Final Exam Review

A mortgage company is named as a loss payee on the insured's homeowners policy, under the standard mortgage clause. If the insured suffers a loss due to a fire, which of the following is true? a)The loss is payable to the insured and the mortgagee. b)The mortgagee should submit a claim to its insurer, and the insured should submit a claim to the HO policy. c)The entire loss is payable to the mortgagee. d)The entire loss is payable to the insured.

a)The loss is payable to the insured and the mortgagee. Loss is payable to the insured and mortgagee to protect the mortgage company's interest. This prevents the insured from cashing the check and not completing repairs.

If an insured bakery is sued because its marketing states that the products of another bakery may not be safe, which coverage of a commercial general liability policy will defend the suit? a)Product liability b)Completed operations c)Personal and advertising injury liability d)Premises and operations

c)Personal and advertising injury liability Personal injury and advertising injury liability covers suits arising from slander and libel.

Coverage must be provided under New York Workers Compensation Laws for all residence employees who work less than

40 hours a week, All Residence employees who work for the same employer must be provided coverage if working less than 40 hours per week. This coverage is provided by the workers compensation- certain residence employees endorsement

Which of the following is NOT found in a commercial package policy? A Certificate of authority B Common policy conditions C Common policy declarations D Interline endorsements

A Certificate of authority Regardless of how the policy is written, it will be comprised of the following essential elements: common policy declarations page, common policy conditions, interline endorsements, and coverage parts.

If an insurer makes a change to broaden coverage in a dwelling policy while it is in effect, the changes will apply a)When the policy is up for renewal. b)Within 60 days. c)Automatically. d)When the new policy is written

Automatically Changes made to broaden coverage in a dwelling policy, if made while the policy is in effect or 60 days before it goes into effect, will apply automatically and will not need to be endorsed to the policy

An insurance contract must contain all of the following to be considered legally binding EXCEPT a. Competent parties b. Beneficiary's consent c. Offer and Acceptance d. Consideration

Benficiary's consent The 4 essential elements of all legal contracts are offer and acceptance, consideration, competent parties, and legal purpose.

A premium discount is the term that describes when an insured owes a total standard premium greater than A $15,000. B $1,000. C $5,000. D $10,000.

C $5,000. A premium discount is when an insured owes a total standard premium greater than $5,000.

With regards to a homeowners policy, which coverage provides for indirect or consequential losses

Coverage D

With regards to a homeowners policy, which coverage provides for indirect or consequential losses A Coverage C B Coverage D C Coverage A D Coverage B

Coverage D correct! Coverage D provides for loss of use, which is an indirect loss.

A builder's risk form is most often written as which of the following? a. scheduled form b. reporting form c. specific value form d. completed value form

D. 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.

The provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the A. Legal action against us clause B. Entire contract clause C. Time limit on certain defenses clause D. Incontestability clause

Entire contract clause

Persons covered under an insurance policy, whether named or not, are known as the A. Exclusions B. Declarations C. Endorsements D. Conditions

Exclusions The exclusions section of an insurance policy details what perils are not insured against and what persons are not insured

What type of compensatory damages will pay for pain suffering and disfigurement? A. Normal B. General C. Special D. Tort

General General compensatory damages are for intangible elements that cannot be specifically measured in terms of dollars

The insured was mowing the lawn in his yard with a lawnmower borrowed from his brother. The fuel line ruptured, and the lawnmower was destroyed in the fire. How will the insured's homeowners liability policy respond?

It will cover the damage

A house insured under a dwelling policy has been vacant for 45 consecutive days. Which of the following statements is true?

Loss by vandalism and malicious mischief is excluded

An agent in another state wants to become an agent in New York. The other state gives the same privileges to New York agents wanting to be licensed in that state as it does its own agents. New York, therefore, extends the privileges of its agents to the prospective agent of the other state. What is this called?

Reciprocity Reciprocity occurs when the state in which the person resides accords the same privilege to residents of New York. (reciprocal)

Under the commercial property coverage program, the basic causes of loss from insures against loss caused by A. Power failure off the premises B. Sprinkler leakage C. Earth movement D. Nuclear hazard

Sprinkler leakage

Crews of ships are covered by the

The Jones Act

In a group health policy, who is the policyowner?

The employer is issued the master contract and considered the policyowner.

When a parent is required to pay for damages caused by their children, this is an example of A. Strict liability B. Intervening cause C. Assumption of risk D. Vicarious liability

Vicarious liability When one party is held liable for an act of another.

Which of the following would NOT be considered an insurance producer? a)An insurer's officer b)An insurance broker c)A reinsurance intermediary d)An insurance agent

a)An insurer's officer Insurance producer means any person required to be licensed to sell, solicit or negotiate insurance, including agents, brokers and intermediaries. Officers are not required to be licensed.

In the split limit coverage in personal auto policies, which limit indicates the maximum amount the policy will pay for bodily injury per person? a)First limit b)Second limit c)Third limit d)Combined limit

a)First limit Split limit coverage uses 3 limits that represent dollar amounts. The first limit indicates the maximum amount the policy will pay for bodily injury for each person.

In this state a temporary license may be issued for all of the following reasons EXCEPT

agents retirement

Under Coverage C of a homeowners policy, the amount of insurance provided to cover personal property insured is a)50% of the amount provided as Coverage B. b)50% of the amount provided as Coverage A. c)Equal to the amount provided as Coverage B. d)Equal to the amount provided as Coverage A.

b)50% of the amount provided as Coverage A. Under the HO forms, Coverage C is automatically provided as equal to 50% of the amount provided in Coverage A.

Rates that are established on the similarities of the risk with other risks are known as a)Merit rates. b)Manual rates. c)Experience rates. d)"A" rates.

b)Manual rates. Rates that are established by similarity of risk are manual rating or class rates.

Which of the following symbols is available to an insured with vehicles subject to no-fault coverage? A Symbol 9 - nonowned autos only B Symbol 1 - owned auto only C Symbol 2 - owned autos subject to no-fault D Symbol 7 - hired autos only

A Symbol 9 - non-owned autos only Symbol 1 is used for any auto, Symbol 2 is used for owned autos only, and Symbol 7 is used for specifically described autos only

An insured pays her major medical insurance annually on March 1 each year. Last March she forgot to mail her premium to the company. On March 19, she had an accident and broke her leg. Her insurance company would

Pay the claim

Under the business auto coverage form, mobile equipment is covered by liability insurance a)When coverage is written as Symbol 1. b)When being carried or towed by a covered auto. c)On an excess basis. d)When listed on the declarations.

b)When being carried or towed by a covered auto. Liability coverage is automatically provided on mobile equipment while being carried or towed by a vehicle insured as a covered auto. (There is a business auto endorsement that will provide auto coverages to mobile equipment upon payment of additional premiums.)

Personal business property out in the open is covered under commercial property policy only while Within 150 feet of the described premises. b)Within 100 feet of the described premises. c)Located on the described premises. d)Specifically described on the declarations.

b)Within 100 feet of the described premises. Business personal property is defined in the policy as property located in the insured structure or within 100 feet of that structure.

Which of the following individuals must pass the written examination to be licensed as an insurance agent? a)A ticket-selling airline representative for one-time issuance of baggage or accident insurance b)An applicant who has passed the written examination for an insurance agent's license in the past if he applies within 2 years following the date of license termination c)A producer previously licensed in New Jersey who is applying for a New York license 120 days after becoming a resident of this state d)A nonresident licensee currently licensed in another state

c)A producer previously licensed in New Jersey who is applying for a New York license 120 days after becoming a resident of this state Each of the above do not need to take the written examination, except for a previously licensed agent in New Jersey who has allowed more than 90 days to lapse since becoming a resident of New York.

An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000 and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay? a)Each policy will pay the total policy limits of $100,000. b)The first policy written will pay $75,000, and the other three policies will contribute proportionately to pay for the remaining $25,000. c)The policy with the earliest effective date will pay the entire loss, and the other policies will pay nothing. d)Each policy will pay $25,000 of the loss.

d)Each policy will pay $25,000 of the loss. Each policy will pay its pro rata share of the loss, but not more than the amount of loss in total.

What term describes the amount collected by an insurance company over a period of time and is based on the amount of time that has passed since the policy went into effect compared with the total life of the policy? a)Loss ratio b)Proportionate earnings c)Credit value d)Earned premium

d)Earned premium Earned premium is the amount of money collected by an insurance company over a period of time based on the ratio of the time passed on the policy to the effective life.

Before an order by the Superintendent can be considered effective, it must be

In writing and signed by the Superintendent

In this state a temporary license may be issued for all of the following reasons EXCEPT

Agents retirement

Which of the following statements would be an example of a product liability claim? a)The insured's product has to be recalled because of an expiration date. b)Faulty packaging of a cereal caused spoilage that resulted in someone getting sick. c)An insured, while delivering product to a customer, hits another car with the delivery truck causing bodily injury and property damage .d)Someone tampers with the insured's product causing the insured to have to recall all products that are on the shelf.

b)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.

An apartment occupant's personal property would be insured under which homeowners form? a)Unit-owners form (HO-6) b)Tenant broad form (HO-4) c)Comprehensive form (HO-5) d)Broad form (HO-2)

b)Tenant broad form (HO-4) The HO-4 form (tenant broad form) is for the apartment dweller. It covers what the insured owns, their contents, and has no coverage for the apartment.

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.

The insured owns an older home with lath and plaster walls. Following a kitchen fire, the insurance company pays to have the wall replaced with drywall that is just as functional, but costs less than lath and plaster. Which loss valuation allows the insurance company to have plaster replaced with drywall? a)Actual cash value b)Functional replacement cost c)Replacement cost d)Market value

Functional replacement cost

What insurance concept is associated with the names Weiss and Fitch?

Guides describing company integrity. Because an insurance company's strength and stability are two very crucial factors in its sustainability, independent rating services have formed to publish regular updates on the financial integrity of different insurance companies.

What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy? a)Open peril policy b)Specified peril policy c)Binder policy d)Named peril policy

a)Open peril policy Open peril (special) policies cover everything except what they say they don't. Named peril policies cover only perils named in them.