Guarantee exam P&C

Who acts on behalf of the principal?

agent

The equipment breakdown coverage form provides coverage for all of the following EXCEPT

bodily injury liability

If a producer allows his license to lapse, within what time period may the producer reinstate the same license?

2 years

Which of the following is the least amount of controlled business that would be considered illegal?

26%

Which of the following risks would be eligible for coverage under a dwelling policy form?

A duplex that is occupied by two families, each of which have a bedroom rented to a boarder

Which of the following best describes a rebate?

A producer returning part of her commission to her client, as an inducement to buy

Which of the following is a federal act that covers crews of ships the same as railroad workers?

Jones Act

The extended nonowned coverage provides protection to

Only the person(s) named on the policy.

A policy contains a consent to settle a loss provision, which requires the insurer to obtain the consent of an insured before the settlement of a claim. With this in mind, what kind of liability policy does the insured most likely have?

Professional liability

The basis of insurance is sharing which of the following among the members of a large homogeneous group with similar exposure to loss?

Risk

Which of the following actions does NOT constitute false advertising?

Stating that dividends are not guaranteed

If the Commissioner issues a cease and desist order, that means the insurer must

Stop committing a particular violation

If a high risk individual seeks to obtain insurance coverage but is unable to do so through the general insurance market, what type of insurance may they seek?

Surplus lines insurance

If the premiums collected by an insurer participating in the WYO flood program are insufficient to cover losses, which of the following would be true?

The insurer will be reimbursed for the excess costs by the NFIP.

If a car is stolen and left in a snow bank and the radiator freezes and does a lot of damage, is the damage covered by the auto policy?

Yes, freezing exclusion is removed if the car is stolen.

A lender who conditions approval of a loan on the condition that the borrower purchase insurance from that lender may be guilty of

coercion

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

twisting

An insured carried underinsured motorist limits of $100,000. She is involved in an accident with a driver whose Part A limits are only $25,000/$50,000/$25,000. The insured suffered $90,000 worth of bodily injury. If the other driver is found 100% negligent, how much would the insured's policy pay toward those medical expenses?

$65,000 The insured's policy acts as excess over the underinsured driver's. The other driver will pay $25,000 (the per person limit), and the insured's policy will pay the difference.

Business auto coverages apply only to those autos that are identified as covered autos in the declarations by entry of the appropriate numerical symbol. Which symbol affords the broadest coverage?

1

How long is the period of time in which a licensee must renew his or her license?

90 days prior to expiration

Under an HO-2 policy, the insurer will pay no more than the actual cash value of the property damage until

The property repair or replacement is complete.

If an insurance policy has the additional coverage provision, how does it affect the policy premium?

There is no additional premium

An insured has the scheduled personal property endorsement attached to his homeowners policy. If the insured acquires new works of art, when must the insurer be notified for the new works of art to be covered under the endorsement?

Within 90 days

Your friend's dog that you are keeping while the friend is out of town bit a visitor in your home. Does your homeowners liability coverage apply?

Yes, the coverage would apply for any animal in your care

During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of

defamation

Which of the following statements is NOT true of a commercial umbrella liability policy?

it would automatically cover all losses as they occur

What was the purpose of the Motor Carrier Act of 1980?

To establish financial responsibility requirements for interstate motor carriers

What is the purpose of the Terrorism Risk Insurance Act?

To share the risk of loss from terrorist attacks with the insurance industry

The Association's obligation for payment of unearned premium resulting from the insolvency of a member insurer is the amount of the unearned premium or

$10,000

How often must organizations consult the National Do Not Call Registry?

Every 31 days

An applicant may challenge information discovered as a result of an investigative consumer report under which of the following Acts?

Fair Credit Reporting Act

What part of the insurance contract describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured?

Insuring agreement

Which of the following best defines the unfair trade practice of rebating?

Offering an inducement of something of value not specified in the policy

Which of the following would be covered under a building and personal property coverage form?

Outdoor sign

All of the following statements about mutual insurance companies are correct EXCEPT

Policy dividends issued by mutual companies are guaranteed and not taxable

Which of the following is FALSE concerning liability coverage of a business auto policy?

The company will reimburse the insured for all loss of earnings

Which of the following would NOT be covered by uninsured motorist coverage?

The insured causes a head-on collision with the car of an uninsured motorist.

All of the following are considerations in determining which state's law applies when a worker is required to travel into another state and is injured while working in the other state EXCEPT

The insurer's chartered location or domicile.

What amount of coverage is provided on HO policies for watercraft?

Up to $1,500

The obligation to compensate injured workers without regard to fault or negligence is known as

absolute liability

In order to receive transportation expenses under the personal auto policy following damage to your auto caused by collision, you must have

collision coverage

When an agent obtains an insurance license for the primary purpose of writing insurance for himself, his spouse, or his own business, this is called?

controlled business

Which method of dealing with risk is applied when insurance is purchased?

transfer

Insurance provides a means to

transfer a loss

An agent tells an insured that if he replaces his current insurance policy with a newer one, his dividends will be higher and his premiums will be slightly lower. The policy, however, would not offer either one of these things. What type of misrepresentation is being committed?

twisting

Medical benefits under workers compensation statutes are provided

without limit

Garagekeepers insurance provides coverage for the insured's liability for

Damage to autos left in the insured's care for repair.

When does the insurer's duty to defend a suit or claim end in a commercial general liability policy?

When loss payments equal the applicable limit of insurance

The commercial crime coverage that would cover losses resulting from the theft of money, securities and other property by employees is

employee theft

With regard to homeowners Section II, which of the following does NOT meet the definition of insured location?

A plot of farmland owned or rented by the insured

An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?

Misrepresentation

Among the applicants in the same class and life expectancy, which of the following factors can be used to influence premium rates?

Occupation

Insureds covered under a Mobile Homeowners Policy move their mobile home to prevent it from being damaged by a fire. What is the maximum amount the policy will pay for this?

$500

A home is insured for $200,000 under an HO-3. Last week, the owner purchased a new home and began to move his personal property to the new residence. Last night, vandals did $8,000 of damage to the property that had been moved to his new residence. Disregarding any deductible, how much will the HO-3 pay?

$8,000

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 written consent of the insurer

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?

Combined single

An insured's home catches fire. As a result, the insured's family must stay in a motel until the home is repaired. The cost of the motel stay would be considered a

Consequential loss.

Space Age Rockets makes model rocket supplies and has 12 employees. The company is located in Atlanta, GA. Georgia has compulsory workers compensation laws. Space Age's owner thinks that his company is too small and unprofitable to carry the workers comp plan mandated by the state. Possible consequences of noncompliance include all of the following EXCEPT

Forced payment of billing for services rendered by any private insurer that "binds" coverage based on an emplovee's request for coverage

Section III of the business auto policy provides physical damage coverage. All of the following are physical damages that may be selected coverages EXCEPT

Limited peril coverage

When Symbol 7 is provided, which of the following statements is true with regards to newly acquired autos?

they are covered if they are used to replace previously owned autos with that coverage

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 driver's auto. The other driver is awarded $125,000 for his injuries and $25,000 for the damage to his car. The insured's vehicle has damage in the amount of $1,200. The total payment made under the insured's policy is

$125,200.

Each of the following may be insured under an HO-3 homeowners policy EXCEPT

The owner-occupant of a condominium unit.

A personal umbrella policy may act as excess over any of the following insurance coverage policies EXCEPT

Auto collision coverage

In a DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will

Be reduced by 10%

A single property insurance policy that can provide coverage for multiple classes of property at one location, or one or more classes of property at multiple locations, with one total amount of coverage and no single item assigned a specific amount of coverage is called

Blanket insurance

The term "functional replacement cost" refers to

A loss valuation method.

What is a sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage that is neither expected nor intended called?

accident

What guarantees that the information explained in the insurance contract is true?

warranty

Other than perils, the difference in the three DP forms is in coverage provided. Which of the following coverage options is covered by the DP-2 and D-P3 but not DP-1?

Coverage E - Additional Living Expense

What are the two sources for workers compensation insurance?

Monopolistic state fund and competitive market

An agent's license may be suspended or revoked for all of the following reasons EXCEPT

Sharing commissions with another agent.

In the event of a loss, the most the insurer will pay is

The amount of the loss or the limits as stated in the policy, whichever is less.

The deductible under earthquake coverage is stated as what?

Percentage of loss

What does HO personal property coverage NOT cover?

Personal property of roomers not related to the insured

Under Coverage E - Scheduled Farm Personal Property, livestock that is not specifically insured is limited to a coverage limit of

$2,000 per head.

Which of the following is true regarding inspection and surveys as a common policy condition?

It grants the insurer the right to make inspections regarding issued insurance.

Which of the following types of property would be covered under Coverage C - Personal Property in a dwelling policy?

Rowboats

Coverage B - Personal and Advertising Injury Liability responds to claims arising from

Suits alleging infringement of a copyright

In a liability policy with split limits of 25/50/25, which number is the maximum amount that would be payable in the event of damage to a person's property?

The amount of the third number, $25,000

A small appliance manufacturer in this state provides products around the globe. A customer in Switzerland is injured using one of its products. If the appliance manufacturer is found liable for the damages, why would its commercial general liability policy cover the customer's claim for bodily injury?

The appliance was manufactured in the United States.

An automobile policy has limits of 100/300/50. The number 100 means

The maximum limit for bodily injury claims that can be paid for one person

What is an insured contract?

Those contracts that are automatically covered under the exposure of premises coverage in a general liability insurance contract

Under Coverage B - Other Structures, a homeowners policy provides coverage for other structures on the residence premises. Which of the following statements is NOT true of this coverage?

Any loss paid under Coverage B reduces the Coverage A limit of liability.

Which of the following conditions is NOT included for farm liability in addition to the common policy conditions?

Arbitration

Two men are partners in a moving company. They have two trucks used to move property of others. They should insure their trucks under a

Business Auto Policy

Which of the following commercial auto coverages provides protection for most commercial auto exposures except truckers, garages, and motor carriers?

Business auto coverage

The statutory law defense that reduces injury and awards for damages proportionately when the plaintiff and defendant are both responsible is called

Comparative negligence

Coverage C in homeowners policy forms offers all of the following EXCEPT

Coverage for loss of use

Which of the following would NOT generally be included in the supplementary payments portion of a liability policy?

Damage to property owned by the insured

The purpose of the Fair Credit Reporting Act is to

protect consumers against the circulation of inaccurate or obsolete personal or financial information