Guarantee Exam (missed Qs)
after giving notice of cancellation of an auto policy, the insurer must return any paid, but unearned premium within a) 45 days b) 60 days c) 15 days d) 30 days
a) 45 days - premiums that have been paid, but are unearned because the insurer has cancelled the policy, must be returned to the insured within 45 days of giving notice of cancellation. the premium is returned on a pro-rata base
which of the following actions does NOT constitute to false advertising? a) using names that disguise the true nature of a policy b) stating that dividends are not guaranteed c) misrepresenting the terms of a policy d) representing an insurance policy as a share stock
b) stating that dividends are not guaranteed - in general, insurance advertisements cannot include any untrue, deceptive, or misleading statements that apply to the business of insurance or anyone who conducts it
before an insurer may transact business in a specific state, they must apply for a license or certificate of authority from the state department of insurance and meet a) moral requirements b) premium requirements c) solvency requirements d) educational requirements
c) solvency requirements - before an insurer may transaction business in a specific state, they must apply for a license or certificate of authority from the state department of insurance and meet solvency requirements to ensure it can pay for its financial obligations
how many days from the cancellation of a policy must an insurer return any unearned premiums to the insured? a) 30 days b) 45 days c) 60 days d) 90 days
b) 45 days any unearned premiums resulting from cancellation of a policy must be computed on a pro-rata basis and paid to the insured within 45 days of cancellation
under which legal defense is there an appointment of damages based upon the degree of fault of each of the plaintiffs and the defendant? a) intervening cause b) absolute liability c) contributory negligence d) comparative negligence
d) comparative negligence -under comparative negligence, the recovery by the plaintiff is lessened or increased depending upon the degree of each party's negligence
what does HO personal property coverage NOT cover? a) personal property of roomers not related to the insured b) the spouse personal property c) the insured's personal property in another country d) the residents sons personal property
a) personal property of roomers not related to the insured - contents coverage does not apply to people who may be at the insured's home- tenants, renters, boarders
a licensed life agent wrote a policy that covers the life of his brother. since the policy owner was related, the agent refunded his brother the commission earned on this policy. this action would be considered a) rebating b) controlled business c) a normal business practice d) unfair discrimination
a) rebating - rebating is defined as any inducement offered in the sale of insurance products that is not specified in the policy
an insured has decided to never drive another vehicle and wants to transfer his auto insurance policy to his wife. what does the insured need to transfer the policy? a) the written consent of the insurer b) an auto policy cannot be transferred c) nothing because his wife is automatically included as an insured d) the written consent of all the other insured's covered by the policy
a) the written consent of the insurer -the insured cannot transfer his or her rights or interest in the policy without the written consent of the insurer. if the name insured dies, coverage will be provided for the surviving spouse or legal representative of the insured, but only until the end of the policy
an agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as a) twisting b) misrepresentation c) rebating d) lying
a) twisting - this is the definition of twisting, which is an unfair trade practice
under coverage C, and at the request of an insured, personal property of guest or residence employee is covered a) while it is in any residence premises occupies by an insured b) while it is in any residence premises occupied by a named insured c) anywhere in the world d) only while on residence premises
a) while it is in any residence premises occupied by an insured -at the request of an insured, personal property of a guest or residence employee may be covered while it is in any residence occupied by an insured
which of the following types of property would be covered under coverage C- personal property in a dwelling policy? a) 2-passenger aircraft b) any personal watercraft c) motor vehicles d) rowboats
d) rowboats - aircraft designed for flight and carrying people, motor-vehicles and motor-powered boats are excluded. however, rowboats and canoes would be covered
other than perils, the difference in three dp forms is in coverage provided. which of the following coverages options is covered by the dp-2 and dp-3 but not dp-1? a) coverage D- fair rental value b) coverage A- dwelling c) coverage B- other structures d) coverage E- additional living expenses
d) coverage E- additional living expenses - coverage E- additional living expenses must be obtained through an endorsement in a dp-1 policy
insurance producers always represent the a) policyowners b) public c) state insurance department d) insurance company
d) insurance company - under agency law the producer legally represents the insurance company with which they are contracted
an insured has an automobile policy with limits of 100/300/50 and a deductible of $1,000. he is involved in an auto accident and crashes into another drivers auto. the other driver is awarded $125,000 for his injuries and $25,000 for the damage to his car. the insured vehicle has damage in the amount of $1,200. the total payment made under the insured's policy is a) $125,000 b) $126,200 c) $100,200 d) $150,200
a) $125,200 - the amount of coverage for the other drivers injuries is limited to $100,00. the damage to the other drivers car, $25,000, is covered in full. the damage to the insured's car is covered minus the $1000 deductible. thus, the total payment is $125,200.
an insurer must notify the consumer in writing that an investigative consumer report has been requested, within how many days of the initial request? a) 3 days b) 5 days c) 10 days d) 30 days
a) 3 days - if a consumer report is requested, the insurer must notify the consumer at least 3 days following the initial request
in reference to insurable interest, which of the following is NOT considered an element of an insurable risk? a) personal b) blood c) financial d) business
a) personal -for any person or property covered under an insurance policy, insurable interest must exist. insurable interest is broken into three categories which include; financial ( a monetary interest) blood ( a relative ) and business ( a business partner)
the exact, direct, uninterrupted cause of loss is the a) proximate cause b) actual cause c) intervening cause d) losing cause
a) proximate cause -an act or an event that is the immediate or actual cause of a loss
which of the following situations would not be an acceptable reason to nonrenew a policy? a) the insured fails to pay the required premium b) the insured moves homes before the expiration date c) the insured has purchased similar coverage elsewhere d) the policy contains a binder clearly stating an expiration date
b) the insured moves homes before the expiration date - moving homes would not be considered an adequate reason to nonrenew a policy
which of these would be covered by medical payments coverage in a personal auto policy? a) a runaway shopping cart in a mall parking lot knocks over an insured down, breaking his leg b) an insured slams a hand in a car door while getting in, breaking the hand c) an insured trips over the curb while crossing the street on the way to her car and sprains a wrist d) an insured falls down while water-skiing and is run over by a boat
c)b an insured slams a hand in a car door while getting in, breaking the hand - auto medical payments coverage applies while in, on, entering or leaving a car
while engaged in a pick-up soccer game in the neighborhood park, the insured collides with another player, breaking his nose. would the insured's homeowners medical payments cover the injury? a) yes, the medical payments coverage also applies off the insured's premises b) no, because even though it was a pick-up game, it was an unorganized event c) no, personal liability applies on-premises only d) no, the insured was not negligent
a) yes the medical payments coverage also applies off the insured's premises -homeowners medical payments coverage applies worldwide as long as the loss occurred during a personal activity of the insured
your friends dog that you are keeping while the friend is out of town bit a visitor on you home. does your homeowners liability coverage apply? a) yes, the coverage would apply for any animal in your care b) yes, if the visitor has no health coverage c) no, because the dog is not yours d) no, because injury to others by animals is not covered
a) yes, the coverage would apply for any animal in your care - personal liability coverage in section || will respond to any claim made against an insured for damages due to bodily injury or property damage. your liability coverage would apply to damage caused by your animals, as well as any other animals in your care
a trucking company has a $1 million umbrella policy in place. the business owner agrees to maintain a 200/500/100 limit on an auto liability, and a personal liability of $400,000. after a car accident, the business is sued. injuries are awarded to a single injured party in the amount of $300,000. it turned out that the business actually carried only 100/250/50 auto liability limits. what is the total amount the umbrella policy will pay? a) $50,000 b) $100,000 c) $200,000 d) $300,000
b) $100,000 - the umbrella policy pays as if the underlying limits were in effect. the underlying limit agreed to by the business was $200,000 per person. therefore, the umbrella would be the additional $100,000 . the business itself would be responsible for the difference between what was required and what was actually provided.
with regard to homeowners section ||, which of the following does NOT meet the definition of inured location? a) a secondary residence acquired by the insured during the policy period b) a plot of farmland owned or rented by the insured c) a meeting hall rented to the insured to hold a reception for his daughters wedding d) a cabin rented to the insured for use on a family vacation
b) a plot of farmland owned or rented by the insured - the definition of an insured location excludes farmland
which of the following components is NOT part of a policy structure? a) definitions b) benefits c) declarations d) additional coverage
b) benefits -the policy structure of property and casualty policies is comprised of essential components. these components include declarations, definitions, insuring agreement, additional coverage, conditions, endorsements, exclusions and policy limits
which of the following statements does NOT describe endorsements? a) endorsements must be signed by an executive officer b) endorsements may only add coverage to a current policy, not remove c) endorsements may be added during the policy term d) endorsements are printed addenda to a policy
b) endorsements may only add coverage to a current policy, not remove - endorsements are changes to a policy, whether it is adding or removing something
during the 120-day period after receiving notice of cancellation of an agency contract, the agency can continue to preform which of the following transactions? a) write new business b) perform routine adjustments of losses c) appoint agents d) bind coverage
b) perform routine adjustments of losses -the agency may continue to perform routine adjustments during the 120-day period prior to termination
using the pro-rata method, if a property is covered by company A for $20,000 and company B covers the same property for $40,000, how much will company A pay on a $24,000 loss? a) $20,000 b) $12,000 c) $8,000 d) $0
c) $8,000 - each policy pays a percentage of the loss based on the percentage of coverage that the policy provides. company A carries 1/3 of the total coverage ( $20,000+$40,000=$60,000) therefore it is responsible for 1/3 of the $24,000 loss, or $8,000
within how many days must an insurance producer respond to an inquiry of the commissioner relative to the business of insurance? a) 5 b) 10 c)15 d) 30
c) 15 - every licensed person in this state must reply within 15 days to an inquiry of the commissioner regarding the business of insurance
An insured's limit of liability applies to a total of damages for bodily injury and property damage resulting from one accident, which may be used in any combination of amounts, not to exceed the single limit. What type of limit does this insured have? a) aggregate b) per occurrence c) combined single d) split
c) combined single - combined single is a single dollar limit of liability applying to the total of damages for bodily injury and property damage combined resulting from one accident or occurrence. the limit may be used in any combination of amounts, not to exceed the single limit.
which of the following describes an insurers responsibility for payment under a policy, as stated in the common policy provisions? a) utmost good faith b) premiums c) limits of liability d) consideration
c) limits of liability - limits of liability are the insurers liability for payment as stated in an insurance policy
an insured's diner suffered a fire loss. in addition to the damage caused by the fire, the floor covering had to be replaced because of the water damage. it took 4 weeks for the repairs to be completed. the insured was without income for that period of time. the insured's policy includes both direct and indirect loss coverage. what part of the loss would be paid as indirect loss? a) both the loss of the income and the cost of the floor covering b) the entire loss would be paid as a direct loss by fire c) loss of income d) loss of floor
c) loss of income
which valuation method takes into consideration what a willing buyer would pay for an insured property? a) actual cost value b) functional replacement value c) market value d) replacement value
c) market value -if property is insured for market value, it is insured for what a willing buyer would pay prior to a loss
the purpose of the fair credit reporting act is to a) ensure the customers receive a copy of investigate consumer reports b) ensure coverage for all applicants c) protect consumers against the circulation of inaccurate or obsolete personal or financial information d) protect the insurer from adverse selection
c) protect consumers against the circulation of inaccurate or obsolete personal or financial information -the fair credit reporting act is administered by the federal trade commission. the purpose of the law is to protect consumers against the circulation of inaccurate or obsolete information and to ensure that consumer reporting agencies are fair and equitable in their treatment of consumers
the personal property off-premises extension of dwelling forms provides limits of coverage up to a) 10% of coverage A anywhere in the U.S or Canada b) 10% of coverage A anywhere in the world c) 10% of coverage C anywhere in the U.S or Canada d) 10% of coverage C anywhere in the world
d) 10% of coverage C anywhere in the world - under the dwellings forms, the insured must apply up to 10% of the coverage C limit against any losses by covered perils to personal property ( other than rowboats or canoes) while it is anywhere in the world
an insured owns an automobile liability policy with bodily injury limits of $200,000 and an umbrella policy with a limit of $1,000,000. the insured is involved in an automobile accident and is found liable for injuries totaling in $900,000. which of the following examples best describes how the benefits will be paid? a) automobile liability policy= $200,000; umbrella liability policy= $200,000 b) automobile liability policy= $450,000; umbrella liability policy= $450,000 c) auto liability policy= $0; umbrella liability policy= $900,000 d) auto liability policy= $200,00; umbrella liability policy= $700,000
d) auto liability policy= $200,000; umbrella liability policy= $700,000 - the umbrella policy is designated to pay excess above the base auto policy
in a dp-1, if the insured elects to apply coverage B to a detached garage, coverage A will a) only be applicable if the insured pays a higher deductible b) only be applicable if the insured pays an additional premium c) be increased by 10% d) be reduced by 10%
d) be reduced by 10% -coverage B- other structures applies 10% of coverage A to a detached structurre
an agent who includes a statement which, when taken in context of the whole presentation, may tend to mislead or deceive the persons addressed has committed what a) defamation b) twisting c) coercion d) misrepresentation
d) misrepresentation -misrepresentation is the action or offense of giving a false or misleading account of the nature of something
for additional premium, the extended coverage's written on the basic form dwelling policy would cover which of the following? a) vandalism b) glass breakage c) fire d) riot
d) riot the seven perils include in the extended coverage for damage by riots
which of the following would NOT be covered by uninsured motorist coverage? a) the insured's neighbor borrowed the insured's car and was hit by uninsured motorist b) the insured car was hit by someone's whose auto insurer is insolvent c) the insured's family member is struck by a hit-and-run driver d) the insured causes a head-on collision with the car of an uninsured motorist
d) the insured causes a head-on collision with the car of an uninsured motorist - uninsured motorist coverage applies to the insured, relatives of the insured, and those occupying the coverage vehicle. UM coverage applies when the uninsured vehicle is at-fault, not the insured vehicle