Adjuster License 7

Which of the following people does NOT have an insurable interest in an insured property? A. A home owner's interest in the local town's water pipes that deliver water to his home. B. A mechanic's interest in a customer's convertible, which is sitting in his garage overnight. C. A tenant's interest in the premium wood flooring that she had installed in her apartment. D. A bank's interest in the new minivan they just financed for a young couple.

A. A home owner's interest in the local town's water pipes that deliver water to his home. The homeowner has no insurable interest in the town's water pipes as he does not own them. The other choices are all examples of insurable interest.

Which of the following policy provisions or clauses is designed to prevent the violation of the principle of indemnity? A. The "Other insurance" provision B. The "Liberalization" clause C. The "Coinsurance" clause D. The "Subrogation" clause

A. The "Other insurance" provision This clause is designed to prevent the insured from collecting from more than one insurer on the same claim until they have violated the principle of indemnity. The insured is not supposed to profit from a loss.

Part One of the standard workers' compensation policy describes: A. The insurers' duty to pay promptly when due, the benefits required of the employer by the workers' compensation statute. B. Those situations in which an injured worker can sue the insured. C. The coverage in the states where an insured's operations are known to exist and are designated in the policy. D. The insured's duties in the event of injury.

A. The insurers' duty to pay promptly when due, the benefits required of the employer by the workers' compensation statute.

Regulation of the insurance industry in the United States is primarily left to: A. The federal government B. The National Association of Insurance Commissioners ( NAIC) C. State governments D. The Supreme Court

C. State governments The states carry the major burden of regulating insurance affairs with only issues involving fair labor standards and antitrust matters left to the federal government.

What type of liability is specifically imposed by statutory law? A. Attractive nuisance B. Imputed liability C. Strict liability D. Intentional tort

C. Strict liability

All of the following are advantages of purchasing workers' compensation insurance from a private carrier, EXCEPT: A. The insurer bears the cost of the claims investigations & claims payments. B. The ability to purchase "employer's liability" coverage as part of the policy. C. The high deductibles D. The ability to purchase "other states" insurance as part of the policy.

C. The high deductibles

All of the following are types of misrepresentation EXCEPT: A. Twisting B. Churning C. Turning D. Sliding

C. Turning

Which of the following is NOT a true statement regarding the agency relationship? A. An agent is an agent for the third party contracting with the principal. B. An agent has the power to bind a principal to a legal contract C. The acts of an agent are considered acts of the principal D. Payments to an agent are considered payments to the principal

A. An agent is an agent for the third party contracting with the principal. The agency relationship is defined by the contractual relationship between the agent and the principal, not a relationship with a third party.

If an insured conceals a material fact, makes false statements or engages in a fraudulent act, he or she is guilty of: A. Concealment B. Estoppel C. Representation D. Misrepresentation

A. Concealment

In liability insurance the term "occurrence" means: A. Continuous or repeated exposure to the same conditions B. An accident C. Non intentional D. A non fortuitous accident

A. Continuous or repeated exposure to the same conditions Sometimes it takes time for damage or an injury to become evident. Previously, all liability policies were based on the concept of "accident" in which all damage is immediately evident. The courts ruled this concept too restrictive and for that reason, liability policies cover claims on an "occurrence" basis.

Information about the premium and policy limits, the identity & address of the named insured, and the policy period is found in which part of an insurance policy? A. Declarations B. Conditions C. Insuring Agreement D. Exclusions

A. Declarations

If an insurance company covered an excluded claim it may have to continue paying other such claims because of: A. Estoppel B. Indemnity rule C. Comparative payment D. Policy language

A. Estoppel 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.

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

Which of the following best describes a competitive state when it comes to workers' compensation coverage? A. Private insurance companies write workers' compensation coverage, but the state also writes coverage that competes with the coverage offered by private carriers. B. All workers' compensation coverage offered in the state is provided by private insurance carriers that compete against one another. C. All workers' compensation coverage offered in the state is provided by state government programs. D. All workers' compensation coverage offered in the state must be provided by the state's residual market program.

A. Private insurance companies write workers' compensation coverage, but the state also writes coverage that competes with the coverage offered by private carriers.

Which of these statements best describes "the law of agency?" A. The activities of any party who receives a percentage of the profits from a business transaction. B. A relationship in which someone is authorized by contract to represent another party C. The duties of a professional who is trained and licensed to prepare legal documents D. The activities of any licensed insurance professional

B. A relationship in which someone is authorized by contract to represent another party

Which of the following describes a moral hazard? A. Faulty wiring B. An arsonist applying for property insurance. C. Laziness & apathy D. Twelve appliances plugged into one electrical outlet.

B. An arsonist applying for property insurance. A moral hazard is presented by applicants or insureds who would cheat, lie or commit other crimes to benefit from insurance coverage. Faulty wiring and overuse of electrical outlets are physical hazards. Laziness & apathy are morale hazards.

Chris is insured through Binders Keepers Insurance Company and his policy period ends in 12 months. However, Chris has decided that he wants to cancel his policy in order to purchase another one from a company that advertises with cute commercials on tv. Chris calls his agent to cancel the policy & is informed that the unearned premium on the cancelled policy will be returned to him by mail in a couple of weeks. When Chris receives the check, he is surprised to find that it's made out for less than the amount of unearned premium he should have received. What is the most likely reason for this? A. Chris' policy agent is a thief B. Chris' policy had a provision stating that UEP must be returned on a short-rate basis C. Chris' policy had a provision stating that UEP must be returned on a pro-rata basis. D. Chris' policy had a provision stating that UEP must have a percentage subtracted for agent commissions before it can be returned.

B. Chris' policy had a provision stating that UEP must be returned on a short-rate basis Many polices require the UEP be returned on a short-rate basis if the insured cancels the policy mid-term. This allows the insurer to keep a greater percentage of the UEP, than if the insured cancelled after the policy period or if the UEP was returned on a pro-rata basis.

An insured has fabricated a claim that would appear to be legitimate. What kind of hazard would this act represent? A. Physical hazard B. Moral hazard C. Morale hazard D. It is a peril, not a hazard

B. Moral hazard This is the type of hazard that exposes the morals of the individual because of the fraudulent act.

Which of the following is generally not considered to be a legal defense against claims of negligence? A. The relevant statute of limitation for filing a lawsuit has expired. B. The loss of the plaintiff was caused intentionally by the defendant C. A state law gives specific immunity from liability to the defendant D. An intervening cause was the proximate cause of the plaintiff's injury rather than the defendant's action (or inaction)

B. The loss of the plaintiff was caused intentionally by the defendant

To be covered under a workers' compensation policy, the last exposure to the conditions causing bodily injury by disease must occur: A. During the most recent term of employment. B. Within the policy period C. During the last day of employment D. During normal working hours, excluding overtime.

B. Within the policy period

All of the following are part of the "entire contract", EXCEPT: A. The insuring agreement of the policy is included in the entire contract B. The entire contract includes all endorsements attached to the policy C. An agreement made between the insured & the agent stated verbally, that the agent will personally service the insured's policy, and it will not be delegated to a staff member is part of the entire contract D. The complete agreement to which the insurer and the insured are held, with no outside stipulations or agreements, are part of the entire contract.

C. An agreement made between the insured & the agent stated verbally, that the agent will personally service the insured's policy, and it will not be delegated to a staff member is part of the entire contract

All of the following are exceptions to the workers' compensation exclusive remedy EXCEPT: A. Failure of the employer to provide benefits B. Third-party-over actions C. An on-the-job injury caused by worker fatigue from working an excessive number of over-time hours D. The fellow worker doctrine

C. An on-the-job injury caused by worker fatigue from working an excessive number of over-time hours An on-the-job injury would be covered, whether or not it was caused by worker fatigue. All of the other answer choices are exceptions of the exclusive remedy provided by workers' compensation.

All of the following are duties of a workers' compensation adjuster, EXCEPT: A. Attending the mediation proceedings of disputed claims. B. Setting and maintaining accurate claim reserves C. Conducting arbitration on disputed claims. D. Responding to all requests for information made by the injured employee, employer, & healthcare provider.

C. Conducting arbitration on disputed claims.

Which of the following BEST describes a tort? A. Is a "wrong" covering a wide-range of legal and moral wrong doing. B. Is a "wrong" committed for which only the government can provide a remedy. C. Is an act causing harm to an innocent party for which a civil remedy is provided through the payment of monetary damages. D. Is a criminal act.

C. Is an act causing harm to an innocent party for which a civil remedy is provided through the payment of monetary damages. When a tort is committed by a negligent party, the injured party is permitted to bring a lawsuit to request a civil remedy for their injuries and property damage.

Joe enters into a contract with Martha to set fire to her house so she can collect on her insurance policy. Martha will pay Joe a portion of the insurance proceeds for his trouble. Which of the following parts of a valid contract is missing in this situation? A. Competent parties B. Consideration C. Legal purpose D. Offer & acceptance

C. Legal purpose

Willie's Widgets is eligible to receive an experience rating to bring down their workers' compensation premium rates. Willie's is granted this eligibility on May 1st, 2018. Which of the following best defines the "experience period" the NCCI will use to calculate Willie's experience rating? A. January 1st, 2014 to January 1st 2018 B. May 1st, 2014 to May 1st, 2018 C. May 1st, 2013 to May 1st, 2017 D. May 1st, 2013 to May 1st, 2016

C. May 1st, 2013 to May 1st, 2017 The "experience period" is the previous four years, excluding the current year. Therefore, the correct answer is May 1st, 2013 to May 1st, 2017.

Any policy limits expressed on a standard NCCI workers' compensation policy, relate to: A. Additional expenses B. Part One: Workers' Compensation C. Part Two: Employer's Liability D. Part Three: Other States insurance

C. Part Two: Employer's Liability

Sam the shopkeeper mops the floor of his store & forgets to set the "Caution Wet Floor" sign in the area to warn his customers. Sarah walks through the store a few moments later, slips on the floor and injures her arm & leg. This is an example of : A. An intentional tort B. Vicarious liability C. Absolute liability D. A negligent tort

D. A negligent tort

Part One of the standard workers' compensation policy covers all of the following, EXCEPT: A. Bodily injury by accident B. Bodily injury by disease C. Bodily injury that results in death D. Bodily injury caused by the negligence of the insured employer

D. Bodily injury caused by the negligence of the insured employer Bodily injury by negligence of the insured employer would be addressed by Part Two of the policy.

All of the following statements are true of liability insurance EXCEPT: A. Legal liability does not have to be determined by a court of law before an insurer will pay. B. Liability insurance only indemnifies third parties C. Liability insurance protects the policyholder against damages he/she causes a third party D. Liability insurance provides indemnification for the insured.

D. Liability insurance provides indemnification for the insured.