Readiness exam

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

An 80% insurance to value requirement is in place

To have insurable interest in the person or property covered by a property insurance policy, which of the following potential risks must the policyowner face? Physical injury Property damage Illness Financial loss

Financial loss

If an insurance policy has the additional coverage provision, how does it affect the policy premium? Premium will be calculated on a pro rata basis based on the amount of additional coverage There is no additional premium Premium will be recalculated when a specific loss covered by this provision occurs Additional premium will be assessed

There is no additional premium

On an application for a commercial property policy, Arthur stated that he had no losses in the past3 years when, in fact, he had 5 losses. Within what period of time must the insurer notify Arthur of its intent to cancel the policy for misrepresentation? There is no time limit on cancellation for misrepresentation 10 days 30 days 45 days

There is no time limit on cancellation for misrepresentation

If a person violates the commissioner's cease and desist order, their license may be reevoked, and the person may be subject to a maximum fine of 1,000 3,000 5,000 10,000

10,000

For how long must a producer maintain records of completing continuing education? 2 years 3 years 4 years 5 years

4 years

If a producer knowingly violates an insurance law, the producer may be fined up to what amount per violation? 1,000 5,000 10,000 50,000

5,000

How many people must sustain death or serious physical injury before the war or terrorism exclusion in a businessowners policy applies? 100 500 1,000 50

50

If a producer knowingly violates the insurance code, the maximum aggregate penalty cannot exceed 100,000 in a 6 month period 50,000 in a 12 month period 100,000 in a 12 month period 50,000 in a 6 month period

50,000 in a 6 month period

How does insurance distribute the financial consequences of individual losses? It transfers the risk to associates of the insued It transfers the risk to a small number of persons insured It transfers the risk to all persons insured It retains the financial consequences

It transfers the risk to all persons insured

Which of the following describes an insurer's responsibility for payment under a policy, as stated in the common policy provisions? Consideration Utmost good faith Premiums Limits of liability

Limits of liability

An insurance agent visits with a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividens than he knows would be possible. Which term describes what the agent has done? Misrepresentation Rebating Twisting Defamation

Misrepresentation

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 events leading to the loss. What is the name of the form? Proof of loss form Mortgagee rights form Notice of claim form Appraisal form

Notice of claim form

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

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

What does HO personal property coverage NOT cover? The resident's son's personal property Personal property of roomers not related to the insured The spouse's personal property The insured's personal property in another country

Personal property of roomers not related to the insured

All of the following are considered parts of the policy structure EXCEPT a)Insuring clause. b)Conditions. c)Provisions. d)Exclusions.

Provisions.

When an insurer pays for the cost to exchange damage property with new property of similar kind and quality, it is called Actual cash value Market value Stated amount Replacement cost

Replacement cost

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

Riot

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

Stating that dividends are not guaranteed

What entity was created to protect insureds against insolvency? The Iowa insurance guaranty association The NAIC The insurer insolvency protection agency the Iowa insurance division

The Iowa insurance guaranty association

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 cost of replacing the floor covering due to the water damage Both the loss of income and the cost of the floor covering The entire loss would be paid as direct loss by the fire The entire loss would be paid as direct loss by fire The loss of income for the time the diner was closed

The loss of income for the time the diner was closed

The broad cause of loss form in the commercial property policy contains three perils in addition to the basic form perils. Which of the following is NOT one of those three perils? Falling objects Utility services Water damage Weight of snow, ice, or sleet

Utility services

Under coverage C, and at the request of an insured, personal property of a guest or a residence employee is covered While it is in any residence premises occupied by an insured while it is in any residence premises occupied by a named insured Anywhere in the world Only while on a residence premises

While it is in any residence premises occupied by an insured

Homeowners policies consider all of the following insured locations except the hotel ballroom rented by the insured for a family reunion a strawberry patch owned by the insured land owned by the insured on which his new home is under construction an individual cemetery plot.

a strawberry patch owned by the insured

After a hearing, who issues the written order resolving the factual issues presented in a hearing and stating what remedial action is necessary? The Iowa supreme court the country clerk the insurance division the commissioner

the insurance division

What amount of coverage is provided on HO policies for watercraft? up to 1,500 up to 10,000 up to 20,000 none

up to 1,500

A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss? a)$20,000 b)$30,000 c)$40,000 d)$60,000

$30,000 For the total amount of a partial loss to be paid, a house must be insured for at least 80% of its value on the date of loss. In this case, because the house is insured for only $60,000 (75% of the minimum requirement), the policy will pay only 75% of the loss, or $30,000.

The insurer of Melco's Fabrication wants to cancel the commercial package policy it issued on the business because it discovered that it made an error in determining the correct premium. Assuming that the error is not so large as to threaten the solvency of the insurer, how long does the insurer have before it can no longer cancel the policy? 30 days from the policy effective date 45 days from the policy effective date 60 days from the policy effective date 10 days from the policy effective date

60 days from the policy effective date

An insured is the owner of a clothing boutique. She has a Floor Plan Merchandise Floater to cover the property that is financed until it is sold. At closing time a month ago, she noticed that very expensive dresses had been stolen. However, she did not file a report to her insurance company until recently. How much will her insurer pay for this loss? a. 100% of the limit written b. nothing c. 50% of the limit written d. 90% of the limit written

90% of the limit written If the insured has not filed a report at the time of loss, the insurer will be liable only for 90% of the limit written

Which of the following could be insured with replacement cost coverage under the flood insurance program? A garage An apartment building A shed A single family home

A single family home

After a covered loss on a homeowners policy, the insured must do all of the following EXCEPT Abandon the property involved to the insurer Allow the insurer to inspect the property as often as reasonably necessary. If requested, submit to an examination under oath. Prepare an inventory of damaged and undamaged property, including bills, receipts, and related documentation.

Abandon the property involved to the insurer

Which standard fire policy condition requires that the insured cooperate with the insurance company and protect damaged property from further loss? Subrogation Vacancy and Unoccupancy Appraisal Abandonment

Abandonment

Under the Garment Contractor Floater of an Inland Marine policy, coverage while the property is in transit between the insured and the subcontractor is usually written on which basis? Unfiled Named Perils Unamed perils All risk

All risk

Which of the following statements about policy cancellation or nonrenewal is true? All policyholders must receive at least 30 days' notice of nonrenewal Under no circumstances may a policy be cancelled with less than 10 days' notice to the insured Any action by the insured that increases the risk of insured peril is grounds for cancellation. An insurer is not required to give its reason for cancellation.

Any action by the insured that increases the risk of insured peril is grounds for cancellation.

In order to get a nonresident license in this state a producer must surrender their license in their state of residence Apply and pay a fee to a nonresident state that reciprocates Pass the nonresident state exam and satisfy their continuing education requirements represent an agency located in this state

Apply and pay a fee to a nonresident state that reciprocates

When do binders expire? After 10 days When an original policy is replaced No later than 30 days As soon as the policy is issued

As soon as the policy is issued

What two policy components are part of every commercial package policy? Consideration and agreement Property coverage and liability coverage Common policy declarations and common policy conditions Common policy exclusions and agreement

Common policy declarations and common policy conditions

Which of the following exclusions would specifically fall under Coverage E in Homeowners insurance? Land Contractual liability Bodily injury to a residence employee Falling objects.

Contractual liability

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

Direct

Which of the following is covered under a dwelling policy? Structures used for commercial manufacturing Fire caused by an earthquake Freezing plumbing systems Flood or surface water

Fire caused by an earthquake

Which of the following losses would be covered by the standard fire policy? A gals lead causes an explosion that demolishes a building without causing a fire. Dust in a woodworking plant spontaneously explodes, without causing a fire. Fumes from chemicals ignite and explode causing a fire that demolishes the building. A steam boiler explodes

Fumes from chemicals ignite and explode causing a fire that demolishes the building.

A homeowner has misplaced some of her insured personal property and has no idea what may have happened to it. Which HO policy form would cover such a loss? HO-2 HO-3 HO-4 HO-5

HO-5

Which homeowners form insures both buildings and personal property on an open peril basis HO-2 HO-3 HO-4 HO-5

HO-5

The main difference between an HO-4 and an HO-6 is a)HO-6 provides limited dwelling coverage as well as contents coverage. b)HO-4 does not cover additional living expenses. c)HO-6 does not cover additional living expenses. d)HO-4 provides limited dwelling coverage as well as contents coverage.

HO-6 provides limited dwelling coverage as well as contents coverage.