Exam Review Questions

Elaborate homes and those with detailed designs or decorative architecture with replacement costs greater than ACV or market value are insured on a) HO-3 with an HO-15 endorsement. b) HO-8. c) HO-8 with an inflation guard endorsement. d) HO-3.

b) HO-8.

Which of the following would NOT be covered by HO liability insurance? a) Property damage b) Intentional tort c) Bodily injury d)First aid expenses

b) Intentional tort

Homeowners policies provide coverage for a) Property of tenants, roomers, or boarders not related to any insured. b) Business property while on the residence premises. c) Losses caused by off-premises power failure. d) The land under the residence.

b) Business property while on the residence premises.

All of the following are considered parts of the policy structure EXCEPT a) Conditions. b) Provisions. c) Exclusions. d) Insuring clause.

b) Provisions.

Which of the following statements is true concerning the special form dwelling policy? a) Coverage A is for all-risk perils, and Coverage C is for basic perils only. b) Coverage A is for all-risk perils, and Coverage C is for the broad form perils. c) Both Coverage A and Coverage C are provided on an all-risk basis. d) Both Coverage A and Coverage C are provided for the broad form perils.

b) Coverage A is for all-risk perils, and Coverage C is for the broad form perils.

Duties of the insurer found in property policy conditions include all of the following EXCEPT a) Return any premiums to the insured. b) Notify the insured in the event of financial difficulty. c) Pay covered losses. d) Provide advance notice of cancellation.

b) Notify the insured in the event of financial difficulty

An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have? a) Special b) Specific c) Schedule d) Blanket

b) Specific

Which of the following perils is covered by the HO-2 and HO-3? a) Flood b) War c) Sudden and accidental rupture of a heating system d) Loss due to power interruption that occurs off the premises

c) Sudden and accidental rupture of a heating system

The personal injury liability endorsement to an HO policy applies to all the following EXCEPT: A. Invasion of privacy. B. False arrest. C. A third party breaks a leg when the insured knocks him down. D. Slander.

C. A third party break a leg when the insured knocks him down

Professional photographers and musicians may insure their equipment with a) A commercial articles floater. b) A theatrical property coverage form. c) A contractors equipment floater. d) An installation floater.

a) A commercial articles floater.

The inspections and surveys condition in a businessowners policy a) Allows the insurer the right to inspect the insured's premises. b) Validates that the insured is in compliance with state and federal guidelines. c) Obligates the insurer to make annual safety inspections. d) Guarantees that all working conditions are safe and healthful.

a) Allows the insurer the right to inspect the insured's premises

Which of the following dwelling policy forms primarily insures a structure on an actual cash value basis? a) DP-1 b) DP-2 c) DP-3 d) All DP forms

a) DP-1

All of the following are excluded in the equipment breakdown basic policy EXCEPT a) Explosion of steam boilers. b) Ordinance or law coverage. c) Business interruption. d) Loss of power, lights, heat, steam, or refrigeration.

a) Explosion of steam boilers

All of the following violations may result in an agent's imprisonment EXCEPT a) Engaging in the business of insurance after being convicted of breach of trust. b) Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction. c) Embezzling funds from the insurer. d) Knowingly obtaining information about a consumer under false pretenses.

b) Failing to report to the department a criminal prosecution taken against the agent in another juridistion

The livestock coverage form covers which of the following losses? a) Sheep died after an attack by the family dog b) A cow died after it ran into a moving tractor c) All risk coverage for death of livestock by any cause except those excluded d) Named peril coverage for death of livestock

d) Named peril coverage for death of livestock

An insured has a personal property replacement cost endorsement under her homeowners policy. If an expensive painting and an antique chair are stolen from the insured's home, what will the insured receive on the claim under that endorsement? a) 70% of the replacement cost b) 80% of the replacement cost c) 100% of the actual cash value d) Nothing

d) Nothing

Which of the following would the livestock coverage form NOT insure against? a) The euthanasia of livestock suspected of carrying mad cow disease b) Death of livestock caused by accidental drowning c) Death of livestock caused by a tornado d) The euthanasia of livestock after being hit by a vehicle

d) The euthanasia of livestock after being hit by a vehicle

Which of the following losses would be covered by an unendorsed homeowners policy? a) Fire or lightning b) Faulty or defective zoning c) Theft in a structure under construction d) Collapse caused by earthquake

a) Fire or lightning

The HO-3 homeowners policy provides a) Open peril coverage on the dwelling and broad form coverage on personal property. b) Open peril coverage on the dwelling and basic form coverage on personal property. c) Basic coverage for the dwelling and broad form coverage for personal property. d) All-risk coverage for both the dwelling and personal property.

a) Open peril coverage on the dwelling and broad form coverage on personal property.

Limited fungi, wet or dry rot, or bacteria endorsement in HO policies applies to a) Property and liability losses b) Specified losses c) Property losses only d) Liability losses only

a) Property and liability losses

Which of the following may NOT be included in an insurance company's advertisement? a) That its policies are covered by a state Guaranty Association b) The policies' limitations or exclusions c) The name of a specific agent d) An identification of a limited policy as a limited policy

a) That its policies are covered by a state Guaranty Association

Under a dwelling policy, which of the following is NOT a factor in determining a loss? a) The amount negotiated by the insured b) The policy limit c) The amount reflecting the insured's interest in the property at the time of loss d) The amount necessary to repair or replace the property

a) The amount negotiated by the insured

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

A licensed producer moving to Pennsylvania may become licensed as a resident if the producer submits a completed application within how many days of establishing residence in Pennsylvania with proof of licensing from their prior home state? a) 30 b) 60 c) 90 d) 180

c) 90

Which coverage form would provide coverage for all incoming and outgoing shipments? a) Motor truck cargo b) Mail coverage c) Annual transit d) Trip transit

c) Annual transit

When must application for coverage be made for Federal Crop Insurance? a) All applications must be submitted by April 15th each calendar year b) At any time before the crop is harvested c) At or before a date established by the Federal Crop Insurance Corporation d) At any time before a loss has occurred

c) At or before a date established by the Federal Crop Insurance Corporation

If an insured operates a home day care business out of his house, how can he ensure the liability exposure coverage? a) Buy additional coverage for his business b) Pay additional premium into his own liability policy c) Attach the home day care coverage endorsement to the HO policy d) Include home business endorsement in the HO policy

c) Attach the home day care coverage endorsement to the HO policy

A Mobile Homeowners Policy is structured the same as a a) Dwelling Policy. b) Commercial Package Policy. c) Homeowners Policy. d) Personal Auto Policy.

c) Homeowners Policy.

All of the following are conditions commonly found in the insurance policy EXCEPT a) Subrogation. b) Appraisal. c) Insuring agreement. d)Cancellation and nonrenewal

c) Insuring agreement.

What is the highest level of protection available under a Federal Crop Insurance policy? a) 65% b) 50% c) 100% d) 75%

d) 75%

The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the a) Conditions. b) Exclusions. c) Declarations. d) Insuring agreement.

d) Insuring agreement.

Which of the following statements is NOT true regarding mobile agricultural machinery and equipment coverage? a) It relates to devices used in the everyday farm operation. b) It covers detached parts and accessories of mobile devices. c) It insures eligible equipment for open perils. d) This coverage must be written as part of farm coverage.

d) This coverage must be written as part of farm coverage.

Which of the following endorsements could be added to a businessowners policy to protect against loss of income due to lightning striking an electrical grid making the business unable to operate? a) Utility services direct damage endorsement b) Named peril endorsement c) Protective safeguards endorsement d) Utility services time element endorsement

d) Utility services time element endorsement

Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT a) The insurer does not have the right to inspect the insured's property and operations. b) The insurer does not make safety inspections for the insured. c) The insurer does not guarantee that conditions are safe or healthful. d) The insurer does not guarantee that the insured is meeting all required safety regulations.

a) The insurer does not have the right to inspect the insured's property and operations.

Which of the following would NOT be considered an exception to the National Do Not Call List? a) Calls by or on behalf of tax-exempt nonprofit organizations b) Calls based from outside of the United States c) Calls for which the consumer has given prior written permission d) Calls which are not commercial or do not include unsolicited advertisements

b) Calls based from outside of the United States

Which of the following types of property would be covered in homeowners coverage forms? a) Animals, birds, or fish b) Landlord furnishings in an on-premises apartment c) Structures used for business purposes d) Structures rented to others who are not tenants of the dwelling

b) Landlord furnishings in an on-premises apartment

The type of insurance used to cover goods for one specific trip is called a) Bailee policy. b) Motor truck cargo policy. c) Trip transit. d) Commercial property.

c) Trip Transit

Which of the following is NOT settled on an actual cash value basis while covered under the business property coverage form? a) Manuscripts b) Works of art or antiques c) Valuable papers and records d) Property of others

c) Valuable papers and records

What is the maximum amount an insurer will pay under the equipment dealers pollution cleanup and removal extension of an inland marine policy? a) $15,000 all expenses incurred during a 12-month period b) $20,000 all expenses incurred during a 12-month period c) $5,000 for all expenses incurred during a 12-month period d) $10,000 for all expenses incurred during a 12-month period

d) $10,000 for all expenses incurred during a 12-month period

How soon after a direct loss does the period of restoration for business income coverage under businessowners property insurance begin? a) 12 hours b) 24 hours c) 36 hours d) 72 hours

d) 72 hours

When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered a) Twisting. b) Controlled business. c) Adverse selection. d) Discrimination.

d) Discrimination.