Texas Practice Exam 10
A leased vehicle is considered to be a covered auto under the personal auto policy (PAP) if it is a private passenger auto leased for at least: a. 6 consecutive months. b. 48 hours. c. 30 consecutive days. d. 1 year.
a. 6 consecutive months.
Which of the following may be included in the Commercial Package Policy? I. Commercial Auto. II. Commercial Inland Marine. III. Equipment Breakdown coverage. IV. Aviation. a. I, II, and III only b. I and II only c. II and III only d. I, II, III, and IV
a. I, II, and III only
Bridges and tunnels may be insured under: a. Inland Marine Forms b. Business floater forms. c. Transportation forms. d. Equipment dealer's forms.
a. Inland Marine Forms
With inland marine insurance bridges, tunnels, and communication towers are referred to as: a. Instrumentalities b. Subject to the perils of transportation c. Rolling stock d. Permanent structures
a. Instrumentalities
Each of the following is a feature of Business Income Coverage, EXCEPT: a. Monetary deductibles. b. Consequential loss coverage. c. Optional coverages are available. d. Coinsurance.
a. Monetary deductibles.
Under a Commercial Property policy, which of the following is not a covered peril under the Basic Cause of Loss form? a. Water damage b. Explosion c. Sinkhole collapse d. Smoke
a. Water damage
A family takes their 50 horsepower power boat to the lake on a trailer towed behind their personal auto. The pleasure boat is adequately covered under which of the following policies? a. Watercraft. b. Dwelling. c. Homeowners. d. Automobile.
a. Watercraft.
Katherine lives in Texas. A third-party claim has been filed against her insurance policy by Joe, for an accident in which Katherine was liable. Joe's attorney contacts Katherine's insurance company and makes an initial offer to settle the claim. The insurance company must notify Katherine of the offer, in writing: a. Not later than the 15th day after the date the initial offer was made. b. Not later than the 10th day after the date the initial offer was made. c. The insurer is not required to inform Katherine of the initial offer. d. Not later than the 30th day after the date the initial offer was made.
b. Not later than the 10th day after the date the initial offer was made.
Teri is a Texas adjuster who has had her license suspended by the Commissioner. What is the maximum length of time Teri's license can be suspended according to the Texas insurance code? a. Six months. b. One year. c. Nine months. d. Three months.
b. One year.
Which of the following would be considered a material misrepresentation by an insured that could void the insurance contract? a. When completing the application, Pat accidentally reverses the number in her street address. b. Robert fails to reveal that he manufactures fireworks in his basement. c. Carol has three dogs but does not mention this on the application. d. Kathy states on the application that she has been insured with three different insurance companies.
b. Robert fails to reveal that he manufactures fireworks in his basement.
Which of the following correctly describes "Included Operations" as it relates to Automobile Physical Damage claims? a. The separate sections of the unibody frame that needed to be repaired, and the repair costs for each. b. The separate tasks that are included as part of a repair procedure, and the labor cost to perform these procedures. c. The separate tasks to repair an automobile are grouped into "included operations" and the labor costs for each group of tasks is listed on the repair estimate. d. The number of bolted parts that must be removed from a conventional body frame in order for repairs to be made, and the labor costs to remove them.
b. The separate tasks that are included as part of a repair procedure, and the labor cost to perform these procedures.
Most aircraft hull policies are written on a: a. Replacement cost basis b. Market value c. Valued basis d. Actual cash value basis
c. Valued basis
Which of the following would be considered an unfair claims practice act? a. An advertisement, announcement or statement containing any assertion, representation or statement with respect to the business of insurance or with respect to any person in the conduct of his insurance business, which is untrue, deceptive or misleading. b. Unfair discrimination in terms of insurance premiums being charged. c. Making false statements as to the financial status of an insurance company. d. Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured.
d. Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of, the insured.
Part D of the personal auto policy does NOT cover: a. Earthquake. b. Explosion. c. Wind. d. Freezing.
d. Freezing.
Which of the following would be considered a "collision" peril under auto physical damage coverage? a. Riot b. Striking an animal c. Missiles or falling objects d. Hitting a pot hole
d. Hitting a pot hole
Trenton has just landed his plane and it is still moving very quickly down the runway when another plane crashes into the side of his plane and causes extensive damage. For the purposes of Aviation coverage, this occurrence took place while Trenton's plane was: a. In flight. b. Not in motion. c. In transition. d. Not in flight.
d. Not in flight.
Which of the following terms is used to indicate that the insurance company is the only party legally bound to perform its duties under the policy? a. Aleatory b. Conditional c. Absolute d. Unilateral
d. Unilateral
If a building insured under a BOP has been vacant or unoccupied beyond _____ the insurer can send the insured a notice of cancellation. a. 60 days b. 30 days c. 45 days d. 90 days
a. 60 days
An oral or written contract for temporary insurance is referred to as a: a. Binder. b. Rider. c. Declaration. d. Certificate of Insurance.
a. Binder.
When an insurance company is called upon to defend an insured who has been named in a lawsuit, the amount it will spend in defense costs is: a. Not limited. b. Subject to the per occurrence limit. c. Subject to the general aggregate limit. d. Subject to the same amount as the amount of coverages for damages.
a. Not limited.
The focus of Equipment Breakdown coverage is: a. Prevention of loss b. Protection from loss c. To provide extra coverage over the property policy d. To reinforce the explosion and fire perils
a. Prevention of loss
The insured carries $100,000 loss of income coverage with a 25% monthly limitation. He sustains a loss of $35,000 for the first month and $20,000 the second month. How much will be paid? a. $55,000 b. $45,000 c. $35,000 d. $20,000
b. $45,000
A public adjuster represents the interest of: a. The insurer b. The insured c. The employer d. The interest of the general public
b. The insured
Which of the following would be eligible to purchase a BOP? a. Movie Theater b. Automobile repair shop c. A six unit apartment building d. A credit union
c. A six unit apartment building
Kate is a claims representative who has been involved in adjusting a very complex claim. During a meeting with the claimant and the claimant's attorney, Kate asks the claimant to sign an authorization for access to his medical records. Which of the following is the term used to describe this stage of the claims process? a. Evaluation. b. Resolution. c. Investigation. d. Negotiation.
c. Investigation.
When someone dies without a will they are said to have died: a. In Replevin. b. Testate. c. Without a Principal. d. Intestate.
d. Intestate.
Connie intentionally trips her neighbor while the neighbor is trespassing on the insured's property. Although the neighbor is not injured, Connie gives the neighbor $500 in cash to settle any potential liability claim. How will Connie's insurance company most likely respond in this situation? a. The insurer will reimburse Connie for the entire $500. b. The insurer will reimburse Connie for $500, less any applicable deductible. c. The insurer will sue the neighbor for the return of the $500 because the neighbor was not injured. d. The insurer will deny liability coverage because Connie's action was intentional.
d. The insurer will deny liability coverage because Connie's action was intentional.
Which of the following would require bailee coverage? a. A TV repair shop b. A grocery store c. A landscaper d. A maid service company
a. A TV repair shop
When insurance is written on a dwelling form each of the following types of property would be insured under Coverage A (dwelling coverage), EXCEPT: a. A detached garage. b. An attached laundry room. c. A central air conditioner. d. Materials in the yard intended for a new addition to the home.
a. A detached garage.
Under an aircraft policy what is NOT a covered territory usually covered (unless endorsed) while the aircraft is in flight? a. Costa Rica b. Mexico c. Canada d. Alaska
a. Costa Rica
The Ordinance or Law Endorsement, when attached to a Commercial Property policy, provides: a. Coverage for the additional costs of rebuilding/repairing/upgrading structures after a covered loss, to comply with a law or ordinance. b. Coverage for loss due to government seizure of property. c. Coverage for the loss of rent after to the imposition of a new zoning law. d. Coverage for the insured's expenses to comply with local ordinances or laws when constructing a new commercial building.
a. Coverage for the additional costs of rebuilding/repairing/upgrading structures after a covered loss, to comply with a law or ordinance.
The premiums for workers compensation are based on: a. The job description of the employees (the work they perform). b. The location of the risk. c. The state schedule of benefits. d. Claim loss ratio.
a. The job description of the employees (the work they perform).
During a tornado, Natalie's house is destroyed when a section of a wall is blown down, knocking over a heater, which sets the house on fire and creates smoke. The proximate cause of this loss is: a. The tornado. b. The fire. c. The collapse of the wall. d. The heater.
a. The tornado.
Sierra's home is located in a flood zone. In insurance terms, the location of Sierra's home is considered: a. A peril. b. A hazard. c. A risk. d. A proximate cause.
b. A hazard.
A church has had the woodwork in the building refinished and new stain and varnish has been applied. The workers placed the rags and brushes that were used to apply the varnish in a small closet and closed the door, creating the possibility of spontaneous combustion. Which of the following terms best describes this condition? a. Catastrophe. b. Hazard. c. Risk. d. Peril.
b. Hazard.
To be compensable under a Workers Compensation policy, which of the following about an employee's injury must be true? I. The injury must arise out of employment II. The injury must arise within the scope of employment III. The injury must not be the fault of the employee a. I only b. I and II only c. I, II, and III d. II and III only
b. I and II only
Miranda has been work part-time in Texas for two different companies for over a year. She is injured on the job and submits a claim for benefits. Using the following information, calculate Miranda's average weekly wage. Then, select the answer choice that is rounded to the closest amount that will be used as Miranda's average weekly wage on the claim. Miranda's wages for the 13 weeks immediately preceding the injury: Weeks 1 - 4 at Company A: $240 and Company B: $200 Weeks 5 - 8 at Company A: $262 and Company B: $222 Weeks 9 - 11 at Company A: $247 and Company B: $198 Weeks 12 - 13 at Company A: $282 and Company B: $249 a. $1,900.00 b. $6,093.00 c. $468.69 d. $146.15
c. $468.69
What is the "retained limit" of a Personal Umbrella policy? a. The cost of defending the insured in a lawsuit. b. Supplementary Payments coverage. c. A deductible that the insured pays when the Personal Umbrella policy covers a claim that was excluded by the underlying liability policy. d. A percentage of the policy limits.
c. A deductible that the insured pays when the Personal Umbrella policy covers a claim that was excluded by the underlying liability policy.
The authority the public believes the agent has based on the agent's actions is known as: a. Fiduciary Authority b. Expressed Authority c. Apparent Authority d. Implied Authority
c. Apparent Authority
Many stationary objects, such as bridges, tunnels and power lines fall within the nationwide marine definition because they are considered to be: a. Instrumentalities of transportation and communication. b. Of substantially high values. c. Capable of being transported. d. Exposed to the same perils as vessels at sea.
a. Instrumentalities of transportation and communication.
In the ocean marine insurance policy, the term "average" means: a. Loss or damage. b. The ACV of the ship. c. The average value of the claim insured against by the perils of the sea . d. That coverage is written on a named peril basis.
a. Loss or damage.
Any misinformation provided by an applicant which is such that the insurance company would not have issued a policy if the true facts were known is: a. Material misrepresentation. b. Malfeasance. c. Fraud. d. Concealment.
a. Material misrepresentation.
Collin suffered a work-related injury on the morning of June 2nd and was off work completely until he returned to work on full duty on June 20th. Collin had worked for his employer for four years and was paid $55,650 per year. Collin's state sets the TTD rate at 70% percent of the average weekly wage. The state sets the maximum compensation rate at $580 per week and the waiting period at 5 days retroactive after 7 days. Collin was not paid for working on February 5th. Collin's average weekly wage is approximately ____ and the amount of compensation benefits he will receive per week while off work is approximately ____. a. $1,070 / $749 b. $1,070 / $580 c. $749 / $580 d. $580 / $580
b. $1,070 / $580
Which of the following is not true about the coinsurance clause in commercial property insurance? a. If an insured does not insure up to a stated % of value, they will become a coinsurer on a partial loss b. It is not relevant on a total loss. c. It allows for a variance in the rate depending on the coinsurance percentage. d. It allows an insured to collect up to 80% on a covered loss
d. It allows an insured to collect up to 80% on a covered loss
Which of the following conditions is not found in the commercial inland marine conditions form? a. Appraisal b. Pair, Set or Parts c. No Benefit to Bailee d. Maintenance of Security Systems
d. Maintenance of Security Systems
A Texas adjuster has adjusted a claim under a policy type for which he is not licensed. This is considered a: a. Misdemeanor and is punishable by a fine of not more than $1,000. b. Felony and is punishable by a fine of $10,000 and confinement in the federal penitentiary for not more than 1 year. c. Felony and is punishable by a fine of not more than $500, confinement in the county jail for not more than six months, or both. d. Misdemeanor and is punishable by a fine of not more than $500, confinement in the county jail for not more than six months, or both.
d. Misdemeanor and is punishable by a fine of not more than $500, confinement in the county jail for not more than six months, or both.
The most common method of settling liability insurance claims is through: a. ADRs. b. Arbitration. c. Mediation. d. Negotiated settlement.
d. Negotiated settlement.
Roger has his golf clubs stolen out of the trunk of Sam's car. Which policy will pay? a. Sam's automobile policy b. Sam's homeowner policy under the extended property coverage c. Roger's automobile policy d. Roger's homeowner policy
d. Roger's homeowner policy
Under a dwelling policy what is the maximum that would be paid for one month for additional living expenses if Coverage A was $75,000? a. $1,250 b. $500 c. $1,000 d. $750
a. $1,250 75/20% then / 12 months.
An insured had a $300,000 underlying liability policy and a $1 million umbrella liability policy with a $300,000 retained limit and a $2,000 self-insured retained limit. An occurrence resulted in $400,000 in personal injury damages which are not excluded by either policy. Shortly thereafter the insurer providing the underlying policy became insolvent. How much of the damages would be covered by the umbrella liability policy? a. $100,000 b. $300,000 c. $398,000 d. $400,000
a. $100,000
Which one of the following is an "employee" under Texas workers compensation law and not exempt from the law? a. An employee temporarily assigned to do a job outside the employer's normal business. b. An independent contractor engaged in construction work. c. A longshoreman who unloads ships at the dock. d. A housekeeper employed by a home owner.
a. An employee temporarily assigned to do a job outside the employer's normal business.
Which of the following is a type of "voluntary loss" taken to save the property from further loss? a. General Average Loss b. Partial Average Loss c. Actual Total Loss d. Constructive Total Loss
a. General Average Loss
Which of the following ISO Homeowners forms does not provide full coverage on Dwelling - Coverage A? a. HO-4 b. HO-5 c. HO-2 d. HO-3
a. HO-4
The insurance company does not pay for certain damaged property under an Equipment Breakdown policy. Identify the property. a. Property of others b. Property of the insured c. Obsolete property d. Building damage caused by a steam boiler explosion
c. Obsolete property
For which of the following does the deductible apply under the aircraft hull policy? a. Collision b. Theft c. Lightning d. Explosion
a. Collision
The three parties to a contract bond are: a. Principal, obligee, surety. b. Obligor, principal, surety. c. Principal, obligee, employee. d. Employee, obligor, principal.
a. Principal, obligee, surety.
Which of the following dwelling forms provides "open peril" coverage for dwellings and other detached structures? a. The Special Form only b. The Basic, Broad and Special Forms c. The Basic and Broad Forms only d. The Broad and Special Forms only
a. The Special Form only
What feature is common to most property insured under a commercial inland marine policy? a. Usually in transit b. Rarity c. Changing values d. Named peril coverage
a. Usually in transit
Under which of the following claims settlements are the claim invoices presented and paid with no attempt to obtain a separate release? a. A partial release. b. A walk-away release. c. An open-end release. d. Structured settlement.
b. A walk-away release.
The personal liability section of a Homeowners Policy covers which of the following? a. Damage to an insured's property caused by a visitor. b. Bodily injury or property damage caused by the personal activities of an insured. c. Bodily injury to a resident caused by a neighbor's dog. d. Bodily injury or property damage caused by war.
b. Bodily injury or property damage caused by the personal activities of an insured.
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. a. $385.00 b. $203.60 c. $162.88 d. $736.00
c. $162.88 80% of weekly wages, then subtract new weekly wages. Take the total by 80% = SIBs.
What is a "proof of loss"? a. A full release of all claims. b. A statement made by the insurer as to the coverage that may apply on a claim. c. A formal statement made by the insured to the insurance company regarding a loss. d. Special requirements made to the insured by the insurance company in case of a claim.
c. A formal statement made by the insured to the insurance company regarding a loss.
Liability coverage under the personal auto policy includes: a. Bodily injury coverage. b. Property damage coverage. c. Both bodily injury and property damage coverage. d. Damage to personal property of others in the insured's vehicle and damaged in an accident.
c. Both bodily injury and property damage coverage.
All of the following statements about HO-8 are correct, EXCEPT: a. The policy form is designed for older or historical homes with replacement values that exceed market values. b. HO-8 covers the dwelling, other structures, and personal property on a named perils basis. c. HO-8 covers the same named perils as the HO-2. d. HO-8 is also known as the Modified Coverage Form.
c. HO-8 covers the same named perils as the HO-2.
Which of the following is not relevant to Tort Law? a. Only a simple majority is required to reward the claimant for damages. b. Tort law applies only to civil trials. c. The state charges the defendant criminally. d. The defendant is called the tortfeasor.
c. The state charges the defendant criminally.
The purpose of expediting expenses under the Equipment Breakdown policy is: a. To pay moving expenses b. To pay the cost of removal c. To pay for repairs or replacement in a timely manner d. To reimburse the insured for loss of use
c. To pay for repairs or replacement in a timely manner
When is a value reporting best used? a. To provide an appraisal to the insurer b. To report a theft of property to law enforcement c. To provide fluid limits of coverage for fluctuating values of property at risk d. To prove a loss
c. To provide fluid limits of coverage for fluctuating values of property at risk
In claims adjusting, which of the following is not considered an unfair claims act? a. Failing to acknowledge or act promptly upon communications regarding policy claims. b. Refusing to pay claims without conducting a reasonable investigation upon all available evidence. c. Failing to adopt and implement reasonable standards for prompt investigation of claims. d. Failing or refusing to separate the damaged from the undamaged property in order to properly evaluate the loss and damages owed the insured.
d. Failing or refusing to separate the damaged from the undamaged property in order to properly evaluate the loss and damages owed the insured.
Which of the following is not a covered peril under the Standard Fire policy? a. Actions of war. b. Removal from the premises any property endangered by a covered peril. c. Lightning. d. Fire.
a. Actions of war.
The Commercial Building and Personal Property coverage form provides five extensions of coverage, but only if: a. An 80% or higher coinsurance percentage is shown on the Declarations page, and the property amount of coverage, based on that percentage, is purchased. b. The extensions are listed on the Declarations page of the policy, and an additional premium is paid. c. The coverage for buildings is written on a replacement cost basis. d. All coverages under the policy are written on a blanket basis.
a. An 80% or higher coinsurance percentage is shown on the Declarations page, and the property amount of coverage, based on that percentage, is purchased.
In a liability situation, "proximate cause" includes what important feature? a. An unbroken chain of events must lead to the bodily injury or property damage. b. The cause of the loss must be proven as negligent. c. The indirect cause of loss must be proven before the proximate cause can be proven. d. An intervening cause of loss must have broken the chain of events for the proximate cause of the loss to be proven.
a. An unbroken chain of events must lead to the bodily injury or property damage.
While stopped in traffic at a red light your car is hit in the rear by Mr. Jones. The damage to your car would be addressed by which of the following coverages? a. Your collision insurance only. b. Your comprehensive only. c. Mr. Jones property damage liability and your collision insurance. d. Mr. Jones property damage liability only.
c. Mr. Jones property damage liability and your collision insurance.
A tornado blows over a wall of a barn which, in turn, knocks over a lamp and starts a fire. What is the proximate cause of loss? a. Tornado b. Smoke c. Fire d. Water Damage
a. Tornado
A Personal Articles Floater (PAF) is designed to protect property owners from damage or losses to personal property while in the process of transport. Which of these statements about a PAF is FALSE? a. A PAF is often used to insure cameras, furs, or fine art. b. A PAF only covers property in the continental United States. c. A PAF is an open-peril policy. d. A PAF carries no deductible.
b. A PAF only covers property in the continental United States.
Linda has received an inquiry from the Texas Commissioner. She realizes that she is required by law to respond to the inquiry, however her response contains information that is confidential and privileged. Which of the following is true of Linda's response to the Commissioner's inquiry? a. The information must be provided to the Commissioner and when Linda sends her response in writing, the information is no longer considered privileged or confidential. b. The information will remain confidential and privileged until it is introduced as evidence in an administrative hearing or in a court of law. c. The portion of Linda's response that is privileged and confidential will be redacted after the Commissioner reviews her response. d. Linda is prohibited by law from including privileged or confidential information in her response.
b. The information will remain confidential and privileged until it is introduced as evidence in an administrative hearing or in a court of law.
How long will the Businessowners Policy pay for "extra expense coverage" used to reduce the loss of income when the insured has suffered a loss from a covered peril? a. Six consecutive months b. Twelve consecutive months c. Until the repairs are complete and the business re-opens, subject to a 12 consecutive month limitation d. Only until the policy expiration date
c. Until the repairs are complete and the business re-opens, subject to a 12 consecutive month limitation
Oliver Dogwood was in an auto accident which destroyed his car. While investigating the accident, Adjuster Doright found that Mr. Dogwood paid $1,000 for the vehicle. After checking with others he found the same vehicle with an asking price of $1,700, a retail price of $2,150 and a dealer price of $1,750. What amount will Mr. Dogwood receive? a. $1,950 b. $2,150 c. $1,000 d. $1,700
b. $2,150
Cars driven by Sue Trent and Jim Higgins were involved in an automobile accident where Mr. Higgins was at fault. Sue Trent's car was a total loss and valued at $6,000, plus she sustained bodily injuries totaling $25,000. Scott Finley, Ms. Trent's passenger, was injured and incurred $6,000 in medical expenses. Mr. Higgins, the responsible party, carries bodily injury coverage with limits of $15,000 per person and $30,000 per accident, and property damage coverage of $5,000. His policy will pay a maximum of: a. $26,000 b. $29,000 c. $35,000 d. $39,000
a. $26,000
Under the Commercial Property Liberalization Clause, if the insurer makes any coverage revision which broadens the coverage without an additional premium charge, it will automatically apply to existing policies if the revision is adopted during the policy term or within: a. 45 days prior to the effective date. b. 30 days prior to the effective date. c. 60 days prior to the effective date. d. 75 days prior to the effective date.
a. 45 days prior to the effective date.
Coverage A of the Homeowners policy would provide coverage for all of the following, EXCEPT: a. A storage shed connected to the dwelling by a utility line. b. The residence being insured. c. Structures attached to the dwelling. d. Material and supplies intended for repair or alteration of the dwelling.
a. A storage shed connected to the dwelling by a utility line.
Which of the following would qualify for the Transportation Expense coverage: I. Car rental fees incurred by the insured due to physical damage to his covered auto. II. Loss of use expenses for which the insured is liable because of physical damage to his covered auto. a. Both I and II b. Neither I nor II c. I only d. II only
a. Both I and II
Which of the following losses is NOT excluded under the Physical Damage coverage of a personal auto policy? a. Damage to a covered auto while being used as part of a car pool. b. Damage to equipment designed for the detection of radar. c. Loss caused by freezing of the cooling system. d. Loss of custom furnishings in a customized van.
a. Damage to a covered auto while being used as part of a car pool.
Which statement best describes "defense" coverage under the Section II - Liability coverage of the Businessowners policy? a. Defense costs are not subject to a limit. b. Defense costs are included in the aggregate limit of insurance. c. Defense costs are paid but limited to claims submitted during the policy period. d. Defense costs are paid at twice the limit of the policy.
a. Defense costs are not subject to a limit.
In commercial property what is the effect of exercising the "agreed value" option? a. Negates coinsurance b. Pays replacement cost c. The insurer and insured must agree on the value of all insured property after a loss d. The insured reports values at an agreed upon date
a. Negates coinsurance
The commercial property Business Income Coverage Form covers all of the following, EXCEPT: a. Non-continuing operating expenses. b. Actions of a civil authority. c. Loss of business income. d. Continuing operating expenses.
a. Non-continuing operating expenses.
The principle of indemnity is illustrated by which of the following? a. Restores an insured to the same condition enjoyed before a loss b. Allows an insured to profit from a loss c. Limits recovery to actual cash value d. Requires an insured to assign any rights of recovery against a third party
a. Restores an insured to the same condition enjoyed before a loss
What does an insurer do when the insured has possibly waived his or her rights in a liability claim? a. Send a "reservation of rights" letter. b. Deny the claim. c. Pay only a portion of the proven liability claim. d. Insist the insured obtain his or her own legal counsel.
a. Send a "reservation of rights" letter.
Which of the following types of property may be insured under a furriers block policy? a. Stocks of furs owned by the insured furrier. b. Customer's furs entrusted to the furrier for storage. c. Furs or pelts on the premises of a breeder. d. Fur garments sold and delivered to customers.
a. Stocks of furs owned by the insured furrier.
Mrs. Vincent is covered on a PAP policy which covers her 2012 Ford SUV. She carries liability and full physical damage coverage. Her neighbor owns a 2002 Chevrolet pick up truck with liability coverage only. Mrs. Vincent borrows the truck to pick up lawn furniture, parks the truck at Home Depot and leaves the keys in the ignition. The truck is stolen and later found wrecked. Which of the following would apply? a. The loss is covered under Mrs. Vincent's "other than collision coverage." b. The loss would be covered under her neighbor's policy. c. The loss is covered under Mrs. Vincent's collision coverage. d. The loss would be covered under her neighbor's homeowners coverage.
a. The loss is covered under Mrs. Vincent's "other than collision coverage."
Under the conditions section of the BOP, all of the following would be considered vacant EXCEPT: a. A 100 unit apartment building of which 70 units are not rented. b. An office building containing two empty units and these two empty suites represent 25% of the total floor space. c. A mercantile building with a print shop on the ground floor but the second and third floors are not being utilized. d. A new building which has not been rented out at all.
b. An office building containing two empty units and these two empty suites represent 25% of the total floor space.
On December 31st of each year, the Texas Department of Insurance computes the reinsurance reserves for all unexpired risks of domestic, foreign and alien insurers doing business in Texas. All of the following types of insurance are EXEMPT from these calculations, EXCEPT: a. Life insurance. b. Commercial property insurance. c. Commercial inland marine insurance. d. Lightning insurance.
b. Commercial property insurance.
Mr. Smith's bicycle shop enters into many written and oral agreements with customers. Mr. Smith's agent informs him that the liability on his BOP contains: a. Products and Completed Operations Liability b. Contractual Liability c. Fidelity Bond d. Premises and Operations Liability
b. Contractual Liability
Misrepresentation is: a. Encouraging a prospect to drop an existing policy in order to sell another policy. b. Leading a client to believe that an insurance policy provides benefits that it does not provide. c. Offering an inducement for the purchase of insurance. d. Suggesting that the insured's carrier is inferior and does not pay claims promptly.
b. Leading a client to believe that an insurance policy provides benefits that it does not provide.
The Protect & Indemnify (P & I) insurance company is formed and domiciled in the state of Rhode Island, but applies for a certificate of authority to write insurance policies in the state of New Hampshire. Which of the following statements is true regarding P & I insurance company? a. P & I insurance company is considered a domestic company in the state of New Hampshire. b. P & I insurance company is considered a domestic company in the state of Rhode Island. c. P & I insurance company is considered a foreign company in the state of Rhode Island. d. P & I insurance company is considered a foreign company in the state of New Hampshire.
b. P & I insurance company is considered a domestic company in the state of Rhode Island.
A large tree has fallen into Paul's yard caused by wind. The claims service representative (CSR) advises Paul to call a contractor to remove the tree and send the bill to the insurance company. The bill is $1,200. However, the policy coverage for the debris removal of a tree that has fallen by wind, is only $500 unless the tree hits the house, which was not the case. What should the adjuster do? a. Pay only $500. b. Pay the $1,200. c. Pay the $1,200, but then explain the policy provisions and ask to insured to reimburse the insurer for the difference. d. Negotiate.
b. Pay the $1,200.
If the named insured's employees use their own vehicles to run errands, and the named insured does not have commercial auto coverage, what coverage should be added to the insured's Businessowners policy? a. The Business Auto endorsement. b. The Hired and Non-owned Auto Liability endorsement. c. The Non-owned and Borrowed Auto Liability endorsement. d. Coverage for this exposure cannot be added to the Businessowners policy, a separate auto policy must be purchased to protect the insured.
b. The Hired and Non-owned Auto Liability endorsement.
Typically, how are defense costs handled under an aviation policy? a. Covered under the policy's insurance limit b. A separate limit applies c. Handled as a supplementary payment d. Paid after a deductible is applied
c. Handled as a supplementary payment
Which of the following statements is TRUE regarding the automatic fines assessed by the Texas Department on licensees who do not comply with the continuing education requirement? a. All automatic fines assessed must be paid by check or money order payable to the Texas Guaranty Fund. b. All automatic fines assessed must be within 45 days after the fine was issued. c. If a licensee fails to obtain the required number of continuing education hours for their license type, an automatic fine of $50 per credit hour not completed will be assessed. d. If the licensee would like to contest the automatic fine, they must make a written request for a contested case hearing within 45 days after the fine was issued.
c. If a licensee fails to obtain the required number of continuing education hours for their license type, an automatic fine of $50 per credit hour not completed will be assessed.
Business Income Protection is designed to: a. Provide continued income to the policyholder after a covered loss. b. Provide the same income the business would have received if there had been no loss. c. Pay what the net profit or loss before income taxes would have been. d. All of the responses are correct.
d. All of the responses are correct.
All of the following are duties that a Texas insurer must perform within 15 days after receipt of the claim, EXCEPT: a. Acknowledge receipt of the claim. b. Commence an investigation of the claim. c. Request from the claimant all items, statements, and forms that the insurer reasonably believes, at the time, will be required from the claimant. d. Schedule a hearing to dispute the claim, if necessary.
d. Schedule a hearing to dispute the claim, if necessary.
