Exam 4
The basic limit for medical payments under coverage F of the HO forms is normally: Answer Choices: Select the Correct Answer $1,000 per person. $500 per person. $2,500 per person. $5,000 per person.
$1,000 per person. . Explanation: Coverage F normally has a limit of $1,000 per accident per individual.
The minimum capital required to form and organize a new domestic stock life insurance company in Alabama is: Answer Choices: Select the Correct Answer $1,000,000. $100,000. $5,000,000. $10,000.
$1,000,000. is correct. Explanation: This amount is required by state law.
To be licensed as an adjuster in Alabama, an applicant must be ___ years of age when making application. Answer Choices: Select the Correct Answer 19 18 21 25
19. Explanation: Alabama mandates age 19 for adjusters.
The information provided by the insured in a proof of loss form is considered: Answer Choices: Select the Correct Answer A representation. A warranty. An assignment. An agreement.
A representation. is correct. Explanation: Representations are statements made by the insured that are assumed to be truthful to the best of the insured's knowledge.
In January 2011 ABC Company wrote a fidelity bond for Jim's Cleaners. In March, Jim discovered an employee theft that took place two years ago. This claim should be handled by: Answer Choices: Select the Correct Answer The carrier who wrote their bond in 2009 ABC Company Both carriers Neither carrier
ABC Company is correct. Explanation: Fidelity bonds normally contain a clause known as a superseded suretyship rider, which holds that the current bond is to pay all losses that would have been recoverable under prior bonds if the "discovery period" has expired on the previous bond.
Your PAP's medical payments would cover you if you became injured in which of the following situations? Answer Choices: Select the Correct Answer As you were walking along the sidewalk in Nova Scotia and hit by a car If you were a paying passenger on a bus If you were a passenger in another's car All the responses are correct
All the responses are correct . Explanation: For the named insured and family members, PAP med pay covers injuries sustained in any auto related accident or when a pedestrian and struck by a car that occurs anywhere in the "coverage territory."
Who signs the declaration page on the Equipment Breakdown policy? Answer Choices: Select the Correct Answer An Authorized Representative The Named Insured Two officers of the company An Authorized Inspector
An Authorized Representative. Explanation: An authorized representative of the company signs the policy Declarations page. This would be the agent.
Under the "Inside the Premises - Theft of Money and Securities" insuring agreement of a crime policy, which of the following situations would NOT be covered: Answer Choices: Select the Correct Answer Cash that is taken by employees. Cash in the register is destroyed in a fire. Travelers checks that have turned up missing. A casino suffers a theft of slot machine tokens.
Cash that is taken by employees. . Explanation: This insuring agreement covers loss of "money" and "securities" (as defined in the form) resulting from theft, disappearance, or destruction. Theft by the insured and/or its partners, members, employees, managers, directors, and trustees is excluded.
Mr. Smith carries a total limit of $20,000 on his home. He has two policies. One policy is with Company A with a limit of $12,000 and another with Company B in the amount of $8,000. In case of a $10,000 covered loss, which of the following is true regarding the payment of the claim? Answer Choices: Select the Correct Answer Company A will pay $6,000 and Company B will pay $4,000 Company B will pay $8,000 Each company will pay 50% of the loss Company A will pay $6,000 and Company B will pay $2,000
Company A will pay $6,000 and Company B will pay $4,000 is correct. Explanation: The total amount of coverage is $20,000. Company A has 60% of the coverage and Company B has 40% of the coverage. Company A has 60% of the loss and would pay $6,000. Company B has 40% of the loss so it would pay $4,000.
Concurrent policies are: Answer Choices: Select the Correct Answer Separate types of policies issued to an insured by an insurer Separate policies that insure the same interest and the identical property in the same loss Not illegal Also known as co-insurance
Concurrent policies are separate policies that insure the same insured and the same property in the same loss.
Which of the following statements is correct regarding pollution caused by smoke released from an industrial operation covered under the Commercial Property Policy? Answer Choices: Select the Correct Answer Always covered Never covered Covered on an "excess basis" Covered if caused by a covered cause of loss peril
Covered if caused by a covered cause of loss peril . Explanation: The Commercial Property Policy will not pay for loss or damage caused by or resulting from the discharge, dispersal, seepage, migration, release or escape of pollutants unless the discharge, dispersal, seepage, migration, release or escape was caused by a covered cause of loss. Release of smoke from an industrial operation is not a covered cause of loss.
Which of the following losses is NOT excluded under the Physical Damage coverage of a personal auto policy? Answer Choices: Select the Correct Answer Damage to a covered auto while being used as part of a car pool. Damage to equipment designed for the detection of radar. Loss caused by freezing of the cooling system. Loss of custom furnishings in a customized van.
Damage to a covered auto while being used as part of a car pool. . Explanation: An exception is made in the policy to allow coverage while the vehicle is involved in a car pool. Coverage is excluded if the vehicle is used as a livery.
Which of the following sections of an insurance policy states who may be considered an insured in addition to the named insured? Answer Choices: Select the Correct Answer Definitions Declarations Insuring Agreements Conditions
Definitions . Explanation: The newer, "easier to read" insurance policies contain a list of definitions. The definition of "insured" describes who is considered an insured under the policy.
Jack Tate ignores the safety warnings and instructions when setting the controls of the steam boiler and as a result, the boiler explodes. Jack carries Equipment Breakdwon coverage. The adjuster for Pressure R Us Insurance Company may do which of the following? Answer Choices: Select the Correct Answer Deny coverage under the intentional errors & omissions exclusion Settle the loss at Actual Cash Value Pay for the loss of the boiler, but deny any expediting expense coverage due to the error on Jack's part All of the responses apply
Deny coverage under the intentional errors & omissions exclusion is correct. Explanation: If a loss occurs as a result of intentional error of the employee, coverage can be denied
Under Coverage E - Scheduled Farm Property, how is the property covered? Answer Choices: Select the Correct Answer For the limit shown in the policy declarations Unlimited Blanket coverage Replacement cost basis
For the limit shown in the policy declarations. Explanation: The property is covered for the limit shown on the declarations page of the policy for the property specifically scheduled.
Signing someone else's name or falsifying documents is considered: Answer Choices: Select the Correct Answer Rebating Coercion Misrepresentation Forgery
Forgery is correct. Explanation: Falsifying documents or signing someone else's name is known as forgery and is an unfair insurance trade practice. Question 11 of 100
The intentional misrepresentation or concealment of known facts for the purpose of gaining an advantage over another party is known as: Answer Choices: Select the Correct Answer Malfeasance. Concealment. Fraud. Waiver.
Fraud.. Explanation: This statement defines fraud. The key is "intentional misrepresentation for the purpose of gaining an advantage
In a commercial crime coverage form with the computer fraud coverage, which of the following would be covered? Answer Choices: Select the Correct Answer Fraudulent instructions to a financial institution to pay money from a customer's transfer account Computer virus Employee dishonesty Theft of the computer
Fraudulent instructions to a financial institution to pay money from a customer's transfer account. Explanation: Computer fraud coverage covers loss or damage to money, securities and other property due to the use of a computer to fraudulently transfer that property from inside the premises or banking premises to a place or person (other than a messenger) outside the premises.
Agent Rice informs the insured that he needs to secure motor vehicle records on all of the drivers in the household based on company requirements. This is an example of Agent Rice's: Apparent Authority Express Authority Fiduciary Authority Implied Authority
Implied Authority is correct. Explanation: Implied authority is the authority the agent believes he has in order to do his job properly. In order to write auto insurance, the agent needs to know what is on the motor vehicle driving record of all the drivers in the household.
According to the commercial auto policy definitions, an "accident":
Includes continuous or repeated exposure to the same conditions. . Explanation: The auto forms of the past used to simply cover the term "accident". It did not include continuous or repeated exposure to the same conditions. Many claims were denied because of this restriction. The current forms now include the broader definition and provide better coverage.
The liability coverage on the BOP would provide coverage for which of the following? Answer Choices: Select the Correct Answer 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. Explanation: Injury or property damage to others caused by the operation of mobile equipment on the insured's premises such as a forklift would be covered by the BOP policy. The other three answers are all specifically excluded.
An aleatory contract is most accurately described by which of the following? Answer Choices: Select the Correct Answer 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. . Explanation: Examples of aleatory contracts include insurance policies and product warranties. Note: "Contingent" means dependent on the occurrence of something not yet certain (conditional).
Which of the following would NOT be covered by a flood insurance policy? Answer Choices: Select the Correct Answer Overflow of water from a pond on the insured property Mudslides from recent heavy rain. Collapse of land along the shore of a body of water Inundation and overflow of surface waters
Mudslides from recent heavy rain.. Explanation: Damage caused by mudflow is covered under the policy. Mudslides are not.
In the general liability occurrence form, to be a covered a products liability claim the claim must: Answer Choices: Select the Correct Answer Be made, and the product must be sold, during the policy period Occur within the policy period regardless of when the product was sold Be caused by a product that was used in the USA or Canada Be for a claim which occurred prior the policy period, regardless of when the product was made or sold
Occur within the policy period regardless of when the product was sold is correct. Explanation: Occurrence form general liability applies to occurrences that occur during the policy period. For products liability it doesn't matter when the product was manufactured or sold by the insured. Products manufactured or sold in the covered territory are covered.
Workers compensation benefits will provide payments for all of the following, EXCEPT: Answer Choices: Select the Correct Answer Pain and suffering. Loss of income. Death benefits. Rehabilitation benefits.
Pain and suffering. is correct. Explanation: Workers compensation laws provide for the payment of medical benefits, income benefits, death benefits and rehabilitation benefits. There are no benefits for pain and suffering.
Which of the following is covered under Coverage A of the HO-2? Answer Choices: Select the Correct Answer Paint to be used on the building Riding lawnmower used to service the premises A detached fence Grave marker
Paint to be used on the building is correct. Explanation: The paint used for the building would be covered under the building limit under Coverages A and B (other structures). The mower is personal property covered under Coverage C. A detached fence is considered to be a separate structure and is covered under Coverage B. Grave markers have a separate limit in the policy for $5,000.
A ship owner wanting coverage in case crew members bring liability suits for injuries sustained while working would purchase: Answer Choices: Select the Correct Answer Workers Compensation Hull Coverage Freight Coverage Protection and Indemnity
Protection and Indemnity is correct. Explanation: Coverage would be obtained by purchasing protection and indemnity coverage.
Offering anything of value to a perspective insurance client to induce the client to purchase insurance is called: Answer Choices: Select the Correct Answer Rebating. Discrimination. Twisting. Churning.
Rebating. is correct. Explanation: This is called rebating and is an illegal act.
Which of the following statements defines the role of a bailee? Answer Choices: Select the Correct Answer A property owner who willingly entrusts the property to another person. Someone, other than the owner, to whom property is entrusted. A property owner who is in the business of renting property to others. Someone to whom property is sold on an installment basis.
Someone, other than the owner, to whom property is entrusted.. The bailee has custody of property of others and is normally performing a service such as dry cleaners. They must exercise more than reasonable care to protect the property from loss
Which of the following would be covered under the property damage section of the uninsured motorist coverage? Answer Choices: Select the Correct Answer The baby's car seat Luggage Emergency equipment Tapes, discs or other media
Tapes, discs or other media is correct. Explanation: The purpose of uninsured motorist property damage is to cover the insured's property when the negligent driver fails to carry the statutory limits of auto coverage, a hit and run situation or a person who is underinsured. However, coverage is only for those items that relate to an automobile's permanently installed equipment such as tapes, discs or other media. The other items would be addressed under the insured's homeowner policy.
Under the farm forms, the maximum amount payable for a loss to a satellite dish is: Answer Choices: Select the Correct Answer $250. $1,000. $500. $750.
The correct answer is: $1,000.. Explanation: The pre-2000 policy forms provided $250 for a satellite dish. Under the newer forms, the limit has been increased to $1,000.
Which of the following is the principal in a bond? Answer Choices: Select the Correct Answer Contractor doing the work Owner of the job The insurance company The surety
The correct answer is: Contractor doing the work. Explanation: There are three parties to a surety or fidelity bond: the principal, whose performance is being guaranteed by the surety; the obligee, to whom the principal makes a promise to perform or to be honest and the surety, which guarantees the principal's performance. If the principal fails, the surety will indemnify the obligee up to the face amount.
Tommy's Tip Top TV Store is delivering a new flat screen TV to Jerry's house. The delivery people set the TV down on the floor in the hallway to get a better grip. While picking it up, the TV scratches the floor. How will the Business Auto policy for Tommy's Tip Top TV Store respond to Jerry's demand for damage to his floor? Answer Choices: Select the Correct Answer No coverage for the damage to the floor Coverage for the damage to the floor is covered under the liability coverage of the Business Auto form Coverage for the damage to the floor is covered under the CGL form Damage must result from an auto accident
The correct answer is: Coverage for the damage to the floor is covered under the liability coverage of the Business Auto form. Explanation: The Business Auto form provides property damage liability coverage caused by the unloading or loading of property from the time it is picked up until the time it is delivered to its final destination.
Which of the following would NOT be considered mobile equipment under the business auto policy? Answer Choices: Select the Correct Answer Bulldozers Vehicles used solely on the farm premises Front end loaders Vehicles where snow plows are permanently mounted to remove snow on the premises
The correct answer is: Vehicles where snow plows are permanently mounted to remove snow on the premises. Explanation: A tractor could be a vehicle used solely on the farm premises and therefore a piece of mobile equipment. A vehicle that has snow plow equipment permanently mounted such as a pickup or dump truck could still be used on the public roads as a method of transportation.
The verdict in a personal injury liability suit was higher than the insured's underlying liability policy's limit of insurance. In this situation: Answer Choices: Select the Correct Answer The insured, the insurance company providing the insured's underlying policy and the company providing the insured's umbrella policy must agree on an appeal and share the expenses of that appeal. Neither the insured's underlying insurer nor the umbrella insurer may appeal without the insured's agreement. The insurance company providing the insured's umbrella liability policy can appeal the case at its own expense even if the insured and the company providing the underlying policy do not appeal. The case cannot be appealed by any of the parties.
The insurance company providing the insured's umbrella liability policy can appeal the case at its own expense even if the insured and the company providing the underlying policy do not appeal. is correct. Explanation: The umbrella insurer has the option to appeal even though the underlying insurer and the insured chooses not to appeal.
An insurance agent represents the interest of:
The insurance company. is correct.
In a liability policy the insurance company will pay damages on behalf of an insured when: Answer Choices: Select the Correct Answer The insurer determines the insured is legally liable and coverage applies under the policy. A relative is injured on the premises. The local police department issues a safety citation. Anytime a third part is injured on the insured's premises.
The insurer determines the insured is legally liable and coverage applies under the policy. is correct. Explanation: Most insurers will pay a claim once it is determined the insured is legally liable. This determination can be made by a court or when the insurer feels that the insured is liable. Bodily injury, which includes both accident and sickness, requires injury to a human being. The dog is property and would be covered under property damage.
The insurance company will pay liability damages on behalf of an insured when: Answer Choices: Select the Correct Answer The insurer determines the insured is legally liable. A relative is injured on the premises. Only when the court determines the insured is legally liable. Anytime a third part is injured on the insured's premises.
The insurer determines the insured is legally liable.. Explanation: Most insurers will pay a claim once it is determined their insured is legally liable. To avoid paying a claim in a timely fashion would expose the insurer to an "unfair claims settlement practice" violation.
If a dwelling insured under an HO-3 is destroyed by fire the insured will likely be paid:
The policy limits for the dwelling.. Explanation: Dwelling claim settlements are based on the dwelling replacement value, not the depreciated value, market value or assessed value. In the case of a total loss, the insured will likely receive the full policy limit.
All of the following are elements of insurability, EXCEPT: Answer Choices: Select the Correct Answer The risk must be unpredictable. The loss must be calculable. The risk must be unexpected. The loss must create a financial hardship.
The risk must be unpredictable. is correct. Explanation: Remember, because this is an "except" question you are looking for the answer that is NOT an element of insurability. In order to provide insurance, the risk has to be somewhat predictable, meaning it must be of such a nature that its frequency and average severity can be readily determined to establish the required premium. It must also create a financial hardship for the insured, and must be calculable so that premium rates can be set. The only answer selection that is NOT an element of insurability is that the risk must be unpredictable. In the law of large numbers, a risk must be predictable in terms of the law of large numbers used to calculate rates.
If your insurance company cancels your commercial insurance, whom must they notify? Answer Choices: Select the Correct Answer They must notify all Insureds listed on the policy. They must notify whoever is listed first on the policy. They must notify the first named insured listed on the policy. They must notify whoever is responsible for premium payments.
They must notify the first named insured listed on the policy. is correct. Explanation: Only the first named insured listed on the policy is to receive any notices.
A curtain catches fire above the stove in the kitchen. This is what type of fire? Answer Choices: Select the Correct Answer Friendly Controlled Sustained Unfriendly
Unfriendly is correct. Explanation: This is considered to be an unfriendly fire. It has left its place of containment.
Collision is referred to as colliding with another object or _____of the vehicle. Answer Choices: Select the Correct Answer Loss Upset or rollover Impact Destruction
Upset or rollover. Explanation: Another word for collision is upset or rollover.
To be defined as a burglary, an event must include which of the following conditions? Answer Choices: Select the Correct Answer Visible signs of forced entry or exit Fear or threat of violence Bodily injury Mysterious disappearance
Visible signs of forced entry or exit is correct. Explanation: To collect for a burglary claim, forcible entry or exit damage must be proved.
An insured can collect on his automobile medical payments coverage in all of the following situations, except: Answer Choices: Select the Correct Answer While injured in an owned vehicle While struck as a pedestrian by a vehicle licensed for on road use As a paying passenger in a taxi cab While in an owned vehicle used as a livery
While in an owned vehicle used as a livery is correct. Explanation: The personal auto medical payments will not provide coverage for any insured while injured in their vehicle that is used as a public or livery conveyance.
A surplus lines broker in Alabama must file a bond in the amount of: Answer Choices: Select the Correct Answer $50,000. $100,000. $25,000. $10,000.
Your answer: $50,000. is correct. Explanation: $50,000 is the amount required by law.
An Alabama licensee must inform the insurance department of a change in legal name or address within ___ of the change. Answer Choices: Select the Correct Answer 30 days 6 months 10 days 2 weeks
Your answer: 30 days is correct. Explanation: Notification of change must be made to the insurance department within 30 days.
Which of the following statements does NOT describe the major purpose of commercial umbrella liability insurance? Answer Choices: Select the Correct Answer To provide supplementary insurance. To provide excess insurance in addition to the underlying policy. To provide additional coverage to the underlying insurance policy. To protect the insured from catastrophic losses by providing additional insurance.
Your answer: To provide additional coverage to the underlying insurance policy. is correct. Explanation: In commercial umbrella insurance the insurer will require the insured to carry "underlying" insurance. Underlying policies pay first for claims covered by the underlying coverage and then the umbrella continues to pay according to its policy provisions.
All of the following are covered under the H0-2 form, EXCEPT: Answer Choices: Select the Correct Answer Fire damage to the insured's personal property Damage to the roof caused by the weight of snow. Damage caused by libel or slander. Emergency room fees for a guest injured on the residence premises.
Damage caused by libel or slander. is correct. Explanation: Damage caused by libel or slander is a "personal injury" liability claim. Unless endorsed, the policy would exclude this claim for damages.
Which of the following coverages are not automatically included in the BOP? Answer Choices: Select the Correct Answer Seasonal increase in contents coverage Loss of income Employee dishonesty General liability coverages
Employee dishonesty. Explanation: Employee dishonesty coverage is not automatically included in the BOP, it must be added by endorsement for an additional premium
In the ocean marine insurance policy, the term "average" means: Answer Choices: Select the Correct Answer Loss or damage. The ACV of the ship. The average value of the claim insured against by the perils of the sea . That coverage is written on a named peril basis.
Loss or damage. is correct. Explanation: The term "average" in ocean marine insurance refers to loss or damage. In order to protect the ship, its cargo and passengers, some of the cargo may be jettisoned (thrown overboard) to save the ship and cargo. Particular average means only one party pays for the loss. General average means all parties share in the loss.
A consumer reporting agency may not furnish a report containing: Answer Choices: Select the Correct Answer Adverse credit information. Bankruptcies occurring more than 10 years ago. Medical information. Judgments or arrests occurring more than 7 years ago.
Medical information.. Explanation: A consumer reporting agency may not furnish a consumer report that contains medical information about a consumer unless the consumer consents to the furnishing of the report in writing.
The insured carries a yacht policy and is pulling a water skier. The skier is a family member and is injured. What coverage might apply to this accident? Answer Choices: Select the Correct Answer No coverage would apply Liability coverage and defense coverage would apply Medical payments coverage Only the injured party's health insurance would cover the claim
Medical payments coverage. Explanation: Medical payments coverage under the yacht policy would cover this loss up to its specified limit.
Homeowner policies typically provide coverage for all of the following, EXCEPT: Answer Choices: Select the Correct Answer Personal liability Personal injury Claim expenses Medical payments
Personal injury is correct. Explanation: Personal injury covers libel, slander, wrongful eviction and several other coverages. The standard homeowner policy must be endorsed to provide personal injury coverage.
Under the premises burglary coverage, loss of merchandise is covered in which of the following situations? Answer Choices: Select the Correct Answer The merchandise is taken during the robbery of a watchman while the premises are closed. The merchandise is taken while the premises are open for business. The merchandise is stolen by an employee. The merchandise is stolen from a truck owned by the insured.
Your answer: The merchandise is taken during the robbery of a watchman while the premises are closed. is correct. Explanation: The premises burglary insuring agreement covers loss of covered property during the actual or attempted burglary/robbery of a watchperson. Damage to the premises is also covered, but only if the property is owned by the insured or the insured is legally liable. It does not cover property in vehicles.
Coverage C of the homeowner's policy covers ______ on watercraft, including their trailers, furnishings, equipment and outboard motors. Answer Choices: Select the Correct Answer $1,500 $1,000 $2,500 $500
$1,500 is correct. Explanation: Coverage C (Personal Property) of the homeowner's policy covers $1,500 on watercraft, including their trailers, furnishings, equipment and outboard motors.
Under Coverage F - Unscheduled Farm Personal Property, the most that will be paid for a "head" of livestock (an adult animal, one year of age or older) is: Answer Choices: Select the Correct Answer $5,000. $2,500. $2,000. $1,000.
$2,000. is correct. Explanation: Coverage F covers farm personal property on a blanket basis both on and off the insured premises. A blanket limit for livestock can be added, however, the most that will be paid for a "head" of livestock (adult animal, one year of age or older) will be $2,000
What is the limit that is paid for water damage under an Equipment Breakdown policy? Answer Choices: Select the Correct Answer $10,000 $15,000 $25,000 Nothing
$25,000 is correct. Explanation: The limit is $25,000.
The additional coverage for Debris Removal will now pay to clean up the debris of others on the insured premises even if the insured has no damage to their own property. The maximum payable to remove this debris of others is: Answer Choices: Select the Correct Answer $25,000 $5,000 $10,000 $50,000
$5,000. Explanation: The Debris Removal additional coverage now extends to $5,000 to cleanup debris of others on the insured premises even if the insured property has not been damaged.
The custom farming endorsement is usually attached to a farmowners policy when receipts exceed: Answer Choices: Select the Correct Answer $5,000 $4,000 $10,000 $7,500
$5,000. Explanation: The custom farming endorsement is used when a farmer is farming for others and the receipts exceed $5,000 per year.
Joan is covered for $10,000 under a personal articles floater for her jewelry. She acquires another piece of jewelry valued at $2,500. Under the automatic coverage provision within the policy, how much coverage would apply to the newly acquired jewelry for 30 days? Answer Choices: Select the Correct Answer Nothing $1,000 $1,500 $2,500
2,500. Explanation: The policy provides for 25% of the limit of insurance to apply to newly acquired jewelry of the same class for a period of 30 days.
If the Commissioner denies a request for an extension to comply with the CE requirements, the licensee must complete the CE within ____ of being notified of the denial. Answer Choices: Select the Correct Answer 30 days 6 months 60 days 3 months
30 days is correct. Explanation: A licensee is given 30 days to comply after denial of a request for an extension
All of the following would be considered "bodily injury" under liability coverage, EXCEPT: Answer Choices: Select the Correct Answer A dog owned by a customer is injured in the parking lot of the a store. A caterer's customer is hospitalized with food poisoning. A shopper trips over an exposed cable at a mall. A clerk demonstrating a barbell drops it on a customer's foot.
A dog owned by a customer is injured in the parking lot of the a store. is correct. Bodily injury, which includes both accident and sickness, requires injury to a human being. The dog is property and would be covered under property damage.
If symbol 23 is used in the declarations to identify covered autos under a garage policy, which of the following would be a covered auto?
A sedan owned by the named insured.. Symbol 23 is used to cover "private passenger" type vehicles only.
On a homeowners policy, Coverage A would include all of the following, EXCEPT: Answer Choices: Select the Correct Answer A storage shed connected to the dwelling by a utility line. The residence being insured. Structures attached to the dwelling. Material and supplies intended for repair or alteration of the dwelling.
A storage shed connected to the dwelling by a utility line. . Explanation: Structures connected by a fence or utility line are considered to be other structures (Coverage B) under the homeowner forms. Coverage A is dwelling coverage.
Under a commercial Building and Personal Property Coverage form with no optional coverages selected, loss valuation/settlement is based on: Answer Choices: Select the Correct Answer Actual cash value. Market value. Original cost. Replacement cost.
Actual cash value. . Explanation: Losses are settled on an ACTUAL CASH Value basis. If the insured desires replacement cost coverage, then that option must be selected by indicating it on the property declarations. The insured limit should be increased to reflect the higher values involved with a replacement cost settlement.
Negligence is what type of civil wrong? Answer Choices: Select the Correct Answer An Unintentional Tort An Intentional Tort A Breach of Public Contract An Intervening Cause
An Unintentional Tort is correct. Explanation: A tort is a civil wrong (as opposed to a criminal wrong) other than a breach of contract. Negligence is an unintentional tort defined generally as "the failure to use the care that a reasonable and prudent person would have in order to protect others from harm."
The loss settlement provision under the homeowner forms: Answer Choices: Select the Correct Answer Applies only to the dwelling Applies to the dwelling and other structures Applies to all covered property Requires the insured to be a coinsurer on 20% of covered losses
Applies to the dwelling and other structures. Explanation: HO forms require the insured to set the limit for the dwelling and other structures at least 80% of the full replacement value in order to receive replacement cost settlement in a covered loss.
The liability coverage of a Personal Auto Policy does not apply to persons who: Answer Choices: Select the Correct Answer Are engaged in work for the insured as an employee of a business. Unintentionally cause bodily injury and property damage. Engage in car pools. Damage to a residence garage not owned by the insured.
Are engaged in work for the insured as an employee of a business.. Explanation: This is a business exposure and as such should be covered under a commercial insurance type policy such as Workers Compensation.
Unless revoked or suspended, an Alabama insurance producer license will remain in effect: Answer Choices: Select the Correct Answer 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. is correct. Explanation: The license does not expire and will remain in effect as long as the renewal fee is paid and CE requirements are met.
What is the purpose of the various classifications used in the rating of workers compensation coverage? Answer Choices: Select the Correct Answer Assigning rate classifications reflecting work exposures to the employee. Providing methods of separating payroll for various employers Establishing rating systems for the various states. Separating rating systems for the various states.
Assigning rate classifications reflecting work exposures to the employee. is correct. Explanation: Rates differ based on the job description of the work performed by the employee. Some types of work are obviously more hazardous than others and rates vary by type of work.
If coverage for towing and labor costs is included in a Personal Auto Policy, labor costs will be covered only if the labor is performed: Answer Choices: Select the Correct Answer At the place of disablement. Within 24 hours of the disablement. Within 48 hours of the disablement. At a garage by an experienced mechanic.
At the place of disablement. . Explanation: Payment under this optional coverage only applies at the place of disablement.
Of the following businesses, which one is not eligible for a Businessowners Policy? Answer Choices: Select the Correct Answer Auto dealer Barbershop Beauty shop Pizza shop
Auto dealer is correct. Explanation: Auto dealerships are not eligible for the BOP.
Which of the following types of carriers must assume the broadest liability under common law? Answer Choices: Select the Correct Answer Contract carriers Common carriers Private carriers Owner-operator carriers
Common carriers. Explanation: Common carriers must assume the broadest liability under common law. They are not responsible for acts of God such as floods, hurricanes or for the negligence of the shipper (poor packing).
Mr. Smith's bicycle shop enters into many written and oral agreements with customers. Mr. Smith's agent informs him that the liability on his BOP contains: Answer Choices: Select the Correct Answer Products and Completed Operations Liability Contractual Liability Fidelity Bond Premises and Operations Liability
Contractual Liability. Explanation: Like the CGL policy, the liability section of the BOP contains coverage for the written and oral agreements the insured enters into known as Contractual Liability.
In a liability situation, more than one policy will share equally in the loss until the lowest policy limit is exhausted and continue in that fashion until all policy limits are exhausted. This is known as: Answer Choices: Select the Correct Answer Pro-rata liability. Primary and excess liability. Contribution by equal shares. Other insurance clause.
Contribution by equal shares.. Explanation: If more than one policy is involved in a liability situation, "contribution by equal shares" will require each policy to share in the loss up to the lowest limit of insurance which at that point, that lowest limit policy is exhausted and excused. The remaining companies continue to share the loss equally until each policy is exhausted.
An employer has been accused of negligently causing an employee to be injured on the job because of failure to repair a safety device on a machine.. What coverage would apply to any legal action brought against the employer by the injured employee? Answer Choices: Select the Correct Answer Employer's liability. Workers compensation coverage. Personal liability coverage. Commercial umbrella coverage.
Employer's liability. is correct. Explanation: Usually workers compensation coverage is the exclusive and only right for recovery. In cases of intentional injury caused by the employer, a civil suit can be made against the employer. The employer would have to rely on "employer's liability" coverage for defense coverage as well as a judgment against the employer. This is Part II of the workers compensation coverage.
Which of the following is generally intended to cover property that moves from one location to another? Answer Choices: Select the Correct Answer Floaters Endorsements Riders Binders
Floaters is correct. Explanation: Floaters refer to a form of inland marine insurance. Some, but not all, are designed to cover the property during the course of transportation. Several cover the property wherever it is located.
The mobile home coverage coverage endorsement can be added to a homeowner policy to include the perils of transportation. Which is not one of those perils covered during the course of transportation? Answer Choices: Select the Correct Answer Upset Stranding or sinking Collision Flood
Flood is correct. Explanation: Flood is excluded under the mobile home transportation endorsement.
In ocean marine insurance, each of the following is considered to be an "implied warranty" EXCEPT: Answer Choices: Select the Correct Answer General average. Seaworthiness. Condition of cargo. Legality of the voyage.
General average. is correct. Explanation: Implied warranties consist of seaworthiness, condition of cargo, legality and no deviation in voyage. A violation of any of these could void coverage.
A commercial inland marine condition defining the insurer's subrogation rights: Answer Choices: Select the Correct Answer Explains the circumstances under which the insurer can cancel the policy. Imposes a time limit within which the insurer must pay or deny the claim. Guarantees the insurer's ability to recover from a third party who is responsible for a covered loss. Requires the insured to maintain any security system described in the policy application.
Guarantees the insurer's ability to recover from a third party who is responsible for a covered loss. is correct. Explanation: When the insurer pays a covered claim caused by a third party, the insurer can seek reimbursement for the loss if they can prove negligence or responsibility on the part of the third party.
Mr. Vickers was in a hurry to catch a plane. He parks his car in the parking garage at the airport and leaves the keys in the ignition. When he returns he finds that his car has been stolen. Later the car was discovered with severe collision damage. The airport carries Garagekeeper's Legal Liability coverage and Mr. Vickers carries Liability and Comprehensive coverage on his auto. What coverage would apply? Answer Choices: Select the Correct Answer Mr. Vickers's comprehensive coverage. No coverage because there were no signs of forcible entry into the vehicle. The airport coverage. Mr. Vickers's collision coverage.
Mr. Vickers's comprehensive coverage. is correct. Explanation: This is an example of a "Other Than Collision" loss, sometimes referred to as Comprehensive. Even though the vehicle was involved in a collision the theft coverage would respond since the damage originated from the theft of the vehicle.
The failure to do what a reasonably prudent person would do under the same circumstances is known as: Answer Choices: Select the Correct Answer Proximate cause. Negligence. Hazard. Indemnity.
Negligence. is correct. Explanation: One who has committed a tort may be held legally liable under the rule of negligence.
A physicians, surgeons, and dentists' professional policy would cover which of the following? Answer Choices: Select the Correct Answer Premises liability only Negligence of the professionals and criminal acts Negligence of the professionals and premises liability Negligent acts of a staff nurse or aide
Negligent acts of a staff nurse or aide. Explanation: This policy would cover claims for malpractice against the medical professionals and members of the staff. Premises liability is not covered, nor is coverage for criminal acts.
Under the terms of homeowner policies, which of the following is a mortgagee permitted to do if the insured fails to pay his or her homeowner policy premium? Answer Choices: Select the Correct Answer Cancel the homeowner policy Pay the premium for the insured Issue a new homeowners policy for the insured Foreclose on the insured's property
Pay the premium for the insured is correct. Explanation: The mortgagee has the right to pay the premium if the insured fails to do so.
In a Physicians Professional liability policy two separate errors cause several claims. How is the deductible determined? Answer Choices: Select the Correct Answer Per claimant Per error Per Claim Per the total claim amount
Per Claim is correct. Explanation: The deductible on a Physicians Professional liability policy is on a per claim basis. It is not based on the error or the individual claimant or the total amount of a claim.
Which of the following inland marine policies most closely resembles the scheduled personal property endorsement? Answer Choices: Select the Correct Answer Personal articles floater Personal property floater Personal insurance floater Personal effects floater
Personal articles floater. Explanation: The personal articles floater is an inland marine policy providing all-risk coverage for certain classes of property. Standard classes on the form are camera, fine arts, jewelry, and others. Additional classes can be added by endorsement. The coverage is effectively the same as that offered by the scheduled personal property endorsement for HO policies.
A trailer leased by the named insured from another business is a covered auto under the insured's BAP. While the trailer is connected to a covered truck-tractor owned by the insured, the BAP provides: Answer Choices: Select the Correct Answer Excess liability coverage on the trailer. Primary liability coverage on the trailer. Either excess or primary liability coverage on the trailer, at the option of the insurer. No liability coverage on the trailer.
Primary liability coverage on the trailer. is correct. Explanation: The BAP would provide primary liability coverage on the trailer in this instance. For physical damage to be covered on this loss the insured would need to have the endorsement, Trailer Interchange Coverage.
Which of the following are additional coverages under a Businessowners policy with the named peril form attached? I. Debris removal. II. Pollutant cleanup and removal. III. Exterior glass. IV. Collapse.
The correct answer is: I, II, and III only. Explanation: All are additional coverages, but collapse and water or other liquid, powder or molten materials are available only under the BOP Special form. The named peril form endorsement which coverts open peril coverage to named peril coverage does not include collapse as an additional coverage.
The increased cost of compliance coverage on flood insurance provides: I. Policy limit coverage for ordinance and law changes. II. Coverage for flood plain management ordinance or law changes. III. $30,000 of coverage per building. Answer Choices: Select the Correct Answer III only II only I, II and III II and III only
The correct answer is: II and III only. Explanation: The increased cost of compliance coverage will provide up to $30,000 of coverage to handle the flood plain management ordinance or law changes affecting the repair and reconstruction of a flood-damaged structure.
All of the following are true regarding supplementary payments provided by a Commercial General Liability policy, EXCEPT: Answer Choices: Select the Correct Answer Such payments are made in addition to the limits of liability provided by the policy. It covers the payment of premium on appeal bonds. It covers the defense costs of groundless suits. It pays $50 per day for loss of earnings.
The correct answer is: It pays $50 per day for loss of earnings.. Explanation: The CGL provides up to $250 per day for loss of earnings as a supplementary payment.
Under the commercial building and personal property coverage form, which of the following is correct regarding the appraisal clause? Answer Choices: Select the Correct Answer No time limits are required Claims must be settled within 60 days of the appraisal request Parties have 20 days to hire appraisers and 15 days to hire umpires Parties have 15 days to hire appraisers and 20 days to hire umpires
The correct answer is: No time limits are required. Explanation: There are no stipulated time requirements in any policy in regards to the appraisal clause.
In the insurance industry, which of the following terms is defined as "any act of stealing"? Answer Choices: Select the Correct Answer Theft Mysterious disappearance Burglary Robbery
Theft is correct. Explanation: Theft means the unlawful taking of money, securities or other property. This broad term includes burglary, safe burglary and robbery. But unlike burglary, safe burglary and robbery, which usually involve the use of force, theft also includes the taking of property by stealth (action to escape notice). The revised forms change the definition from "any act of stealing" to a more specific "unlawful taking of money, securities or other property to the deprivation of the insured".
According to the definitions section of a homeowner policy, the term best described by the phrase an "unforeseen and unintended" event is a/an: Answer Choices: Select the Correct Answer Accident Peril Hazard Risk
Your answer: Accident is correct. Explanation: This is the definition of an accident.
Common carriers are responsible for damage to customer goods they transport except for damage resulting from: Answer Choices: Select the Correct Answer Acts of God. Traffic Accidents. Load Shifting. Poor vehicle maintenance.
Your answer: Acts of God. is correct. Explanation: Common carriers are exempt from legal liability when the goods belonging to others are destroyed by acts of God. Flood and tornados are examples. They are also exempt from losses as a result of poor packing on the part of the owner of the goods.
The APEX Corporation purchases widgets from the Holly Company. The following statement is on the back of each invoice: "Purchaser shall hold seller harmless from liability arising out of the sale of these widgets." To cover this possible loss exposure, the APEX Corporation should obtain which of the following types of insurance? Answer Choices: Select the Correct Answer Commercial General Liability Contractual Liability Contingent Liability Contractual Liability and Contingent Liability
Your answer: Commercial General Liability is correct. Explanation: Commercial general liability includes contractual liability coverage for certain defined contracts that are considered to be "insured" contracts. Seldom, if ever, is contractual coverage written by itself.
A person insured under the basic dwelling form DP-1 causes damage to the fence on his property amounting to $200 while driving his own auto. The policy will: Answer Choices: Select the Correct Answer Pay the $200 as a supplementary payment Deny the claim Pay the claim after applying the appropriate deductible Subrogate against the auto insurer
Your answer: Deny the claim is correct. Explanation: The basic DP-1 dwelling form does not provide coverage for the insured's property caused by his own vehicle.
A mutual insurance company is: Answer Choices: Select the Correct Answer Owned by its policyholders. Owned by stockholders. A reciprocal insurance company. Similar to Lloyds of London.
Your answer: Owned by its policyholders. is correct. Explanation: Policyholders own a mutual company and stockholders (sometimes called shareholders) own a stock company. Therefore, the difference between a mutual company and a stock company is ownership.
All the following are reasons that a driver would be insured under the assigned risk plan, EXCEPT: Answer Choices: Select the Correct Answer They desire to save premium They are uninsurable in the standard markets They have had too many claims They cannot show evidence of satisfying the financial responsibility law of the state
Your answer: They desire to save premium is correct. Explanation: Those drivers with a poor driving records or DUI charges are usually declined by the standard insurance markets. The only auto insurance market for them is the assigned risk plan. The plan is never used to save premium.
