Coverage B) of the CGL policy cover this claim?

Mental anguish is a covered injury

An insurance policy form that lists specific covered perils provides

Named peril coverage

An insured has extended coverage on her dwelling that includes coverage for vandalism and malicious mischief. One evening, she is sitting in her living room when she hears a crash and the sound of glass breaking. She runs to the door and discovers a brick has been thrown through her glass door. To inform her insurer of a possible claim, she fills out a form detailing the event leading to the loss. What is the name of the form?

Notice of claim form

Which of the following is consideration on the part of an insurer?

Paying the claim

Policy limits are the maximum amount an insured may collect, or for which an insured is protected under the terms of the

Policy

What is a bailee responsible for?

Property of others in his custody

Business auto coverage apply only to those autos that are identified as covered autos in the declarations by entry of the appropriate numerical symbol. Which symbol affords the broadest coverage?

Symbol 1

All of the following statements regarding personal property coverage in the homeowners program are correct EXCEPT

The HO-3 policy covers the mysterious disappearance of personal property

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?

The coinsurance penalty applies

An insured was having a new home built. While digging the footing for the foundation, the contractor struck a solid rock formation and found that it was necessary to blast the formation in order to remove the rocks. The force of the blast broke several windows and some chinaware in a neighbor's home several blocks away. Who pays for this damage?

The contractor

Homeowners policies consider all of the following insured locations EXCEPT

A strawberry patch owned by the insured

What guarantees that the information explained in the insurance contract is true?

A warranty

Which of the following would be added for coverage under a property policy by an endorsement?

Additional insureds

An insured has a maximum limit of coverage available under her liability policy during a policy year, regardless of the number of claims made or the number of accidents. Her limits are restored at the policy anniversary. What type of limit does the insured have?

Aggregate

All of the following persons would be covered under a business auto policy EXCEPT

An employee of the named insured operating an auto that is owned by the employee's spouse

Which of these would be covered by the medical payments coverage in a personal auto policy?

An insured slams a hand in a car door while getting in, breaking the hand

Two men are partners in a moving company. They have two trucks used to move property of others. They should insure their trucks under a

Business auto policy

Which of the following is NOT an indicator of a competent party?

Business profession

An insured was told to leave his home because of endangerment by a brush fire that was out of control. The insured was able to have his personal property moved to storage away from the endangered area. For how long will the homeowners policy provide coverage for the stored property?

30 days

How soon does the period of restoration for business income coverage begin after the direct loss?

72 hours

When insurance is written on a dwelling form, which of the following types of property would be insured under Coverage B (Other Structures)?

A garage separated from the dwelling

Which of the following contract elements best describes insurance written in support of public policy?

Legal purpose

Unless additional coverages are added to the businessowners policy (BOP), the maximum amount of coverage on an outdoor sign attached to a building is limited to

$1,000

The maximum monetary penalty for an agent who violates an insurance law, rule or order is

$25,000

Resident agents must complete how many hours of continuing education every 2 years?

24 hours

According to the Motor Vehicle Safety Responsibility Law in Texas, which of the following coverage amounts would satisfy proof of financial responsibility?

30/60/25

The Commissioner of Insurance must evaluate an insurer's financial condition and its ability to comply with state laws every

5 years

The limited theft endorsement designed for a landlord excludes all of the following EXCEPT

A lawnmower the landlord owns and keeps at rented premises

A property and liability insurer may write business on all of the following EXCEPT

A person's life

Which of the following best describes a rebate?

A producer returning part of her commission to her client, as an inducement to buy

Which of the following could be insured with replacement cost coverage under the flood insurance program?

A single-family home

An employee who suffers an injury covered by workers compensation is entitled to all health care reasonably required for the injury. This includes health care that

All of the above

In order to obtain insurance through the Texas Automobile Insurance Plan Association, the applicant must provide proof that he or she has been rejected by

At least 2 auto insurers

Which of the following is NOT an example of the company's location of incorporation?

Authorized

If the State Insurance Department believes that an agent may be in violation of an insurance law or regulation, what may be issued?

Cease and desist order

Insurers CANNOT transact in this state without a

Certificate of Authority

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 doesn't this insured have?

Combined single

An agreement that is enforceable by law is known as what kind of contract?

Legal

During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of

Defamation

Which of the following conditions allows the insurer to examine the insured's records at the end of a policy term to make sure an adequate fee is being collected for the exposure?

Deposit Premium Audit

Which of the following would be considered a peril?

Fire

An agent solicits insurance on behalf of the

Insurance company

Which of the following terms refers to solicitation, negotiation, effectuation or advising related to an insurance contract?

Insurance transaction

Which of the following best defines the unfair trade practice of rebating?

Offering an inducement of value not specified in the policy

All of the following statements about mutual insurance companies are correct EXCEPT

Policy dividends issued by mutual companies are guaranteed and not taxable

All of the following are true regarding a producer's fiduciary responsibilities EXCEPT

Producers may commingle personal funds with company funds

All of the following are requirements for an individual to be licensed EXCEPT

Provide a financial statement

All of the following our considerations and determining which states law applies when a worker is required to travel into another state is injured while working in the other state EXCEPT

Reinsures chartered location or domicile

What is designed to assume risks that are generally unacceptable to the normal insurance market?

Residual Markets

Which of the following actions does NOT constitute false advertising?

Stating that dividends are not guaranteed

Which of the following is a license able to place insurance with unauthorized insurers?

Surplus lines broker

If an agent suspects that a fraudulent insurance act has been committed in this state, whom should the agent notify first and foremost?

The Insurance Fraud Unit of the Texas Department of Insurance

An insurer filed a new policy form and endorsements with the Commissioner 60 days ago. The insurer has not heard back from the Commissioner. What can the insurer assume?

The form has been approved

Which of the following statements is true regarding personal injury protection (PIP) coverage in auto liability policies issued in this state?

The insured may reject this coverage in writing

An insurer may cancel a homeowners insurance policy that as been in effect for more than 60 days for any of the following reasons EXCEPT

The insured submits claim against the policy

Reports required by the Texas Department of Insurance based on complaints about unfair settlement practices must contain information about all of the following EXCEPT

The resident state of the claimants

Medical benefits under workers compensation statutes are provided

Without limit

Which of the following stipulates the procedure that insureds and insurers can use when they cannot agree on the value of a loss?

Appraisal clause

When do binders expire?

As soon as the policy is issued

The transfer of a legal right or interest in an insurance policy is called

Assignment

In a DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will

Be reduced by 10%

Answers to questions in an insurance application are called representations and, such as, they are

Believed to be true to the best of the applicant's knowledge

In order to start coverage before a policy is issued, insurers can issue a(n)

Binder

A single property insurance policy that can provide coverage for multiple classes of property at one location, or one or more classes of property at multiple locations, with one total amount of coverage and no single item assigned a specific amount of coverage is called

Blanket insurance

An insured intentionally did not disclose a material fact on an application for insurance. This would be considered

Concealment

An insured's home catches fire. As a result, the insured's family must stay in a motel until the home is repaired. The cost of the motel stay would be considered a

Consequential loss

Under the employee theft coverage, when a covered employee is found to have participated in a dishonest act, the coverage for that employee will terminate

Immediately

Which of the following injuries may be covered under Coverage C - Medical Payments of a commercial general liability policy?

Injuries to a member of the general public that occurs on the premises

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?

Insuring agreement

Which of the following is NOT true regarding the automatic increase in insurance endorsement in dwelling policies?

It does not require additional premium

Statistical probabilities of loss for a particular class of insured is best predicted when the insured group is

Larger

Which of the following describes an insurer's responsibility for payment under a policy, as stated in the common policy provisions?

Limits of liability

With respect to the commercial package policy, an interline endorsement is one that

May apply to more than one line of insurance that is included in the package

Prior to paying a claimant under a professional liability policy, the insurer must

Obtain the consent of the insured

What term includes losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected?

Occurence

When does the period of restoration for business income coverage end in a business owners policy?

On the date the property is required

In the last 62 hours, there were 2 instances of volcanic eruptions that damaged a property covered by a dwelling policy. How many deductibles will the insured have to pay before the policy covers the damages caused by the eruptions?

One

Which statement best describes agreement as it relates to insurance contracts?

One party accepts the exact terms of the other party's offer

An insured's diner suffered a fire loss. In addition to the damage caused by the fire, the floor covering had to be replaced because of the water damage. It took 4 weeks for the repairs to be completed. The insured was without income for that period of time. The insured's policy includes both direct and indirect loss coverage. What part of the loss would be paid as indirect loss?

The loss of income for the time the diner was closed

An automobile policy has limits of 100/300/50. The number 100 means

The maximum limit for bodily injury claims that can be paid for one person

Which of the following statements regarding surety bonds is true?

The purpose of the surety bong is to guarantee that specific duties or obligations will be fulfilled

zip an applicant submits the initial premium with an application, which action constitutes acceptance?

The underwriters approve the application

If an insurance policy has the additional coverage provision, how does it affect the policy premium?

There is no additional coverage

Which method of dealing with risk is applied when insurance is purchased?

Transfer

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 example of

Vicarious liability