Exam 3 HARD questions!

A golfer slices a tree shot and the ball goes through the window of a house beside the fairway. The broken glass is paid for by a. the golfer's homeowners liability coverage b. the homeowner's property coverage on the house c. the liability policy of the golf course d. the property coverage of the golf course

A

An agent delivers a policy to an applicant, who pays the initial premium but refuses to submit a statement of good health. Which of the following terms best describes what the applicant has violated? a. consideration b. representation c. adhesion d. contractual agreement

A

For negligence liability to exist, which is NOT a requirement? a. an intervening cause b. proximate cause c. a breach of legal duty act or not act d. injury or damage to another

A

Which of the following would NOT be covered by commercial inland marine policies? a. property lost due to military action b. commercial property float risks c. loss cause by weather conditions d. bridges and tunnels

A

An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done? A) twisting b. defamation c. misrepresentation d. rebating

C

An applicant for property insurance owns a building in which combustible materials are stored in the furnace room. From an underwriting standpoint, this risk would likely be considered a a. speculative risk b. moral hazard c. physical hazard d. morale hazard

D

An insured has decided to never drive another vehicle and wants to transfer his auto to his wife. What does that insured need to transfer the policy? A) The written consent of the insured B) An auto policy cannot be transferred C) Nothing, because the wife is automatically included as an insured D) The written consent of all the other insureds covered by the policy

A

Coverage B - Personal and Advertising Injury Liability responds to claims arising from a) suits alleging infringement of a copyright b) scope of patent protection c) failure of products to perform as advertised d) premises and operations injury claims

A

What type of policy, which may be added by endorsement or churched separately, may an insured purchase in order to provide coverage for other types of contracts? a. a contractual liability policy b. a term life policy c. an other coverage policy d. an added endorsement policy

A

Which of the following exposures is not covered under the garage liability coverage form? a. contractual liability b. premises and operation liability c. products and complete operations liability d. auto liability

A

The commercial crime coverage that would cover losses resulting from the theft of money, securities, and other property by employees is: a. inside the premises-theft of money and securities b. employee theft c. funds transfer fraud d. forgery or alteration

B

The garage coverage form is written to cover the insurance needs of an insured in the business of selling, repairing, servicing or storing automobiles. Which of the following coverages are not included in a garage policy? a) Product liability b) Physical damage on a customer's auto c) Auto liability d) Premises and operations liability

B

Unless additional coverages are added to the businessowners policy (BOP), the maximum amount of coverage on an outdoor sign attached to a building is limited to A. 500 B. 1,000 C. 2,000 D. 4,000

B

All of the following persons would be covered under business auto policy EXCEPT a. an employee of the named insured operating an auto that is owned by the employees spouse b. a person operating an auto borrow by the named insured, with permission c. a person operating a covered auto with permission of the insured d. the owner from whom a trailer is borrowed and connect to an auto owned by the named insured

A

An applicant for disability insurance policy has a heart conditions of which they are unaware and therefore they answer no tot he questions pertaining to heart problems on their application. This answer is considered to be a A. fraudulent answer b. representation c. warranty d. concealment

B

An insured was having a new home built/ While digging the footings for the foundation, the contractor struck a solid rock formation and found that was necessary to blast the formation in order to remove the rocks. The force of the blast broke several windows and some chinaware ina neighbor's home several blocks away. Who pays for this damage? a. the insureds insurer, regardless of negligence b. the contractor c. the neighbors insurer d. the insureds insurer if the neighbor proves that the insured was negligent

B

Coverage for loss by some perils under a building and personal property form is suspended if a. an uninsured peril causes a partial loss b. the insured building is vacant for over 60 days c. a loss occurs while a hazard beyond the insured's control is increased d. the insured fails to satisfy the coinsurance provision

B

Testimony, documents, or other evidence obtained by the Commissioner may NOT be used in which of the following situations a. an investigation of a producer b. an investigation of an agency c. a private civil proceeding against an agency or producer d. examination of a witness in an investigation

C

The personal property off-premises extension of dwelling forms provides limits of coverage up to: a. 10% of Coverage A anywhere in the world b. 10% of coverage C anywhere in the U.S. and Canada c. 10% of Coverage C anywhere in the world d. 10% of coverage A anywhere in the U.S. and Canada

C

Under which legal defense may a claimant's recovery be defeated if the defendant can show that claimant contributed, no matter how slightly, to the injury or damage? a. pro rata liabilty b. presumed negligence c. contributory negligence c. comparative negligence

C

W. has recently purchased a used car lot with 50 used vehicles. His insurance agent, Bill Emnow, told Wille that it will take 30 days to get a policy-in-force on the cars to be sold. One option that Bill may be able to offer Willie could be a) An insurer's bond b) A CGL policy c) A temporary policy with another insurer d) A binder from the planned insurer

C

What is the purpose of ordinance or law coverage endorsement? a. To enforce ordinance or law as they pertain to insurance policies b. to protect the insure against losses caused by laws c. to remove the exclusion of losses resulting form ordinance or law d. to exclude losses resulting from newly issued ordinance or law

C

What two policy components are part of every commercial package policy? A. Consideration and agreement B. Property coverage and liability coverage C. Common policy declarations and common policy conditions D. Common policy exclusions and agreement

C

A trucking company's truck is out of service for repairs. While making the delivery in aborroed truck, the driver is responsible for an accident that caused $55,000 in property damage to other vehicles and injuries to 2 individuals. Under the commercial auto liability policy conditions, which policy pays for this loss? A) The insurance companies will share in the settlement based on the other insurance conditions B) Only the insurance company for the borrower of the truck will pay for damages and injuries C) The policy for the toiled owner fo the truck will be primary and the borrowers insurance will be excess D) The policy for the company that barred the truck will be primary and the titled owner of the truck will be excess

D

An insured has an auto policy with limits of 100/300/50. and a deductible of $1,000. He is involved in an auto accident and crashes into another driver's auto. the other driver is awarded $125,000 for his injuries and $25,000 for the damage to his car. the insured's vehicle has damage in the amount of $1,200. The total payment made under the insured's policy is a. $125,200 b. 126,200 c, 100, 200 d. $150,200

A

Business auto coverage applies only to those auto that are identified as covered auto in the declaration by entry of the appropriate numeral symbol. Which symbol affords the broadest coverage? a. 1 b. 2 c. 7 d. 9

A

How long must be the notice of cancellation on an auto insurance policy for nonpayment of premium? a. 10days b.15days c. 20days d. 30days

A

The limited theft endorsement designed for a landlord excludes all of the following except: a. a lawnmower the landlord owns and keeps at tenant's house b. landlord's jewelry c. landlord's silverware

A

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

An insured is injured while driving his own car. Which of the following coverages will pay for the loss? A. Part A - liability b. Part B - Medical payments c. Part- C - Uninsured motorist d. Part D - Damage to your auto

b

Coverage C in in HO policy forms offers all of the following EXCEPT a. coverage for property located at another resident premises b. coverage for loss of use c. worldwide coverage d. coverage for property of others

b

In the event of a loss, the most the insurer will pay is a. The amount fo the loss or the limits as stated in the policy, whichever is more b. the amount of the loss c. the limits as stated in the policy d. the amount of the loss or the limited stated in the policy whichever is less

d

A driver who has an auto policy with limits of liability lower than required by state law would be considered? a. an insolvent motorist b. uninsured motorist c. underinsured motorist d. an insured motorist

B

What is the minimum required age to become licensed as an adjuster in Alabama? a. 18 b. 19 c. 21 d. 25

B

Using the pro rata method, if a property is covered by Company A for $20,000 and Company B covers the same property for $40,000, how much will Company A pay on a $24,000 loss? a. $20,000 b. 12,000 c. 8,000 d. 0

c. 8,000 pro rata liability applies. each policy pays a % of the loss based on the % of coverage that policy provides. since company carries 1/3 of the total coverage then it is responsible for 1/3 of the loss

Which of the following statements regarding surety bonds is true? a. the purpose of the surety bond is to guarantee that specific duties or obligations will be fulfilled b. a surety bond is also know as the third party guarantee insurance because it always involves three parties c. the principle is the designated beneficiary of the holder of the surety bond d. the person who promises to fulfill the obligation of the bond is known as the obligee

A

what is an insured contract? a) those contracts that are automatically covered under the exposure of premises coverage in a general liability insurance contract b) those contracts for which specific individual policies are written c) only those contracts for which a specific premium is charged in the policy d) only those contracts that specifically name both parties to the contract in the policy

A

A producer in another states wants to become a producer in Alabama. The other state gives the same privilege to Alabama producer wanting to be licensed in that state as it does its own producers. Alabama therefore extends the privates of its producers to the prospective producer of the other state. What is this called? A) equal privilege B) reciprocity C) fair exchange D) equanimity

B

An employer may purchase workers compensation Assigned risk if they were denied coverage by at least how many other insurers? a. 1 b. 2 c. 3 d. 5

B

In order to issue policies through the AAIP, an insurance producer in Alabama must hold a. an adjuster's insurance b. a property and causality license c. a limited lines auto license d. a variable products license

B

Which of the following MUST the Commissioner do before suspending or revoking the license of an agency? a.) inform the NAIC b). Hold a hearing to determine if a violation has been committed c.) advise the agency of the suspension in writing within 30 days d.) assess a civil penalty of not less than $100 or no more than $1000

B

Which of the following elements of an insurance contract requires paying premium and providing a statement of good health? a. offer and acceptance b. consideration c. legal purpose d. competent parties

B

An insured and his spouse were traveling down an icy road and hit a sign causing $1,350 in damage to his own car. If the insured has $250 deductible and already collected $1,500 claim, how much will he collect on this claim? a. 0 b. $250 c. $1100 d. $1350

C

In insurance, the agents have authorization to represent the company and may exercise this relation through a. Underwriting department, actuarial department, claims department b. reciprocal authority, risk retention, reinsurance c. expressed authority, implied authority, apparent authority d. domestic authority, foreign authority, client authority

C

When does the insurer's duty to defend a suit or claim end in a commercial Bernal liability policy? a. When both he loss payment and defense costs equal the applicable policy limit b. when the insured agrees to the settlement c. when the loss payment equals the applicable limit of insurance d. when defense costs equal the application limit of the insurance

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 losses would be excluded for coverer under the farm property special form? a. Theft of property from the insured residence b. drowning of livestock c. Fire caused by curing tobacco d. Loss of livestock cause by attack by dog or wild animals

C

Which of the following symbols ina business auto policy indicateds that coverage for newly acquired vehicles applies if the insurer already covers all autos owned by the insured a. symbol 1 b. symbol 2 c. symbol 7 d. symbol 19

C

An insured has $5000 of medical coverage under a personal auto policy at the time of a covered accident. The insured and 3 passengers are injured. The insured's medical expenses are $8000. The first passenger's total $4000, the second passenger's total $6500, and the third passenger's total $1200. How much will the policy pay under medical payment coverage? a. $5000 b.$8000 c. $15200 d. $19700

C So the policy will pay maximum ($10,000) for the insured and passenger 2 because their medical expenses exceed the limit. All of passenger 1 and passenger 3's expenses would be paid ($5,200). Grand total $15,200.)

An insured has a commercial blanket bond in the amount of $25,000. Three identifiable employees steal $10,000 each in a single loss. How much will the bond pay? A) $30,000 B) $75,000 C) $10,000 D) $25,000

D

Lost Treasures has a guard dog in a fenced lot to protect the salvage yard. The dogscared a passerby , who now claims that it was a traumatic experience and that he now suffers from recurring nightmares. A claim for personal injury of $5000 is filled against Lost Treasures.Why will the personal and advertising injury liability section (coverage B) of the CGL policy cover this claim? a. animals are excluded form coverage b. the injury was expected or intended c. the occurrence was off premises d. Mental anguish is a covered injury

D

Under the employee theft coverage, when a covered employee is found to have participated in a dishonest act, the coverage for that employee will terminate a. in 30days b. on the anniversary of the bond c. upon employees conviction d. Immediately

D

Which would NOT be covered by an insured's uninsured motorist coverage a. the insured's neighbor borrowed the insured's car and was hit by an uninsured motorist b. the insured's car is hit by someone whose auto insurer is insolvent c. the insured son is struck by a hit-and -run driver d. The insured causes a head-on-collision with the car of an uninsured motorist.

D

An insured's child ran into a neighbor's planter on his bicycle and broke the planter and ruined the plants. the cost to replace the planter was $400, and the cost to replace the plants was $100. Which section of the insured's homeowners policy would pay? a. Section II with no deductible b. Section I with no deductible c. Section I, subject to the deductible d. Section II, subject to the deductible

D Under Section II - Additional Coverage Damage to Property of Others, the policy would provide replacement cost coverage up to $1,000 to pay for damage to property of others caused by an insured

If an applicant submits the initial premium with an application, which action constitutes acceptance? a. The applicant submits a statement of good health b. the producer delivers the policy c. the insurance company receives the application and initial premium d. the underwriter approves the application

d