Insurance License Exam

A

All of the following persons would be covered under a business auto policy EXCEPT a. An employee of the named insured operating an auto that is owned by the employee's spouse b. A person operating an auto borrowed by the named insured, with permission c. A person operating a covered auto with the permission of the insured d. The owner from whom a trailer is borrowed and connected to an auto owned by the named insured

B

All of the following qualify as an "insured contract," as defined in commercial auto policies EXCEPT a. Easement or license agreement b. Agreement for demolition near a railroad c. A least of premises d. A sidetrack agreement

C

Businessowners liability coverage automatically includes all of the following liability coverages EXCEPT a. Host liquor b. Product c. Pollution d. Contractual

A

The HO-4 form designed for tenants covers losses on what basis? a. Broad peril b. Open peril c. Special peril d. Basic peril

B

A driver who has an auto policy with limits of liability lower than required by state law would be considered a. An insolvent motorist b. An uninsured motorist c. An underinsured motorist d. An insured motorist

D

A trucking company's truck is out of service for repairs. While making the delivery in a borrowed truck, the driver is responsible for an accident that causes $55,000 in property damage to other vehicles and injuries to 2 individuals. Under the commercial auto liability policy conditions, which policy pays for this loss? a. The insurance companies will share in the settlement based on the other insurance condition b. Only the insurance company for the borrower of the truck will pay for damages and injuries c. The policy for the titled owner of the truck will be primary, and the borrower's insurance will be excess d. The policy for the company that borrowed the truck will be primary, and the titled owner of the truck will be excess

D

An audit revealed the administrator for a pension plan has made investments that were not consistent with the risk tolerance set forth int eh plan for its members. The earnings for the past year are substantially below the average for comparable funds. The governing board wants to take action against the administrator. What type of commercial liability would the board need to provide for this risk? a. Employee dishonesty bond b. Personal injury liability c. Fiduciary liability owned by the administrator d. Fiduciary liability policy paid by the pension fund

C

An executive is accused of sexual harassment. What type of coverage would respond? a. Hiring practices liability b. Commercial general liability (CGL) c. Employment practices liability d. Workers compensation

A

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 a. $125,200 b. $126,200 c. $100,200 d. $150,200

C

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 income and the cost of the floor covering b. The entire loss would be paid as direct loss by fire c. The loss of income for the time the diner was closed d. The cost of replacing the floor covering due to the water damage

C

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

A

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? a. 1 b. 2 c. 7 d. 9

A

Coverage B - Personal and Advertising Injury Liability responds to claims arising from a. Suits alleging infringement of a copyright b. Scope of patent protection c. Failure of products to perform as advertised d. Premises and operations injury claims

D

Coverage E (Personal Liability) and/or Coverage F (Medical Payments to Others) would respond to a claim arising from all of the following situations EXCEPT a. While sweeping the floors, an insured's resident maid trips and falls down the stairs, breaking her leg b. An insured's boat stored in the garage slips off of its supports and injures a visitor c. An insured's dog left in the care of a friend bites a salesman d. An insured's 14-year-old son was throwing rocks at the neighbor's house and broke several windows

B

Farmer Steve's shed has been vacant for an entire year. When he files a claim to cover some recent damage to the shed, how much will his farm policy pay? a. 50% of half of the limit of insurance, or 25% b. 50% of the limit of insurance c. All of the cost, up to the limit of insurance d. Nothing

D

For an additional premium, the extended coverages written on the basic form dwelling policy would cover which of the following? a. Vandalism b. Glass Breakage c. Fire d. Riot

C

Guaranteeing future dividends is considered to be an unfair or deceptive act known as a. False financial statements b. Rebating c. Misrepresentation d. Twisting

A

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? a. Yes, freezing exclusion is removed if the car is stolen b. Yes, there is no exclusion for freezing c. No, freezing is never covered d. No, theft is never covered

A

In a DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will a. Be reduced by 10% b. Only be applicable if the insured pays a higher deductible c. Only be applicable if the insured pays an additional premium d. Be increased by 10%

A

In a businessowners policy (BOP), which of the following would be covered? a. Medical Expenses b. Liquor Liability c. Pollution d. Mobile Equipment

B

In reference to insurable interest, which of the following is NOT an element of insurable risk? a. Business b. Personal c. Blood d. Financial

B

The Second Injury Fund will pay the benefits in which of the following situations? a. Workers compensation benefits for an employee who has been injured while working for a previous employer, in case injury would occur again b An employee with a previous injury suffers a second injury that causes the disability to be more serious c. The same injury occurs to a different person d. A person is injured twice in the same year, as long as neither injury affects the other injury

A

The broad cause of loss form in the commercial property policy contains three perils in addition to the basic form perils. Which of the following is NOT one of those three perils? a. Utility services b. Water damage c. Weight of snow, ice, or sleet d. Falling objects

B

The commercial crime coverage that would cover losses resulting from the theft of money, securities, and other property by employees is a. inside the premises - theft of money and securities b. Employee theft c. Funds transfer fraud d. Forgery or alteration

C

The deductible under earthquake coverage is stated as what? a. Percentage of the policy premium b. Half of the policy premium c. Percentage of loss d. Flat dollar amount

A

The equipment breakdown coverage form values loss on a/an a. Replacement cost basis b. Valued basis c. Stated amount basis d. Actual cash value basis

B

The garage coverage form is written to cover the insurance needs of an insured in the business of selling, repairing, servicing, or storing automobiles. Which of the following coverage are not included in a garage policy? a. Product liability b. Physical damage on a customer's auto c. Auto liability d. Premises and operations liability

B

The insured's guest cottage, which is insured under his farm policy, is being rented by a young couple. When one of the renters is injured in the rented property, the insured files a claim under his farm liability coverage. How will the coverage respond? a. The claim will be covered only if the insured agrees to certain conditions b. The claim will not be covered c. The claim will be covered in full d. The claim will be covered, but the benefits will be reduced

B

The limited theft endorsement designed for a landlord excludes all of the following EXCEPT a. Silverware stolen from the landlord's china cabinet b. A lawnmower the landlord owns and keeps at rented premises c. Jewelry stolen from the landlord's home d. Money stolen from the tenant's apartment

D

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

A

Under a fidelity bond, what happens when the employer discovers the employee has committed a dishonest act? a. Coverage terminates immediately b. Loss will be covered even after discovery period c. No action is taken until a loss has actually occurred d. Current bond could pay even if the act occurred in a period covered by the bond it replaced.

B

What policy would a business owner whose business fills scuba tanks most likely need to insure unfired pressure vessels and compressors? a. Contractors Equipment Floater b. Equipment Breakdown c. Inland Marine Scuba Floater d. Commercial General Liability

B

What two policy components are part of every commercial package policy? a. Property coverage and liability coverage b. Common policy declarations and common policy conditions c. Common policy exclusions and agreement d. Consideration and agreement

B

When Symbol 7 is provided, which of the following statements is true with regards to newly acquired autos? a. They are automatically covered only for 30 days b. They are covered if they are used to replace previously owned autos with that coverage c. They are covered only until the end of the policy term d. They are not covered until the insurer is notified

C

When does the insurer's duty to defend a suit for claim end in a commercial general liability policy? a. When both loss payments and defense costs equal the applicable policy limit b. When the insured agrees to the settlement c. When loss payments equal the applicable limit of insurance d. When defense costs equal the applicable limit of insurance

B

When ownership of a vessel changes, the premium will be returned on a a. Lump sum basis b. Pro rata basis c. Monthly basis d. Annual basis

C

When reviewing a standard workers compensation and employers liability policy, the limits of coverage are described in Part One of the policy. The dollar limits of the benefits provided are stated a. In Line Item 3(A) of the policy information page b. In paragraph 1 of Part One as directed by law c. In the state workers compensation law itself d. On the face of the policy declarations page.

A

Which clause of a hull policy says that if the insured does not take immediate steps as soon as possible to minimize the loss and protect the property from further loss, the coverage may be invalidated? a. Sue and labor b. Pilotage and towage c. War and strikes d. Protection and indemnity

D

Which homeowners form insures both buildings and personal property on an open peril basis? a. HO-2 b. HO-3 c. HO-4 d. HO-5

C

Which homeowners form provides open peril coverage for dwelling (Coverage A) and contents (Coverage C)? a. HO-2 b. HO-3 c. HO-5 d. HO-8

A

Which of the following conditions is NOT included for farm liability in addition to the common policy conditions? a. Arbitation b. Bankruptcy of the insured c. Duties in the event of an occurrence, claim, or suit d. Liberalization

C

Which of the following describes an insurer's 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

D

Which of the following dwelling policies require insurance equal to at least 80% of the replacement value of the dwelling at the time of loss in order to provide replacement cost coverage? a. DP-1 onle b. DP-2 only c. DP-3 only d. DP-2 and 3

A

Which of the following is FALSE concerning liability coverage of a business auto policy? a. The company will reimburse the insured for all loss of earnings b. The company will pay the premium on any appeal bond c. The company will pay any interest accruing between time of judgement and payment d. The company will defend any suit alleging bodily injury (BI) or property damage (PD) covered by the policy

D

Which of the following is NOT a cause of loss form for commercial property coverage? a. Special b. Basic c. Broad d. Specific

A

Which of the following is NOT part of Section II of the boatowners policy? a. Watercraft damage b. Watercraft liability c. Medical payments d. Uninsured boaters

C

Which of the following is NOT true of the agent's implied authority? a. It is incidental to express authority b. It is given to an agent by the insurance company that is not specifically communicated c. It is specifically stated in the contract d. It is assumed by the agent in order to transact the business of insurance

C

Which of the following is the oldest known type of insurance? a. Farm b. Businessowners c. Ocean marine d. Dwelling

A

Which of the following would NOT generally be included in the supplementary payments portion of a liability policy? a. Damage to property owned by the insured b. Cost of first aid to others at the time of an accident c. Expenses the insured incurs, as part of defense, at the company's request d. Loss of earnings due to the accident

D

Which of the following would be considered a covered auto on your personal auto policy? a. Your pickup truck used for deliveries of your retail business b. Your farm tractor c. Your farm wagon being towed by your tractor d. Your farm wagon being towed by your pick up truck

B

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. No, the insured was not negligent b. Yes, medical payments coverage also applies off the insured premises c. No, because even though it was a pick-up game, it was an organized event d. No, personal liability applies on-premises only