Review questions you missed on exam simulator

A tornado that destroys property would be an example of which of the following? A loss A physical hazard A peril A pure risk

A peril is the cause of loss insured against in an insurance policy.

What is the deductible of a personal liability umbrella policy called?

a) The CPP b) The SIR c) The PIL d) The CGL The self-insured retention (SIR) is an initial part of a loss the insured pays before the umbrella pays if no other policy covers the loss.

Events or conditions that increase the chances of an insured loss occurring are referred to as a) Exposures. b) Risks. c) Perils. d) Hazards.

Hazards Hazards are conditions or situations that increase the probability of an insured loss occurring.

Which of the following is true regarding rejection of higher uninsured/underinsured motorist limits? a) The insurer may reject higher limits within 10 days from the date the policy is issued. b) Limits established by the insurer cannot be rejected by the insured. c) The insured has 20 days from the receipt of a notice of raised limits to reject them. d) The rejection of higher limits is only binding upon the named insured.

Insureds have 20 days from the receipt of a notice of raised limits to reject such limits. A rejection of higher limits by the named insured is binding upon all insureds under the policy.

Which of the following would be required to be licensed as an insurance producer? A) A salaried full-time employee who furnishes information for group insurance B) An insurance company director who performs executive, administrative and managerial duties C) A salaried employee who advertises and solicits insurance D) A person whose activities are limited to producing insurance advertisements

A person does not require an insurance producer license if he or she only advertises without intent to solicit insurance. However, once there is solicitation, a license is required.

Which of the following is an example of a producer being involved in an unfair trade practice of rebating? a) Inducing the insured to drop a policy in favor of another one when it's not in the insured's best interest b) Charging a client a higher premium for the same policy as another client in the same insuring class c) Making deceptive statements about a competitor d) Telling a client that his first premium will be waived if he purchased the insurance policy today

Rebating is defined as offering any inducement in the sale of insurance products that is not specified in the policy, including money, reductions in commissions, promises, and personal services. Both the offer and acceptance of a rebate are illegal.

Insurance is the transfer of a) Peril. b) Risk. c) Loss. d) Hazard.

Risk Insurance is the transfer of financial responsibility associated with a potential of a loss (risk) to an insurance company.

There are only 3 reasons an Auto Policy may be cancelled after the first 60 days of a new policy. There are many reasons a policy may be nonrenewed. Which of the following is a legitimate reason for nonrenewing an Auto Policy? a) One of the primary operators had 3 not at fault accidents within the last 3 years b) Drunk driving conviction 4 ½ years ago c) The named insured has enlisted in a branch of the U.S. armed forces d) The insured has had 4 comprehensive claims within the last 6 months

An Auto Policy can be non-renewed for an accumulation of accidents even if they are not the insured's fault.

How often must insurance consultants renew their license? a) Every year b) Every 2 years c) Every 5 years d) Never: licenses are perpetual unless revoked

Consultants' licenses must be renewed annually, by submitting a renewal application and a nonrefundable renewal fee by June 1.

Which of the following statements is TRUE concerning Virginia financial responsibility? a) Financial responsibility may be established by making a cash deposit of at least $100,000. b) Insurance is compulsory. c) Financial responsibility must be proven at the time of registration. d) In lieu of insurance, the owner may pay a fee known as the Uninsured Motorist Fee.

Consultants' licenses must be renewed annually, by submitting a renewal application and a nonrefundable renewal fee by June 1.

Which of the following statements is TRUE concerning Virginia financial responsibility? a) Financial responsibility may be established by making a cash deposit of at least $100,000. b) Insurance is compulsory. c) Financial responsibility must be proven at the time of registration. d) In lieu of insurance, the owner may pay a fee known as the Uninsured Motorist Fee.

Insurance is not compulsory in Virginia and the vehicle registrant may choose to pay a $500 fee per vehicle to register with no insurance.

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? a) Defamation b) Illegal c) A legal advertising strategy d) Unfair Discrimination

It is illegal to participate in any boycott, coercion, or intimidation that is intended to restrict fair trade or create a monopoly.

In which instance may 3 licensees share commissions? a) Sharing of commissions is at the discretion of the insurer. b) When all 3 are licensed for the same line of insurance from which the commission comes c) When at least 2 are licensed for the appropriate line of insurance from which the commission comes d) Three licensees may never share a commission.

No insurer may pay any compensation, fee, or commission for services as agent or broker unless that person was licensed as an agent or broker at the time of the transaction. Licensees may share commissions, as long as each license is licensed for the same line of insurance at the time of transaction.

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

Provisions Provisions is a broad term used to refer to the sections or clauses of an insurance policy that communicate the policy's benefits, conditions, etc. The essential parts of the policy are declarations, insuring clause, conditions and exclusions

Which of the following is included under the physical damage coverage of a personal auto policy? a) Custom furnishings or equipment in a pickup or van b) Sound reproduction equipment permanently installed in the covered auto c) A covered auto that is seized and destroyed by a government authority d) A cellular phone located in a locked vehicle

Sound reproduction equipment is covered if installed by the manufacturer or installed later where the manufacturer would have installed the equipment.

Agent P has a life license. How many hours of CE must be completed to complete Agent P's requirement? a) 8 b) 10 c) 12 d) 16

Any agent who holds one type of license must complete 16 hours of continuing education. Any agent who holds more than one type must complete 24 hours of continuing education.

Bob insists that the insurer owes him $10,000 for liability damages, while his insurer asserts that they owe him no more than $7,000. Which of the following would most likely describe the type of claim settlement that they might pursue? a) Arbitration b) Small claims court c) Independent audit d) Appraisal hearing

Arbitration When an insured and insurer cannot agree on how to settle a claim, arbitration is often used. The settlement is submitted to an arbitrator(s) whose decision may or may not be binding on both parties dependent on state law.

Which of the following is a method of claim settlement used in casualty insurance when the insured and insurer cannot agree on how to settle a claim? a) Arbitration b) Proof of loss c) Restoration d) Appraisal

Arbitration is a method of casualty claim settlement used when the insured and insurer cannot agree on how to settle a claim. The arbitrator's decision is binding to both parties.

When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of a) Warranty. b) Concealment. c) Misrepresentation. d) Fraud.

Concealment occurs when a person withholds a material fact that is crucial to making a decision. In insurance, this involves withholding information that would be crucial to underwriting decisions.

In return for premium, an insurance company must a) Use standardized tables of coverage for specific risks to be excluded from coverage. b) Give the insurer valuable consideration. c) Be fair in underwriting and pay covered losses. d) Provide the insured with coverage adequate for all potential losses.

In return for premium, an insurance company must be fair and impartial in underwriting of risks and must pay claims made for all covered losses.

An additional loss that results from a direct loss of property is called a/an a) Liability loss. b) Punitive loss. c) Indirect loss. d) Proximate loss.

Indirect Direct losses come about because of perils named in the policy. Indirect losses, also known as consequential losses, come about as a result of a direct loss.

Which of the following statements is incorrect with regard to information collection Privacy Protection? a) A notice is not required in the case of policy renewal if a notice has been provided with the prior 24 months. b) Insurance institutions and agents must provide notice of their information practices to applicants and policyholders, no later than 30 days after a policy is delivered, as long as the free-look period has not lapsed. c) Insurance agents must provide notice of their information practices to applicants and policyholders, no later than the time the policy is delivered. d) If information is collected from a source other than the applicant or public record, notice must be given at the time the information is collected.

Insurance agents must provide notice of their information practices to applicants and policyholders, no later than the time the policy is delivered.

An individual has a property and casualty policy for his business which includes fire insurance. When the policy is renewed on the anniversary date, the renewal will not include any coverage for flood damage. Which of the following is the insurer NOT required to do upon renewal? A) State that information regarding flood insurance is available from the National Flood Insurance Program B) Explicitly state that flood coverage is excluded C) Advise the policyowner that contents coverage for flood may be available for an additional premium D) Provide the contact number of the Department of Insurance for a quote on flood insurance premiums

The insurer does not provide contact information to the State Department of Insurance to obtain flood insurance premium quotes. The other three responses are disclosures that must be made by an insurer when a policyholder receives a new policy or renews a contract of fire insurance.

All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT

Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident.

The limited fungi, wet or dry rot, or bacteria coverage endorsement applies to which type of losses? a) Liability and personal articles b) Property and liability c) Personal effects and liability d) Property and personal injury

b) Property and liability This endorsement applies to both property and liability losses.