WATERCRAFT: AL Property & Casualty Exam Questions

Fly-By-Night Construction Company has a CGL policy with coverage dates of 03/01/11 to 03/01/12. The per occurrence limit is $500,000 and the general aggregate limit is $1,000,000. The maximum that can be paid during the policy period on the insured's behalf is:. $1,000,000. $500,000. $1,500,000. $2,000,000.

$1,000,000. The maximum per occurrence is $500,000 but, the maximum for all claims paid during the policy period is the aggregate limit of $1,000,000.

Under the HO-3 policy, the maximum coverage limit available for boats and trailers lost due to theft is: $500 $1,500 $2,000 $2,500

$1,500 Boats and their trailers are subject to a theft limitation of $1,500. However, theft is not covered if the property is off the insured's residence premises.

A BOP policy has a $500,000 occurrence limit for liability and a $1,000,000 aggregate limit. If claims for $600,000 and $400,000 have been filed in two separate incidents, how much coverage remains, if any, for any future claims submitted during the policy term? $500,000 -0- $100,000 $1,000,000

$100,000

What is the limit that is paid for water damage under an Equipment Breakdown policy? $10,000 $15,000 $25,000 Nothing

$25,000

A surplus lines broker in Alabama must file a bond in the amount of: $50,000. $100,000. $25,000. $10,000.

$50,000. $50,000 is the amount required by law.

The named insured is an auto dealer with a single insured location. Physical damage coverage under the insured's garage policy is written on a reporting basis. On the date of the insured's last report, the value of covered autos at the insured's location was $400,000; the insured's report on that date showed values of $300,000. A covered loss occurs, with damage totaling $80,000. How much of this loss will the garage insurer pay? $80,000 $60,000 $40,000 $0

$60,000 The insured will suffer a penalty equal to the percentage of the under reporting of the inventory bears to the actual inventory. The insured reported 25% less than the actual inventory and would be paid $60,000 instead of the $80,000 loss.

In Alabama, an adjuster must keep records pertaining to transactions under his or her license for at least: 1 year. 2 years. 3 years. 5 years.

1 year.

Under a Watercraft Policy, which of the following would be covered? 1 - Bodily Injury 2 - Property Damage 3 - Medical Payments to Others

1,2, and 3

Under Homeowners insurance, "Medical Payments to Others" coverage will cover necessary medical expenses incurred within: 1 year of the accident causing the injury. 4 years of the accident causing the injury. 3 years of the accident causing the injury. 2 years of the accident causing the injury.

3 years of the accident causing the injury.

An Alabama licensee must inform the insurance department of a change in legal name or address within ___ of the change. 30 days 6 months 10 days 2 weeks

30 days

The continuing education requirements do not apply to producers who have been licensed in Alabama for 15 years and are at least ___ years of age. 60 62 55 65

60 Producers who have been licensed for 15 years and are at least 60 years old are not required to complete CE.

Under the livestock coverage form, how must livestock be covered? 80% to Value 90% to Value 100% to Value Actual Cash Value

80% to Value

All the following are true regarding a warranty, EXCEPT: A certain order of words, written or spoken, is necessary to create a warranty. A warranty can be expressed or implied. A warranty can refer to the past, present or future. A warrranty is guaranteed to be true.

A certain order of words, written or spoken, is necessary to create a warranty. No particular order of words, written or spoken, is necessary to create a warranty.

Assume that the auto in each of the following examples is insured for comprehensive coverage. Which of the losses would be excluded under the BAP? A fire destroys 10 CD's in the auto A thief removes a cassette player from under the auto's dash. The tape player had been permanently installed. A CB radio is damaged in a flood. The radio was permanently mounted in the auto's dash where the factory installs the radio. All of the losses are excluded.

A fire destroys 10 CD's in the auto The physical damage coverage of the BAP specifically excludes tapes, records, discs or other similar electronic devices designed for use with audio, visual or data electronic equipment.

All of the following would have an insurable interest in a home and be insurable under the homeowners program, EXCEPT: A co-owner of a 2-family house occupying the second floor apartment. The owner of a seasonal dwelling who has his primary dwelling insured under an HO-3. A non-occupant realtor. An individual who owns a house under construction.

A non-occupant realtor.

Which of the following is a valid reason to deny coverage or charge a higher premium for an automobile policy? Race or religion Adverse driving history or motor vehicle record Sexual orientation Ancestry

Adverse driving history or motor vehicle record

The insured owns a 20-foot fishing boat with a 50-horsepower motor. Which of the following policies would be best suited to cover a theft loss on a lake? Homeowner policy Personal article floater Boatowners policy Yacht policy

Boatowners policy The Boatowners policy would be the better product to cover a fresh water boat of this size and horsepower. The Homeowner policy has a limitation for physical damage coverage and does not cover the theft of a boat off the insured's premises. Also the HO policy would not cover the liability of an outboard motor of more than 25-horsepower.

Operating a motor vehicle in Alabama that is not covered by a liability insurance policy is considered a: Class C misdemeanor. Class A felony. Class A misdemeanor. Class B misdemeanor.

Class C misdemeanor. Motor vehicle liability insurance is required in Alabama. Operating a motor vehicle without it is considered a Class C misdemeanor.

Which of the following prevents someone from collecting payment for negligence under the laws of some states? Contributory Negligence Comparative Negligence Intervening Cause Assumption of Risk

Contributory Negligence

Commercial Building and Personal Property Coverage Forms apply to all of the following, EXCEPT: Dwellings. Buildings. Business personal property. Personal property of others.

Dwellings. Dwelling Forms are available for dwellings.

Which of the following would be covered under employee dishonesty? Money lost on the way to the bank Inventory shortages Embezzlement Robbery of the employee

Embezzlement The other answer choices are excluded or are not dishonest acts of an employee.

Which of the following is not considered a "breakdown" under Equipment Breakdown coverage? Mechanical failure Rupture or bursting caused by centrifugal force Electrical failure Lack of power, light, heat, steam or refrigeration

Lack of power, light, heat, steam or refrigeration

The maximum amount a policy will pay in the event of a loss is called the: Limits of liability. Coinsurance amount. Deductible. Pro rata return.

Limits of liability.

The insured owns a two family dwelling and is covered under a Homeowner policy. One of the units is rented. The insured also maintains a small incidental business in the structure. In case of a covered loss, which of the following would NOT be paid under Coverage D - Loss of Use? Rental income from the rental unit Additional living expenses incurred by the insured Loss of income from the incidental business Rental income and additional living expenses

Loss of income from the incidental business

The "impaired property" exclusion of a CGL policy's Coverage A deals mainly with: Loss of use claims due to "impaired property". Physical injury due to the "impaired property of others". Property damage due to "impaired products". Liability due to "impaired property".

Loss of use claims due to "impaired property".

The liability coverage section of the personal auto policy does not extend coverage to which of the following vehicles Mr. Love owns? A camper-trailer pulled by the family car The family car A pick-up truck with a gross vehicle weight of 7,000 pounds, used to deliver quotations for plumbing work. Motorcycles used for cross country travel

Motorcycles used for cross country travel Motorcycles must be added by a specific endorsement

When is abandonment of insured property to an insurer permitted under a commercial property policy? When written prior notice is lawfully delivered to the insurer When the insured desires immediate settlement When the property is certain to be a total loss Never

Never Today's property policies follow the tradition of the Standard Fire Policy by totally prohibiting abandonment of insured property by any party. The abandonment clause is brief: There can be no abandonment to this Company of any property.

Which of the following watercraft would be covered for liability under "Section II - Liability" of the Homeowners policy? A 28 foot sailboat owned by an insured. A 100 HP jet ski rented to the insured. An outboard motor boat with a 50 horsepower motor. None of the responses listed are correct.

None of the responses listed are correct. A sailboat must be less than 26 feet in length, the rented jet ski must be less than 50 HP and an outboard motor boat must be less than 25 HP.

A daughter is attending college and her family carries a tenant's homeowner policy HO-4 with $50,000 contents coverage. The daughter has about $15,000 of personal belongings consisting of clothing, musical instruments and electronic equipment, some appliances and other personal items. Which is the form to use to cover her property exposures? Personal effects form Personal articles form Personal property form The homeowner form

Personal property form

A deductible usually applies to which of the following automobile policy coverages? Physical Damage Bodily Injury Liability Property Damage Liability Medical Payments

Physical Damage

What type of coverage would a physician, surgeon, or dentist require? Businessowner's Homeowners endorsement Commercial Professional

Professional

John Smith has just made his last car payment which concludes his contract. The finance company, for reasons not immediately apparent, has the car repossessed. If Mr. Smith brings a suit, the court will allow Mr. Smith to retake possession of the car pending the court's final ruling as to ownership if Mr. Smith provides the court a: Attachment bond. Indemnity bond. Performance bond. Replevin bond.

Replevin bond. A replevin bond guarantees that if property is in the possession of party A is determined to belong to party B and the court orders its return to party B, party A will do so. Party A would first have to obtain an attachment bond, also required by the court, in case the property was wrongfully repossessed.

The term "theft" is broad enough to cover: Any illegal act committed Forgery or writing bad checks Arson for profit or extortion Robbery, burglary and larceny

Robbery, burglary and larceny Theft includes robbery, burglary and larceny as well as a mysterious disappearance where there is the presumption of theft. This is correct because theft provides the broadest definition of criminal activity.

A customer deposits items in a safe deposit box at the bank. These items are missing the next time the customer opens the box. What crime coverage is necessary to cover this loss? Safe Depository Guests Property Lessees of Safe Deposit Boxes Extortion-Commercial Entities

Safe Depository

The "named non-owner coverage" endorsement" is used to provide personal auto coverage for: Someone who does not own an automobile, but who drives borrowed or rented autos. Relatives of the named insured who do not live in the same household. Persons that drive the insured's vehicle with permission. Provides coverage for the named insured that is furnished a company vehicle.

Someone who does not own an automobile, but who drives borrowed or rented autos.

Which of the following is not needed for rating the premium in the BOP? Square foot area Gross sales Protection class Rate group

Square foot area BUT, it does play a role in determining the eligibility of the risk for the BOP.

The insured carries a workers compensation policy which includes employer's liability coverage. Which of the following is not covered by employer's liability coverage? Statutory benefits Suits brought by injured employees, in case of employer's gross negligence Suits brought by spouses or dependent of injured workers Legal defense costs

Statutory benefits Statutory coverage is found in Part I of the policy. Employer's liability Part II coverage does not cover those benefits that statutorily apply.

An insured has injured a third party while loading his private passenger automobile. Which of the following would respond to cover the claim? The Personal Auto Policy Section II of the Homeowner Policy A CGL Policy A Boatowners Policy

The Personal Auto Policy

"Policy territory" in the CGL includes: The United States only The United States and Canada The United States, Canada, and Mexico The United States, Canada, Mexico, and England

The United States and Canada

If a large employer has a current workers compensation policy with an experience modification factor above 1.00, which of the following is the most accurate statement? The employer has recently modified its products and services The employer has experienced a reduction in total payroll during the last year The employer has had better- than-expected claims experience during the last few years The employer has had worse-than-expected claims experience during the last few years

The employer has had worse-than-expected claims experience during the last few years An experience modification factor above 1.0 means that the employer's claims record during the experience period (the last four prior years excluding the most recent year) is worse than expected.

The insured owns an expensive rare painting. He has it appraised by an art dealer and has it insured for $50,000 under a personal articles floater. There is a market decline for this item. It is destroyed in a fire at his office. The company offers him $40,000, the current market value. How will the loss be handled? The item is not covered because it was away from the insured's residence at the time of the loss. The insurance company will cover the item for the full $50,000 amount. The insurance company is correct in offering fair market value at the time of the loss. The insurance company will ask for a reevaluation of the item based on records and documentation of the price paid, the current market value and the appraised value.

The insurance company will cover the item for the full $50,000 amount.

Which of the following should be insured by an HO-6? The owners of condominiums and townhouses A tenant who rents an apartment in a high-rise building The owner of a ranch-style house A person who wishes to schedule their valuable jewelry separately on a policy

The owners of condominiums and townhouses

Most inland marine "all risk" forms exclude loss or damage caused by: Smoke. Vandalism. War. Vehicles.

War.

The insured carries collision and other than collision coverage. Which of the following losses would be considered a collision claim? a - A rock rolls down a hill and strikes the insured vehicle b - The vehicle is damaged when a flood occurs and a large log strikes the vehicle c - The insured is going around a curve and fails to miss a large boulder in the road d - A tree falls on the vehicle causing hood and glass breakage damage

c - The insured is going around a curve and fails to miss a large boulder in the road

The insured carries $100,000 underinsured motorist coverage under his personal auto policy. He is injured by another driver who carries $25,000 bodily injury limits. If the insured is injured to the extent of $100,000, how much can he collect under his underinsured motorist coverage? a - $25,000 b - $50,000 c - $100,000 d - $75,000

d - $75,000 The insured could collect up to $75,000. The other driver's policy would pay $25,000 and the insured's UIM coverage would pay the rest of the claim up to $75,000.

Who pays for the services of the arbitrators under/uninsured motorist coverage? a - The Insurance Company b- The Insured c- The Party that wins the most as a result of arbitration d - Both the Insured and Insurer each pay for the arbitrator they selected and both will split the expense of a third arbitrator.

d- Both the insured and insurer each pay for the arbitrator they selected and both will split the expense of the third arbitrator. Uninsured motorist coverage contains an arbitration clause to settle disputes between the insured and the insurer. Each party selects one arbitrator and each pays for their own arbitrator. The two arbitrators select a third arbitrator. Each party will split the expenses of the third arbitrator.

Which of the following is least likely to be considered "transacting insurance" under most state laws? A person mails renewal policies to clients. A person presents insurance quotations to applicants. A person completes applications and transmits them to insurers. A person negotiates with insurers to get the best quotes for clients.

A person mails renewal policies to clients.

Bill Walters is named in the "drive other car" endorsement attached to the business auto policy of his brother, John Walters, and a premium is shown in the endorsement for liability coverage. Which of the following vehicles would be covered autos under the "drive other car" endorsement? A van being driven by Bill. The van is owned by Kathy Webster. A station wagon being driven by Tanya Walters, Bill's wife. She and Bill live together and she owns the station wagon. A pickup being driven by Bill as part of his job in a repair garage. The truck is owned by Ted Armor, Bill's boss. A sedan being driven by Bob Walter's, Bill's son. The car belongs to Bill.

A van being driven by Bill. The van is owned by Kathy Webster.

Under the farm property form with replacement cost coverage, after the first $1,000 how is the claim paid? ACV until repairs are completed and then the full replacement cost is paid ACV until the proof of loss is sent to the insurer ACV until the loss is paid by the insurer ACV unless the 80% of the total loss

ACV until repairs are completed and then the full replacement cost is paid

Under the HO Policy, loss of use would cover which of the following? Additional Living Expense and Fair Rental Value Personal Property The Insured's Liability Other Structures

Additional Living Expense and Fair Rental Value Coverage D, covers the loss of use of a dwelling

Which of the following can be used to provide coverage and comply with the workers compensation laws of Alabama? Purchase coverage from an approved workers' compensation carrier Provide coverage through a group self-insurance fund Individually self-insure, if qualified All of the responses are correct

All of the responses are correct

In ocean marine, what is covered by protection and indemnity coverage? All of the responses are correct. Loss of life, injury and illness. Crew member burial expense. Damage to docks, buoys and other structures not owned, leased, or hired by the insured.

All of the responses are correct.

The doctrine which relates to legal liability is: Strict Vicarious Res ipsa loquitor All responses listed are correct.

All responses listed are correct. All of the responses listed are correct. In the common law of negligence, the doctrine of res ipsa loquitur (Latin for "the thing speaks for itself") states that the elements of duty of care and breach can be sometimes inferred from the very nature of an accident or other outcome, even without direct evidence of how any defendant behaved.

Under a personal auto policy, which of the following persons would be excluded from coverage for bodily injury and property damage liability? An employee of the named insured, while transporting passengers for a fee. The named insured's spouse who resides in the same household as the insured. Any person using the car with the permission of the insured. Any person legally responsible for the use of the automobile with the insured's permission.

An employee of the named insured, while transporting passengers for a fee.

Al has an umbrella liability policy which does not pay damages until such time as Al is legally obligated to pay them. This type of policy is known as: A reimbursement policy. A pay-on-behalf-of policy. An indemnification policy. An obligation policy.

An indemnification policy.

Which of the following is an ideal form of protection for the frequent shipper of goods? Annual Transit Policy Trip Transit Policy Monthly Transit Policy Common Carrier Motor Truck Cargo Policy

Annual Transit Policy

You have an HO-3 policy on your home. Coverage F will pay medical expenses for: Anyone invited onto your property and injured while there A son or daughter away at college . You and all resident relatives Roomers and boarders

Anyone invited onto your property and injured while there "Medical Payments to Others" provides coverage for an injury occurring on the insured premises to a non-resident invitee.

A bid bond is used: 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.

Unless revoked or suspended, an Alabama insurance producer license will remain in effect: As long as the renewal fee is paid and the continuing education requirements are met. For 2 years. For 5 years. For 1 year.

As long as the renewal fee is paid and the continuing education requirements are met.

In property and casualty insurance, when must a person absolutely have an insurable interest? At the time of the loss At the time of the application completion At any time Before the loss occurs

At the time of the loss It is true that the insured must have an insurable interest at the time of the loss. Sometimes during the policy period there may be a name change and the insurable interests stated in the original application for coverage may change. One partner may sell his portion to another. Sometimes this name change is overlooked and causes problems when the incorrect named insured is left on the policy and the new name is left off and there is a loss. This occurs when there is a partnership ownership situation. So the more accurate answer is that the insured must absolutely have an insurable interest at the time of the loss.

Which of the following coverages provides payments to a third party, rather than to the named insured? Bodily injury and property damage liability Commercial property building coverage Automobile comprehensive coverage Medical payments under a personal auto policy

Bodily injury and property damage liability

Smoke damage to the insured premises caused by the sudden faulty operation of the insured's fireplace is covered under the: Both the DP-2 and the DP-3. DP-1. Both the DP-1 and the DP-2. Both the DP-1 and the DP-3.

Both the DP-2 and the DP-3.

The insurance department may suspend, revoke, or deny an agent's license for all of the following reasons, EXCEPT: Conviction of a misdemeanor that is unrelated to insurance. Untrue statements on an agent license application. Incompetency. Converting policyholder premium funds.

Conviction of a misdemeanor that is unrelated to insurance.

Which of the following would not be covered by garage liability? Costs the insured sustains to recall defective products. A customer falls down at the dealership building. A faulty break job causes a customer's vehicle to crash into another car. While driving a dealership-owned pickup, an employee has an accident, injuring another person.

Costs the insured sustains to recall defective products. Garage liability coverage includes automobile liability and commercial general liability as well, but products being recalled are excluded from the ISO form. This is because liability insurance is to cover something that occurs and products are recalled to prevent something from occurring.

Which of the following would NOT be a prospect for errors and omissions insurance? Dentists Insurance Agents Real Estates Agents Lawyers

Dentists A dentist would require medical malpractice coverage.

Which of the following is not considered to be an unfair claims settlement practice? Attempting to settle a claim on the basis of an application which was altered without the knowledge of the insured Making a claims payment and omitting the coverage under which payment is being made Denying a claim that is not covered by the policy. Stating to claimants that it always appeals arbitration awards for the purpose of compelling them to accept lower settlements

Denying a claim that is not covered by the policy.

An "other insurance" clause is included in an insurance policy to deal with the problem of: Duplicate insurance coverage. Excess insurance coverage. Inadequate coverage. Conditional coverage.

Duplicate insurance coverage. The other insurance clause is included in an insurance policy to provide a method of determining how much of a covered claim each insurer will pay when an insured carries more than one insurance policy. Settling a claim on a pro-rata basis is an example wherein each insurer pays its fair share of a loss, as determined by the percentage that the insurer's limit bears to the total coverage carried.

Which of the following coverages are not automatically included in the BOP? Seasonal increase in contents coverage Loss of income Employee dishonesty General liability coverages

Employee dishonesty

A person may be negligent if he or she: Fails to do what a reasonable and prudent person would do. Injures another person even though he acted prudently. Commits a deliberate act that injures another. Hires someone to damage another's property.

Fails to do what a reasonable and prudent person would do.

Which of the following is NOT covered under a premise burglary claim? Product is stolen Damage to a door Fire to the building caused from the break in Damage to a show case

Fire to the building caused from the break in Crime insurance coverage does not include the peril of fire to the premises however caused, except loss of or damage to "money" and "securities" and loss from damage to a safe or vault other than a safe or vault. Fire coverage is provided for most property under commercial property coverage.

Minimum coverage provided by the basic dwelling form (DP-1) includes coverage against loss by: Fire, lightning and internal explosion. Fire and lightning only. Fire, lightning, and extended coverages (EC). Fire, lightning, extended coverages (EC), and vandalism and malicious mischief (VMM).

Fire, lightning and internal explosion.

A business adjacent to an insured's business is damaged by fire. Because of the damage to the adjoining property, the insured is denied access to his business by the fire department. If the insured's Commercial Property policy contains a Business Income coverage form, then the insurance company will cover the loss of business income: For a maximum of four weeks. For a maximum of thirty days. For a maximum of sixty days. For a maximum of six months.

For a maximum of four weeks. Coverage is limited to only four weeks, after a waiting period of 72 hours. In some cases, the insurer will extend this provision for an additional premium.

What coverage is used to cover damage to a customer's vehicle in the care and custody of a repair garage? Garagekeeper's legal liability. Garage liability. Drive other car coverage. General liability.

Garagekeeper's legal liability. covers damage to the customer's vehicle as a result of the negligence of the repair facility. This coverage can also be provided on a direct and primary basis, meaning that any damage sustained to the customer's vehicle while in the garage facility's care custody and control would be covered without proving negligence.

Which of the following are essential if a salvage award is to be made? I. The property involved must be in peril from some hazard. II. The salvage service must be voluntary. III. The effort must be successful.

I, II and III

A tort is: I. A civil wrong. II. A legal obligation. I only II only Both I and II Neither I nor II

I. A civil wrong.

Which of the following best describes the purpose of workers compensation coverage? Medical Disability Indemnity Burial, loss of wage coverage and disability benefits

Indemnity Indemnity means to restore, as reasonably as can be expected, a person to their status of life prior to a work-related injury or disease.

Medical payments coverage under the farmowners policy covers which of the following? Injuries sustained by an invitee Injuries sustained by a farm employee Injuries sustained by the insured Injuries sustained by a tenant living in the insured's dwelling

Injuries sustained by an invitee Medical payments would pay for the injuries sustained by an invitee or guest. Coverage does not apply to members of the insured's family, roomers or boarders or tenants of the dwelling, or to farm employees

The liability coverage on the BOP would provide coverage for which of the following? Injury or damage caused by the operation of mobile equipment An injury that is also covered by Workers Compensation Law Liability that is caused by the operation of a business auto Liability resulting from the accidental escape of pollutants

Injury or damage caused by the operation of mobile equipment The other three answers are all specifically excluded.

Bridges and tunnels may be insured under: Inland Marine Forms Business floater forms. Transportation forms. Equipment dealer's forms.

Inland Marine Forms

Pollutant cleanup under the commercial building and personal property form: Is completely excluded Is a coverage extension Is an additional coverage Is an optional coverage

Is an additional coverage

An aleatory contract is most accurately described by which of the following? It is a contract in which the performance of one party is contingent upon the occurrence of a fortuitous (accidental) event. It is a contract which alleges certain facts to be true in the written agreement. It is a contract in which one party offers payment in exchange for the other party's performance. It is a contract which alters a previous agreement.

It is a contract in which the performance of one party is contingent upon the occurrence of a fortuitous (accidental) event. Examples of aleatory contracts include insurance policies and product warranties.

In crime insurance, which of the following individuals is NOT considered to be a custodian? Janitor Employee Partner Insured

Janitor

Which of the following conditions is not found in the commercial inland marine conditions form? Appraisal Pair, Set or Parts No Benefit to Bailee Maintenance of Security Systems

Maintenance of Security Systems

Medical payments coverage under a BOP applies to expenses incurred by non-insureds for bodily injury and reported to the insurer within: Four years after the accident date. Three years after the accident date. One year after the accident date. Two years after the accident date.

One year after the accident date. One year is the limitation in the BOP. Other policies (Personal Auto and Homeowners) provides for a 3 year limitation.

In ocean marine insurance, each of the following is true about the term "general average" EXCEPT: 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.

Which of the following is covered by a flood policy? Overflow of inland or tidal water Vehicles A broken water main Livestock

Overflow of inland or tidal water Overflow of inland or tidal water is the prime coverage under flood insurance. Mudflow is also covered. Mudslides are not. The coverage does not include damage or loss of livestock or roads.

Which of the following is true regarding the HO-5 form?. . Provides open peril coverage on the buildings and their contents. Provides open peril coverage on buildings and broad form peril coverage on their contents. Provides broad form peril coverage on the buildings and their contents. Provides broad form peril coverage on the buildings and named peril coverage on their contents.

Provides open peril coverage on the buildings and their contents. The HO-5 form provides open peril coverage on the dwelling, other detached structures and personal property of the insured.

A homeowner desires to have his personal property covered for losses not subject to depreciation. The insured would need: Actual cash value coverage. Functional replacement cost coverage. Replacement cost endorsement. Market value coverage.

Replacement cost endorsement.

Coverage E under the farm forms covers which of the following? Unscheduled personal property Scheduled personal property Scheduled real property coverage Blanket real property coverage

Scheduled personal property

Under the National Flood Insurance Program, replacement cost coverage is available for: Single family dwellings only. Any residential property. Both residential and non-residential buildings. All types of buildings and their contents.

Single family dwellings only. Replacement cost coverage is available for single family dwellings only, provided the insured carries at least 80% to value. Contents are covered on an ACV (actual cash value) basis. Any other structures or their contents are covered on an ACV basis.

All of the following statements about claims-made coverage in a CGL policy are correct, EXCEPT: The basic extended reporting period gives the insured ten years to report claims that allegedly occurred during the policy period. The claims-made form includes Personal and Advertising Injury coverage. Under the claims-made form, claims filed during the policy period can be covered even if the event occurred prior to the policy's effective date. The date before which no claim will be accepted is known as the retroactive date.

The basic extended reporting period gives the insured ten years to report claims that allegedly occurred during the policy period. A claims-made CGL policy automatically includes a "basic extended reporting period" which gives the insured 60 days beyond the expiration date to report occurrences to the insurer which the insured suspects MAY result in a claim. If a claim is made against the insured during the next FIVE years for one of those reported occurrences, the insurer will cover it.

What information would not normally be found on an insurance binder? The conditions and general exclusions of the insurance contract The limit of coverage on an item of property The names of lienholders or mortgagees The identity of the insurer and agent

The conditions and general exclusions of the insurance contract Conditions and general exclusions will be stated in the actual insurance policy. An insurance binder legally represents the policy while it is being prepared by the insurer. Binders typically contain only the policy specifications and the insured parties.

An insured carries an unendorsed HO-2 policy. He has suffered a partial loss to his dwelling and the authorities have advised him that the property cannot be repaired and must be demolished. What will the insurer pay? The insurer will pay nothing The replacement cost value of the entire structure The cost of the value of the damaged property plus 10% The actual cash value of the partial loss

The cost of the value of the damaged property plus 10%

After a claim has been paid, any recovery rights applying to the amount paid by the insurance company belong to: The insured. The insurance company. Both the insured and the insurance company. Either the insured or the insurance company, depending upon which paid the greater share of the loss.

The insurance company.

What is the limit for medical benefits under workers compensation? $100,000 per injury $500,000 for any one accident 80% of medical bills up to $10,000 per injury There is no set limit

There is no set limit

What is the purpose of an installation floater? To cover property belonging to a contractor or others that is intended to become a part of a structure To cover property to be installed at the insured's location To cover property that has been installed when the contractor has completed the job and the work has been accepted To cover the insured's machinery, tools and other equipment used to install property to become a part of a building

To cover property belonging to a contractor or others that is intended to become a part of a structure The policy is used to supplement coverage provided by the commercial property forms. It covers property off an insured's location and in transit or at the job site awaiting installation or when it has been installed. Coverage ceases when the property has been accepted by the purchaser.

A Commercial Property Policy on a mortgaged property specifies which of the following responsibilities as a duty of the insured? To provide a sworn proof of loss statement following a loss if requested by the company To return the policy if it is canceled by the insurance company To pay the mortgagee in full in the event of a total loss Hire a public adjuster to appraise damages

To provide a sworn proof of loss statement following a loss if requested by the company

Under the law of agency, all of the following are the types of authority an agent might have, EXCEPT: Uncertain Authority. Express Authority. Implied Authority. Apparent Authority.

Uncertain Authority. There is no authority known as "uncertain authority."

Equipment Breakdown coverage does not apply to which of the following losses? Vandals have destroyed a boiler A boiler safety relief valve has malfunctioned and caused the boiler to crack A boiler has exploded due to a water flow problem An electric motor has self-destructed as a result of a broken part

Vandals have destroyed a boiler Coverage does not apply to loss outside the equipment (often referred to as the insured object or objects). An explosion outside the equipment is not covered whereas an explosion inside the equipment is covered.

Making distinctions in the premium rates charged for insurance between insureds or property having like insuring or risk characteristics is an example of: a - Rebating b - Unfair Discrimination c - Unfair Representation d - False Underwriting

b - Unfair Discrimination Risks showing like characteristics must be treated equally. Making distinctions on similar risks is unfair discrimination.