Exam
The insured purchased a $200,000 extra expense policy. If the percentages applying to the limit of insurance are 40%, 80%, and 100%, what would be the maximum payable for a 47-day loss? A) $80,000 B) $120,000 C) $160,000 D) $200,000
C) $160,000 Extra expense coverage is written with a minimum of 3 applicable percentages that apply to the limit of insurance in the declarations. When the period of restoration is 30 days or less, the first percentage applies; when it is more than 30 days and not more than 60 days, the second percentage applies; when more than 60 days, the third percentage applies. In this case, the calculation should be 80% of $200,000, so $160,000.
Who is required to join the Workers Compensation Rating Bureau of Indiana? A) Any employer in Indiana that employs more than 50 people B) All companies who do business in Indiana, regardless of the state of incorporation C) Any company that has filed a workers compensation claim D) All insurers that write workers compensation policies in Indiana
D) All insurers that write workers compensation policies in Indiana All insurance companies that write workers compensation policies in Indiana must be members of the Workers Compensation Rating Bureau of Indiana.
What are the two major sections of commercial crime policies? A) Discovery form and loss sustained form B) Property and liability C) Occurrence and claims made D) Commercial entities and government entities
D) Commercial entities and government entities The crime program offers policies in two major sections: commercial entities and government entities. For each section the insured can select a form that has different coverage triggers, discovery form or a loss sustained form.
Which of the following statements would be an example of a product liability claim? A) An insured, while delivering product to a customer, hits another car with the delivery truck causing bodily injury and property damage. B) Someone tampers with the insured's product causing the insured to have to recall all products that are on the shelf. C) The insured's product has to be recalled because of an expiration date. D) Faulty packaging of a cereal caused spoilage that resulted in someone getting sick.
D) Faulty packaging of a cereal caused spoilage that resulted in someone getting sick. Product liability covers damage done by the product but not damage to the product.
All of the following are exclusions that apply in all three types of Dwelling Policies EXCEPT A) Government action B) Water damage C) Earth movement D) Fire or lightning
D) Fire or lightning Fire and lightning is covered in all policy forms. All the other answer choices are exclusions.
The insured with a claims-made commercial general liability (CGL) policy may request in writing claim and occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide the information A) Within 30 days. B) Within 60 days. C) As soon as practical. D) Within 45 days.
D) Within 45 days. This is a standard CGL claims-made provision.
A tow truck was stolen from the insured's premises. The insured has loss of use coverage on his commercial auto policy. How much will the insured be able to collect from the coverage if unable to use the town truck in its operations for 40 days? a)$200 b)$400 c)$600 d)$800
c)$600 The insurer will pay expenses for which an insured becomes legally liable for loss of use of a vehicle rented or hired without a driver under a written rental contract. If the coverage is purchased, this coverage extension will pay for loss of use of the damaged vehicle up to $20 per day to a maximum of $600.
A producer has completed all of his continuing education hours, but his license has just lapsed. Within what timeframe must the producer reinstate his license if he wants to avoid taking an exam to regain his licensed status? a)6 weeks b)2 years c)12 months d)30 days
c)12 months If a producer has completed all of the required continuing education hours and allows his/her license to lapse, the license can be reinstated within 12 months without having to pass a written examination.
An uninsured motor vehicle includes all of the following EXCEPT a)A vehicle not covered by an auto insurance policy. b)A vehicle that has no liability bond in force. c)A vehicle owned and operated by a self-insurer. d)A vehicle which flees a hit-and-run accident.
c)A vehicle owned and operated by a self-insurer. An uninsured motor vehicle does not included vehicles owned and operated by self-insurers, unless the self-insurer becomes insolvent.
Under which circumstance can a producer receive a commission and a consultant's fee for the same transaction? A) A producer makes a disclosure about the compensation arrangements prior to the transaction. B) When a producer holds a valid consultant's license C) When the transaction is approved by the Commissioner D) Under no circumstances: producers cannot be consultants
A) A producer makes a disclosure about the compensation arrangements prior to the transaction. A producer may accept both a fee and a commission for the same transaction, if he/she provides to the insured a written agreement on the fees, and discloses to the insured that he/she will receive compensation for the sale of the policy and the method of compensation prior to the sale, solicitation, negotiation, or renewal of any policy.
Which of the following clauses establishes the procedure for determining the amount of a loss when the insurer and the insured cannot agree on the value of property or amount of loss? A) Appraisal clause B) Loss payment clause C) Valuation clause D) Loss settlement clause
A) Appraisal clause Either an insured or insurer can request an appraisal. Each hires an appraiser. The appraisers then select a disinterested third party (umpire). Disagreements between the appraisers are settled by the umpire whose decisions are usually binding on both parties.
Several insureds have become liable because of a single loss. How will the policy's limit of liability be affected? A) No more than the per occurrence limit applies, no matter how many insureds are involved. B) Pro rata liability applies. C) A homeowners policy can have no more than one insured. D) The full limit applies to each insured individually.
A) No more than the per occurrence limit applies, no matter how many insureds are involved. The insurance applies separately to each insured. This condition does not increase the insurer's liability for any one occurrence.
Which of the following personal auto coverages would apply for damage caused by a bird hitting the windshield? A) Other-than-collision coverage B) Property damage coverage C) Uninsured motorist coverage D) Collision coverage
A) Other-than-collision coverage Other-than-collision coverage includes losses caused by contact with birds or animals, windstorm, hail, water, or flood, and breakage of glass. Please review the complete list in the text.
A house insured under a dwelling policy has been vacant for 70 consecutive days. Which of the following statements is true? A) Loss by theft is covered. B) Loss by vandalism and malicious mischief is excluded. C) Glass breakage as a result of vandalism is covered. D) Damage to glass building blocks is not covered.
B) Loss by vandalism and malicious mischief is excluded. After vacancy for more than 60 consecutive days, vandalism and malicious mischief (VMM) coverage is excluded under a dwelling policy.
Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses? A) Exclusions B) Declarations C) Insuring agreement D) Additional coverage
D) Additional coverage The additional coverage portion of a policy provides an additional amount of coverage for specific loss expense, at no additional premium.
Both the broad theft and limited theft endorsements on the dwelling program exclude all of the following types of property EXCEPT A) Credit cards. B) Motor vehicles licensed for the road. C) Aircraft. D) Watercraft.
D) Watercraft. Canoes have limited coverage.
The state requires that motorists maintain a certain amount of insurance, per accident, for bodily injury liability. According to the Financial Responsibility Law, what is this limit?a)$1,000 b)$10,000 c)$25,000 d)$50,000
d)$50,000 According to the Financial Responsibility Law, motorists must maintain $50,000 in insurance, per accident, for bodily injury liability.
Mine subsidence insurance is available to which of the following? A) Policyowners of commercial property insurance B) Former mine workers C) Low-income insureds who do not qualify for coverage on the normal market D) Anyone with basic fire coverage
D) Anyone with basic fire coverage Mine subsidence insurance is available to anyone with basic fire coverage, and can be purchased from property and casualty insurance agents.
A tornado that destroys property would be an example of which of the following? a) A peril b) A pure risk c) A loss d) A physical hazard
a) A peril A peril is the cause of loss insured against in an insurance policy.
Which of the following is a legal representative of a specific insurance company? A) The insured B) The Commissioner C) The broker D) The producer
D) The producer Under agency law, producers legally represent the insurance company with which they are contracted.
What type of liability would a person who owns wild animals have? a)Vicarious b)Implied c)Direct d)Absolute
d)Absolute "it's absolutely your fault your tiger bit me" Any conduct that is inherently dangerous, such as using explosives or keeping wild animals, imposes absolute liability. The claimant does not have to prove anything.
What is the deductible of a commercial liability umbrella policy called? a)The PIL b)The CGL c)The CPP d)The SIR
d)The SIR The self-insured retention (SIR) is an initial part of a loss the insured pays before the umbrella pays if no other policy covers the loss.
The state requires that motorists maintain a certain amount of insurance, per accident, for bodily injury liability. According to the Financial Responsibility Law, what is this limit? A) $50,000 B) $1,000 C) $10,000 D) $25,000
A) $50,000 According to the Financial Responsibility Law, motorists must maintain $50,000 in insurance, per accident, for bodily injury liability.
Which of the following would be covered under the Film Coverage Form? A) Soundtracks B) Contraband C) Unused footage D) Library stock
A) Soundtracks The all-risk coverage form excludes the following property: cut-outs, unused footage, positive prints or films, library stock, and contraband or other property in illegal trade or transportation.
What is the maximum dollar amount an insurer will pay for loss to sound equipment permanently installed in a vehicle insured under a business auto policy? A) $250 B) $500 C) $1,000 D) $2,000
B) $1000 The maximum paid for loss of audio, video, and data electronic equipment is $1,000 for equipment permanently installed in the vehicle, or removable from a permanently installed housing unit.
What is the maximum civil penalty for willfully and knowingly violating a cease and desist order? A) $25,000 per violation B) $50,000 per violation C) $5,000 per violation and 1 year in jail D) $10,000 per violation if more than one
B) $50,000 per violation The maximum civil penalty for willful violations of a cease and desist order is $50,000 for each act or violation.
If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to A) $350. B) $500. C) $750. D) $1,000.
B) $500. A Mobile Homeowners Policy will pay up to $500 if the insured moves the mobile home to a safer area to protect it from loss by a covered peril.
All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT A) The injury or damage must occur after the insured has released physical possession of the product to another. B) The injury or damage must occur within 90 days after the insured's work is completed. C) The injury or damage must occur away from the insured premises. D) The injury or damage must arise out of the insured's product or work.
B) The injury or damage must occur within 90 days after the insured's work is completed. The products and completed operations hazard includes injuries or damage that occur after the insured has completed its job and left the site, or relinquished control of a product it manufactured or sold. There is no time limit on the injury or damage.
All of the following are special personal property limits under a homeowners policy EXCEPT A) $1,500 for trailers not used with watercraft. B) $2,500 for theft of firearms. C) $500 for business personal property on the insured premises. D) $1,500 for securities, accounts, deeds, and evidences of debt.
C) $500 for business personal property on the insured premises. HO forms place a $2,500 limit for business personal property that applies on premises only. A limit of $500 applies to loss of business personal property while away from the premises.
Which of the following types of licenses is most suitable for an individual or corporation who, for a fee, offers advice concerning insurance contracts? A) Temporary producer B) Insurance producer C) Insurance consultant D) Insurance agent
C) Insurance consultant An insurance consultant license allows the licensee, for a fee, to advise clients on insurance contracts.
Which of the following statements concerning the builders risk coverage form is correct? A) It covers the interest of the builder only and cannot include coverage for the owner. B) It may not be written for perils other than fire and extended coverage. C) It may be written on a reporting form for the completed value of the structure. D) It usually continues in effect for one year after completion of the structure.
C) It may be written on a reporting form for the completed value of the structure. Builders risk insurance is a property insurance form that provides direct damage coverage on structures while they are under construction. Coverage may be written on a completed value form (requires 100% coinsurance) or reporting form (values are reported as completed).
Which of the following conditions is NOT necessary for becoming a nonresident producer in Indiana? A) Being a resident producer in good standing in the home state B) Being licensed as a resident producer C) Paying appropriate fees D) Passing the proper examination
D) Passing the proper examination To become a nonresident producer in Indiana, one must be a licensed resident producer in good standing in one's home state, and submit appropriate application and fees. No additional prelicensing education or examinations are required as long as the two states have reciprocity.
Who will transport the property of anyone who hires them? a)Common carriers b)Private carriers c)Motor truck carriers d)Commercial carriers
a)Common carriers Common carriers transport the property of anyone who hires them.
The type of professional liability coverage a medical doctor needs is a)Druggist liability. b)Ordinance and law coverage. c)Malpractice coverage. d)Errors and omissions coverage.
c)Malpractice coverage. The type of professional liability insurance written to protect those in the medical field is called medical malpractice.
An insured has a personal auto policy with both comprehensive (other-than-collision) and collision coverage. His car is stolen and recovered five days later. If the insured claims transportation expenses of $20 per day, how much will his policy pay? a)$60 b)$80 c)$100 d)$120
a)$60 The policy will pay $20 per day after 48 hours, not to exceed 30 days in total.
An insured with a homeowners policy has removed property from the insured location to protect it from loss that could be caused by a covered peril. The removal coverage applies for a)5 days. b)30 days. c)60 days. d)90 days.
b)30 days. Removal coverage applies for 30 days when the property has been removed to be protected.
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called a)Blanket coverage. b)Described coverage. c)Specific coverage. d)Schedule coverage.
c)Specific coverage. One location is insured for a specific amount of insurance on the structure and contents.
A producer licensed in another state wants to become a nonresident producer in Indiana. The other state gives the same privileges to Indiana producers as it does to its own producers. Indiana, therefore, extends the licensing privileges to the prospective producer of the other state. What is this called? A) Residency privilege B) Uniform application C) Reciprocity D) Fair exchange
C) Reciprocity "Reciprocity" occurs when the state in which the person resides accords the same privilege to residents of Indiana.
Under businessowners policy Section I, if an insurer wants to nonrenew a policy for nonpayment of premium, how many days before the expiration date must the insurer notify the mortgageholder? A) 10 days B) 15 days C) 20 days D) 30 days
A) 10 days If an insurer will not be renewing a policy for nonpayment of premium, according to businessowners policy Section I, it must notify the mortgageholder at least 10 days before the policy expires.
An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage? A) $5,000 minus the policy deductible B) $14,000 C) $15,000 D) $5,000 maximum for the accident
B) $14,000 The limit is not more than $5,000 per person, per accident.
Additional coverages in the liability section of a homeowners policy cover all of the following EXCEPT A) Damage to a third-party property for which the insured is legally liable. B) Claims expense. C) Expenses the insured incurs rendering first aid for bodily injury to third parties. D) Damage to the property of others.
A) Damage to a third-party property for which the insured is legally liable. Legal liability coverage is a primary liability coverage, not an additional coverage.
Which of the following IS covered under the theatrical property floater of an Inland Marine policy? A) Vehicles used on stage B) Admission tickets C) Animals D) Jewelry made with precious stones
A) Vehicles used on stage Covered property includes the following: scenery; costumes; theatrical property; and similar property of others. Vehicles are also covered if they are actually used on stage.
A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean? a)Coverage is automatic. b)There is no coverage. c)Coverage applies without premium. d)This must be a misprint on the form.
b)There is no coverage. If no premium amount is shown, there is no coverage for that coverage part.
A transportation network company (TNC) terminates its driver. How long must the TNC maintain records pertaining to the terminated driver? A) 1 year B) 3 years C) 5 years D) 10 years
A) 1 year All records relating to a terminated TNC driver must be maintained by the TNC for a period of at least 1 year.
Which of the following losses would NOT be covered by a homeowners policy? A) A coin collection valued at $500 lost in a fire B) A $550 utility trailer blown away by a tornado C) A stolen silver tea set worth $2,000 D) A $800 outboard motor destroyed by hail
A) A coin collection valued at $500 lost in a fire An HO policy will pay up to $2,500 for silverware by theft, $1,500 for boats, motors, trailers, $1,500 for loss of trailers not used with boats, but no more than $200 for coins.
An insured is involved in a motor accident, resulting in a medical expense of $125,000. It's determined that the other driver was at fault. If the insured has underinsured motorist limits of $100,000, and the at-fault driver has bodily injury limits of $50,000/$100,000, how much would the insured's policy pay for medical expenses? A) $25,000 B) $50,000 C) $75,000 D) $125,000
C) $75,000 The insured's policy acts as excess over the underinsured driver's. The other driver will pay $50,000 (the per person limit), and the insured's policy will pay the difference ($125,000 - $50,000 = $75,000).
An insured is applying for a casualty insurance policy. One of the conditions of the policy allows the insurance company to inspect the insured's books at the end of the policy term to make sure sufficient premium has been collected for the exposure she plans to insure. Which condition is part of the insured's policy? A) Contract Bond B) Errors and Omissions insurance C) Deposit premium audit D) Excess liability coverage
C) Deposit premium audit Deposit premium audit is a condition that allows an insurer to inspect the insured's books at the end of the policy term to make sure sufficient payment has been collected for the exposure.
All of the following statements are true regarding employee dishonesty optional coverage under the businessowners policy (BOP) EXCEPT A) Losses result from dishonest acts of any of the insured's employees. B) Coverage includes all property, including money and securities owned or held by the insured. C) It provides coverage for all employees, even those employees who were terminated in the past 90 days. D) It provides coverage for direct loss or damage to business personal property.
C) It provides coverage for all employees, even those employees who were terminated in the past 90 days. By definition, an employee covered under the employee dishonesty optional coverage is one who is currently employed or who was terminated in the past 30 days.
A business using its own trucks to move its own cargo would insure the cargo using A) Motor carrier form. B) Trip transit coverage. C) Motor truck cargo - owners form. D) Motor truck cargo - carriers form.
C) Motor truck cargo - owners form. A business using its own trucks to move its own cargo would insure the cargo using the owners form.
All of the following statements concerning coinsurance are true EXCEPT A) The insured agrees to maintain insurance equal to some specified percentage of the value of the property. B) If the insurance carried is less than required, the insurance may not cover the whole loss. C) The coinsurance formula will also be applied to total losses. D) It is used to help adequacy and equity in rates.
C) The coinsurance formula will also be applied to total losses.
What is the maximum number of continuing education hours a producer is permitted to carry over from one renewal period to the next? A) 0 B) 3 C) 6 D) 12
D) 12 Producers may carry over up to 12 hours of CE credit hours from one renewal period to the next.
In the event an insurer decides to cancel a commercial policy because of an increase in hazard, how many days' notice must it provide the insured? A) 10 B) 20 C) 30 D) 45
D) 45 An insurer must provide at least 45 days' notice when canceling a policy for increase in hazard, failure to comply with reasonable safety recommendations, nonpayment of premium, evidence of fraud or material misrepresentation, or if the reinsurance associated with the policy has been cancelled.
Expenses that an organization would not have incurred if business interruption had not existed are known as A) Continuing expenses. B) Additional expenses. C) All-inclusive expenses. D) Extra expenses.
D) Extra expenses. Extra expenses are expenses that an organization would not have incurred if the business interruption had not occurred. Examples include additional overtime labor costs or renting a similar building to continue operations, as opposed to waiting until the existing building is rebuilt.
With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto? a)A vehicle leased to the named insured for 12 months by a leasing company b)A vehicle that is titled and insured by the named insured, but is driven principally by the named insured's son, who is resident of the household c)A vehicle rented for the insured's personal used D)A vehicle that is titled to another person, but is being used with permission by an insured
D)A vehicle that is titled to another person, but is being used with permission by an insured Because the personal auto policy provides coverage on both owned and nonowned autos, situations will exist in which two or more policies will apply in a given situation. If the auto is owned and insured by someone other than the operator, then that policy will be primary coverage for that auto, and the operator's insurance would act as excess.
Within what timeframe should an applicant or a producer request a hearing before the Commissioner regarding the notice of denial or nonrenewal of a license? a)Within 30 days after the license is denied b)Within 30 days after the application for renewal is received by the Commissioner c)Within 63 days after the notice of denial is mailed d)Within 63 days after the application for license is mailed
Once the Commissioner notifies an applicant or a producer of a license denial or nonrenewal, the applicant or producer has the right to make a written demand for a hearing (within 63 days after the denial/nonrenewal notice is mailed). The hearing mush be held within 30 days of the written demand.
covered watercraft was damaged in an accident. The actual cash value of the damaged property was assessed at $10,000. The cost of repairs for the watercraft was assessed at $5,000. The insured's watercraft policy is written with a $25,000 limit. How much will the insurer pay for coverage to damage to the watercraft? a)$5,000 b)$10,000 c)$15,000 d)$25,000
a)$5,000 The limit of liability for Part D will be the lesser of amount shown in the Declarations, actual cash value of the stolen or damaged property, or amount necessary to repair or replace the property.
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT a)Conditions. b)Consideration. c)Legal purpose. d)Offer and acceptance. Conditions are part of the policy structure. Consideration is an essential part of a contract.
a)Conditions. Conditions are part of the policy structure. Consideration is an essential part of a contract.
A person who knowingly and with intent to defraud an insurer files a statement of claim containing any false, incomplete, or misleading information can be found guilty of committing a a)Felony. b)Minor violation. c)Class C violation. d)Misdemeanor.
a)Felony. A person who knowingly and with intent to defraud an insurer files a statement of claim containing any false, incomplete, or misleading information commits a felony.
Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called a)Material misrepresentations. b)Fraudulent statements. c)Warranties. d)Common errors. A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company.
a)Material misrepresentations. A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company.
All of the following are factors in the determination of actual cash value EXCEPT a)Replacement cost. b)Insurance premium paid. c)Type and quality of property. d)Age of the property.
b)Insurance premium paid. Actual cash value (ACV) is a valuation method in which the value of property is determined using the replacement cost for property of like kind and quality, minus depreciation. The original cost is not a factor.
Under a dwelling policy, which of the following is NOT a factor in determining a loss? a)The amount necessary to repair or replace the property b)The amount negotiated by the insured c)The policy limit d)The amount reflecting the insured's interest in the property at the time of loss
b)The amount negotiated by the insured The value of a loss is decided according to the actual cash value of the property, the policy limit, the amount needed to repair or replace the property, or the amount reflective of the insured's interest in the property.
How much is the premium for the dwelling under construction endorsement under the dwelling policy? a)50% of the actual value premium b)The average amount of insurance during construction c)75% of the gross premium d)The full value of the house
b)The average amount of insurance during construction The premium is based on the average value of the house and building materials from the first day of construction until completion.
Both the broad theft and limited theft endorsements on the dwelling program exclude all of the following types of property EXCEPT a)Aircraft. b)Watercraft. c)Credit cards. d)Motor vehicles licensed for the road.
b)Watercraft. Canoes have limited coverage.
The commercial property declarations page contains which of the following information? a)Interline endorsements b)Cause of loss forms c)Description of the property insured d)Common policy conditions
c) Description of the property insured The declarations page provides the information as to who, what, when, where, and how much. The interline endorsements, policy conditions, and cause of loss forms are modular parts that are combined to create the contract.
Which of the following statements would be an example of a product liability claim? a)Someone tampers with the insured's product causing the insured to have to recall all products that are on the shelf. b)The insured's product has to be recalled because of an expiration date. c)Faulty packaging of a cereal caused spoilage that resulted in someone getting sick. d)An insured, while delivering product to a customer, hits another car with the delivery truck causing bodily injury and property damage.
c)Faulty packaging of a cereal caused spoilage that resulted in someone getting sick. Product liability covers damage done by the product but not damage to the product.
Erroneous Publishing copied all the material from Angels Inc.'s book. The only changes made by Erroneous were to rename the title and chapters, put a different cover on it, and distribute it as its own. Angels Inc. files a claim against Erroneous and seeks damages. Will a commercial general liability policy cover the claim? a)Yes, because the claim is a result of Erroneous products and work b)No, because this event does not meet the definition of infringement. c)No, because the claim results from copyright infringement and is not in an advertisement. d)No, because there is no bodily injury or property damage.
c)No, because the claim results from copyright infringement and is not in an advertisement. Advertising injury is defined in the policy as any of the following: libel, slander, defamation, or violation of the privacy of others, misappropriation of advertising, ideas, and infringement of copyright, title, or slogan. However, because the copyright infringement was in a product and not an advertisement, coverage is specifically excluded.
Which of the following is true about the Commissioner of Insurance?a)The Commissioner is appointed by the NAIC. b)The Commissioner must present a bond in the sum of $100,000. c)The Commissioner is authorized to participate in the NAIC. d)The Commissioner may be removed from office by popular vote.
c)The Commissioner is authorized to participate in the NAIC. The Commissioner is appointed by the Governor and may also be removed from office by the Governor, if such action is required. The Commissioner must present a bond in the sum of $50,000 with surety, and is authorized to participate in the National Association of Insurance Commissioners (NAIC).
John Sims and Steve Becker have formed a partnership known as the Sims & Becker Insurance Agency. After a serious car accident, one of the partners was deceased and the other became totally disabled. To finish servicing the company's existing accounts, the Commissioner could grant a temporary license to all of the following EXCEPT a)A court appointed representative. b)The company's compliance officer. c)The partnership itself. d)The partners' spouses.
c)The partnership itself. A temporary license may be issued to the producer's spouse, a court appointed representative, or an individual designated by the disabled or deceased producer. Temporary licenses may only be issued to individuals.
As it applies to homeowners policies, the term "business" means A) A trade, professions, or occupation. B) An enterprise. C) Full-time employment only. D) Hobbies and avocations. Per HO ISO forms, "business" means a trade, professions, or occupation engaged in on a full-time, part-time, or occasional basis.
A) A trade, professions, or occupation. Per HO ISO forms, "business" means a trade, professions, or occupation engaged in on a full-time, part-time, or occasional basis.
An installation floater is used to insure A) Appliances intended to become a permanent part of the building. B) Buildings under construction. C) All types of for-sale merchandise. D) Dams, power plants, water plants, and other such installations.
A) Appliances intended to become a permanent part of the building. The installation floater covers the interest of the owner, seller, or contractor of refrigeration systems, elevators, or other pieces of large equipment intended to become a permanent part of the building on location awaiting or in the process of being installed or tested.
How is it determined whether an insurer is allowed to write business in a state? A) The insurer's domicile or location of incorporation will determine whether a company is domestic, foreign, or alien. B) The insurer's domicile will determine whether an insurance company is domestic, foreign, or alien. C) The insurer's location of incorporation will determine whether a company is domestic, foreign, or alien. D) The insurer's net income will determine whether a company will be allowed to write business in a state.
A) The insurer's domicile or location of incorporation will determine whether a company is domestic, foreign, or alien. Insurers can also be defined by their location of incorporation and whether or not they are authorized to write business in a state. The insurer's domicile, or location of incorporation, will determine whether an insurance company is considered domestic, foreign or alien.
Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT A) The insurer does not guarantee that the insured is meeting all required safety regulations. B) The insurer does not have the right to inspect the insured's property and operations. C) The insurer does not make safety inspections for the insured. D) The insurer does not guarantee that conditions are safe or healthful.
B) The insurer does not have the right to inspect the insured's property and operations. The inspection and survey condition DOES allow the insurer the right to inspect the property and operations. These inspections are important in determining the insurability of the insured's property and operations, in setting proper insurance rates, and in making loss control recommendations.
Supplementary payments on a CGL provide all of the following EXCEPT A) The cost of bonds to release attachment. B) Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds. C) $100 in gasoline costs by the insured driving a witness to and from court. D) Pre-judgment and post-judgment interest. Supplementary payments will cover only $250 for these.
B) Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds. Supplementary payments will cover only $250 for these
Replacement cost coverage is provided in both the broad and special form dwelling policies when A) The amount of insurance on the dwelling is at least 90% of its replacement cost when the policy is written. B) The dwelling is insured for 100% of its replacement cost at the time of a loss. C) The amount of insurance on the dwelling is at least 80% of its replacement cost at the time of loss. D) The amount of insurance on both the dwelling and personal property is at least 80% of its replacement cost when the policy is written.
C) The amount of insurance on the dwelling is at least 80% of its replacement cost at the time of loss. It is always a requirement on property forms that provide replacement cost coverage that insurance on the dwelling be at least 80% of its replacement cost at the time of loss
Which of the following circumstances would be EXCLUDED under medical payments coverage of a personal auto policy? A) The insured's mother is injured while exiting from the insured vehicle. B) The insured is struck by another vehicle while crossing the street. C) The insured is injured while driving his motorcycle on his resident premises. D) The insured's friend is injured in an accident while riding as a passenger in the insured's car.
C) The insured is injured while driving his motorcycle on his resident premises. Coverage does not apply when the insured is occupying a vehicle with fewer than 4 wheels.
Besides the peril of earthquake, which other peril is covered by the earthquake cause of loss form under a commercial property policy? A)Hurricane B) Lightning C) Volcanic eruption D) Tidal wave
C) Volcanic eruption The earthquake cause of loss form adds two perils for coverage: earthquake and volcanic eruption. The volcanic eruption coverage provided by the other cause of loss forms is limited to above ground-type volcanic action, clearly excluding ground shock waves.
In which of the following types of property valuation will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation? A) Replacement cost B) Stated amount C) Market value D) Agreed value
D) Agreed value Agreed value is a property policy with a provision agreed upon by the insurer and insured as to the amount of insurance that represents a fair valuation for the property at the time the insurance is written. When a loss occurs, the policy pays the agreed value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation.
In order to get a nonresident license in this state, producers must A) Pass the nonresident state exam and satisfy their continuing education requirements. B) Represent an agency located in this state. C) Surrender their licenses in their state of residence. D) Apply and pay a fee to a nonresident state that reciprocates.
D) Apply and pay a fee to a nonresident state that reciprocates. Producers may apply for a nonresident license by showing that they are in good standing as producers in their home states and by paying a fee, if the two states reciprocate.
An insured is involved in an auto accident in another state. The state has a financial responsibility law that specifies limits of liability higher than the limits shown in the declarations. What amount will the insured's policy pay? A) Lower limits B) The insurer will not pay for out-of-state accidents C) Only the limits specified in the policy D) Higher limits
D) Higher limits According to the out-of-state coverage provision in the personal auto policy (PAP), if the state or province has a financial responsibility law specifying limits of liability higher than the limits shown in the declarations, the insured's policy will provide the higher specified limits.
All of the following are true regarding deposit premium EXCEPT A) It could be adjusted by the audit. B) It must be paid in advance. C) It is an estimated premium paid at the policy issue. D) It is 50% of the actual premium.
D) It is 50% of the actual premium. Deposit premium is an estimated premium paid in advance at the time the policy is issued that may be adjusted by the audit based on actual exposures.
Which of the following statements is NOT true regarding a personal umbrella liability policy? A) It may cover certain exposures not provided under the primary layer. B) It may require the payment of a self-insured retention. C) It provides excess liability coverage over underlying personal liability. D) It provides errors and omissions coverage for an agency.
D) It provides errors and omissions coverage for an agency. Personal umbrella policies cover the personal exposure of the insured. Errors and omissions coverage is provided only in a professional liability policy.
Under a dwelling policy, which of the following clauses applies if an insured has lost one of two matching silver candlesticks? A) Sets coverage B) Fractional loss C) Portion loss D) Pair or set
D) Pair or set Pair or set is a clause stating that if only one item of a set has been lost, the insurer is not obligated to pay the total value of the set.
A bond is written for a set limit, and the surety will be liable only for this amount of the limit. This limit is known as the A) Face value. B) Stated amount. C) Limit of liability. D) Penalty.
D) Penalty. A bond is written for a set limit, sometimes called the penalty. If the principal's obligation exceeds the limit, the surety will be liable only for the amount of the limit.
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as A) Twisting. B) False advertising. C) Coercion. D) Rebating.
D) Rebating. Rebating is defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Both the offer and acceptance of a rebate are illegal.
Which of the following losses would be covered under the property damage liability coverage of a personal auto policy? A) A temporary substitute vehicle is damaged while the insured is driving it. B) The insured's vehicle is damaged when it collides with a deer. C) A passenger in the insured's vehicle is injured following an accident caused by the insured. D) The insured damages a rented garage when he failed to stop in time.
D) The insured damages a rented garage when he failed to stop in time. Damage to a nonowned structure would be covered under PD (property damage).
An insured is a member of the neighborhood association, and has become liable for damage to a third party. Each member of the association has been assessed a portion of the loss equal to $2,000. How much will the Loss Assessment additional coverage of the insured's homeowners liability policy pay? A) $2,000 B) Nothing C) Up to $500 D) Up to $1,000
D) Up to $1,000 The policy will pay up to $1,000 per occurrence for the insured's share of loss assessment charged against them as owner or tenant of the residence premises during the policy period by a corporation or association of property owners.
Which of the following would be considered a Class A misdemeanor? A) Being involved in an unfair competition practice B) Committing insurance fraud C) Failing to provide the insured with the policy summary D) Willfully violating the Indiana Insurance Code
D) Willfully violating the Indiana Insurance Code Any person who willfully and recklessly violates the Indiana Insurance Code will be charged with Class A misdemeanor, which is punishable by up to one year in jail or a fine not to exceed $5,000.
Which of the following statements is true concerning a bonded contractor who defaults on a construction performance contract? a)The obligee may engage another contractor and then seek reimbursement from the surety. b)The surety may cancel the bond and avoid paying any losses or expenses. c)The contractor will lose his license to operate in the state. d)The principal has no obligation to complete any remaining work or to pay for the expenses.
a)The obligee may engage another contractor and then seek reimbursement from the surety. The bonding company would have to see that the job was completed and then seek recovery for its expenses from the bonded contractor (principal).
An insured was involved in an automobile accident for which the insured was at fault. Which of the following coverages would pay for damage to the insured's automobile? a)Comprehensive coverage b)Collision c)Other-than-collision d)Property damage liability coverage
b)Collision The policy defines collision as the upset or impact of a covered vehicle with another vehicle or object.
A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss? A) $20,000 B) $30,000 C) $40,000 D) $60,000
B) $30,000 For the total amount of a partial loss to be paid, a house must be insured for at least 80% of its value on the date of loss. In this case, because the house is insured for only $60,000 (75% of the minimum requirement), the policy will pay only 75% of the loss, or $30,000.
In Indiana all of the following may act as insurance consultants EXCEPT A) A licensed insurance producer. B) A trust officer of a bank acting in the normal course of his duties. C) An individual who holds both the producer's and consultant's license. D) An attorney acting within his professional capacity.
C) An individual who holds both the producer's and consultant's license. The Insurance Code allows certain professionals, acting within the scope of their profession, to advise their clients on matters of insurance without holding an insurance license. While a producer may act as a consultant, he/she may not, however, hold both licenses at the same time.
How many days after receiving a report about a workplace injury must an insurance carrier deliver the report to the Workers Compensation Board? a)7 days b)14 days c)3 days d)5 days
a)7 days After an insurance carrier receives a report about a workplace injury, it has 7 days to deliver the report to the Workers Compensation Board.
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered a)An unfair trade practice. b)A misrepresentation. c)A required statement. d)A legal representation of the Association.
a)An unfair trade practice. It is an unfair trade practice to make any statement that an insurer's policies are guaranteed by the existence of the Insurance Guaranty Association.
A builder's risk form is most often written as which of the following? a)Completed value form b)Scheduled form c)Reporting form d)Specific value form
a)Completed value form A building under construction could be insured on reporting forms, but the value of the building should only increase during the policy period. To prevent all the administrative work required for reporting forms, most often completed value forms are used.
What is the maximum allowed value of a gift a producer can offer a customer without violating regulations on rebating? a)$10 b)$25 c)$50 d)$100
b)$25 Producers may give a small item valued at less than $25 if the gift is not related to the purchase or renewal of insurance. The gift items may include promotional handouts, advertising products or meals.
The state requires that motorists maintain a certain insurance limit, per accident, for property damage liability. According to the Financial Responsibility Law, what is this limit? a)$5,000 b)$25,000 c)$50,000 d)$100,000
b)$25,000 According to the Financial Responsibility Law, motorists must maintain $25,000 in insurance, per accident, for property damage liability.
A liability policy that provides coverage for a claim for injury or damage if the claim is first reported or filed against the insured during the policy period is called a)Premises coverage. b)Claims-made form. c)Bodily injury/property damage form. d)Occurrence form.
b)Claims-made form. Claims-made forms require that the loss occur after the retroactive date and the claim be reported before the expiration date of the coverage if the policy is to respond.
The state requires that motorists maintain a certain amount of insurance, per person, for bodily injury liability. According to the Financial Responsibility Law, what is this limit? a)$1,000 b)$10,000 c)$25,000 d)$50,000
c)$25,000 According to the Financial Responsibility Law, motorists must maintain $25,000 in insurance, per person, for bodily injury liability.
Under the provisions of the business income coverage form, all of the following are true EXCEPT a)The insured agrees to resume all or part of operations as quickly as possible. b)The insured is reimbursed for payroll that continues after the loss begins. c)The insured is reimbursed for the loss from the date of loss to the date of restoration or policy expiration date, whichever comes first. d)If the insured and insurer are unable to come to agreement as to the value of the loss, either party may make a written demand for an appraisal.
d)If the insured and insurer are unable to come to agreement as to the value of the loss, either party may make a written demand for an appraisal. Business income will pay beyond the expiration date of a policy. It will pay until the business is restored or the limits of coverage are exhausted. Business income will pay beyond the expiration date of a policy. It will pay until the business is restored or the limits of coverage are exhausted.
All of the following are true statements regarding the supplementary payments of a commercial general liability policy EXCEPT A) They pay defense costs even after the aggregate limit has been reached. B) They pay all expenses incurred by the insurer. C) They pay pre-judgment and post-judgment interest. D) They pay all reasonable costs incurred by the insured in helping to investigate or defend a claim.
A) They pay defense costs even after the aggregate limit has been reached. Once the aggregate has been reached, the insurer will not be responsible for paying further claims; therefore, the insurer no longer pays to defend.
When producers change the address of their residence or office, the Insurance Department must be notified within A) 14 days. B) 30 days. C) 31 days. D) 60 days.
B) 30 days. Producers have 30 days to notify the Insurance Department when they have changed their residential or business address, legal name, or email address.
In a participation plan, the insured may be eligible for which of the following? A) Guaranteed dividends B) A partial premium refund C) An increase in insurance over time D) Lower premiums
B) A partial premium refund The insured is eligible for dividends (partial premium refund) if the experience during the policy term falls within guidelines established by the insurer at the inception of the policy term. Dividends are not guaranteed, and to be eligible for participation, the account must generate a minimum amount of premium.
If a complaint has been filed against a producer who has been implicated in an unfair trade practice, the Commissioner will hold a hearing. When must the producer be notified of the charges? A) 10 days from the receipt of complaint by the Commissioner B) At least 5 days prior to hearing C) Not more than 63 days after the complaint review D) No later than 20 business days from the file of complaint
B) At least 5 days prior to hearing If the Commissioner has a reason to believe that an insurance producer has been involved in an unfair trade practice, the Commissioner will hold a hearing. The producer must be notified of the hearing and the charges no later than 5 days before the hearing.
An insured's business is damaged because of a fire, and he is forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this? A) Additional B) Consequential C) Direct D) Special
B) Consequential Consequential loss, also known as indirect loss, is a second financial loss caused by a covered direct loss.
In addition to the common policy conditions, all of the following conditions apply to liability coverage EXCEPT A) Bankruptcy. B) Employers liability. C) Separation of insured. D) Legal action against insurer.
B) Employers liability. The following conditions apply to the liability coverage in addition to the common policy conditions: bankruptcy, duties in event of occurrence, claim or suit, legal action against the insurer, and separation of insured. Employers liability is an exclusion.
Which of the following would be covered under the Garage Liability Coverage Form? A) Loss of use B) Insured's business premises C) Product recalls D) Fellow employees
B) Insured's business premises The garage coverage form provides liability protection for the insured's premises, autos, products, and work performed. All the other answer choices are exclusions from coverage.
A policy condition that states if a policy is broadened with no additional premium, then the expanded coverage will be automatically applied to all policies of the same type is known as A) Limit of insurance clause. B) Liberalization clause. C) Maximum indemnity clause. D) Loss control clause.
B) Liberalization clause. The liberalization clause states that if a policy is broadened with no additional premium, then the expanded coverage will be automatically applied to all policies of the same type.
If an insurer becomes insolvent, which of the following would pay benefits to policyholders? A) The Federal Reserve Fund B) The Guaranty Association C) The NAIC Fund D) The State
B) The Guaranty Association All admitted insurers must be a member of the Insurance Guaranty Association as a condition of their license. The Insurance Guaranty Association is in existence to protect policyowners and beneficiaries against losses caused by the insolvency of an insurance company.
The members of a limited liability company are insureds under a businessowners policy (BOP) if A) Members of a limited liability company cannot be insureds under a BOP. B) The limited liability company is designated as the named insured. C) Each individual is listed as a named insured on the policy. D) A single individual member of the limited liability company is listed as the named insured.
B) The limited liability company is designated as the named insured. If the named insured is designated as a limited liability company, the named insured and members also are insureds, but only with respect to the conduct of the business. Managers are insureds, but only with respect to their duties as managers.
Which situation would NOT be covered by the basic Causes of Loss form under a commercial property policy? A) The automatic fire protective sprinkler system inside New Realities Book Shop leaks, causing damage to the store. B) Gordon's Motorcycle Heaven is damaged by the sudden sinking of land created by the action of water on limestone. C) The Surf Side Club Waterfront Restaurant is damaged when flood waters rise and seep into the restaurant. D) Piccolo Pete's Café has its door broken by vandals trying to get inside.
C) The Surf Side Club Waterfront Restaurant is damaged when flood waters rise and seep into the restaurant. Damage caused by flood, surface water, mudslide, water that backs up from a sewer or drain, or ground surface water that seeps through foundations, basements, doors or windows is not covered.
Directors and officers liability insurance defends actions against a corporation or its officers and directors alleging wrongful acts. With regard to the coverage provided, wrongful acts include any of the following EXCEPT a)Breach of duty. b)Embezzlement. c)Misstatements. d)Neglect.
b)Embezzlement. Embezzlement is a criminal act. There is no "standard" director and officers policy; however, most policies specifically exclude coverage for defense or payment of claims resulting in fines or penalties resulting from criminal acts, nor will they pay punitive damages.
What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations? a)Arbitration plan b)Experience modification factor c)Workers classification factor d)Merit rating plan
b)Experience modification factor The calculations relate an employer's losses, payroll, and premiums, segregated according to classifications of operations, all as reported to the bureau by the employer's insurance company.
Prior to state-directed workers compensation statutes being enacted, employees had a)No right to sue their employers for their work-related injuries. b)Limited payments for their work-related injuries. c)Guaranteed protection for their work-related injuries. d)To sue an employer for the "loss" and prove that the employer was at fault.
d)To sue an employer for the "loss" and prove that the employer was at fault. Prior to workers compensation statutes being enacted, workers had to sue employers for damages, and few lawsuits resulted in ANY compensatory payments.
