Insurance Exam 3

Joseph Jones purchased a new car stereo system from Dailey's Auto Enhancements. Daily's permanently installed the stereo system in the console area of the car, where he could access it easier while driving than the typical area in the dashboard. The cost of the new system, disregarding any installation costs, was $2,000. One year after installation, Joseph's car was broken into and the stereo was stolen. At this point, the ACV of the system had fallen to $1,700. Disregarding any deductible, how much will Joseph's policy pay on this claim? Answer Choices: $1,000. $1,700. $2,000. Because the stereo was not permanently installed in the location used by the auto manufacturer, the loss would not be covered.

$1,000.

What is the minimum weekly income benefit payable under the Texas Workers Compensation law? Answer Choices: 15% of the state average weekly wage. 25% of the state average weekly wage. 66.66% of the employee's average weekly wage. 15% of the employee's average weekly wage.

15% of the state average weekly wage

A Texas insurer is liable for a claim but is in violation of Texas regulations as to the timely payment of the claim. Texas requires that the insurer must pay, in addition to the settlement amount, interest on the amount of the claim at the rate of _____% per year. Answer Choices: 18 15 20 17

18

A non-waiver agreement issued by an insurance company is: Answer Choices: A loss or damage issue. A coverage issue. A cause of loss issue. An exclusion issue.

A coverage Issue

The insured has several business locations and would like to insure both the structures, and the inventory (contents). His agent advises him to complete a statement of values form and issues a policy with one limit to cover all locations. This is an example of: Answer Choices: Insuring on a specific basis. Insuring on a reporting form basis. Insuring on a blanket basis. Insuring on a scheduled basis.

Insuring on a blanket basis

All of the following items have a special limit of liability for Coverage C of the Homeowners forms, EXCEPT: Answer Choices: Securities. Gold. Outdoor furniture. Watercraft.

Outdoor furniture

Under the Equipment Breakdown Protection form that covers boilers and machinery, what is considered to be one loss event? Answer Choices: The initial breakdown that causes other breakdowns. A boiler that explodes in a building adjacent to the insured's building that causes a loss to the insured. No more than three separate losses that occur during a 7-day period. When expediting expenses are paid to the insured.

The initial breakdown that causes other breakdowns.

The Declarations section of an insurance policy contains: Answer Choices: The name and address of the insured and the duration of the policy. Specifications for the necessary method to submit a proof of loss. The insurance companies promise to pay in exchange for the premium payment. A list of conditions and exclusions under the policy.

The name and address of the insured and the duration of the policy.

Which of the following property insurance cause of loss forms provides coverage for all risks of loss? Answer Choices: The broad form. The special form. The reporting form. The basic form.

The special form.

Mr. Kessler has an auto policy with bodily injury limits of $15,000/$30,000. He injures two people in one accident. Mr. Brown receives injuries of $19,000. Mr. Jones receives injuries of $15,000. Legal expenses to defend Mr. Kessler total $10,000. How much is Mr. Kessler liable for after his insurance company makes its payment? Answer Choices: $4,000 $15,000 $14,000 $19,000

$4,000

Part One of the standard workers' compensation policy covers all of the following, EXCEPT: Answer Choices: Select the Correct Answer Bodily injury by accident. Bodily injury by disease. Bodily injury that results in death. Bodily injury caused by the negligence of the insured employer.

Bodily injury caused by the negligence of the insured employer.

The Part B - Medical Payments coverage under a standard Personal Auto policy will cover the insured if he/she is injured while a passenger on a: Answer Choices: Train. Bus. Subway. Airplane.

Bus.

All of the following items have a built in limit (maximum) of coverage if the cause of loss is theft, EXCEPT: Answer Choices: Patterns Furs Jewelry Computers

Computers

All of the following are excluded under the Commercial Building and Personal Property form, EXCEPT: Answer Choices: Furniture and fixtures. Petty cash and IOUs. A watch dog. The insured's panel truck.

Furniture and fixtures.

A ship has suffered damage and sunk. Which of the following would respond to cover the loss of the ship? Answer Choices: Protection and indemnity coverage Shipper's fees Hull Insurance Cargo coverage

Hull Insurance

Harry and Sally are retired, no longer own a home, but live and travel extensively in their motor home. To cover their personal items, which of the following forms would provide Harry and Sally the most comprehensive coverage? I. The personal effects floater II. The personal articles floater III. The personal property floater Answer Choices: III only I and II only II only II and III only

II and III only

An office building is limited in the number of stories it may contain be eligible for coverage under the Businessowners Policy? Answer Choices: Five stories Six stories Four stories Seven stories

Six stories

he 165 numbered lines on page 2 of the Standard Fire policy covers: Answer Choices: The additional coverages included with the policy. The conditions and exclusions of the policy. The insuring agreements of the policy. The declarations page of the policy.

The conditions and exclusions of the policy.

All of the following items may be covered by a Commercial Inland Marine policy, EXCEPT: Answer Choices: Transport vehicles. Radio towers. Bridges. Property being transported.

Transport vehicles.

A storm has caused heavy damage to property adjacent to but not owned by the insured. Debris from the damage caused by the storm has blown onto the insured's covered property. How much coverage under the ISO standardized Businessowners policy is provided for removal of this debris? Answer Choices: $25,000 $10,000 $5,000 There is no coverage because the debris was not from the insured's property.

$5,000

Which of the following relieves the financial burden on the claimant by making certain payments to the claimant even before the claim is negotiated? Answer Choices: Advance Payment Rehabilitative Payment Partial Release Payment Conditional Partial Release Payment

Advance Payment

Which of the following would not be considered an "occupational disease?" Answer Choices: Diabetes. Black lung. Mesothelioma. Pulmonary fibrosis.

Diabetes.

Pollutant cleanup under the commercial building and personal property form: Answer Choices: Is completely excluded Is a coverage extension Is an additional coverage Is an optional coverage

Is an additional coverage

Which of the following would be considered "economic losses" that could result in compensatory damages being awarded in a negligence case? Answer Choices: Disfigurement. Loss of consortium. Pain and suffering. Medical expense and lost wages.

Medical expense and lost wages.

The "control of property" condition of the Commercial Property policy: Answer Choices: States that the insured must have control over the insured property when a loss occurs, otherwise coverage will not apply. States that a negligent act of someone beyond the insured's direction or control will not affect the coverage. States that if the insured violates a condition of the insurance at one location, it is considered to be violated at all insured locations. States that a negligent act of someone beyond the insured's direction or control will void the coverage.

States that a negligent act of someone beyond the insured's direction or control will not affect the coverage

Which endorsement must be attached to a BOP policy for coverage to apply to a freezer that was damaged by the interruption of a power source? Answer Choices: Flood insurance endorsement Earthquake endorsement Utility Services - Time Element endorsement Utility Services - Direct Damage endorsement

Utility Services - Direct Damage endorsement

The insured has a communication failure at his premises due to a lightning strike at the phone company. The insured's phone system is damaged and he is out of business for four days. Which endorsement is necessary to provide coverage for the loss of business income? Answer Choices: Non owned and Hired Auto Earthquake Utility Services - Time Element Utility Services - Direct Damage

Utility Services - Time Element

Nathan owns an ice cream shop in a strip mall next door to Eli's Hot Dogs & More restaurant. Eli's restaurant is damaged by fire, and Nathan is denied access to his ice cream shop by the fire department because it is adjacent to the damaged restaurant. If Nathan's Commercial Property policy includes a Business Income coverage form, then the insurance company will cover Nathan's loss of business income for: Answer Choices: A maximum of six months. A maximum of thirty days. A maximum of sixty days. A maximum of four weeks.

A maximum of four weeks.

Which of the following statements is TRUE regarding Commercial Property coverage? Answer Choices: Commercial property coverage can only as part of a package policy. Commercial property coverage can only be written as a monoline policy. Commercial property coverage can be written as both a monoline policy and as part of a package policy. Commercial property coverage can only be written if a separate liability policy is attached to it.

Commercial property coverage can be written as both a monoline policy and as part of a package policy.

Which of the following is not a true statement regarding the use of non-original equipment manufactured replacement parts for vehicles? Answer Choices: The parts are at least equal to the original equipment manufacturer parts in terms of kind, quality, safety, fit, and performance. Insurers specifying the use of non-original equipment manufacture replacement crash parts shall not be required to pay the cost of any modifications to the parts which may become necessary to affect the repair. Insurers specifying the use of non-original equipment manufacture replacement crash parts warrant that such parts are of like kind, qualify, safety, fit, and performance as original equipment manufacturer replacement crash parts. Non-original equipment manufacture replacement crash parts must carry non-removable identification so as to identify the manufacturer.

Insurers specifying the use of non-original equipment manufacture replacement crash parts shall not be required to pay the cost of any modifications to the parts which may become necessary to affect the repair.

All of the following are examples of unfair claim practices, EXCEPT: Answer Choices: Making claim payments and stating the coverage under which payment is made. Failing to affirm or deny coverage of claims within a reasonable period of time after receipt of a properly executed proof of loss. Attempting to settle claims on the basis of an application that was altered without notice to or the knowledge or consent of the insured. Failing to promptly provide a reasonable explanation of the basis in the policy for denial of a claim or offer a compromise settlement.

Making claim payments and stating the coverage under which payment is made

An aircraft policy is endorsed to cover the "war" risk exposures. Which of the following is also included within this coverage? Answer Choices: Confiscation Seizure Arrest and detention All of the responses are correct

All of the responses are correct

Which of the following is required to calculate the estimated annual premium in a workers' compensation policy? Answer Choices: Estimated annual payroll and work classification(s). Estimated annual gross income. Number of estimated overtime hours. Number of employees and their job descriptions.

Estimated annual payroll and work classification(s)

A personal watercraft policy would pay for which of the following losses? I. A boat's motor is stolen on the 25th day after the insured acquired it, and before the insured reported its acquisition to the insurance company. II. A boat that sank in 40 feet of water is refloated at a cost of $700. Answer Choices: II only I only Both I and II Neither I nor II

II only

Which of the following BEST describes a tort? Answer Choices: Is a "wrong" covering a wide-range of legal and moral wrongdoing. Is a "wrong" committed for which only the government can provide a remedy. Is an act causing harm to an innocent party for which a civil remedy is provided through the payment of monetary damages. Is a criminal act.

Is an act causing harm to an innocent party for which a civil remedy is provided through the payment of monetary damages

Chaz takes his girlfriend to an expensive restaurant for Valentine's Day. It is raining, so he decides to have the valet park his car, saving his girlfriend from getting wet. The valet is driving the car into the restaurant's parking garage, when he clips the side of the garage entrance with the front fender of Chaz's car. The garage wall needs to be repaired as well as the fender and headlight of Chaz's car. How would Part D of Chaz's Personal Automobile respond to this loss? Answer Choices: It would cover both the loss to Chaz's car, and the damage to the garage under the Collision coverage of Part D. It would not cover either the damage to Chaz's car or the damage to the garage, because Chaz permitted someone other than an insured to drive his car. It would not cover the damage to Chaz's car because he allowed someone other than an insured to drive it. But it would cover the damage to the garage because the insured automobile caused the loss. It would cover the loss to Chaz's car because it is the insured automobile, but would not cover the damage to the garage

It would cover the loss to Chaz's car because it is the insured automobile, but would not cover the damage to the garage

What coverage under the BOP automatically applies if a customer slips and falls on the named insured's premises, regardless of legal liability? Answer Choices: Business liability coverage. Personal injury coverage. Medical expense coverage. Advertising injury coverage.

Medical expense coverage.

The clause in an ocean marine policy that refers to "particular average" means: Answer Choices: Only one party shares in the loss. Damage to cargo losses will be shared by all parties. Payment must be made under the freight insurance coverage. Payment must be made under the 'running down clause'.

Only one party shares in the loss.

For the insured dwelling and other structures, the DP-3 provides: Answer Choices: Open peril coverage. The broad form perils. The basic form perils. Fire, lightning, the extended coverage perils and vandalism & malicious mischief coverage.

Open peril coverage.

Which of the following is NOT a claim settlement option in a property loss? Answer Choices: Replace the property with like kind and quality. Replace the property with new. Repair the property. Pay market value only.

Pay market value only.

The BOP provides liability coverages. Which of the following is a correct statement regarding the limits of coverage? Answer Choices: The BOP only provides a Per Occurrence limit. The BOP only provides Aggregate Limits of Liability coverage. The BOP Liability section provides for Split Limits of Liability coverage. The BOP contains two Aggregate limits, one for Premises and Operations Liability and one for Products and Completed Operations. The coverage also has a Per Occurrence limit.

The BOP contains two Aggregate limits, one for Premises and Operations Liability and one for Products and Completed Operations. The coverage also has a Per Occurrence limit.

All of the following statements are true regarding the revocation or modification of a certificate of authority in Texas, EXCEPT: Answer Choices: The reason for the revocation or modification must be specifically stated in the notice to the insurer. The Commissioner must notify the insurer in writing of the intent to revoke or modify the certificate of authority not later than the 10th day before the date the change will be effective. The reason for the revocation or modification is not required to be stated in the notice to the insurer. The Commissioner may revoke or modify a certificate of authority if a condition or requirement for granting a certificate is no longer satisfied.

The reason for the revocation or modification is not required to be stated in the notice to the insurer

Equipment Breakdown coverage does not apply to which of the following losses? Answer Choices: Vandals have destroyed a boiler. A boiler safety relief valve has malfunctioned and caused the boiler to crack. A boiler has exploded due to a water flow problem. An electric motor has self-destructed as a result of a broken part.

Vandals have destroyed a boiler.