Texas Exam 22
Under the Commercial Building and Personal Property Coverage form, if no optional coverages are selected, loss valuation/settlement is based on: Answer Choices: Select the Correct Answer Actual cash value. Market value. Original cost. Replacement cost.
Actual cash value
All of the following are common-law duties of an employer under a workers' Compensation policy, EXCEPT: Answer Choices: Select the Correct Answer Warn workers of inherent dangers. Provide a safe working environment. Assumption of risk. Provide an adequate number of competent fellow workers.
Assumption of risk
Which of the following is excluded fro coverage under a Homeowners policy? Answer Choices: Select the Correct Answer Personal liability coverage. Damage caused by an automobile. Coverage for personal property. Coverage for appurtenant structures.
Damage caused by an automobile
Under the ISO standard BOP form, how much would be paid for any one tree, shrub, or plant in case of a covered cause of loss? Answer Choices: Select the Correct Answer $1,500 $1,000 $300 $500
$1,000
What is the Part D limit of liability for damage to a non-owned trailer under the Personal Auto policy? Answer Choices: Select the Correct Answer $1,500. $500. $1,000. $2,000.
$1,500
Texas insurers must acknowledge receipt of a claim within: Answer Choices: Select the Correct Answer 10 days. 15 days. 30 days. 20 days.
15 days
What does the term "unvalued basis" mean as it relates to ocean marine hull insurance? Answer Choices: Select the Correct Answer A policy wherein the amount of coverage is stated A policy designed to cover open lands A policy where the value is not declared until after the loss A policy where the value is determined by the exposure
A policy where the value is not declared until after the loss
All of the following are Texas adjusters who are not permitted by law to adjust a loss related to roofing damage on behalf of an insurance company, EXCEPT: Answer Choices: Select the Correct Answer An adjuster who is also a roofing contractor. An adjuster that has taken roofing classes and is capable of repairing a damaged roof. An adjuster who sells roofing products and services. An adjuster who also holds a controlling interest in a roofing-related business.
An adjuster that has taken roofing classes and is capable of repairing a damaged roof
Inland Marine insurance is commonly used to insure all of the following, EXCEPT: Answer Choices: Select the Correct Answer Automobiles. Stamps. Camera equipment. Jewelry.
Automobiles
Which of the following would be covered under employee dishonesty? Answer Choices: Select the Correct Answer Money lost on the way to the bank Inventory shortages Embezzlement Robbery of the employee
Embezzlement.
A Commercial Package Policy (CPP) always includes: I. A single Declarations page common to all coverages. II. A single Conditions section common to all coverages. III. A single Exclusions section common to all coverages. Answer Choices: Select the Correct Answer I only I, II and III I and II only II and III only
I and II only.
In aviation insurance, which of the following would cover crew members? Answer Choices: Select the Correct Answer Medical Payments (by endorsement) Bodily Injury Extended Liability Passenger Liability
Medical Payments (by endorsement)
What coverage under the BOP automatically applies if a customer slips and falls on the named insured's premises, regardless of legal liability? Answer Choices: Select the Correct Answer Business liability coverage. Personal injury coverage. Medical expense coverage. Advertising injury coverage.
Medical expense coverage
Where is Covered Property listed and described on the BOP? Answer Choices: Select the Correct Answer In the coverage form Under the conditions On the declarations page Under the extensions of coverage
On the declarations page
All of the following are covered under the Equipment Breakdown coverage form, EXCEPT: Answer Choices: Select the Correct Answer The breakdown of any structure or materials supporting the equipment. A structure. Business personal property. Personal property of others.
The breakdown of any structure or materials supporting the equipment
The additional coverage for debris removal under the standardized Building and Personal Property coverage form will only be paid if: Answer Choices: Select the Correct Answer The insured reports the debris removal expenses to the insurance company in writing within 90 days of the loss. The debris belongs to someone other than the insured and the property is of a type that would not ordinarily be covered under this coverage form. The insured reports the debris removal expenses to the insurance company in writing within 180 days of the loss. The expenses were incurred to remove pollutants from land.
The insured reports the debris removal expenses to the insurance company in writing within 180 days of the loss
Following the payment of a claim, the salvaged property becomes the property of: Answer Choices: Select the Correct Answer The insurer. The insured. A third party salvage company contracted by the insurer. The state.
The insurer
Which of the following is an ideal form of protection for the frequent shipper of goods? Answer Choices: Select the Correct Answer Annual Transit Policy Trip Transit Policy Monthly Transit Policy Common Carrier Motor Truck Cargo Policy
Annual Transit Policy
Which of the following is required to calculate the estimated annual premium in a workers' compensation policy? Answer Choices: Select the Correct Answer Estimated annual payroll and work classification(s). Estimated annual gross income. Number of estimated overtime hours. Number of employees and their job descriptions.
Estimated annual payroll and work classification(s)
Texas Workers' Compensation law, the definition of an employee includes: I. A person, other than an independent contractor or the employee of an independent contractor, who is engaged in construction, remodeling, or repair work for the employer on the employer's premises. II. A seaman on a vessel engaged in interstate or foreign commerce. III. A person whose employment is not in the usual course and scope of the employer's business.
I only.
With inland marine insurance bridges, tunnels, and communication towers are referred to as: Answer Choices: Select the Correct Answer Instrumentalities Subject to the perils of transportation Rolling stock Permanent structures
Instrumentalities
Which of the following is included in the Supplementary Payments under a standardized Personal Automobile policy? Answer Choices: Select the Correct Answer Loss of earnings of 80%, with a daily limit of $50 per day. Interest accruing after a judgement is entered (post-judgement interest). Up to $500 for the cost of bail bonds necessary in defense of a claim. Up to $20 per day, for transportation expenses, not to exceed an aggregate limit of $600.
Interest accruing after a judgement is entered (post-judgement interest)
A covered loss has damaged the property belonging to the owner. Property belonging to a customer is also damaged. The customer brings suit against the insured for this damage. The insurer may do which of the following? Answer Choices: Select the Correct Answer Pay the defense costs incurred in the suit against the insured Negotiate the settlement of the property of others directly with the owners of that property Negotiate the settlement of the property of others directly with the owners of that property and pay the defense costs incurred in the suit against the insured Only pay the expense cost and not negotiate a settlement
Negotiate the settlement of the property of others directly with the owners of that property and pay the defense costs incurred in the suit against the insured
An insured purchases several different insurance policies that provide coverage in an amount that would allow him to make a profit from a covered loss. This is known as: Answer Choices: Select the Correct Answer Indemnification. Overinsurance. Reinsurance. Sharing a risk.
Overinsurance
A dead tree beside Jerry's home is best described as which of the following types of hazards? Answer Choices: Select the Correct Answer Physical hazard. Proximate hazard. Moral hazard. Morale hazard.
Physical hazard
Which of the following best describes "no release or walk-away" release? Answer Choices: Select the Correct Answer A form of advanced payment to the claimant. A structured settlement. The bills are paid and no attempt to obtain a separate release is made. The insurer agrees to waive its right to subrogation against a third party who caused the damage.
The bills are paid and no attempt to obtain a separate release is made
Herb is a licensed Texas adjuster. He has been very busy and forgot to take the continuing education courses required for him to renew his license. How long does Herb have after the date his license expires to complete the required continuing education courses? What is the fine that he will have to pay? Answer Choices: Select the Correct Answer 60 days / $30 per deficient CE credit hour. 90 days / $50 per deficient CE credit hour. 6 months / $150 flat fine. 3 months / $200 flat fine.
90 days / $50 per deficient CE credit hour
Who signs the Declarations page on an Equipment Breakdown policy? Answer Choices: Select the Correct Answer An Authorized Representative The Named Insured Two officers of the company An Authorized Inspector
An Authorized Representative
What type of coverage would a heating and cooling contractor need when work has been done on a newly renovated building but not yet accepted by the owner? Answer Choices: Select the Correct Answer An Installation Floater A Builder's Risk Policy A Bailee Form of Coverage A Transportation Floater
An Installation Floater
An insurance broker is a person who represents: Answer Choices: Select the Correct Answer An insured or prospective insured. An insurance company. Themselves. Several insurance companies.
An insured or prospective insured.
An agent, insured or claimant has intentionally deceived an insurer for financial gain. Such an act is known as: Answer Choices: Select the Correct Answer Fraud. Misrepresentation. Concealment. Twisting.
Fraud
The Ocean Marine coverage that insures either prepaid shipping charges, or the income to be earned for moving cargo is known as: Answer Choices: Select the Correct Answer Freight insurance. Protection & Indemnity (P&I). A Block policy. Cargo coverage.
Freight insurance.
The perils insured against by a Homeowners policy are contained within the: Answer Choices: Select the Correct Answer Conditions. Insuring Agreements. Definitions. Declarations.
Insuring Agreements
The "removal coverage" of the Standard Fire policy is: Answer Choices: Select the Correct Answer Will only cover the removal expense for five days under all circumstances. Is extremely broad and will cover the removal expense for five days and beyond if an extension is arranged with the insurance company. Is very restrictive and covers property for removal for only 3 days. Will cover the insured for the removal of property to protect it from the peril of flood.
Is extremely broad and will cover the removal expense for five days and beyond if an extension is arranged with the insurance company.
Tort Law applies to all of the following, EXCEPT: Answer Choices: Select the Correct Answer Liability arising from the commission of an unintentional tort. Liability arising from negligence. Liability arising from a breach of duty. Liability arising from breach of contract.
Liability arising from breach of contract
With a work-related injury, the loss of a finger would be characterized as what type of disability? Answer Choices: Select the Correct Answer Permanent total Permanent partial Temporary total Temporary partial
Permanent partial
The Building & Personal Property Coverage form of the Commercial Property program includes some optional coverages. Which of the following is the optional coverage that changes the standard valuation condition of the form, but keeps the coinsurance provision in place? Answer Choices: Select the Correct Answer The Actual Cash Valuation optional coverage. The Inflation Guard optional coverage. The Replacement Cost Valuation optional coverage. The Agreed Valuation optional coverage.
The Replacement Cost Valuation optional coverage
A public adjuster represents the interest of: Answer Choices: Select the Correct Answer The insurer The insured The employer The interest of the general public
The insured
Which of the following best describes how the peril of "theft" is covered under the 1943 New York Standard Fire policy? Answer Choices: Select the Correct Answer Theft is specifically excluded under the SFP. Theft is a covered peril under the SFP. Theft is a covered peril under the removal coverage. Theft can only be added to the SFP by endorsement.
Theft is a covered peril under the removal coverage
If a dwelling or commercial building has been without occupants for a significant period of time, but personal property still exists within the dwelling or building, it is considered: Answer Choices: Select the Correct Answer Vacant. Empty. Abandoned. Unoccupied.
Unoccupied.
Under "Coverage A - Building" of the BOP form, which of the following is NOT covered? Answer Choices: Select the Correct Answer Completed additions, and additions under construction All permanently installed fixtures, machinery and equipment Outdoor fixtures Valuable papers and records
Valuable papers and records
Gavin, the named insured under a Personal Auto policy, his daughter Tabitha, and two of her friends are riding in the covered auto when Gavin accidentally runs a stop sign, striking another vehicle. Everyone in Gavin's vehicle was injured as well as the driver and two passengers in the other car. How long do Tabitha's friends have to submit their medical expense claims for coverage under Part B of Gavin's standardized Personal Auto policy? Answer Choices: Select the Correct Answer Within six months of the date of the accident. Within two years of the date of the accident. Within three years of the date of the accident. Within 18 months of the date of the accident.
Within three years of the date of the accident
A Texas insurer is liable for a claim but is in violation of Texas regulations as to the timely payment of the claim. Texas requires that the insurer must pay, in addition to the settlement amount, interest on the amount of the claim at the rate of _____% per year. Answer Choices: Select the Correct Answer 18 15 20 17
18
Under a commercial property policy, once the insured has submitted a properly executed proof of loss within 60 days of a loss as required by the policy, how long does the company have to pay the claim? Answer Choices: Select the Correct Answer 45 days 60 days 30 days 10 days
30 days
Which of the following businesses is NOT eligible to be covered by a Businessowners policy? Answer Choices: Select the Correct Answer A credit union. A commercial office building. An apartment building with rental units. A small retail gift shop.
A credit union.
All of the following would be excluded by an unendorsed aircraft policy, EXCEPT: Answer Choices: Select the Correct Answer Air turbulence Hi-jacking Government confiscation Confiscation
Air turbulence
Under the Commercial Property Condominium Association form, coverage is based on: Answer Choices: Select the Correct Answer The Commercial Property form. The Condominium Association Agreement and By-Laws. The special cause of loss form. State and local ordinances.
The Condominium Association Agreement and By-Laws.
Calculate the Supplemental Income Benefit (SIBs) for Sandra, an injured worker in Texas. Sandra has been given an IR of 20% and has been actively seeking a new job. She has not accepted a lump-sum payment for her injuries and she has returned to work in a modified position. Sandra's AWW before her injury was $522.00. Her weekly wages after the injury in her modified position are $214.00. Answer Choices: Select the Correct Answer $385.00 $203.60 $162.88 $736.00
$162.88 To calculate SIBs in Texas, take 80% of the injured workers average weekly wage before the injury, and subtract the weekly wages the injured worker made after the work-related injury. Then, 80% of that number is the amount of the Supplemental Income Benefits.
Under the BOP, how long is business income covered in case of an insured direct loss? Answer Choices: Select the Correct Answer 12 months 6 months 15 months 9 months
12 months
Which of the following injury or damage falls within the products-completed operations hazard as defined in a commercial umbrella liability policy? Answer Choices: Select the Correct Answer A spot remover company hired sales representatives across the country to visit potential customers' homes and demonstrate its product. The company received hundreds of claims from people who said the carpets in their homes were reunited because, during the demonstration, the spot remover ate large holes in the carpet. A home hair preparation was advertised to "curl hair" within two hours." Many people used the product and their hair fell out. A building being constructed by a contractor falls and causes bodily injury. A contractor is blasting and a rock is thrown and a vehicle is damaged.
A home hair preparation was advertised to "curl hair" within two hours." Many people used the product and their hair fell out.
Loss to insured property caused by self-propelled missiles is covered under which of the following perils of the Homeowners form? Answer Choices: Select the Correct Answer Windstorm Riot Aircraft Vandalism
Aircraft
A power surge sparks a small electrical fire in an office building. The electrical fire triggers the automatic sprinkler system and the water from the sprinklers, soaks the carpet and shorts-out all the computers, causing thousands of dollars in damage. The office must close for two months during repairs. The cost of renting a temporary office space while the physical damage to the office building is repaired is considered: Answer Choices: Select the Correct Answer An indirect loss. A physical loss. A direct loss. An occurrence.
An indirect loss
To prove negligence, the "proximate or legal cause" of the injury or loss, includes what important feature? Answer Choices: Select the Correct Answer An unbroken chain of events lead to the bodily injury or property damage. The cause of the loss is not relevant if the defendant is proven to be legally liable. An intervening cause must have broken the chain of events before the proximate cause can be proven. The direct cause of the loss must also be the proximate (legal) cause of the loss.
An unbroken chain of events lead to the bodily injury or property damage.
Inland marine insurance is commonly used to insure all of the following, EXCEPT: Answer Choices: Select the Correct Answer Automobiles. Stamps. Camera equipment. Jewelry.
Automobiles
Which of the following BEST describes a tort? Answer Choices: Select the Correct Answer Is a "wrong" covering a wide-range of legal and moral wrongdoing. Is a "wrong" committed for which only the government can provide a remedy. Is an act causing harm to an innocent party for which a civil remedy is provided through the payment of monetary damages. Is a criminal act.
Is an act causing harm to an innocent party for which a civil remedy is provided through the payment of monetary damages
The insured carries a yacht policy and is pulling a water skier. The skier is a family member and is injured. What coverage might apply to this accident? Answer Choices: Select the Correct Answer No coverage would apply Liability coverage and defense coverage would apply Medical payments coverage Only the injured party's health insurance would cover the claim
Medical payments coverage
The commercial property Business Income Coverage Form covers all of the following, EXCEPT: Answer Choices: Select the Correct Answer Non-continuing operating expenses. Actions of a civil authority. Loss of business income. Continuing operating expenses.
Non-continuing operating expenses
A Texas adjuster may be subjected to a criminal penalty for all of the following, EXCEPT: Answer Choices: Select the Correct Answer Acting as an adjuster without a license. Not paying court mandated child support. Adjusting a claim for workers' compensation when holding a Property & Casualty adjuster license. Adjusting a Homeowners claim when holding only a Workers' Compensation adjuster license.
Not paying court mandated child support
In ocean marine insurance, each of the following is true about the term "general average" EXCEPT: Answer Choices: Select the Correct Answer Only the party having an interest in the lost property suffers a loss. It refers to partial losses to save the ship. It involves a deliberate sacrifice of property. The loss is shared by all interests involved in the voyage.
Only the party having an interest in the lost property suffers a loss
Under Part A of a Personal Automobile policy, "supplementary payments" refer to which of the following? Answer Choices: Select the Correct Answer Payment of defense and other expenses by the insurance company beyond the limits of liability. Payments made by the insured for damages exceeding his policy limits. Payments received by the insured directly from the person or persons who caused a loss. Payments made by the insurance company for the insured's own medical expenses, to supplement any other medical insurance.
Payment of defense and other expenses by the insurance company beyond the limits of liability
A person, firm, or corporation that, for compensation, acts on behalf of an insured in negotiating the settlement of certain claims for loss or damage to property is known as a/an: Answer Choices: Select the Correct Answer Independent adjuster. Consultant. Public adjuster. Insurance agent.
Public adjuster
What does an insurer do when the insured has possibly waived his or her rights in a liability claim? Answer Choices: Select the Correct Answer Send a "reservation of rights" letter. Deny the claim. Pay only a portion of the proven liability claim. Insist the insured obtain his or her own legal counsel.
Send a "reservation of rights" letter.
The "control of property" condition of the Commercial Property policy: Answer Choices: Select the Correct Answer States that the insured must have control over the insured property when a loss occurs, otherwise coverage will not apply. States that a negligent act of someone beyond the insured's direction or control will not affect the coverage. States that if the insured violates a condition of the insurance at one location, it is considered to be violated at all insured locations. States that a negligent act of someone beyond the insured's direction or control will void the coverage.
States that a negligent act of someone beyond the insured's direction or control will not affect the coverage
Which of the following policy provisions or clauses is designed to prevent the violation of the principle of indemnity? Answer Choices: Select the Correct Answer The "Other Insurance" provision. The "Liberalization" clause. The "Coinsurance" clause. The "Subrogation" clause.
The "Other Insurance" provision.
The insured carries a standard Yacht policy on his vessel registered in Florida. One of the crew members is injured while performing a work-related task on the yacht while sailing off the coast of Italy. What coverage would respond to the crew member's injuries? Answer Choices: Select the Correct Answer Medical Payments coverage. Liability coverage. Hull coverage. The Jones Act.
The Jones Act.
Which of the following is NOT a correct statement in determining the cost of a "comparable automobile" when a physical damage loss has a occurred? Answer Choices: Select the Correct Answer When comparable automobiles are available or were available in the local market area in the last 90 days, the average cost of two or more comparable automobiles. The cost of a comparable automobile as determined by a computerized automobile valuation service that produces statistically valid fair market values within the United States market. When comparable automobiles are not available or were not available in the local market area in the last 90 days, the average of two or more quotations from two or more licensed dealers in the local market area. If not possible to determine the value using standard methods of value determination, the cost of a comparable automobile shall otherwise be supported by documentation and fully explained to the claimant.
The cost of a comparable automobile as determined by a computerized automobile valuation service that produces statistically valid fair market values within the United States market
All of the following statements are correct regarding the insurer's right to "examine under oath" as specified in the Building and Personal Property coverage form, EXCEPT: Answer Choices: Select the Correct Answer The insurer has the right to examine any insured under oath, while not in the presence of any other insured. The insurer has the right to examine any insured under oath, but only if the claimant has brought a lawsuit against the insurer. The insurer has the right to examine the related books and records of the insured, as part of the examination under oath. All answers provided in an "examination under oath" must be signed by the insured.
The insurer has the right to examine any insured under oath, but only if the claimant has brought a lawsuit against the insurer
Which of the following perils is covered for earth movement under the DP-2 Dwelling form? Answer Choices: Select the Correct Answer Earthquake Subsidence Landslide There are no perils covered for earth movement under the Dwelling forms.
There are no perils covered for earth movement under the Dwelling forms
An insured's boat is struck by another boat. He and his family are injured. His boat sinks because of the damage. An investigation determines that the party that caused the accident is not insured. If the insured carries a watercraft policy, what coverages would apply? Answer Choices: Select the Correct Answer Liability coverage Medical payments Uninsured boater's coverage and hull insurance Uninsured boater's coverage
Uninsured boater's coverage and hull insurance
All of the following statements are TRUE about Workers Compensation benefits, EXCEPT: Answer Choices: Select the Correct Answer The workers compensation laws of the state take precedence over the insurance policy. Rehabilitation benefits may be provided under certain conditions. Waiting periods apply to medical and disability benefits. Death benefits may include a burial allowance.
Waiting periods apply to medical and disability benefits
All of the following would be considered "uninsured motorists", EXCEPT: Answer Choices: Select the Correct Answer A motorist driving without liability insurance. A motorist who Is covered for liability, but does not carry enough coverage to meet the state's financial responsibility requirements. A motorist driving with coverage up to the required state financial responsibility limits for liability, but not high enough to pay the claims for an at-fault accident. A motorist with liability coverage with an insurance company that has become insolvent.
A motorist driving with coverage up to the required state financial responsibility limits for liability, but not high enough to pay the claims for an at-fault accident.
Part F of the standard Personal Automobile policy states that the policy can be terminated within the first 60 days for any reason other than non-payment of premium if: Answer Choices: Select the Correct Answer At least 20-days' notice is provided to the insured. At least 30-days' notice is provided to the insured. At least 10-days' notice is provided to the insured. Another type of policy option is provided by the insurer.
At least 20-days' notice is provided to the insured
If an insured carries Coverage C under a Dwelling policy, how much coverage applies off the insured premises (world-wide basis)? Answer Choices: Select the Correct Answer 10% of the Coverage C limit. 25% of the Coverage C limit. 40% of the Coverage C limit. 50% of the Coverage C limit.
10% of the Coverage C limit
Sam and Dan are working to clean out the gutters around the roof on Sam's house. Sam and Dan are standing at the top of separate ladders that are propped against the side of Sam's house, when Dan's ladder begins to wobble and ultimately falls into Sam's ladder. Both men and their ladders crash to the ground. Whose injuries will be covered by Sam's Homeowners policy under Coverage E - Personal Liability? Answer Choices: Select the Correct Answer Only Dan's injuries would be covered. Neither Sam's nor Dan's injuries would be covered. Both Sam and Dan's injuries would be covered. Only Sam's injuries would be covered.
Only Dan's injuries would be covered
The Homeowners policy on Dylan's $110,000 home is voided when he intentionally burns the house to the ground. Consequently, he does not receive the settlement check he was hoping to when he committed the arson, but he still has an outstanding mortgage balance of $76,000. How does this event affect the mortgage lender? Answer Choices: Select the Correct Answer The insurer pays the mortgage lender $110,000. The insurer pays the mortgage lender $76,000. The insurer pays the mortgage lender $55,000 - half the total amount of the loss. Because the arson voided the policy, the mortgage lender is paid nothing.
The insurer pays the mortgage lender $76,000.
Jewell has filed a lawsuit because she was injured by a negligent party. During the court proceeding, it is determined that Jewell was 15% negligent in her own injuries, however, the award for damages was set at $22,000. Jewell's state uses the pure comparative negligence standard to compute damage awards therefore, the amount Jewell will receive in damages is: Answer Choices: Select the Correct Answer $3,300. $22,000. $18,700. $25,300.
$18,700
Which of the following best describes "covered property" under the Equipment Breakdown coverage form? Answer Choices: Select the Correct Answer Any property that the insured owns or is in the insured's care Buildings and personal property owned by the insured Boilers and machinery owned or operated by the insured Electronic data processing equipment
Any property that the insured owns or is in the insured's care
The Texas Insurance Commissioner has the powers and duties vested in the Department by which of the following? I. The Texas insurance code. II. Any insurance laws passed in Texas that are not part of the insurance code. III. The Texas labor code. IV. The Texas occupations code. Answer Choices: Select the Correct Answer I and III only. I, II and III only. I, II and IV only. I, II, III and IV.
I, II and III only
A fire starts in the rear of Paws & Such Veterinary Care. Four cats belonging to clients as well as the owner's dog are treated for smoke inhalation. What if any is covered by the BOP for the clinic? Answer Choices: Select the Correct Answer All the animal injuries are covered as they were in the building at the time Nothing is covered as animals are excluded The cats belonging to clients are covered but not the owner's dog The owner's dog is covered but the cats are excluded
The cats belonging to clients are covered but not the owner's dog
The NAIC Model Legislation governing the settling of insurance claims was created: Answer Choices: Select the Correct Answer To provide insureds with a step-by-step process to submit claims to their insurer. To set forth standards for foreign an alien insurers to follow when conducting business outside of their state/country of domicile. To set forth standards for the investigation and disposition of claims arising under policies or certificates of insurance. To provide mandatory federal legislation that all insurers conducting business in the United States must follow, regardless of the state in which they are domiciled.
To set forth standards for the investigation and disposition of claims arising under policies or certificates of insurance
A bid bond is used: Answer Choices: Select the Correct Answer As a promise from the surety that if the principal is the low bidder and is awarded the contract, the principal will enter into the contract and provide required performance and other bonds. To indemnify bids posted at auction. To indemnify sealed bids. To insure that there is fairness in the bid selection process.
As a promise from the surety that if the principal is the low bidder and is awarded the contract, the principal will enter into the contract and provide required performance and other bonds
All of the following are "open-peril" exclusions of the HO-3 and HO-5 form, EXCEPT: Answer Choices: Select the Correct Answer Flood. Neglect, deterioration, and general wear and tear. Mold, fungus, and wet rot. Theft.
Theft
A common carrier is not held liable for the loss of a shipper's goods when the loss results from: Answer Choices: Select the Correct Answer Negligence of the carrier. An act of God. Collapse of a bridge. An insured peril.
An act of God
Coverage for all reasonable expenses incurred by an insured in order to continue as nearly as practicable the normal operation of his/her business after a loss is: Answer Choices: Select the Correct Answer Operations Expense Coverage Extra Expense Coverage Additional Expense Coverage Loss of Use Coverage
Extra Expense Coverage
If an insurance company covered an excluded claim it may have to continue paying other such claims because of: Answer Choices: Select the Correct Answer Estoppel. Indemnity rule. Comparative payment. Policy language.
If an insurer allows payment of certain excluded claims, the right to exclude similar claims in the future has been waived. This may cause someone to rely on the coverage to be in place when it is not. So the insurer is now "estopped" or stopped from excluding similar claims in the future. This is known as the principle of estoppel.
John's Texas adjuster license has been expired for 16 months. Which of the following describes the procedure John will need to follow to reinstate his license? Answer Choices: Select the Correct Answer John will need to take any continuing education courses necessary to meet the requirements and submit a license renewal application with a fine of $150. John can apply to the Commissioner for a waiver of continuing education and submit a license renewal application. John will need to take the state licensing exam again and submit an application for a new license. John must take the state licensing exam again, and if he passes it, his license will be automatically renewed after the test score is submitted to the Department.
John will need to take the state licensing exam again and submit an application for a new license
All of the following statements are TRUE regarding automobile "no-fault" laws, EXCEPT: Answer Choices: Select the Correct Answer Medical expense and lost wage claims are paid by the insured's own automobile policy, without assigning fault to any party in the accident. Medical payments and physical damage claims are paid by the state without assigning fault to any party in the accident. No-fault laws have been passed by states to alleviate the backlog of lawsuits brought to assign fault for the accident. No-fault laws expedite claims payments, reducing the amount of time insured's must wait for reimbursement.
Medical payments and physical damage claims are paid by the state without assigning fault to any party in the accident..
A Standard Fire policy frequently insures both a mortgagee and an insured under the same policy. All of the following statements are true regarding how a property loss will be paid under an SFP when there is a mortgage on the property, EXCEPT: Answer Choices: Select the Correct Answer The insured's recovery will be an amount that only covers the equity the insured has in the property at the time of the loss. The insurance company protects the interest of the mortgagee first. The insured receives payment from the insurance company for the entire loss and the insured is responsible for paying the mortgagee their portion of the payment. The amount of insurable interest the policyholder has in the property may limit the amount the insurer will pay them for the claim.
The insured receives payment from the insurance company for the entire loss and the insured is responsible for paying the mortgagee their portion of the payment.
The insured has a communication failure at his premises due to a lightning strike at the phone company. The insured's phone system is damaged and he is out of business for four days. Which endorsement is necessary to provide coverage for the loss of business income? Answer Choices: Select the Correct Answer Non owned and Hired Auto Earthquake Utility Services - Time Element Utility Services - Direct Damage
Utility Services - Time Element
An insured has suffered a property loss and reported the claim promptly. Which of the following is NOT an immediate duty of the adjuster who received the claim? Answer Choices: Select the Correct Answer Immediately seek subrogation rights against a third party. Verify the effective date of the coverage. Verify the proximate cause of loss. Determine those that have insurable interests in the property.
Immediately seek subrogation rights against a third party
Which of the following is true regarding the coverage under an aviation policy? Answer Choices: Select the Correct Answer Only the pilots named in the declarations or pilot endorsement can operate the aircraft. Qualified substitute pilots are covered and do not have to be listed for coverage to apply. Coverage applies in flight under any conditions requiring special permit or waiver from the FAA even if such permit or waiver has been granted. By a declared pilot operating outside the limitations imposed in the declarations.
Only the pilots named in the declarations or pilot endorsement can operate the aircraft
Which of the following would be considered an Unfair Claim Settlement Practice? Answer Choices: Select the Correct Answer Offering insureds less than what they request in their loss notice. Refusing to pay a claim after conducting a thorough investigation. Failing to deny coverage of a claim within a reasonable amount of time after concluding the investigation. Raising an insured's premium rates after paying a claim.
Failing to deny coverage of a claim within a reasonable amount of time after concluding the investigation
A "hostile fire" is defined by the Standard Fire policy as: Answer Choices: Select the Correct Answer One that is set and burns within its intended boundaries. One that is set by a hostile entity for any intended reason. One that burns beyond its intended boundaries. One that is set by someone who intends it to produce damage.
One that burns beyond its intended boundaries
Mr. Thompson carries the minimum auto limits in his state. He drives his car to New York which requires bodily injury limits of $25/50 and a wrongful death limit of $50/100 and no-fault coverage. If he has an accident in New York what coverage would he have? Answer Choices: Select the Correct Answer The coverage will automatically be modified to comply with the New York requirements. The insurance company will not raise the limits to those required in New York. The insured must pay an additional premium to have their limits increased before entering the state. Mr. Thompson will have to ask his company for higher limits before the trip.
The coverage will automatically be modified to comply with the New York requirements
What is the purpose of establishing loss reserves? Answer Choices: Select the Correct Answer To determine the exact amount the company expects to pay. To establish an estimate of the total amount the insurer expects to pay on a claim. To determine ultimate legal liability. To estimate the legal expenses to be incurred in a claim situation.
To establish an estimate of the total amount the insurer expects to pay on a claim
An insured who had a $500,000 primary liability policy purchased a $1 million Umbrella liability policy with a $2,000 self-insured retention limit. Later, the insured allowed the required underlying primary policy with a limit of $100,000 to expire. A week after that, the insured became liable for a $100,000 loss that is not excluded by the provisions of either the primary policy or the Umbrella policy. How will this loss likely be settled? Answer Choices: Select the Correct Answer The insured will pay the full $100,000 loss. The umbrella policy will pay the full $100,000 loss. The underlying policy will pay the full $100,000 loss. The insured will pay $2,000, and the umbrella policy will pay the remainder of the loss.
The insured will pay the full $100,000 loss
Spencer is covered under a standard Personal Automobile policy with a policy inception date of October 15th. Additionally, the policy will expire on October 15th of the current year. Spencer contacts his agent on October 7th and asks to have an new endorsement added to his policy. The agent agrees, adds the coverage the same day, and informs Spencer that there will be an additional premium of $20 per month charged. When will the adjustment of premium be effective for Spencer? Answer Choices: Select the Correct Answer Spencer would not be permitted to add an endorsement until the policy period ends and a new policy is issued sometime after October 15th. October 16th. October 15th. October 7th.
October 7th.
Mr. York had his pickup truck stolen while it was parked in a "no parking" zone outside his office. The value of the truck was $18,500. In addition, tools valued at $200, extra tires and hubcaps for the truck valued at $550 and a tarp worth $50 were in the truck. Mr. York has a collision deductible of $500 and a comprehensive deductible of $250. The insurance company will pay what amount? Answer Choices: Select the Correct Answer $18,000 $18,250 $19,050 $18,800
$18,800
