Terms/things to know
The association will pay for all covered claims in excess of what amount
$10
Up to what dollar amount per day for three years for loss of essential services?
$20
Broad theft endorsement on dwelling has specific coverages for theft regarding what?
$200 on money $1,500 on securities $ 1,500 on jewelry
Your covered auto includes
- Any vehicle shown in the declarations - newly acquired auto - Any trailer owned - Any auto or trailer not owned by the insured but used as a temporary substitute of r a vehicle described above which is out of normal use because of its breakdown, repair, servicing or loss or destruction
Exclusions to the liability coverage provided for certain persons and vehicles in the PAP are what
- Intentional injury or damage - Damage to property owned or being transported by a covered person - Damage tot he property rented used or in the care of a covered person (except a home or private garage) - BI to an employee during the course of employment (except domestic employees not required to be covered by workers compensation) - Use of a vehicle as a public or livery conveyance; except carpools - Any vehicles logged into a transportation network platform as a driver whether or not a passenger is occupying the vehicle - Any motorized vehicle with fewer than 4 wheels - Any vehicle designed mainly for use off public roads - any vehicle owned by or furnished for regular use by a family member other than a covered auto - any vehicle located inside a racing facility for the purpose of racing Used or designed for flight
Who is insured under Part B of an auto policy?
- Person or organization that is protected by insurance - Named insured - Any family member while occupying a motor vehicle -Named insured member as a pedestrian if struck by a motor vehicle Any other person while occupying a covered auto
Agricultural employers who employed how many or more employees for at least how many hours per week for five or more consecutive weeks are mandated to furnish coverage under workers compensation.
1 employee and 35 hours
PPI - Pays up to what amount per accident for damage to property of others
1 million
What is the minimum amount of additional coverage provided by umbrella policies?
1 million
Business owners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period?
1 year
Businessowners policy liability coverage will pay for necessary medical expenses if incurred within what maximum time period?
1 year
Twisting/misrepresentation can revoke your license for what time period?
1 year
PAP must provide protection for what losses under diverse circumstances?
1) legal liability (property damage and injuries to others) 2) Injury to the insured or members of the insureds family 3) Damage to or loss of the auto itself
An insured may be liable for property damage to a motor vehicle up to what amount tot he extent that damages are not covered by insurance?
1,000
Fire department service charge under a CPP will cover what amount?
1,000
What is the minimum civil fine over violation of insurance code in Michigan?
1,000
Under builders risk form what is the amount paid for trees plants, shrubs and sods?
1,000 but not more than 250 per tree, shrub or plant
Outdoor property is covered for what amount on a CPP?
1,000 for fences and antennas 250 - for plants trees and shrubs
What are the amounts from lowest amount to highest amount, fines per violation for failure to comply?
1,000-10,000
How many days before revocation shall take effect?
10
Casualty insurance notice of termination must be mailed at lease how many days prior to cancellation?
10 days
How many days for Supreme Court to review an order?
10 days
If the insurer cancels coverage for nonpayment of premium how many days will it provide written notice to mortgage holder?
10 days for nonpayment 30 days for all other reasons
Coverage B provides what amount of coverage A on homeowners policies?
10% of coverage A
Amount for damage to property of other for any one accident?
10,000
Knowingly violating a cease and desist order the commissioner may order a civil fine up to what amount
10,000
What is the amount and time period for pollutant cleanup under a CPP?
10,000 in 12 months
What is the amount or percentage a CPP will pay for increased cost of construction?
10,000 or 5%
Bobs home is insured under a dwelling policy for 100,000. His home suffered 20,000 due to a fire, but then the home was struck by lightning starting another fire and completely destroyed the structure. How much will Bob's policy pay
100,000
What is the amount the coverage extensions will pay for business personal property under a CPP?
100,000
What is the fine for accepting rebate?
100.00
What is the fine per violation for inducement (rebating)
100.00
A lapsed producer license may be reinstated without retaking the licensing exam if reinstated within how many months
12 months
Exempt from prelicensing requirements. Persons who have been licensed as an insurance producer within the preceding how many months?
12 months
How long does one have to complete pre-licensing education?
12 months
The insurer must pay to its insured what percent of interest on claims not paid on timely basis?
12%
What is the interest if claims are not paid in health claims?
12%
The audit of payroll expenditures shall be completed within how many days of the request
120
How many days does an insured have to notify the insurance company of becoming the owner of a newly acquired vehicle?
14 days
if the disability lasts longer than how many days or longer, then disability compensation benefits are calculated retroactive back to the date of the injury
14 days
How many does days does an insurer have give notice of appointment termination of producer?
15
After being notified by commissioner how many days does one have to appear for a hearing?
15 days
How many days do you have to file notice of appointment?
15 days
Controlled business cannot exceed what percent of total periods in how many months?
15%. And 12 months
THe insured purchased a 200,000 extra expense policy. The percentages applying to the limit of insurance are 40%, 80% and 100% what would be the maximum payable for a 47 day loss?
160,000
A policyholder has an equipment breakdown policy with a 200,000 Limit. If a boiler explosion causes 100,000 damage to the boiler itself, 50,000 damage to the insureds building and 30,000 of expediting expenses how much will the insured collect under that policy?
175,000 because equipment breakdown policy applies to property of the insured, property of others, expediting expenses in any combination as long as expediting expenses does not exceed 25,000
A temporary insurance producer license may be issued for up to how many days?
180
Under dwellings, if civil authority prohibits one from using their dwelling, due to a covered peril that caused damage to a neighboring location, additional living expenses would be covered for how long?
2 weeks
A claim must reported within how many years after the date the employee knew of injury?
2 years
A counselor must keep a copy of counseling record for how many years?
2 years
Dwelling and homeowners allows action brought within how many years after date of loss?
2 years
Electronic data under a CPP is covered for what amount?
2,500
Personal property of others is covered for what amount under the coverage extensions of a CPP?
2,500
What is the amount the insurer will pay for valuable papers and records under the coverage extensions in a CPP?
2,500
What is the limit for outdoor signs not attached to the building?
2,500
A notice of termination sent within the first 55 days of policy issuance may take effect no less than how many days from the date of mailing
20 days
Cancellation notice must be mailed at least how many days prior to termination of policy?
20 days
When an insurer refuses to renew an auto policy within how many days must it mail a notice of nonrenewal to the insured?
20 days
When an insurer refuses to renew an auto policy within how many days must it mail a notice of nonrenewal to the insured?
20 days notices of nonrenewal to the insured
How much will transporatation expenses pay?
20 per day, 600 maximum
Bodily injury or death of one person for any one accident limit
20,000
Bodily injury per person on uninsured motorist and underinsured motorist has to be what amount
20,000
What is the minimum civil fine for violating a cease and desist order of the commissioner?
20,000
How many hours of CE every 2 years?
24
What is the waiting period for expense payments to begin in an auto policy?
24 hours
the minimum earned premium is the greater of what amount or pro rata premium for the coverage provided
25
If the actual value exceed the limit of insurance the businessowners policy contains a seasonal provision that automatically increase the limit of insurance for business property by what percent?
25%
What is the amount the Personal property coverage form will pay for debris removal
25% or 10,000 in coverage for expenses reported within 180 days of the loss for coverage
Requiring a premium deposit greater than what percent of the total projected annual premium or what amount?
25% or 2,500
If an auto policy has split limits of 30/50/25 how much will the policy pay for the property damage in a single accident?
25,000
The total civil fined cannot exceed what amount?
25,000
What is the maximum insurance will pay for expediting expenses?
25,000
What is the amount the coverage extensions will pay for a newly acquired building?
250,000
How much for each violation if a person knew the act was prohibited?
2500
An employee may choose their own physician after how many days?
28 days
How many hours of CE have to be ethics?
3
Agricultural employers who employed how many more employees for at least how many hours for at least 13 weeks
3 days and 35 hours
Employers mandated to furnish coverage Non agricultural employers who employ how many or more employees at one time?
3 employees
Non agricultural employers who e,ploy less than how many employees if one of the employees has been regularly employees for at least how many hours per week for at least 13 of the preceding 52 weeks?
3 employees and 35 hours
Michigans continuing education requirement consists of what characteristics?
3 hours spent on ethics 24 hours of completed education Other than 3 hours of ethics, licensee may take course on any other line
Coverage for medical payments under a Personal Auto Policy (PAP) applies to expenses following a covered accident that are incurred and services rendered within what time period?
3 years
AN individual may contest a cease and desist order by requesting a hearing no later than how many days after order is delivered?
30
Producer must notify commissioner of any administrative action taken or criminal prosecution against producer within how many days?
30
An insured with a mine owners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. Removable coverage applies for how many days?
30 days
Automatic coverage for newly acquired property (cars, house, etc) are covered under existing policy for how many days?
30 days
Claims covered in the event of an insurer insolvency are claims that existed before or were incurred within how many days of appointment of the receiver?
30 days
Homeowners - newly acquired personal property is covered under the policy for how many days?
30 days
How long does an insurer have to inform an insured they plan to replace, repair the loss property?
30 days
How long is the waiting period after the application has been accepted before flood insurance goes into effect?
30 days
How many days do you have to inform the commissioner of appointment termination?
30 days
How many days does a commissioner have to approve appointment?
30 days
How many days does a producer have to respond to notification?
30 days
How many days written notice must be sent to the insured prior to cancellation?
30 days
IF an insurer terminates a producer the commissioner must be notified within how many days does the insurer have to deliver the notice?
30 days
Insurer must make payment within how many days of proof of loss under homeowners and dwelling policies?
30 days
Insurer terminates a producer, the commissioner must be notified within how many days?
30 days
Newly acquired/constructed property is covered for how long under a CPP coverage extensions?
30 days
Preservation of property is covered within how many days of removing from insured location?
30 days
Removal coverage included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it for how long?
30 days
Removal coverage under a dwelling policy will provide coverage for how many days if the insured removes property that is endangered by a covered peril which made removal necessary
30 days
Requiring the payment of increased premium increment within how many days of written notification?
30 days
Under dwelling personal property during a move to a different location will be covered at both locations under pro rata coverage for how long?
30 days
Within how many days the insurer must specific satisfactory proof of loss?
30 days
An insureds building has actual cash value of 200,000 and insured the property for 120,000 with a 80% co-insurance clause. When a 40,000 loss occurs, how much will the policy pay?
30,000
If an auto policy has split limits of 30/50/25, what is the max amount the policy will pay for injuries to one person in a single accident?
30,000
What is the maximum PIP deductible per accident?
300
Eligible employee includes house hold domestic servants who worked how many or more hours per week for at least 13 weeks preceding 52 weeks
35 hours
Bodily injury or death of more than one person for any one accident?
40,000
What is the mount for bodily injury per accident?
40,000
How many days for health care provider to correct deficiency
45 days
How many days for health care providers to pay a claim?
45 days
What is the waiting period in the event of theft, that expenses covered begin?
48 hours
Building supplies under builders risk of others is covered for what amount?
5,000
PIP - what is the maximum death benefit?
5,000
Under the commercial crime coverage inside the premises - robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records?
5,000
What is the amount under coverage extensions that an insurer will pay for non owned detached trailers in a CPP?
5,000
What is the special per occurence limit that applies to loss or damage to precious metals, precious and semiprecious stones, pearls, furs, manuscripts, drawings, or records?
5,000
What amount or less of tokens or merchandise to applicant is allowed?
5.00
A person who is more than what percentage at fault for the accident will not be awarded damages?
50%
Coverage C under home owners provides coverage equal to what?
50% of coverage A
Under coverage C of a HO -3 policy, what is the amount of insurance provided for personal property?
50% of coverage A
Knowingly violating a cease and desist order the commissioner may order civil fine, but all total fines cannot exceed what amount?
50,000
How much is each CIVIL fine
500
Misrepresentation of the identity of the insurer is a misdemeanor with a maximum fine up to what amount?
500
No coverage is provided for claims that involve refunds of unearned premium cover for what amount?
500
Vocational rehabilitation cannot exceed how many weeks?
52
A policy may be cancelled during how many days following date of policy issue?
55 days
What is the maximum funeral/burial benefit under workers compensation?
6,000
According to the insured duties after a loss provision in homeowners policies if the insurer requires a signed sworn proof of loss, the insured must provide proof within how many days?
60 days
IF the insurer required a signed sworn proof of loss the insured must provide proof within how many days following a homeowners policy?
60 days
Losses caused by vandalism and malicious mischief are excluded from coverage if a dwelling has been vacant for how many days?
60 days
The insured has how many days to send proof of loss after insurer requests it?
60 days
Coverage under builders risk will end in all situations except
60 days after the construction has ended
Disability compensation waiting period is how many days?
7 days
The insured has how many days to appeal cancellation to the commissioner?
7 days
Earthquake coverage under homeowners policies are covered if the occur within what time period?
72 hours
What is the time period before coverage begins on a business income time element form?
72 hours
Weekly total disability benefits are what percent of the employees after tax wage?
80%
What is the amount required for co insurance under coverage extensions?
80%
What is the co insurance clause of Coverage F unscheduled farm property?
80%
Survivor income benefits are what percent of the employees after take weekly wage for how many weeks from the date of death?
80% and 500 weeks
If an auto policy has liability limits of 40/60/20, what would be the equivalent combined single limit?
80,000
The disability compensation benefits may be paid for up to how many weeks?
800
PIP - What is the percent of income lost for up to three years?
85%
Disability compensation benefits begin on the what day after the injury?
8th day
How many days are given in the grace period to complete CE
90
How many days does a nonresident producer who move to Michigan have to apply and become resident licensees
90
NOnresident producers who have within how many days to canceled their resident license
90
The maximum weekly total disability benefit is what percent of the state average weekly wage?
90%
What are the most common penalties for violations of insurance statutes?
A cease and desist order, a fine, and license suspension or revocation
Who is an insurance agent?
A person authorized to sell, solicit, negotiate insurance contracts
With respect to auto insurance, the terms owned autos doesn't include what?
A pick up/van titled to and used in the name insured business
What is a combined single limit in a personal auto policy?
A single limit of coverage for bodily injury and property damage in ONE accident
Fiduciary liability insurance
A specialized type of insurance that guarantees the faithful performance of a trustee of employee benefit plans is called
What is a covered auto?
A vehicle shown in the policy declarations
What is a warranty in an insurance contract
Absolutely true statement which the validity of the policy depends
What are the limits of theft coverage on a HO-8 form?
Actual cash value of what was stolen, additional limits may apply to certain classes of property.
What part of an insurance policy covers, claims related expenses reasonable expenses, incurred by an insured to protect damaged property from further loss or defense expenses?
Additional coverage
Coverage E is what? - dwelling policy
Additional living expenses under dwelling policy
How does the auto medical payments coverage endorsement modify the auto policy?
Adds medical payment coverage to a commercial auto policy
Interest on a judgement
After the judgement has been entered
Applicants minimum age has to be?
Age 18
What type of licensee represents the insurance company?
Agent
This would not be considered rebating
Agent misrepresenting the policy benefits to convince a policy owner to replace policies
What is the limit that the that the insurer will pay for all losses that occur during a policy period?
Aggregate
When the insurer and insured determine a value for property and the insured will pay no more for loss or damage to that property, the insurer will pay no more for loss or damage to that property than the proportion the insurance limit for this coverage bears?
Agreed value
Which property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation?
Agreed value
What are the four elements of an insurance contract?
Agreement Consideration Competent parties Legal purpose
Amount an insurer will pay under coverage D depends on what?q
Amount of coverage on the dwelling
Who is considered a nonresident agent?
An agent who resides and is licensed in another state but is authorized to transact insurance in this state
What is reinsurance?
An agreement between a ceding insurer and assuming insurer
What would be considered a newly acquired auto?
An auto acquired during the policy period
Private passenger vehicle is what
An automobile used for private needs rather than for business use
Personal auto policy (PAP) is what?
An insurance policy for the owners of private passenger vehicles. Combines physical damage insurance with liability insurance for claims from use of the auto.
What does broad theft coverage under a dwelling policy NOT cover?
Animals, antiques, business property?
Which coverage form would provide coverage for all incoming and outgoing shipments?
Annual transit
In personal auto policy, to what geographical region does the out of state coverage apply?
Any U.S territory or state as well as Canada
While an insures covered auto is in the repair shop following damage caused by collision, the insured would have coverage for what kind of vehicle under a personal auto policy (PAP)
Any vehicle not owned by insured but furnished for use while the covered auto is out of normal use because of repair
What type of authority is based on the agents actions or words?
Apparent
What would prohibit an applicant from being eligible for insurance coverage under an automobile insurance policy issued by the Michigan automobile insurance placement facility?
Applicants auto insurance policy was cancelled for nonpayment of premium within the last 2 years
Business premium is paid how?
As one indivisible payment
When the condo association coverage form and the condo commercial unit owners form cover the same loss?
Association coverage form will be considered primary and pay the loss
When can a standard fire policy be cancelled by the insured?
At any time
In property insurance, when must insurable interest exist?
At time of the loss
If an insurer holds a certificate of authority it is known as what type of insurer?
Authorized or admitted
If an insurer holds a certificate of authority it is known as what type of insurer?
Authorized/admitted
If an insurer meets the states financial requirements and is approved to transact business in the state it is considered to be what type of insurer?
Authorized/admitted
Who does the garage coverage form insure?
Auto dealers, service stations and auto repair shops
What are some of the types of businesses that are excluded from coverage under a businessowners policy?
Auto sales and servicing Banks Bars and grills Places of amusement and manufacturers
How much is the premium for the dwelling under construction endorsement under the dwelling policy?
Average amount of insurance during construction
What are the methods of managing risk?
Avoidance Transfer Retention Reduction Sharing
What types of losses are indicated by the split limits in an auto insurance policy?
BI per person BI per accident PD per accident
Why does the HO-4 form not provide dwelling coverage?
Because the individual does not own the residence, they rent/lease it
A policy that insures all property at multiple locations for a single amount is referred to as what?
Blanket
Bodily harm means what?
Bodily harm, sickness or disease, including death that results from the injury
Insurance companies transacting automobile insurance in Michigan must offer uninsured motorist coverage that equals the insureds coverage limits for what?
Bodily injury
What does Part A: Liability pay for
Bodily injury and property damage due to an accident for which the insured is legally liable Defense costs as long as the policy covers a particular loss Costs for settling or defending the insured as deemed appropriate
What is not included in coverage in basic form dwelling policy?
Breakage of glass
Coverage form used to insure building while under construction. This coverage is most often written on a completed value form but may be written on a reporting form basis?
Builders risk coverage form
What are the coverage forms used in commercial auto insurance?
Business auto coverage Business auto physical damage Garage coverage Motor carrier coverage
What coverages are provided by a business liability coverage form?
Business liability coverage covers bodily injury, property damage, personal injury, advertising injury and medical expenses
What is the difference between cancellation and nonrenewal?
Cancellation is termination of an in force policy and nonrenewal is not continuing coverage
If the commissioner/superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?
Cease and desist order
What does the term of reasonable expectations mean?
Certain expectations for coverage that a reasonable person would have based on the sources other than just the policy language
A state issued document empowering an insurance company to become an admitted insurer is called what?
Certificate of authority
What document is required for an insurance company to transact business?
Certificate of authority
What is covered under broad and special dwelling policies?
Collapse Breakage of glass Lawns, trees, shrubs and plants
Someone who is not license cannot do what?
Collect premiums from in force policies
What coverages are available in the physical damage section of a personal auto policy?
Collision and other than collision coverages
A person or business that requires coverage for all liability exposure should purchase what type of insurance?
Commercial General Liability and Professional Liability
What are the coverage party that may be included in a commercial package policy?
Commercial Property General Liability Crime Equipment breakdown Auto Inland marine Farm
Classes if inland marine risks are
Commercial property floater risks Bridges tunnels, and other instrumentalities of transportations and communication Domestic shipments and transportation risks
Part D coverage to your auto
Commonly called physical damage coverage, includes both collision and other than collision coverage.
What are producers required to do in order to renew their license?
Complete Continuing Education hours and pay a renewal fee
Builders risk form is most often written on what type of form?
Completed value form
An applicant knowingly fails to communicate information that would make a sound decision regarding coverage?
Concealment
Knowingly failing to communicate information that would help an underwriter make a sound decision is known as what?
Concealment
What are the modular parts which are combined to creat the contract of a commercial package policy?
Cover Declarations Interline endorsements Lines of insurance declaration page Lines of insurance coverage forms Common conditions Lines of insurance condition Causes of loss Endorsements
What are the 3 liability coverages included in the commercial general liability (CGL) coverage form?
Coverage A - Bodily injury and property damage Coverage B - personal and advertising injury Coverage C - medical payments
What are the major coverages available in homeowners policy?
Coverage A - dwelling Coverage B - other structures Coverage C - personal property Coverage D - loss of use
What is true concerning the special form dwelling policies?
Coverage A is for all Risks and coverage C is for the broad form perils
Under dwelling policy what would cover a garage attached the the primary structure?
Coverage B
In homeowners which coverage provides protection against indirect or consequential loss?
Coverage D - Loss of use
Scheduled personal property endorsement under home owners provides what?
Coverage beyond the limitations under the original policy.
In dwelling policies, automatic increase in insurance is?
Coverage by endorsement
Temporary substitute auto is what
Coverage for any auto or trailer not owned by an insured for regular use because any other auto listed on the policy is out for normal use, due to breakdown, repair, servicing, loss or destruction
What is not true regarding the fire department service charge?
Coverage limit pays in place of the limit of insurance shown in the declarations
The extra expense coverage form provides what?
Coverage that will permit the insured to continue in business without interruption following a property damage loss.
Extra expense coverage under casualty provides
Coverage that will permit the insured to continue in business without interruption following property damage loss.
Broad theft under a dwelling policy
Covers property in the insureds care, custody and control.
Which DP policies will provide replacement cost coverage if the dwelling is insured for 80% of replacement costs?
DP-2 and DP-3
What is not covered under falling object perils?
Damage to awnings, fences, outdoor equipment, outdoor radio and television antennas or aerials, masts or towers.
What does a boat owners policy cover?
Damage to the boat and trailer Liability Medical payments (to others)
What is the occurence form trigger based on?
Date of the injury or damage
What are the elements of a commercial package policy?
Declarations Conditions Endorsements
If a producer makes maliciously critical statements about another insurer, what is the illegal practice called?
Defamation
If an insured peril was the proximate cause of loss, what type of loss is it?
Direct
How are direct or indirect losses related?
Direct losses cause indirect losses
Legal liability coverage form provides coverages for damages for which the insured is legally liable arising from?
Direct physical damage to property of others in insureds care
What are the 2 coverage triggers in commercial crime policies
Discovery Loss sustained
A loss that did not happen during th policy period but was revealed during the policy period?
Discovery form
Two individuals who are in the same risk and age class are charged different rates for their policies due to an insignificant factor. What is this called?
Discrimination
Insurers are classified according tot heir domicile. What are the three types of insurers?
Domestic Foreign Alien
WHat are the five characteristics of an ideally insurable risk?
Due to chance Definite and measurable Not catastrophic Predictable Randomly selected What does the term reasonable expectations mean in insurance?
What does form HO-5 cover?
Dwelling Other structures Contents of personal property
When is an appraisal needed, and how can it be requested
Either party can request it when the insurer and insured cannot agree on the value of a loss
Owned auto
Eligible vehicles titled by the insured or acquired during the policy period
Interline endorsements are used for what?
Eliminate redundancy May or may not apply to more than one coverage part
What is the purpose of interline endorsements in commercial package policies?
Eliminate redundancy, minimize number of other endorsements because it applies to more than one coverage part
Monopolistic State Fund
Employers are required to purchase workers compensation insurance from a state operated entities
Professional liability coverage protects the insured against legal liability resulting from what?
Errors and omissions
Moral Hazard
Ethics a person has - did I lie?
What type of coverage do umbrella policies provide?
Excess coverage over the primary policy
Insurance contracts are aleatory in nature. What does that mean?
Exchange of unequal values
What does the term aleatory mean?
Exchange of unequal values
Part B: medical payments
Expenses associated with necessary medical and funeral expenses caused by an accident and sustained by insured Expenses and services Must be rendered within 3 years
A producer or insurer must at least annually supply each insured with the renewal of a policy unless what has been provided
Explanation of a point system A statement that if the insured is an eligible person, he/she may qualify for insurance from more than one insurer possibly at a lower rate Statement that the producer will, upon request, furnish to the insured a set of quotations from insurers represented by the producer
A producer must annually supply each insured with the renewal of a policy unless what has been provided by the insurer?
Explanation of point system Statement that if the insured is eligible person he/she may qualify for insurance from more than one insurer at a lower rate Statement that the producer will furnish tot he insured a set of quotations from insurers they represent
Product liability claims
Faulty containers that caused spoilage that resulted in some consumers becoming ill.
Which is the federal body that regulates truckers who travel across state lines?
Federal motor carrier safety administration
Requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility?
Fiduciary
What is the purpose of the national flood insurance program (NFIP)?
Fills the gap in flood coverage left by private insurers
what do all 3 dwelling policies cover?
Fire, lightning, internal explosion
In Commercial package policies who may cancel the policy in writing and make changes to the policy with the consent of the insurer?
First named insured
How is the coverage written for HO-8 forms?
For market value of property
Collision covers and Other than collision coverage
For newly acquired auto begins on the date the insured becomes owner
What type of insurer is formed under the laws of another state?
Foreign
What type of insurer is forms under the laws of another state?
Foreign
Intentionally misrepresents or concealing material fact to induce an insurance company to make a contract is known as what?
Fraud
What type of business personal property is covered?
Furniture and fixtures Machinery and equipment Stock All other personal property owned by the insured and in the insureds business Labor, materials, or services provided or arranged on personal property of others The use interest of tenant for improvements Leased personal property which the insured is contractually liable
What are the 2 parts of the garage liability coverage?
Garage operations - covered autos Garage operations - other than covered autos
What are the 7 coverage parts that may be included in a Commercial Package Policy?
General liability Commercial property Inland marine Commercial auto Equipment breakdown Crime and Farm
When replacement coverage cost is not reasonable, what type of HO coverage is applicable?
HO - 8
What coverage forms are available under the homeowners policy>
HO -2 HO - 3 HO - 4 HO - 5 HO- 6 HO -8
What HO form covers historic home with replacement cost more than market value?
HO-8
What is the most limited HO coverage?
HO-8
Split limits
Has 3 dollar amounts 35/50/15 35,000 per person 50,000 for all bodily injuries 15,000 for property damage per accident
Conditions that increase the chance of a loss are known as what?
Hazards
Underinsured Motorists coverage
Helps an insured with bodily injury damage caused by another motorist when that motorist has insufficient coverage. UIM will pay the difference between the uninsured UIM limits and the at fault drivers bodily injury limits.
A vehicle rented from a commercial rental company is known as what type of auto?
Hired auto
What homeowners policy form is known as a special form?
Ho-3
What ho form insures a tenant living in an apartment?
Ho-4
What homeowners policy form is known as contents broad form?
Ho-4
What are the optional coverages under a HO-3 Policy?
Home day care Earthquake coverage Personal property replacement cost
A business owners policy is mostly similar to what other insurance form?
Homeowners
Apparent
If an agent is using stationery with the logo of an insurance company the applicants assume the agent is authorized
No benefit to Bailee - PAP
If auto is damage at shop for repairs the insurer will not directly or indirectly benefit any carrier or bailee
Other sources of recovery - PAP
If other insurance is applicable the insurer will pay on a proportional basis. Coverage for any covered non owned auto is excess of any other collectible source which includes insurance and any other source of recovery available to the owner of the non owned auto.
Other insurance clause in auto?
If there is other insurance available to pay for a covered loss, the insurer will only pay its share of the loss.
What are the three types of agent authority?
Implied - assumed Apparent - perceived Express - agents contract
How are supplementary payments paid in liability insurance policies?
In addition to limits of liability
Occupying
In upon getting in, on out of or off vehicle
When can an insured cancel a business owners policy?
In writing at any time
Other than collision
Includes losses caused by; Misses or falling objects Fire Theft Windstorm Explosion or earthquake Hail, water, flood Vandalism or malicious mischief Riot or civil commotion Contact with birds or animals Breakage of glass
What provision states that if a policy allows for greater benefits than the financial loss incurred the insured may be compensated only for the amount lost?
Indemnity
An insureds business is damaged by a fire, and temporarily shut down for repairs as a result the insured suffers loss of income. What type of loss is the loss of income?
Indirect/consequential
Limits of insurance to which this coverage applies are automatically increased by an annual percentage shown in the declarations and prorated over the policy term is what type of optional coverage?
Inflation guard
What does the term "exclusive remedy" mean in workers compensation?
Injured employees cannot seek damages outside workers compensation
What does coverage A of a CGL form provide coverage for?
Injury or death suffered by a third party or damage to the property of others
What do individuals use to transfer their risk of loss to a larger group?
Insurance
In general, who can be excluded from producer licensing and examination requirements?
Insurance company officers, directors or any other employees who do not transact insurance who do not receive commissions for their services
What are residual markets?
Insurance markets designed to assume risks that are generally not insurable in the normal insurance market
What is controlled business?
Insurance on the producers own life or property, or the lives or property of the producers family or business associates
Under part A of auto policies who is considered an insured?
Insured or any family member Any person using an insureds covered auto with permission
If an insured has failed to maintain the underlying limits as required by a personal umbrella policy?
Insured would be responsible for the amount required as underlying limits in the event of a claim.
Whether named or not on the policy persons covered are known as what?
Insureds
Underinsured motorist (UIM) coverage will pay the difference between which 2 limits?
Insureds UIM limits and the at fault drivers insurance holiday injury limits
Under a businessowners policy, the inspections and surveys condition specifies all of the following
Insurer does not guarantee that the insured is meeting all required safety regulations Insurer does not make safety inspections for the insured Insurer does not guarantee that conditions are safe or healthful
Payment of loss in PAP
Insurer has the option of paying money, repairing or replacing the damaged or stolen property. In addition if stolen property is recovered, the insurer may return the property to the insured, paying for any damage, or they may keep all or part of the property at an agreed or appraised amount.
Inspections and surveys is what?
Insurer is granted the right but does not have the obligation to make inspections, surveys.
Supplementary payments
Insurer promises to pay certain other costs on behalf of insured
Who is responsible for the costs associated with the examination of insurers?
Insurer who is being examined
If a house is covered by a standard mortgage clause and is a total loss what will happen?
Insurer will only pay for the interest as it appears on the policy to both the insured and mortgagor
What losses are excluded from coverage in the liability section of the personal auto policy?
Intentional injury or damage Damage to property owned or transported by insured Use of a vehicle as a public conveyance Use of a vehicle without permission
What would be covered, under a dwelling policy, DP-2 falling object peril?
Interior building damage if the exterior damage occurred first.
What is the name for policy endorsements that may apply to more than one coverage part?
Interline endorsements
Family member
Is a person related by blood, marriage or adoption who is a resident of the household.
When does coverage for builders risk start?
It begins on the date construction starts
According to the common policy conditions for CPP if the insured dies what happens to the policy?
It transfers to the legal representative
What is true regarding the fire department service charge under the builders risk form?
It's an additional coverage
What are some of the exclusions from coverage in all the homeowners forms?
Land Structures used for business purposes Animals/birds/fish Aircraft Rented property Electronic data and motor vehicles
What are additional coverages available in home owners policies without addition premiums?
Lawns, trees, shrubs, debris removal, fire department service charge, reasonable repairs.
Hired autos
Leased, hired, rented, or borrowed from someone other than an employee or partner
What is the limit of liability in Part D; Coverage for damage to your auto?
Lesser of the actual cash value of the vehicle or the amount needed to repair or replace the vehicle
What type of coverage is included in homeowners policies, but not available in dwelling policies?
Liability
What type of coverage is included in section II of homeowners insurance?
Liability insurance
Motor truck cargo - carriers form, covers what?
Liability to cargo while it is being transported - it is liability coverage
What type of perils are covered by advertising injury form?
Libel Slander Defamation Violation of privacy Infringement of copy rights or titles
What determines an insurers responsibility for payment as stated in the insurance policy?
Limits of liability
Personal property of others is covered when?
Located at the premise or within 100ft of premises and in the insureds care custody and control
In Commercial crime policy, what does employee theft cover?
Losses resulting from theft of employees
What type of professional liability coverage will a medical doctor need?
Malpractice
It is never legal to limit coverage based on what?
Marital status Gender
What does building coverage cover?
Materials/supplies and equipment within 100 ft of the premises 2,500 per sign limit for loss or damage
What are the 4 types of benefits provided by workers compensation insurance?
Medical Disability Rehabilitation Death benefits - 5,000
What types of expenses are covered by Coverage C - medical payments in CGL policies?
Medical Surgical Hospital Funeral expenses for third parties injured because of the insured business operations
A Businessowners policy specifies what?
Method of refund of unearned premiums Transfer of owners rights Insureds cancellation requirements
On its advertisement a company claims that it has funds in possession that are in fact not available for the payment of loss or claims what is the company guilty of?
Misrepresentation
What illegal act does a producer commit when the producer represents a policy in more favorable lighting than the policy really is?
Misrepresentation
Contractors equipment floater in an unfiled marine insurance what will be covered?
Mobile equipment and contractors equipment Owned, rented, or borrowed equipment (borrowed from contractors And mobile equipment during transportation to and from the job site
What type of policy consists of the declarations, conditions, endorsements and other attachments applicable to a single line of insurance?
Monoline
What is the difference between monopolistic state fund and competitive market?
Monopolistic state funds - employers are required to purchase workers compensation insurance from a state operated entity Competitive market - workers compensation is purchased by employers from insurers authorized to write casualty insurance
Which forms can earth quake coverage be added to a policy?
NONE
Who is an insured on Part c of auto policy PAP?
Named insured and family members Any other person while occupying vehicle Any person entitled to recover damages because of injuries to one of the above
What do the terms 'you' and 'your' refer to throughout the auto policy?
Named insured shown in declarations Spouse of the named insured if resident in same household
On a dp-3 form coverage for personal property is provided as what type of coverage?
Named peril same as DP-2
A loss has occurred before the first report has been filed on a value reporting coverage form. What is untrue about the reporting coverage form?
Never more than 75% of the loss is paid
What are the 4 categories of uninsured motor vehicles?
No insurance or liability bond Insurance is less than what's required by the financial responsibility laws A hit and run where the driver cannot be identified Insurer denies coverage or becomes insolvent
What is mysterious disappearance?
No knowledge of time, place, location or cause of loss
Morale hazard
Not caring about being safe because "you have insurance
Fire department service charge additional coverage under businessowners policy?
Not subject to deductible Additional 2,500 amount of insurance Coverage limit is payable in addition to the limit of insurance shown in the declarations
An insured has personal property replacement cost endorsement under her homeowners policy. If an expensive painting and antique chair are stolen from the insureds home, what will the insured receive on the claim under that endorsement?
Nothing
Which type of policy is a liability policy that covers all claims arising out of incidents occurring during the policy period, regardless of whether the policy is still in effect at the time of the loss?
Occurrence form
How are the dwelling and other structures covered in an HO-3 policy form?
On an open peril basis
Combined single
One limit for both bodily injury and property damages
What does the term unilateral contract mean?
One sided only one party makes a legally enforceable promise
Where can National Flood Insurance be issued?
Only in participating flood prone areas
Who may share in the commission from the sale of an insurance policy?
Only producers properly licensed for the type of insurance transaction
When would theft of property of guests and residence employees be covered under the HO-8
Only while on the insured premises
A policy that covers all causes of loss except for those specifically excluded is known as what type of policy?
Open/special
What personal auto coverage would pay for damages to a covered auto caused by collision with a deer?
Other than collision
Part E: Duties After an Accident or Loss
Outlines the duties required of any person seeking damages under the policy following a loss or accident. This PAP coverage part does not include any subsections. - Prompt notification of loss - cooperating with insurer - forwarding any legal papers received - submitting to a physical exam, examination under oath when requested and recorded statements - Allowing the insurer the right to access medical records - Submitting a proof of loss - Notifying the police of a hit and run or stolen vehicle - protecting the property from further loss - allowing the insurer the right to inspect and appraise the damaged property
Which coverage would business owner need in a crime policy to cover money that may be stolen from a messenger?
Outside the premises
What are the coverage parts in a Personal Auto Policy (PAP)
Part A: Liability coverage Part B: Medical payments coverage Part C: Uninsured motorist coverage Part D: Coverage for damage to your auto Part E: Duties after an accident/loss Part F: General Provisions
What personal auto coverage would pay for the insureds travel expenses and loss of earnings while the insured is involved in the settlement process of a covered loss?
Part A; Liability
If an insured is injured while driving his own car, what coverage in his personal auto policy will pay for the loss?
Part B; medical payments
What are the 2 main parts of workers compensation insurance?
Part I - workers compensation Part II is employers liability
What is the primary purpose of Workers Compensation insurance?
Pay benefits to employees for injuries arising out employment
What is the purpose of a claims made form?
Pay for Bodily injuries or property damage reported during the policy period
What sublimit in liability policy puts a ceiling on the payment for all claims that arise from a single accident?
Per occurenece
Limits of liability and other insurance in Part B on what basis?
Per person basis. Without regard to fault
A tornado that destroys a property would be example of what?
Peril
What is the term for the cause of loss insured against in an insurance policy?
Peril
Part F - General provisions
Personal auto form describes the conditions that apply to all coverage parts in addition to the conditions that apply to the individual coverages. - Bankruptcy - Policy changes - fraud - legal action against insurer - insurer right to recover payment (subrogation)
What is PIP
Personal injury Protection
What is the difference between a personal injury and advertising injury?
Personal injury refers to individuals Advertising injury is incurred to a business Both are non physical injuries
What are the three types of hazards?
Physical Moral Morale
Property damage means what?
Physical injury, destruction or loss of use of tangible property
What components make up a commercial policy?
Policy cover; policy declarations; interlines endorsements; lines of insurance declaration pages; lines of insurance coverage forms; common policy conditions; lines of insurance conditions; causes of loss forms; and endorsements
What are the determining factors of a loss under a dwelling policy?
Policy limit Insureds interest in property at the time of loss Amount necessary to repair or replace the property
When does coverage for builders risk end?
Policy on the construction expires or is cancelled Construction is abandoned and not intended to be completed Whenever the property is accepted by purchaser 90 days after construction is completed 60 days after constructed building is occupied or put to intended use When the insureds interest in the property ceases
What coverage is provided in the liability section of the business auto coverage form?
Policy will pay for injury or property damage to third parties
What type of policy is a businessowners policy?
Prepackaged, stand-alone policy
What is the purpose of a cease and desist order?
Prevent a producer or insurer from further violating laws for transacting insurance
What are the parties to a surety bond?
Principal (obligor) Obligee (insured) Guarantor (surety)
Non owned autos
Private passenger auto, pickup, van or trailer operated by or in the custody of the name insured or a family member, but is not titled by or furnished for regular use of the insured
Medical malpractice, agents, brokers, errors and omissions, and directors and officers liability are examples of what type of liability insurance?
Professional liability
Commercial general and professional
Professionals who want coverage for all liability exposures
What is consideration the part of the insurer?
Promise to pay in the event of a loss - it is binding
What is financial responsibility in auto insurance?
Proof that one can pay for damages caused, often fulfilled by purchasing insurance
Business personal property coverage covers what
Property located in or on the building structure described in the declarations or in the open. Have to be within 100 ft of the building or structure or within 100 ft of the premises.
Dwelling coverage C is limited to covering property when?
Property owned by guests is at the insured location
Part A: in auto policy does what
Protects the insured against loss arising from legal liability when an automobile that the insured owns, operates, or maintains is involved in an accident
What is the purpose of employers liability insurance?
Protects the insured from situation that are not covered under a states workers compensation law
Insured has the duties following a loss under a CGL
Provide prompt written notice of any claim or suit Furnishing the insurer with copies of any demands, notices, other legal papers Assisting the insurer upon request in the enforcement of any right against any person or orginization
Uninsured means what?
Provides insured with money for bodily injuries that the insured would be legally entitled to recover from the owner or operator of a vehicle that does not carry true required insurance
An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?
Rebating
What does mobile equipment cover?
Relates to decides used in everyday farm operation It covers detached parts and accessories of mobile devices It insured eligible equipment for open perils
Bail Bonds
Releases a person from jail insurer will pay up to $250
In property insurance what is actual cash value?
Replacement cost at time of loss minus depreciation
What type of coverage does an HO-3 provide?
Replacement cost coverage.
If a Michigan diver is at fault in another state with different liability limits, what coverage would provide equivalent to the other states required limits?
Residual liability insurance
What does indemnify mean in insurance?
Restore to the same financial standing as before the loss occurred
A temporary producer license could be issued for everything except
Retiring producer
What is the date stipulated on the declaration page of a claims made liability form as the earliest date on which an incident may occur and be covered by the policy?
Retroactive date
Property coverage under a DP-3 is provided on?
Same as DP-2 broad form because the dwelling is open peril coverage and personal property is named
What does it mean that the business owners policy is sold as a package
Self contained pre-packaged policy containing both property and liability
What is the name for the deductible in liability umbrella policies?
Self-insured retention (SIR)
When other insurance is written on the same basis as a Commercial property policy, what is the insurer obligated to cover?
Share of the loss
What businesses qualify for coverage under a businessowners policy?
Small to medium sized businesses
What types of entities can be insured under a General Liability policy?
Sole proprietors Partnerships Corporations
What is a lessor
Someone who grants a lease of a motor vehicle
What is consideration in an insurance contract?
Something of value that each party gives to the other. On part of the insurer is binding
An insured owned several buildings each at a different location and insured on a separate policy. What type of coverage does the insured have?
Specific
Wagering on a sporting event is known as what type of risk?
Speculative
What type of limits of liability has the limits separately stated in different coverages?
Split limits
Who owns stock companies?
Stock holders
If an insurer denies coverage because an insured failed to comply with the policy provisions what would a mortgage holder have to do to receive payment?
Submit proof of loss within 60 days
What is the name for non admitted insurers who are allowed to transact business in this state?
Surplus lines insurer
Who must be notified of a producers change of address?
The Department of Insurance (Commissioner/Director/Superintendent)
If someone presents greater loss expectancy because of geographic location the insurer ma pay the producer commissions of what?
The Normal amount
How much will an insurer pay under Coverage D loss of use depends on what?
The amount of coverage on the dwelling
In homeowners policies what determines the amount an insurer will pay under coverage D?
The amount of coverage on the dwelling
What is a morale hazard?
The effect a person's indifference concerning loss has on the risk to be insured.
What is moral hazard?
The effect of a person's reputation, character, living habits, etc. on his/her insurability.
What does the term 'you" refer to in a personal auto policy?
The insured
What is not specified in businessowners policing regarding inspections and surveys conditions?
The insurer does not have the right to inspect the insureds property and operations
Examination of books and records
The insurer is granted the right to audit books and records of the insured relating to the policy for a period of up to 3 years after the end of the policy
Limits of liability in auto coverage - PAP
The lesser of the actual cash value of vehicle at time of loss The amount necessary to repair or replace the vehicle
What does a cancellation provision in a businessowners policy specifies everything EXCEPT
The method of transferring the owners rights
In surety bonds, who purchases the bond and promises to fulfill the obligation?
The principal or obligator
On a DP-3 form dwelling property special form policy, the coverage provided for personal property is
The same as provided on DP-2 broad form
What is a livery?
The transporting of people or things for hire
What is collision?
The upset or impact of a covered vehicle or non owned auto with another vehicle or object
What does Coverage A under a dwelling policy not cover?
Theft
What is the broadest coverage in Commercial crime form?
Theft coverage
Business income coverage covers consequential loss of business income that occurs when a business must suspend its operations due to a direct loss. What type of form is this called?
Time element
To whom may a certificate of authority be issued
To an insurer authorized to transact business in this state
What is the purpose of surety bonds?
To guarantee that specific duties and obligations of the principal will be fulfilled
What is not a goal of risk retention
To minimize the the insureds level of liability in the event of a loss
What is not included in standards builders risks form?
Tools 50 ft away from the building
How much will a dwelling policy pay for the removal of trees?
Trees, plants, shrubs are covered limited to not more than $500 for any ONE tree and not to exceed 5% of coverage A in total
Which type of misrepresentation persuades an insured to detriment, to cancel lapse or switch policies from one to another?
Twisting
What do numerical symbols in auto policies represent?
Type of coverage provided for specific autos
What is included in coverage territory in business owners policies?
US and territories Canada and Puerto Rico
What is risk?
Uncertainty of loss
What is the process that insurers use to determine whether a policy should be issued and on what terms and conditions?
Underwriting
What is part C in a PAP
Uninsured and underinsured
What type of auto coverage will apply in a hit and run accident where the driver cannot be identified
Uninsured motorist
Coverage F is what in farm insurance?
Unscheduled farm property
How much will a physical damage policy pay for transportation expenses due to a theft of a covered auto?
Up to $20 a day up to a max of 600
Property off premises is covered for what amount under the coverage extensions of a CPP?
Up to 1,000
Loss of earnings
Up to 200 for attending hears, attendance
What endorsement could be added to a businessowners policy to protect loss of income due to lightning striking an electrical grid making the business unable to operate?
Utility services time element endorsement
What could be added to a business owners policy to protect against loss of income due to lightning striking an electrical grid making the business unable to operate?
Utility services time element endorsement - would cover business income and extra expenses asrising from utility service disruption that is caused by a covered peril.
What is not settled on actual cash value basis while covered under business property form?
Valuable papers and records
CPP-If building has been vacant for 60 days before loss happens, the insurer will not cover what?
Vandalism Glass breakage Water damage Theft Attempted theft If the loss occurs from anything else the payment will be reduced by 15%
If a building is vacant an insurer will not cover what types of perils?
Vandalism Sprinkler leakage Glass breakage Water damage Theft/attempted theft
Who is considered an insured under part A; liability of a personal auto policy?
Vehicle owner, his/her family members or any person using the covered auto with permission
Trailer Interchange Coverage is what?
When a business swaps trailers with another carrier, this coverage is necessary to cover a loss to the others trailer while in the borrowers possession.
HO-8 is used when
When elaborate homes who have more expense costs to replace them on market value due to functional replacement costs
When can insurance be sold through surplus lines insurer?
When insurance cannot be obtained through an authorized carrier
When would misrepresentation on an insurance application be considered fraud?
When it is intentional and material
Mutually exclusive means what?
When something cannot occur simultaneously with something else
In insurance contracts, when is the offer usually made?
When the application is submitted
When is controlled business legal?
When the commissions from controlled business do not ecveed aggregate commissions on all the other business
In insurance contracts when does acceptance usually occur?
When the insurer approves prepaid application
When does the underinsured motorist coverage apply?
When the motorist is at fault and does not have enough coverage to cover the damage of bodily injury
When does uninsured motorist coverage apply?
When the other party is liable but has no insurance
When can the commissioner or director examine insurers?
Whenever deemed necessary but at lease once every few years
The commercials property declarations page contains what information?
Who what where, and how much are insured Interline endorsements Conditions Causes of loss forms
Transportation expenses
Will be paid if the loss is caused by collision or other than collision, as long as the corresponding coverage is indicated in the Declarations. Coverage applies to covered auto and non owned auto
Out of state coverages
Will higher limits to the least required amount for out of state accidents if needed
What is a second injury fund?
Workers comp program designed to pay for any additional benefits when an employee with previous injury suffers second injury
What is Part I in workers compensation?
Workers compensation
Competitive market
Workers compensation is purchased by employers from insurers authorized to write casualty insurance
What are the 4 additional coverages offered by the builders risk form?
debris removal Fire department service charge Pollutant cleanup Removal and preservation of property
Insurers are classified according to their domicile. What are the three types of insurers?
domestic, foreign, alien
What is part II in workers compensation?
employers liability
Under PIP insurance if an injury impairs a persons ability to perform regular work duties, how long will the workers personal protection insurance pay benefits for lost income?
first 3 years
Appeal bonds bonds to release attachment
required of the defendant in a lawsuit who elects to appeal a verdict
Financial responsibility requirements
the policy will comply with the law to the extent required
Physical hazard is defined as what?
type of hazard that arises from the physical characteristics of an individual, such as a physical disability due to either current circumstance or a condition present at birth.
How much will the homeowners policy pay, if a neighbors tree has fallen into the insureds yard, to remove the tree?
up to 1,000 to remove the tree if it fell due to a covered peril, and is blocking the driveway, handicapped ramp or even if no damage to a covered structure has occurred
How many days does an insurer have to provide claim and occurrence information, providing it is requested at any time up to 60 days after the policy period ends.
within 45 days