Casualty

A structure may be eligible for coverage under the National Flood Insurance Program if it meets all of the following requirements EXCEPT A Is entirely over water. B Is not located within the Coastal Barrier Resource System. C Has 2 solid walls and a roof. D Is principally above ground.

A

According to the Section I - Property of the Businessowners policy definitions, what is the term for insured's business activities occurring at the described premises? A Operations B Covered territory C Enterprise D Controlled business

A

An insured has extended coverage on her dwelling that includes coverage for vandalism and malicious mischief. One evening, she is sitting in her living room when she hears a crash and the sound of glass breaking. She runs to the door and discovers a brick has been thrown through her glass door. To inform her insurer of a possible claim, she fills out a form detailing the events leading to the loss. What is the name of the form? A Notice of Claim form B Appraisal form C Proof of Loss form D Mortgagee Rights form

A

An insured just purchased an auto policy for his new car. He wants to understand what perils are not insured against. Which section of his policy should the insured check? A Exclusions B Insuring agreement C Declarations D Definitions

A

During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sound worse than it is. This is an example of an unfair trade practice of A Defamation. B Twisting. C False advertising. D Misrepresentation.

A

Eligibility requirements for obtaining property coverage in the FAIR Plan include all of the following EXCEPT A Risk must be owner occupied. B Risk must be insurable. C The applicant must have made an unsuccessful effort to obtain coverage in the normal market. D Risk must be located in a specific area.

A

How is the premium paid for the businessowners policy? A One indivisible premium B Itemized premium C Pro rata liability premium D Separate premium for property and for liability

A

If a mortgagee is named in a mortgagee clause, how would a property policy pay claims on a home damaged in a fire? A The mortgagee would receive loss reimbursement. B The insured is considered a co-claimant and receives loss reimbursement from the mortgagee. C Only the insured would receive loss reimbursement. D The mortgagee may only receive loss reimbursement if the mortgagee brings an action against the insured.

A

If certain insurance coverages cannot be procured from authorized insurers, what can be procured from unauthorized insurers? A Surplus lines B Endorsements C Risk retention coverage D Nothing, unauthorized insurers cannot provide any coverage

A

The Commissioner receives complaints from several policyholders of a particular insured. She needs to examine information included in their insurance contracts. Where will she find this information? A Licensee's principal place of business B State Insurance Board C The Commissioner's Office D A & B

A

The statutory law defense that reduces injury and awards for damages proportionately when the plaintiff and defendant are both responsible is called A Comparative negligence. B Assumption of risk. C Intervening cause. D Contributory negligence.

A

To be valid, an insurance policy must have all of the following EXCEPT A Countersignature B Acceptance C Consideration D Offer

A

Under the common policy conditions of a policy, all of the following are TRUE about changes in a policy EXCEPT A The insurer must obtain permission from all named insureds to make a change. B The policy can be changed only by a written endorsement issued by the company. C Changes in the policy can be requested only by the first named insured. D Changes can be made only with the insurance company's consent.

A

What is the maximum aggregate penalty for a licensee unintentionally violating the insurance laws of Delaware? A $100,000 B $50,000 C $1,000 D $5,000

A

What is the term that describes mixing the client's money with the producer's personal money? A Commingling B Churning C Twisting D Rebating

A

Which of the following best describes a rebate? A A producer returning part of her commission to her client, as an inducement to buy B A producer misrepresenting policy provisions or coverages at issue C A producer requiring an insured to buy insurance from her as a condition to a loan D A producer selling insurance primarily to himself, his family and his friends

A

Which of the following is defined as the failure to use care that an otherwise prudent person would have under similar circumstances? A Negligence B Attractive nuisance C Proximate cause D Vicarious liability

A

Which of the following is not a duty of the Commissioner? A Develop insurance rates B License insurance companies, producers and brokers C Enforce violations of the Insurance Code D Regulate insurance rates

A

Which of the following is the cause of loss? A Peril B Hazard C Exposures D Risk

A

Which of the following provisions is usually found in homeowners policies and provides a replacement cost settlement to policyholders who carry adequate insurance? A Insurance to value B Coinsurance C Actual cash value D Pro rata

A

Which of the following statements does NOT describe endorsements? A Endorsements may only add coverage to a current policy, not remove. B Endorsements may be added during the policy term. C Endorsements are printed addenda to a policy. D Endorsements must be signed by an executive officer.

A

Which of the following types of property would be covered under Coverage C - Personal Property in a dwelling policy? A Rowboats B 2-passenger aircraft C Any personal watercraft D Motor vehicles

A

Agents may be found guilty of defamation if they make false statements that are intended to A Misrepresent the benefits payable under policies. B Maliciously criticize another insurance company. C Deceive a policyholder. D Misinform prospective clients about policy coverage.

B

All of the following are true about the cancellation provision of a commercial insurance policy EXCEPT A The insured may cancel the policy at any time by mailing or delivering written notice of cancellation to the insurer. B The insurer is required to provide proof that the insured received the cancellation notice prior to cancelling the policy. C The insurer is required to give advance notice of its intended cancellation to the insured. D The insurer may cancel the policy by mailing or delivering written notice of cancellation to the first named insured.

B

Among the applicants in the same class and life expectancy, which of the following factors can be used to determine premium rates? A Race B Occupation C Ancestry D Marital status

B

An individual just applied for National Flood Insurance. How many days can she expect to wait before coverage is effective? A 20 B 30 C 45 D 60

B

An insured has a maximum limit of coverage available under her liability policy during a policy year, regardless of the number of claims made or the number of accidents. Her limits are restored at the policy anniversary. What type of limit does this insured have? A Per occurrence B Aggregate C Split D Single

B

An insured was backing his car out of the driveway and hit a fire hydrant. The automobile sustained $1,300 of damage to the bumper. The insured's auto policy has a $500 deductible. Which of the following is true? A The insured will pay all but $500 of any claims he makes on his policy. B The insured is responsible for the first $500 of any claim that he makes on his policy. C The insured is responsible for the total of $500 on claims made for the calendar year on the policy. D The insured will receive a $500 discount on all repair work that is contracted by his insurer.

B

An insured was told to leave his home because of endangerment by a brush fire that was out of control. The insured was able to have his personal property moved to storage away from the endangered area. For how long will the homeowners policy provide coverage for the stored property? A 10 days B 30 days C 90 days D 3 days

B

An insured's diner suffered a fire loss. In addition to the damage caused by the fire, the floor covering had to be replaced because of the water damage. It took 4 weeks for the repairs to be completed. The insured was without income for that period of time. The insured's policy includes both direct and indirect loss coverage. What part of the loss would be paid as indirect loss? A The entire loss would be paid as direct loss by fire B The loss of income for the time the diner was closed C The cost of replacing the floor covering due to the water damage D Both the loss of income and the cost of the floor covering

B

How long must a licensee keep records on file, available for inspection by the Commissioner? A 1 year B 3 years C 60 days D 120 days

B

If a fire erupts in the kitchen and spreads to the upstairs bedroom, resulting in the destruction of furniture, what type of loss has occurred? A Proximate B Direct C Indirect D Consequential

B

In reference to insurable interest, which of the following is NOT an element of insurable risk? A Business B Personal C Blood D Financial

B

In the last 72 hours, there were 3 instances of volcanic eruptions that damaged a property covered by a dwelling policy. How many deductibles will the insured have to pay before the policy covers the damages caused by the eruptions? A Zero B One C Two D Three

B

John had a disagreement with his insurer on the value of his damaged property. After making a written demand, both John and the insurer each selected an appraiser. The appraisers then agreed on a fair value without having to select an umpire. What condition did John use? A Fair Value B Appraisal C Arbitration D Notice of Claim

B

NFIP flood insurance policies have a term period of A 6 months. B 1 year. C 2 years. D 10 years.

B

What is the purpose of the Guaranty Association? A To issue certificates of authority B To provide benefits to insureds whose insurers have become insolvent C To regulate premium rates D To promote the uniformity of policy provisions

B

What sublimit in a liability policy sets the maximum amount that will be paid for all claims arising from a single accident? A Aggregate B Per occurrence C Per person D Combined single

B

When an insurer pays for the cost to exchange damaged property with new property of similar kind and quality, it is called A Stated amount. B Replacement cost. C Actual cash value. D Market value.

B

When do binders expire? A No later than 30 days B As soon as the policy is issued C After 10 days D When an original policy is replaced

B

Which of the following authorities can reinstate a license after it has been suspended? A NAIC B Commissioner C District court D State insurance board

B

Which of the following describes an insurer's responsibility for payment under a policy, as stated in the common policy provisions? A Premiums B Limits of liability C Consideration D Utmost good faith

B

Which of the following documents notifies the insurer of events that may lead to a possible claim? A Appraisal statement B Notice of claim C Subrogative statement D Binder

B

Which of the following entities is eligible for a businessowners policy? A Manufacturing operations B Convenience stores C Places of amusement D Automobile sales and servicing operations

B

Which of the following is NOT a condition for procuring surplus lines? A The insurance must not be so exported for the purpose of securing advantages either as to a lower premium rate than would be accepted by an authorized insurer. B The policy must not contain a surplus lines clause prohibiting such a procurement from occurring. C The insurance must be procured through a licensed surplus lines broker. D The full amount of insurance required must not be procurable from among the insurers authorized to transact that kind of insurance in Delaware.

B

Which of the following statements is CORRECT regarding business income coverage under the businessowners policy (BOP)? A The business income coverage has a monthly limitation and a set benefit period. B The business income losses are payable for 12 consecutive months following the occurrence. C The business income coverage is subject to coinsurance limitations of 50%. D The business income coverage has an aggregate dollar limit.

B

Which valuation method takes into consideration what a willing buyer would pay for an insured property? A Functional replacement value B Market value C Replacement value D Actual cost value

B

"This insurance contract is issued pursuant to the Delaware Insurance Laws by an insurer neither licensed by nor under the jurisdiction of the Delaware Insurance Department." This statement is best described as A A summary of risk insured. B A condition for procurement. C An endorsement of the policy. D The entire contract.

C

A lender who conditions approval of a loan on the condition that the borrower purchase insurance from that lender may be guilty of A Unfair discrimination. B Illegal inducement. C Coercion. D Misrepresentation.

C

A person may request a hearing by the Commissioner. What are the requirements for requesting a hearing? A The applicant for hearing must file an application at least 20 days in advance of the Commissioner's standard days in court. B The application must be filed by an attorney. C The application must be in writing and within 90 days after the violation occurred. D The application must be in writing and within 1 year of the act in question.

C

According to the law of agency, insurance producers represent A The public. B The State. C Insurers. D Insureds.

C

All of the following are optional endorsements that may be added to the standard equipment breakdown coverage form EXCEPT A Extra expense. B Business interruption. C Debris removal. D Utility interruption.

C

An insured believes that his insurer is not properly fulfilling its obligations regarding his policy. What section of the policy will give the insured more information about specific duties of the insurer? A Definitions B Obligations C Conditions D Endorsements

C

An insured's limit of liability applies to a total of damages for bodily injury and property damage resulting from one accident, which may be used in any combination of amounts, not to exceed the single limit. What type of limit does this insured have? A Per occurrence B Combined single C Split D Aggregate

C

As specified in the protective safeguard endorsement added to a businessowners policy, if the automatic sprinkler system is shut down due to freezing conditions, the insured does not need to notify the insurance company as long as the system is restored within A 12 hours B 24 hours C 48 hours D 72 hours

C

Each of the following may be insured under an HO-3 homeowners policy EXCEPT A One co-owner when each distinct portion of a two-family dwelling is occupied by co-owners. B The intended owner-occupant of a dwelling under construction. C The owner-occupant of a condominium unit. D An occupant of a dwelling under a life estate arrangement when dwelling coverage is at least 80% of the current replacement cost.

C

Errors and omissions (E&O) liability insurance coverage A Does not protect the agent if the case against the agent is frivolous. B Is unlimited. C Protects an agent in the case of unintentional negligence. D Has very low deductibles.

C

Guaranteeing future dividends is considered to be an unfair or deceptive act known as A Twisting. B False financial statements. C Rebating. D Misrepresentation.

C

How many people must sustain death or serious physical injury before the War or Terrorism Exclusion in a Businessowners policy applies? A 500 B 1,000 C 50 D 100

C

In order to start coverage before a policy is issued, insurers can issue a(n) A Indemnity certificate. B Subrogative agreement. C Binder. D Coverage authorization.

C

Premiums collected on behalf of the insurance company by an agent will be held in what capacity? A Security B Rebate C Fiduciary D Debit

C

The businessowners policy (BOP) extension coverage form for personal property off-premises is limited to A $2,500 B $5,000 C $10,000 D $15,000

C

Under which legal defense is there an apportionment of damages based upon the degree of fault of each of the plaintiffs and the defendant? A Absolute liability B Contributory negligence C Comparative negligence D Intervening cause

C

What is used as the basis for requiring a community to join the National Flood Insurance Program (NFIP)? A Community flood study B There are no requirements for communities to join the NFIP. C Flood Hazard Boundary Maps (FHBM) D Flood Insurance Rate Maps (FIRMs)

C

What kind of insurance is provided by the FAIR Plan? A Automobile liability insurance B Workers Compensation insurance C Basic property insurance D Basic medical insurance

C

When agents, brokers, or solicitors handle premiums for an insurer, they are acting in which capacity? A Legal representative with power of attorney B Natural person C As a fiduciary D As a managing general agent (MGA)

C

When an insured feels their insurance was wrongly canceled or nonrenewed, they can file a complaint with the Commissioner, who may then hold a hearing. If the Commissioner determines that an insurer has violated insurance laws, the Commissioner may require the insurer to do any of the following EXCEPT A Reinstate coverage to the end of the policy period. B Continue coverage at a rate and on the same terms and conditions as available to other similar risks. C Reinstate coverage to the end of the policy period with a reduced premium rate. D Accept the application or written request for insurance coverage at a rate and on the same terms and conditions as available to other similar risks.

C

When an insured's gardener was spraying weeds in his lawn, he failed to notice that the wind was drifting the spray into the neighbor's yard where he damaged their flower bed. The insured was found to be legally liable for this damage. This is an example of A Comparative negligence. B Gross negligence. C Vicarious liability. D Intervening cause.

C

When handling premium funds in the conduct of their business, insurance producers act in what capacity? A Financial B Special C Fiduciary D Accounting

C

When may the Commissioner reinstate a suspended license? A No earlier than 6 months after the suspension B No earlier than 1 year after the suspension C At any time D No earlier than 3 months after the suspension

C

When surplus lines insurance goes into effect, the broker must execute an affidavit to the Commissioner A Immediately. B Within 10 days. C Within 30 days. D Within 15 days.

C

Which of the following best defines the unfair trade practice of rebating? A Charging premium amounts in excess of the amount stated in the policy B Making false statements that are maliciously critical and intended to injury another person in the business of insurance C Offering an inducement of something of value not specified in the policy D Making statements that misrepresent an insurance policy in order to induce an insured to replace the policy

C

Which of the following contract elements best describes insurance written in support of public policy? A Offer and acceptance B Competent parties C Legal purpose D Consideration

C

Which of the following entities can grant or revoke a Certificate of Authority? A NAIC B MIB C Commissioner D State Insurance Board

C

Which of the following is NOT true regarding the automatic increase in insurance endorsement in dwelling policies? A It is optional. B It provides protection from inflation. C It does not require additional premium. D It increases the amount of coverage by an annual percentage.

C

Which of the following is true regarding a producer's ability to bind coverage? A Producers have full authority to bind coverage. B Producers can only bind coverage if their license is temporary in nature. C Producers are not authorized to bind coverage. D Producers can bind coverage in emergency situations only.

C

Which of the following terms best describes the home of an insured who goes on vacation for 3 months? A Temporary empty B Vacant C Unoccupied D Condemned

C

Which of the following will be covered by businessowners property coverage form? A Aircraft and vehicles B Outdoor fences C Buildings and business personal property D Money and securities

C

Who acts on behalf of the principal? A Insured B The state C Agent D Insurer

C

A homeowner has misplaced some of her insured personal property and has no idea what may have happened to it. Which HO policy form would cover such a loss? A HO-2 B HO-3 C HO-4 D HO-5

D

A producer advises a policyholder that he should replace his life insurance policy with another, similar policy. The agent is advising this, however, for the sole purpose of earning a commission. What violation has the agent committed? A False advertising B Twisting C Replacement fraud D Churning

D

An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as A Twisting. B Fraud. C Concealment. D Misrepresentation.

D

An insurance producer's license is suspended for an unfair trade practice. How much of the producer's commissions may be kept from the sale of insurance policies made while the license was in good standing? A A percentage of commissions specified by the Commissioner B One third of the commissions, until examination by the Commissioner C None of the commissions D All of the commissions

D

Domestic insurers must be examined at least once every A 4 years. B 5 years. C 2 years. D 3 years.

D

Homeowners policies consider all of the following insured locations EXCEPT A Land owned by the insured on which his new home is under construction. B An individual cemetery plot. C The hotel ballroom rented by the insured for a family reunion. D A strawberry patch owned by the insured.

D

If an agent follows the rules and terms of his agent contract, he is exercising his A Apparent authority. B Contractual authority. C Implied authority. D Express authority.

D

If an insurance policy has the additional coverage provision, how does it affect the policy premium? A Premium will be recalculated when a specific loss covered by this provision occurs. B Additional premium will be assessed. C Premium will be calculated on a pro rata basis based on the amount of additional coverage. D There is no additional premium.

D

The equipment breakdown coverage form values loss on a/an A Valued basis. B Stated amount basis. C Actual cash value basis. D Replacement cost basis.

D

To determine the actual cash value of an insured property, what must be deducted from the current replacement cost? A Agreed value B Stated value C Fair market value D Depreciated value

D

What are the two types of utility services endorsements? A Direct loss and indirect loss B Protective safeguards and mechanical breakdown C Open peril and named peril D Direct damage and time element

D

What information is found in the conditions part of an insurance policy? A The persons or risks not covered under the policy B The identity of the named insured C The amount of coverage provided by the policy D The description of the duties and obligations of the insured

D

What part of the insurance contract describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured? A Exclusions B Declarations C Conditions D Insuring agreement

D

Which of the following is covered under a dwelling policy? A Freezing plumbing systems B Flood or surface water C Structures used for commercial manufacturing D Fire caused by an earthquake

D

Which of the following perils is NOT covered the DP-2? A Damage caused by burglars B Damage caused by the weight of ice and snow C Damage caused by falling objects D Damage to pets, birds, or fish

D

Which of the following perils will be EXCLUDED from coverage under HO-4 Tenant Broad Form of a homeowners policy? A Weight of ice, snow, or sleet B Fire or lightning C Volcanic action D Sewer water backup

D

Which of the following statements is INCORRECT? A An individual is a representative of one or more insurance companies. B An individual must be appointed by each company they represent. C An Agency is the fiduciary relationship between a person and brokerage. D An Agency itself does not need to be licensed; only individuals must be licensed.

D