Insurance Exam

Spouses of officers and stockholders

A cooperation is insured under a commercial liability (CGL) policy and is named in a lawsuit to recover expenses for bodily injury and property damages from a claim. The insurance company is obligated to provide coverage for all of the following named in the suit EXCEPT

Vacant

A structure that is not inhabited by anyone and stores no property is considered

Operations

According to the Section I- Property of the Business owners policy definitions, what is the term for insured's business activities occurring at the described premises?

Abandon the property involved to the insurer.

After a covered loss on a homeowners policy, the insured must do all of the following EXCEPT

Coercion

Agent McButch uses his big size and implication of his "connections" to intimidate applicants into purchasing life insurance from him. Which unfair trade practice is this an example of?

Maliciously criticize another insurance company.

Agents may be found guilty of defamation if they make false statements that are intended to

The insurer must provide proof that the insured received the notice.

All of the following are TRUE regarding the cancellation condition of a policy EXCEPT

The owner of a non owned vehicle

All of the following are considered insured under the hired and nonowned auto liability endorsement added to a businessowners policy EXCEPT

Insurance premium paid.

All of the following are factors in the determination of actual cash value EXCEPT

Producers may commingle personal funds with company funds.

All of the following are true regarding a producer's fiduciary responsibilities EXCEPT

The HO-3 policy covers the mysterious disappearance of personal property.

All of the following statements regarding personal property coverage in the homeowners program are correct EXCEPT

The general aggregate does not apply to fire damage legal liability.

Although a businessowners policy (BOP) will cover fire damage legal liability, which of the following statements is true?

Occupation

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

Legal

An agreement that is enforceable by law is known as what kind of contract?

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

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

Employment practices liability

An executive is accused of sexual harassment. What type of coverage would respond?

Conditions

An insured believes that his insurer is not properly fulfilling its obligations regarding his policy. What section of the policy will give the insured more information about specific duties of the insurer?

The bodily injuries sustained by the postman.

An insured lives in an area that has rolling hills and lots of trees. The pathway up to his house has been known to be covered with ice during the winter months as well. One day, while delivering the morning mail, a postman slipped and fell on the insured's pathway inuring his back and head. The insured will be liable for

Auto liability policy = $200,000; umbrella liability policy = $700,000

An insured owns an automobile liability policy with bodily injury limits of $200,000 and an umbrella liability policy with a limit of $1,000,000. The insured is involved in an automobile accident and is found liable for injuries totaling $900,000. Which of the following examples best describes how the benefits will be paid?

The contractor

An insured was having a new home built. While digging the footings for the foundation, the contractor struck a solid rock formation and found that was necessary to blast the formation in order to remove the rocks. The force of the blast broke several windows and some chinaware in a neighbors home several blocks away. Who pays for this damage?

Manufacturer of the tire

An insured was involved in an accident that was caused by a tire blowing out. The insured was severely injured and incurred medical expenses of $100,000. The insured brought a recovery action against the manufacturers of the auto and the tires. The court held that the tire was the cause of the accident. Who is required to pay for this loss?

Foreign

An insurer incorporated under the laws of another state but doing business in this state is considered

Loss of use

Fair rental value coverage in the dwelling policy is similar to which homeowners policy form?

Riot

For an additional premium, the extended coverages written on the basic from dwelling policy would cover which of the following?

Each party relies upon the truthfulness of the other.

For an insurance contract, the principle of utmost good faith means

Change in risk which substantially increases hazard

For which of the following reasons may an insurer refuse to renew a property insurance policy after it has been in effect for more than 60 days?

1 year

Georgia drivers must keep proof of financial responsibility for

3

How many hours of continuing education must licensees complete every renewal period on the subject of ethics?

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

If a car is stolen and left in a snow bank, causing the radiator to freeze and sustain heavy damage, is the damage covered by the auto policy?

30 days

If a policy is to be cancelled for any reason except nonpayment of premium, how many days' notice must the insurer give the policyholder before cancelling the policy?

The underwriters approve the application.

If an applicant submits the initial premium with an application, which action constitutes acceptance?

There is no additional premium.

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

The amount of the third number, $25,000

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?

Binder.

In order to start coverage before a policy is issued, insurers can issue a(n)

Only one party makes a promise.

Insurance contracts are unilateral in nature. What does that mean?

$500

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?

Determining the premium charged and the amount of insurance required on a specific property.

Loss valuation is best described as the process of

Policy

Policy limits are the maximum amount an insured may collect, or for which an insured is protected under the terms of the

Fiduciary

Premiums collected on behalf of the insurance company by an agent will be held in what capacity?

Indemnity

Restoring an insured financially after a claim is known as

An insurer's right to take possession of property after having paid for the loss is referred to as the right to

Salvage

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

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

Who may extend the length of a binder issued in Georgia?

The Commissioner

10,000

The businessowners policy (BOP) extension coverage form for personal property off-premises is limited to

Premises

The commercial general liability Coverage Part A - Bodily Injury and Property Damage provides coverage for which of the following?

Policy exclusions

The declarations section in a homeowners policy provides all of the following information EXCEPT

Proximate cause.

The exact, direct, uninterrupted cause of loss is the

Only for those other states listed in the policy

The other states' insurance section of a workers compensation policy provides coverage

Excess insurance over the primary liability policy.

The purpose of purchasing an umbrella liability policy is to provide

Court costs assessed against the insured in a suit

The supplementary payments section of the commercial general liability policy would cover

Depreciated value

To determine the actual cash value of an insured property, what must be deducted from the current replacement cost?

Financial loss

To have insurable interest in the person or property covered by a property insurance policy, which of the following potential risks must the policyowner face?

$1.5 million

To qualify for an original certificate of authority, what minimum capital stock or surplus must an insurer have?

Speculative

Wagering on a sporting event is an example of what type of risk?

Special and general

What are the two types of compensatory damages?

Personal Property of roomers not related to the insured

What does HO personal property coverage NOT cover?

The description of the duties and obligations of the insured

What information is found in the conditions part of an insurance policy?

Personal injury liability

What injury is less physical than those covered under bodily injury liability?

Accident

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?

Protect the general public

What is the main purpose of requiring licenses for persons who transact insurance?

Enforce the provisions of the Insurance Code

What is the primary duty of the Commissioner of Insurance?

To remove the exclusion of losses resulting from ordinances or laws

What is the purpose of the ordinance or law coverage endorsement?

Proof of loss

What statement must an insurer receive before it will pay benefits for a loss?

Occurrence

What term includes losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected?

15 days notice

When a hearing regarding an insurance matter is requested, all parties must receive

Replacement Cost

When an insurer pays for the cost to exchange damaged property with new property of similar kind and quality, it is called

As soon as the policy is issued

When do binders expire?

When loss payments equal the applicable limit of insurance

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

On the date the property is repaired

When does the period of restoration for business income coverage end in a businessowners policy?

Whenever the agent is acting within the conditions of the contract

When is the company responsible for the actions of its agents?

Transfer

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

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

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

The larger the pool of risks under study, the more accurate the predictions will be

Which of the following best depicts the law of large numbers?

Deposit Premium Audit

Which of the following conditions allows the insurer to examine the insured's records at the end of a policy term to make sure an adequate fee is being collected for the exposure?

Consideration

Which of the following elements of an insurance contract requires payment of premium?

Convenience stores

Which of the following entities is eligible for a businessowners policy?

Willful violation of a penal statute or ordinance committed by the insured

Which of the following exclusions applies to both personal injury and advertising injury in the business owners policy?

Authorized

Which of the following is NOT an example of the company's location of incorporation?

Business profession

Which of the following is NOT an indicator of a competent party?

Damage to pets, birds,

Which of the following perils is NOT covered the DP-2?

Endorsements may only add coverage to a current policy, not remove.

Which of the following statements does NOT describe endorsements?

An 80% insurance-to-value requirement is in place

Which of the following statements is CORRECT regarding the replacement cost coverages under the businessowners policy (BOP)?

Appraisal clause

Which of the following stipulates the procedure that insureds and insurers can use when they cannot agree on the value of a loss?

Unoccupied

Which of the following terms best describes the home of an insured who goes on vacation for 3 months?

Nonrenewal

Which of the following terms means termination of an insurance policy at its expiration date by not offering a policy continuation or replacement?

Property lost due to a military action

Which of the following would NOT be covered by commercial inland marine policies?

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

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

Damage to property owned by the insured

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

Additional insureds

Which of the following would be added for coverage under a property policy by an endorsement?

A customer service representative who solicits no more than one policy a year

Which of the following would be required to become licensed as an insurance producer?

Definitions

Which part of the policy clarifies the terms that are used throughout the policy?

Other insurance

Which provision defines how the policy will respond if there is other valid insurance written on the same risk?

Punitive

Which type of damages is intended as a form of punishment for negligent, willful, or outrageous intent?

Yes, medical payments coverage also applies off the insured premises

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?