adjusting question's part 3
Both Steve and his wife, Arlene, carry DP-2 policies on their $135,000 home. Steve's policy has a limit of $108,000 and Arlene's has a $27,000 limit, and both policies pay on a pro rata basis. After a hailstorm causes $13,000 in damage to their roof, how much of the damage will be covered by Steve's policy (ignoring any deductible)? A.$10,400 B.$13,000 C.$9,630 D.$2,600
A.$10,400
Lightning strikes one of Christy's trees in her backyard and starts a fire that spreads to two other trees before firefighters are able to put it out. The fire department charges her $600 for responding to her call. Christy's DP-2 policy has a Coverage A limit of $95,000. What is the maximum amount of indemnification that Christy can expect to receive for this loss (ignoring any deductible)? A.$2,000 B.$4,750 C.$1,500 D.$500
A.$2,000
Scott lived in a mobile home before it was completely destroyed in a recent flood. The mobile home is large enough to qualify for a special loss settlement under his flood policy, which has a limit of $28,000. Before the flood, the mobile home was worth $15,000, but it would cost $25,700 to buy a new one today. How much indemnification will Scott receive for this loss? A.$22,500 B.$15,000 C.$28,000 D.$25,700
A.$22,500 -A Special Loss Settlement will pay the lowest of the following: the dwelling's replacement cost, 1.5 times the dwelling's actual cash value, or the policy limit. In Scott's case, the lowest of these three amounts is 1.5 times the ACV of his mobile home ($15,000 x 1.5 = $22,500).
In the case of condominiums: A.the unit owner and condo association share responsibility for insuring the property. B.the condo association is wholly responsible for insuring units. C.the unit owner is responsible for insuring the whole condo unit, inside and out. D.the unit owner is only responsible for insuring personal property.
A.the unit owner and condo association share responsibility for insuring the property. -Condo owners are usually only responsible for the part of the property that they own - the finished surfaces of the insured's unit. But, the condo association is responsible for insuring the overall building, which is owned collectively.
Melanie's $300,000 home suffers $90,000 in damage from a fire. The adjuster finds the home's value since 2008 has depreciated 25%, making the ACV loss $67,500. Although Melanie's policy covers repairs at their replacement cost, she receives $67,500 at the time of loss. Repairs to her home end up totaling $79,500. How much, if any, further indemnification may Melanie receive from the loss? A.$10,500 B.$12,000 C.$22,500 D.$0
B.$12,000 -The Recoverable Depreciation provision allows the insurer to pay ACV up front, and then the remainder of the actual cost to repair or replace the damaged property after repairs have been completed. The difference between the actual cost of repair ($79,500) and the initial ACV payment ($67,500) is $12,000.
While Andrea was grocery shopping in BB Mart, the large Dairy sign fell off the wall and landed on her. Because of her extensive injuries, Andrea sued BB Mart and was awarded $375,000 in damages. BB Mart's Commercial General Liability policy has a general aggregate limit of $1,000,000 and a per occurrence limit of $300,000. What is the per occurrence limit after this claim is settled? A.$75,000 B.$300,000 C.$700,000 D.$0
B.$300,000 -That is incorrect. The per occurrence limit is still $300,000, and the general aggregate limit is now reduced to $700,000. A per occurrence limit is subject to the aggregate limit that precedes it. The CGL will pay any number of individual claims up to the per occurrence limit for each claim, until the aggregate limit is exhausted.
Sam's Ocean Marine hull policy has a franchise deductible of $50,000. When Sam's ship suffers $75,000 in damage after being overtaken by pirates, how much indemnification can Sam expect to get from his insurer? A.$0 B.$75,000 C.$50,000 D.$25,000
B.$75,000 -That is incorrect. If a covered loss exceeds the amount of the franchise deductible, the insurer pays for the entire loss.
In a BOP, all of the following losses are excluded from liability coverage, EXCEPT: A.product recall. B.property damage to premises rented by the insured. C.pollutants. D.injury caused by medical services.
B.property damage to premises rented by the insured. -That is incorrect. Damage to premises rented by the insured is covered in a BOP.
Which of the following would NOT be covered under Part A of a Personal Auto Policy? A.Legal defense costs B.Damage the insured causes while driving his friend's car C.Damage the insured causes to his own garage D.Lost wages
C.Damage the insured causes to his own garage
Joe (the principal) is handling the disbursement of a deceased executive's estate, and he is required to carry a bond guaranteeing such work. The surety company requires one of its accountants to be a second signer on the disbursement checks that Joe writes. In this case, the surety has established: A.penal sum guarantee. B.dual representation. C.joint control. D.collateral.
C.joint control.
Sam, who has a typical HO-3 policy, is forced to evacuate his home by civil authorities due to rising flood waters in his neighborhood. It takes a month before Sam is allowed to come back to his home. During this time, he has spent $3,000 in hotel expenses, on top of his monthly mortgage payment of $850. When he files a claim, how much will Sam receive under Coverage D - Loss of Use? A.$3,000 B.$3,850 C.$850 D.$0
D.$0
Clara plays the harp in an orchestra. Her harp cost $12,000, and she had it for 5 years before it was stolen from her locker at a symphony hall. She recently found out a new harp will cost $15,000. Assuming her harp depreciated at $1,000 a year, how much will an actual cash value policy indemnify Clara? A.$7,000- ACV pays the original amount paid minus depreciation B.$12,000- ACV pays the original amount paid for the item Your Answer C.$15,000 - ACV pays the current market value D.$10,000 - ACV pays at current market value minus depreciation
D.$10,000 - ACV pays at current market value minus depreciation
In an insurance policy, the summary of what the insurer will do in the event of a covered loss is called: A.the dec page. B.the conditions section. C.the definitions section. D.the insuring agreement.
D.the insuring agreement.
The purpose of the principle of indemnity is: A.to transfer the risk of financial loss from one party to another. B.to transfer the right to collect a debt from one party to another. C.to prevent an insured from making a profit on a loss. D.to prevent an insurer from making a profit on a loss.
D.to prevent an insured from making a profit on a loss.
There are several terms that are often interchangeable with "endorsements." Which of the following is NOT one of these terms? A.Binders B.Attachments C.Addendums D.Riders
A.Binders
Which of the following would qualify as a "Dependent Child" according to the Workers' Compensation law? A.21 year old son B.1 year old granddaughter living in deceased's household at time of death C.25 year old stepson D.17 year old married daughter
B.1 year old granddaughter living in deceased's household at time of death
The Liberalization Clause in an insurance policy: A.voids the policy if the insured deliberately conceals or misstates pertinent info. B.states that the insurer is obligated to pay for covered losses only up to the limit set by the policy. C.states that any change to a policy form that broadens coverage without increasing the premium will automatically apply to existing policies. D.states that, in the event of a loss, the insurer will only pay up to the insured value of the risk.
C.states that any change to a policy form that broadens coverage without increasing the premium will automatically apply to existing policies. -The Liberalization Clause states that any change to a policy form that broadens coverage without increasing the premium will automatically apply to the issued policies of that type.
Which of the following is not a function of the Alabama Ombudsman program? A.Help injured or disabled workers B.Help employers with their questions about workers' comp C.Provide benefit review conferences D.Represent injured employees in court
D.Represent injured employees in court -The Alabama Ombudsman program doesn't help injured employees with representation in court.
Which of the following are eligible for a Fortified Home Hurricane designation? A.Duplexes B.All homes C.Townhomes D.Single family homes with permanent foundations
D.Single family homes with permanent foundations -Single family homes with permanent foundations are eligible for a Fortified Home Hurricane designation.
A fire in Sarah's factory causes her to shut the factory doors for 50 days. To limit her loss of income and keep production going, Sarah spends $125,000 renting equipment and another building. Sarah's commercial property policy doesn't have Business Income Coverage, but it does include Extra Expense Coverage. The limit on her Extra Expense coverage is $100,000 and she has Limits of Loss Payment of 40%/80%/100% during her period of restoration. How much indemnification will Sarah receive for her extra expenses? A.$80,000 B.$100,000 C.$50,000 D.$125,000
A.$80,000 -That is incorrect. Since it took more than 30 days but fewer than 60 days for repairs to be completed, her Extra Expenses coverage will pay up to 80% of the limit ($100,000) which comes to $80,000.
If an Alabama insurer wants to cancel a HO policy because the policyholder isn't paying premiums, it needs to give the policyholder ____ days advance notice. A.10 B.30 C.15 D.5
A.10 -That is incorrect. Insurers must give policyholders at least 10 days notice before cancelling a policy, if the poliyholder has not been paying premiums.
Xavier owns a small insurance company. Recently the company won a bid to insure a new housing development in Omaha, NE. His company can handle any claims that arise, but if a series of tornados were to tear through the area and destroy the entire development, Xavier's company would suffer financially. Which type of insurer could help Xavier's company protect itself the most from this potential loss? A.A re-insurer B.A stock insurer C.A reciprocal insurance group D.A fraternal benefits society
A.A re-insurer
Why has Pollutant Cleanup and Removal coverage become more popular recently? A.EPA fines and penalties have increased. B.Laws requiring pollutant removal have been enacted in many states. C.Accidental pollutant damages have increased exponentially. D.There has been an increase in the number of intentional acts of pollution.
A.EPA fines and penalties have increased.
In 1945 Congress passed the McCarran-Ferguson Act. What does that act do? A.Gives the states the authority to regulate the insurance industry B.Gives the federal government the authority to regulate the insurance industry C.Provides universal insurance coverage D.Regulates the way insurance information is shared
A.Gives the states the authority to regulate the insurance industry
Loggers, roofers, and coal miners would fall into which of the following categories? A.High-risk employees B.High-maintenance employees C.Low-risk employees D.Low-maintenance employees
A.High-risk employees
Which of the following statements about a moral hazard is FALSE? A.It is the result of an unconscious behavior. B.A moral hazard increases risk. C.It is intentionally reckless behavior because of security offered by insurance. D.It is a hazard caused by human behavior.
A.It is the result of an unconscious behavior. -A moral hazard involves consciously risky behavior because of the existence of insurance coverage.
For the purposes of workers' compensation insurance, all of the following words describe an "accident," EXCEPT: A.Preventable B.Unexpected C.Sudden D.Violent
A.Preventable
Which of the following statements best describes a part of the appraisal process? A.The claimant and the insurer each select an appraiser, and those two select an umpire. B.All parties must agree to the final amount in order for it to be binding. C.A neutral third party, called the appraiser, plays an advisory role to help the disputing parties come to a settlement. D.The opposing parties submit their evidence to the appraiser, who makes a final and binding decision.
A.The claimant and the insurer each select an appraiser, and those two select an umpire.
Law and Ordinance, also known as Code Upgrade Coverage, covers which of the following expenses? A.The cost of repairs or upgrades done to meet new building codes B.The cost of additional upgrades to buildings that have met all building code requirements C.A company's legal expenses if they are shut down due to code violations D.Damage to historical buildings caused during a riot
A.The cost of repairs or upgrades done to meet new building codes
Which of the following statements about Alabama's approach to Workers' Comp insurance is true? A.WC is compulsory, and Alabama has no state WC fund. B.WC is compulsory, and Alabama has a monopolistic state WC fund. Your Answer C.WC is elective, and Alabama has a competitive state WC fund. D.WC is elective, and Alabama has no state WC fund.
A.WC is compulsory, and Alabama has no state WC fund.
A farm insurance policy may include all of the following EXCEPT: A.a commercial package policy. B.farm personal property coverage. C.farm liability insurance. D.dwelling coverage.
A.a commercial package policy. -That is incorrect. A Farm policy does include some commercial coverages, but it does not include an entire commercial package policy.
Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows into Sandra's home, causing extensive damage to the East wall and roof. As a result, Sandra and her family must move into a hotel until the repairs are completed. The cost of staying in a hotel is: A.an indirect loss. B.a direct loss. C.a physical hazard. D.the proximate cause.
A.an indirect loss.
In a garage policy, PIP coverage is: A.available with an endorsement. B.included unless the insured declines it in writing. C.mandatory. D.not available.
A.available with an endorsement.
All of the following causes of loss are excluded from coverage in an Equipment Breakdown Protection Coverage Form, EXCEPT: A.combustion explosion. B.hail. C.electrical testing. D.mechanical failure.
A.combustion explosion.
After an earthquake, Jake's home is still standing, but it is a little shaken. The damage is not extensive, but Jake wants to cash in on the situation, so he takes a sledgehammer to some of his extra belongings and adds them to his claim. Jake has committed: A.property insurance fraud. B.health insurance fraud. C.insurer fraud. D.arson.
A.property insurance fraud.
Six Stars Development Company has just purchased several large properties in Las Vegas. As a result of this large purchase, they are a little short on money and decide to save money by not purchasing insurance on their new properties. Six Stars is practicing: A.risk retention. B.risk reduction. C.risk transference. D.risk avoidance.
A.risk retention.
Which of the following would NOT be covered under Errors and Omissions insurance? A.Wrongful termination claim B.Bodily injury claim C.Sexual harassment claim D.Discrimination claim
B.Bodily injury claim
Bonnie's PAP includes Comprehensive coverage. Which of the following losses could this coverage pay for? A.Bonnie rear-ends another vehicle. B.Bonnie's car catches fire. C.Bonnie rolls her vehicle in a one-car accident. D.Bonnie's car breaks down due to an engine malfunction.
B.Bonnie's car catches fire. -Comprehensive coverage would NOT cover a rollover, a fender bender, or breakdown due to engine malfunction. It would cover fire damage.
Robert applies for an auto loan from his local bank. He meets with a loan officer, who goes over Robert's paperwork. The loan officer tells Robert: "I'll give you a loan as long as you insure the car with ABC Insurance." This is an example of: A.Defamation B.Coercion C.Misrepresentation D.Unfair discrimination
B.Coercion
Which of the following is NOT true about a scheduled payment release? A.It is most often used with Workers' Compensation claims. B.It can't be used with Workers' Compensation claims. C.The insurer agrees to pay all compensatory damages up to the point of settlement. D.It is also called a rehabilitation settlement.
B.It can't be used with Workers' Compensation claims. -That is incorrect. In a scheduled payment release, or "rehabilitation settlement", the insurer agrees to pay all compensatory damages up to the point of settlement. It is most often used in Workers' Compensation claims.
Which of the following is NOT true of the Company's Options provision in the standard fire policy? A.It mandates that the insurer notify the claimant of its choices within 30 days of receiving required proof of loss. B.It requires the insurer to settle the claim, in whichever manner it chooses, within 30 days of receiving notice of the claim. C.It states that the insurer may choose whether to take all, or part, of the damaged property at the agreed or appraised value. D.It allows the insurer the choice of whether to repair, rebuild, or replace damaged property.
B.It requires the insurer to settle the claim, in whichever manner it chooses, within 30 days of receiving notice of the claim.
Which of the following statements is TRUE regarding Mechanical Breakdown Insurance? A.It covers oil changes and tire rotation. B.It will not cover the cost of repairs that exceed the value of a vehicle. C.It covers damage caused by the towing process. D.It would indemnify a policyholder for damage to an engine caused by the owner inadvertently driving into a lake.
B.It will not cover the cost of repairs that exceed the value of a vehicle.
Which of these perils is NOT excluded from coverage in a homeowners policy? A.Earth movement B.Lightning C.Nuclear war D.Water damage
B.Lightning
Which of the following situations does NOT involve an instance of "pure risk?" A.Loss of a house due to a hurricane B.Loss of money invested in the stock market C.Loss of a company car in an unfortunate accident D.Loss of crops due to an infestation of parasites
B.Loss of money invested in the stock market
Gail's restaurant is doing more business than ever, so Gail decides to add more dining space. Three weeks into the project, a hurricane blows through town, reducing the new construction to rubble. Gail maintains commercial property insurance coverage valued at 70% of her property's replacement cost, although her policy says she must maintain at least 80% to be fully insured. Which coverage on her policy could pay to rebuild her restaurant at replacement cost? A.Increased Construction Costs coverage B.None C.Outdoor Property extension D.Replacement Cost endorsement
B.None -That is incorrect. In a commercial property policy, the Replacement Cost endorsement would change the loss settlement option from ACV to RC, but it requires the policyholder to meet the minimum level of coinsurance. Since Gail's policy does not meet this requirement, she will NOT be indemnified at replacement cost.
When is someone considered a passenger, and thus covered under Passenger Bodily Injury Liability? A.Once she takes a seat on the plane B.Once she begins to board the plane C.After clearing the airport security checkpoint D.After booking a plane ticket
B.Once she begins to board the plane -In an aviation policy, "passenger" is defined as anyone who is in, on, or boarding the aircraft, with the purpose of flying in the aircraft, or anyone alighting from the aircraft after flight.
James is in the consulting business and frequently flies from city to city to meet clients and help them improve their business practices. Most cities have adequate public transit, but sometimes it's easier to rent a car. Which coverage symbol would specifically pertain to rental cars on James' Business Auto Policy? A.Symbol 7 B.Symbol 8 C.Symbol 19 D.Symbol 9
B.Symbol 8
According to the Mortgagee Clause, what is NOT one of the rights of the mortgagee? A.The mortgagee may receive a portion of claim payments. B.The mortgagee may change the coverage amount. C.The mortgagee may be indemnified, even in the event of fraud by the insured. D.The mortgagee will be notified if the insurer intends to cancel the policy.
B.The mortgagee may change the coverage amount.
A typical workers' compensation policy combines two basic forms of coverage. They are: A.Workers' Compensation and Products Liability B.Workers' Compensation and Employers Liability C.Professional Liability and Medical Payments D.Bodily Injury and Health
B.Workers' Compensation and Employers Liability -Generally, a WC policy includes two forms of coverage: workers compensation and employers liability.
A stand alone excess liability policy: A.can cover risks that are not covered in the base policy. B.follows a base policy, but may have different exclusions and limitations. C.can act as a primary policy. D.excludes coverage for personal liability.
B.follows a base policy, but may have different exclusions and limitations.
For loss settlement purposes, most homeowners policies: A.pay for damages to structures at actual cash value, and damages to personal property at replacement cost. B.pay for damages to personal property at actual cash value, and damages to structures at replacement cost. C.pay for damages to structures and personal property at actual cash value. D.pay up to 80% of the value of the damaged item, leaving the remaining 20% to be paid by the insured.
B.pay for damages to personal property at actual cash value, and damages to structures at replacement cost.
James owns a masonry business and has a commercial liability policy with the following liability limits: $150,000 per occurrence / $500,000 per policy term. While at a job site, his cement truck's chute cannot reach the pour site, so the operator adds two extra chutes, extending its length. The chute collapses under the weight of the concrete, causing $35,000 in injury to one of the workers. The loss is covered by the policy, and James' insurer pays the claim. What will the new limits be for the remainder of the policy term? A.$115,000/$465,000 B.$150,000/$500,000 C.$150,000/$465,000 D.$115,000/$500,000
C.$150,000/$465,000 -The $150,000 is a per occurrence limit, thus will remain the same for the next occurrence. The $35,000 settlement will be subtracted from the $500,000 aggregate limit for the policy term, bringing that total to $465,000.
An adjuster has a duty to provide which of the following to the claimant? A.Periodic reports detailing the status of the claim B.A settlement sufficient to offset the out-of-pocket burden of the deductible C.An open line of communication D.A recommendation of a reputable claims lawyer in the local area
C.An open line of communication -That is incorrect. The adjuster must work to maintain open communication with the claimant throughout the entire claim process.
On January 27, 2004, Ryan was using an exercise bike from NusquamCycle when the chain broke, causing him to fall and bruise his knee. Seven years later, on January 25, 2011, Ryan's knee gave out while jogging. His doctor told him that he'll need surgery and that this deterioration was probably caused by his bruise from the exercise bike. Assuming NusquamCycle is no longer in business, which CGL policy would cover Ryan's claim filed on January 25, 2011? A.Claims-Made policy from Jan 1 2003-Jan 1 2004 with a basic extended tail B.Claims-Made policy from Jan 1 2001-Jan 1 2002 with a supplemental extended tail C.Claims-Made policy from Jan 1 2003-Jan 1 2004 with a supplemental extended tail D.Claims-Made policy from Jan 1 2001-Jan 1 2002 with a basic extended tail
C.Claims-Made policy from Jan 1 2003-Jan 1 2004 with a supplemental extended tail
This agent is a salaried employee who sells insurance products for only one insurer. A.General Agent B.Exclusive Agent C.Direct Writer D.Captive Agent
C.Direct Writer -That is incorrect. A direct writer is a salaried agent who sells insurance products for only one insurer.
Which of the following statements is TRUE of a claim dispute litigated in a state that follows the doctrine of Contributory Negligence? A.The settlement amount will be reduced by the percentage of the plaintiff's negligence. B.The settlement amount will be reduced by the percentage of the defendant's negligence. C.If the plaintiff is found to be at all negligent, she will receive no settlement. D.If the defendant is found to be at all negligent, she will receive no settlement.
C.If the plaintiff is found to be at all negligent, she will receive no settlement.
Which of the following is a feature typically found in a Business Owners Policy? A.Coverage for company-owned vehicles B.Malpractice coverage C.Inflation Guard for buildings and structures D.Professional Liability coverage
C.Inflation Guard for buildings and structures
On July 14, 2014, Mark suffered injuries when a kitchen appliance he was using broke apart during operation. In Alabama, what is the last date Mark can file a lawsuit for his injuries? A.January 14, 2015 B.July 14, 2017 C.July 14, 2016 D.July 14, 2018
C.July 14, 2016 -The statute of limitations for product liability in AL is 2 years, so the last date he can file a lawsuit is July 14th, 2016.
Phil runs a locomotive repair business, which is insured under a commercial property policy. One night, some blasting powder is accidentally ignited and blows a crowbar through one of the engines. No one is hurt, but the locomotive is severely damaged. Which coverage option may help cover the cost of repairing the engine from this unfortunate event? A.Interior Explosion Coverage B.Mechanical Breakdown Coverage C.Legal Liability Coverage D.Replacement Cost Coverage
C.Legal Liability Coverage
For Keith's 50th birthday, his wife surprises him with a new boat. In order to drive legally with his boat in tow, how much liability insurance does Keith need to purchase for his boat trailer? A.25/50/25 B.5/10/5 C.None; boat trailers are exempt from mandatory liability insurance D.10/20/10
C.None; boat trailers are exempt from mandatory liability insurance -In Alabama, boat trailers are exempt from mandatory liability insurance.
Which of the following insurance protections is NOT offered by a garagekeeper's insurance policy? A.Specific causes of loss B.Collision coverage C.Personal injury protection D.Comprehensive coverage
C.Personal injury protection
Jared recently purchased a 25 foot watercraft with a 250 horsepower motor. While cruising on the lake, he accidentally runs into Gary's boat, causing $2,500 in damage to Gary's hull. How will Jared's insurer respond when Gary files a claim against Jared's homeowners policy for the damage he caused? A.The insurer will pay the claim because Jared's boat is covered by his homeowner's policy. B.The insurer will deny the claim because the policy excludes all watercraft from its liability coverage. C.The insurer will deny the claim because Jared's boat is excluded from his liability coverage. D.His insurer will deny the claim because the boat was not completely enclosed in a building.
C.The insurer will deny the claim because Jared's boat is excluded from his liability coverage. -Because the motor on Jared's watercraft is greater than 25 horsepower, there is no liability coverage provided under his homeowners policy.
Which of the following automobile components is NOT covered by a Mechanical Breakdown Insurance policy? A.Steering assembly B.Engine C.Tires D.Drive train
C.Tires -Mechanical Breakdown Insurance covers breakdown of the mechanical and electrical components of a vehicle - those that are designed to last the life of the vehicle. Tires are not mechanical components, and they are designed to wear out and be replaced regularly.
Which of the following BEST describes the insurance provided by residual market insurance programs? A.Low premiums B.Designed to help low-risk consumers C.Usually a "last resort" form of insurance D.Very extensive coverage
C.Usually a "last resort" form of insurance
A few weeks ago Christopher's garage was destroyed by an out-of-control motorist. Fortunately, the motorist had sufficient liability insurance to cover the damages. However, the insurer insists that Christopher's garage is worth far less than the appraisals he has received from contractors. Christopher and the insurer have gone back and forth in negotiations for weeks, making little headway. Christopher decides it's time to: A.issue an answer for the policyholder. B.issue a judgment. C.issue a complaint against the policyholder. D.issue a reservation of rights.
C.issue a complaint against the policyholder.
When the dollar amount difference between an adjuster and a claimant is very large, the adjuster should: A.consult a more experienced adjuster. B.negotiate to decrease the difference between the two. C.move to dispute resolution. D.begin the investigation over to see what has been missed.
C.move to dispute resolution. -That is incorrect. If the claimant's demands are much higher than the insurer's range and he is not willing to lower it to an acceptable amount, the adjuster is wasting valuable time trying to negotiate, and the case should proceed to dispute resolution or the court.
A fiduciary agent must regularly report to the principal. Which of the following is the BEST example of a principal in the context of insurance? A.A policyholder who has filed a first-party claim with his insurance company. B.An adjuster who signs a form on behalf of his employing insurance company. C.A public adjuster who is employed by a claimant to examine her damaged property. D.An insurer that employs an insurance adjuster to investigate damage claims.
D.An insurer that employs an insurance adjuster to investigate damage claims. -The principal, which is usually the insurer, is the entity that gives an agent authority to act on its behalf.
In which section of a Standard Fire Policy would you find information on rules of conduct and obligations the policyholder must follow in order for insurance coverage to apply? A.Declarations B.Insuring Agreement C.Exclusions D.Conditions
D.Conditions -In the Conditions section, you would find rules of conduct and obligations the policyholder must follow in order for insurance coverage to apply.
Which of the following would be covered under Coverage A in a dwelling policy? A.Building materials that will be used to construct a storage shed B.Damage to the land C.Construction tools next to the dwelling D.Gas furnace in the basement
D.Gas furnace in the basement -Machinery that services the dwelling (such as a furnace) is covered under Coverage A. But, Coverage A does not pay for damage to land, construction tools next to the dwelling, or building materials not intended for use on the dwelling.
Which of the following BEST describes how covered losses are settled under a typical Equipment Breakdown Protection Coverage Form? A.Losses are normally paid at actual cash value, but an insured may change this with a Replacement Cost endorsement. B.Losses are paid at actual cash value. C.Losses are paid at replacement cost if the replacement or repair occurs within 12 months of the accident. D.Losses are normally paid at replacement cost, but an insured may change this with an Actual Cash Value endorsement.
D.Losses are normally paid at replacement cost, but an insured may change this with an Actual Cash Value endorsement. -In a typical Equipment Breakdown Protection Coverage Form, losses are paid at replacement cost, but an insured may change this with an Actual Cash Value endorsement. With the ACV endorsement, the policy will pay the lesser of 1) the amount needed to repair or replace damaged property with like kind and quality, or 2) the actual cash value of the damaged property.
Which of the following statements about insurable interest is FALSE? A.Insurable interest reduces the incentive for someone to cause damages intentionally to insured property. B.Purchasing an insurance policy on your home helps protect your insurable interest in a home. C.When a renter leases your house, your insurable interest in the home remains. D.Maintaining property values allows your neighbor to have an insurable interest in your house.
D.Maintaining property values allows your neighbor to have an insurable interest in your house.
An insured may only add Utility Interruption coverage to her Equipment Breakdown policy if at least one of three other coverages are also present. Which of the following is NOT one of these other coverages? A.Business Income and Extra Expense B.Extra Expense Only C.Spoilage Damage D.Property Damage
D.Property Damage -Utility Interruption coverage is only available if the insured has also selected Business Income and Extra Expense, Extra Expense Only, or Spoilage Damage coverage.
When is a self-insured retention applied in an umbrella policy? A.There are no self-insured retentions in umbrella policies. B.Whenever the umbrella policy covers a claim C.When the umbrella policy excludes the peril in question D.When the umbrella policy covers a loss that is excluded by primary policies
D.When the umbrella policy covers a loss that is excluded by primary policies -Umbrella policies provide coverage where underlying policies are often exceeded. If no underlying policy is in force, the insured must cover the losses up to the point where the umbrella policy attaches (begins to provide coverage).
When Louise goes online and fills out phony applications with XYZ Auto Insurance in order to print the temporary insurance cards and sell them for a profit on the black market, she is: A.using a Ponzi Scheme. B.using a regular business practice. C.committing soft fraud. D.committing hard fraud.
D.committing hard fraud.
As Jonathan was driving through an intersection, another driver ran a red light and crashed into the side of Jonathan's car, which caused significant physical damage to both vehicles. Jonathan must now rent a car while his is being repaired. The rental car expense would be considered a/an: A.proximate cause. B.physical hazard. C.direct loss. D.indirect loss.
D.indirect loss. -That is incorrect. The cost of renting a car is not part of the actual damage to Jonathan's property, but it is an economic consequence of that damage, so it is an indirect loss.
All of the following are covered under Coverage A of a Business Owners Policy, EXCEPT: A.flooring and floor coverings. B.building maintenance equipment, such as fire extinguishers. C.owner's furniture in an apartment that is rented as furnished. D.leased business personal property that must be insured.
D.leased business personal property that must be insured. -Leased business personal property would not be covered under Coverage A.
In Alabama, an employee's Average Weekly Wage is: A.the average amount the employee earned in the last 13 weeks leading up to her injury. B.2/3 of the average amount the employee earned in the last 13 weeks leading up to her injury. C.2/3 of the average amount the employee earned in the last 52 weeks leading up to her injury. D.the average amount the employee earned in the last 52 weeks leading up to her injury.
D.the average amount the employee earned in the last 52 weeks leading up to her injury. -An employee's Average Weekly Wage is the average amount the employee earned in the last 52 weeks leading up to her injury.
