insurance practice test

If the insured purchases a new aircraft to replace a scheduled aircraft, there is automatic coverage provided the insurance company is notified within ______ days of the purchase and premium payment is made.

30 45 60 10 30 DAYS

Which of the following is eligible to be a named insured under a Homeowners policy?

A trust. A corporation. A partnership. An estate. A trust. is correct.

Indemnify Insurance, Inc. is deploying adjusters to an area recently hit by a hurricane. The company has 25 employee adjusters who are ready to deploy but they need 25 more. Carol is a licensed adjuster who signs a contract with Indemnify Insurance, Inc. to work on their behalf during this deployment. Carol is acting as:

An independent adjuster. A public adjuster. A field adjuster. A staff adjuster. A staff adjuster. is incorrect. The correct answer is: An independent adjuster.

Which of the following "additional coverages" of the Building and Personal Property Coverage form is paid without the application of the policy deductible?

Electronic Data. Increased Cost of Construction. Debris Removal. Fire Department Service Charge. Fire Department Service Charge. is correct.

Disability income benefits are paid weekly under a workers' compensation policy when the employee's injury is:

Permanent. Total. Temporary. Partial. Permanent. is incorrect. The correct answer is: Temporary.

A claim reserve is set "statistically" by using which of the following reserving techniques?

The roundtable method. The formula method. The individual case method. The claim committee method. The formula method uses claim statistics to create a mathematical formula that arrives at a reserve amount.

In most states, workers' compensation laws apply:

to most workers except those specifically excluded by law

Which of the following Dwelling insuring agreements would be included on a DP-3 form but not on a DP-1 form?

"Other Structures". "Additional Living Expenses". "Fair Rental Value". "Dwelling". "Additional Living Expenses". is correct.

The insured has suffered roof damage as a result of a tornado. He makes temporary repairs until permanent repairs can be made. He spends $1,500 for this work. How much, if any amount, will the DP-2 Dwelling policy pay on the repairs?

$0 $1,000 $1,500 $500 $1,500 is correct.The policy will pay all of the costs due to the "reasonable repairs" clause in the policy. This pays for the cost to make reasonable repairs in order to protect covered property from further loss.

What is the Part D limit of liability for damage to a non-owned trailer under the Personal Auto policy?

$1,500. $500. $1,000. $2,000. $500. is incorrect. The correct answer is: $1,500.

An insured is covered under a standard Businessowners Policy for replacement cost coverage and has sustained a fire loss to his building. Due to changes in the building codes in his town, it's going to cost $20,000 extra just to comply with the new building codes and make the repairs. How much, if any, will the BOP pay for these extra costs?

$10,000. $5,000. $0. $20,000. $10,000. is correct. There is a limited amount of $10,000 for the "Increased Cost of Construction" in order to comply with newer ordinances or laws. However, this coverage applies only to buildings insured on a replacement cost basis. Further, the $10,000 coverage cannot be used to pay any costs after a loss for an ordinance or law, that the insured was required to comply with before the loss, but failed do so. It is important to note that the ordinance or law exclusion is still in place, preventing the insured from assuming that the entire policy limit is available to pay these costs to bring the building up to code after a claim. The policy will then provide "Increased Cost of Construction" coverage through an "additional coverage", but these costs are limited to $10,000.

A standard Homeowners policy has been issued with a $300,000 limit to cover a four-family dwelling. What is the automatic amount that will be provided for Coverage C?

$150,000. $90,000. $75,000. $30,000. $75,000. is correct When a four-family dwelling is covered with a Homeowners policy, 25% of the Coverage A limit is automatically provided for Coverage C - Personal Property coverage. 25% of $300,000 is $75,000.

The liberalization clause of a Businessowners policy automatically applies favorable expansions of coverage, for which a premium is not charged if the changes are made during the policy period or within ______ prior to the effective date of the policy.

45 days. Six months. Three months. 30 days. 45 days. is correct.

Under a standardized Dwelling form, a loss by a covered peril for Improvements, Alterations and Additions is covered for up to:

5% of the Coverage C limit of liability. $1,000. 5% of the Coverage A limit of liability. 10% of the Coverage C limit of liability. 10% of the Coverage C limit of liability. is correct

When an insurer takes no action upon realizing material changes in a contract, this is called:

An implied waiver. A misrepresentation. A warranty. A guarantee. An implied waiver. is correct.

To obtain an insurance agent, producer, or adjuster license, an applicant must be:

At least 18 years of age. is correct.

Which of the following types of coverages are included in the standardized Businessowners policy?

Coverage for employer's liability. Coverage for business personal property. Coverage for disability income. Coverage for business automobiles. Coverage for business personal property. is correct.

All of the following statements are TRUE regarding a Commercial Inland Marine policy, EXCEPT:

Coverage is not dependent on the property being located at a specific "premises" at the time of the loss. The coverage moves with the property being covered. Coverage is most often written on a named peril basis. The controlled forms may be used as part of a Commercial Package Policy. Coverage is most often written on a named peril basis. is correct. Coverage under a Commercial Inland Marine policy is NOT most often written on a named peril basis, it is most often written on an open peril basis.

All of the following are types of "agent authority" bestowed upon an adjuster with an appointment, EXCEPT:

Express authority. Implied authority. Apparent authority. Evident authority. Evident authority. is correct.

The standard personal auto policy provides coverage for damage caused to the insured's automobile caused by an uninsured motorist under which of the following insuring agreements?

Part A. Part B. Part C. Part D. Part B. is incorrect. The correct answer is: Part C. EXPLANATION:Part C provides coverage for uninsured/underinsured motorists.

All of the following items are covered under the Employer's Liability section of a workers' compensation policy, EXCEPT:

Premiums for appeal bonds. Litigation costs taxed against the insured. The insured's loss of earnings due to the litigation. Interest on a judgments as required by law. Premiums for appeal bonds. is incorrect. The correct answer is: The insured's loss of earnings due to the litigation. Loss of the insured's earnings due to the litigation is not covered by the Employer's Liability section of the policy.

Personal property such as furniture, household goods, machinery, or equipment that the insured owns uses in his/her home or business is classified as:

Property with the Right of Possession or Use. Personal property held for sale. Land classified as personal property. Personal property in use. Personal property in use. is correct. For insurance purposes, furniture, household goods, machinery, or equipment that the insured owns uses in his/her home or business is classified as personal property in use. If the insured owns the property, it cannot be property that is leased or rented. Additionally, it cannot be personal property held for sale because the insured uses the property and land is not covered.

Which of the following statements is true regarding a stock insurance company?

Stock companies are owned by their policyholders. Stock companies pay a portion of their earnings to their policyholders as dividends. Stock companies pay a portion of their earnings to their stockholders (shareholders) as dividends. Stock companies permit their policyholders to elect their Board of Directors. Stock companies pay a portion of their earnings to their stockholders (shareholders) as dividends. is correct

Which of the following sections of an Ocean Marine policy is very similar to the "Duties of the Insured" in other property policies?

The Inchmaree clause. The "Running-Down" clause. The Sue and Labor clause. The implied warranties. The Sue and Labor clause. is correct.

Which of the following statements is NOT TRUE regarding Part B of the personal automobile policy?

The coverage limit applies per person. The coverage limit applies to any one accident. The coverage includes split limits to cover more than one person, per accident. The coverage provides for a single limit of liability. The coverage includes split limits to cover more than one person, per accident. is correct.

Which of the following statements is TRUE concerning the Part D coverage of a standardized Personal Auto policy?

Can be endorsed to settle on a replacement cost basis. It can cover owned and nonowned automobiles. Applies only when the insured is "at-fault" in an accident. Excludes physical damage coverage to cars over 10 years old. It can cover owned and nonowned automobiles. is correct.

Which of the following would be considered "economic losses" that could result in compensatory special damages being awarded in a negligence case?

Disfigurement. Loss of consortium. Pain and suffering. Medical expense and lost wages. Your answer: Medical expense and lost wages. is correct.

Which of the following statements regarding the eligibility requirements for coverage under a Dwelling policy is TRUE?

Dwellings owned by corporations or other business entities are eligible. Dwellings must be owner-occupied in order to be eligible. Dwellings must have less than 6 single-family units to be eligible. Dwellings used as rental properties are not eligible. Dwellings owned by corporations or other business entities are eligible. is correct.

An orthotic device is a custom-fitted or custom-fabricated medical device that is applied to a part of the human body to: I. Correct a deformity. II. Improve a bodily function. III. Relieve the symptoms of an injury. IV. To wholly or partially replace an arm or a leg.

I and II only. I, II and III only. I, II, III & IV. I, II and IV only. I, II and IV only. is incorrect. The correct answer is: I, II and III only.

If the Standard Fire policy is issued with the extended coverage endorsement attached, coverage will be provided for all of the following, EXCEPT

Law and Ordinance. Riot or civil commotion. Aircraft. Vehicles. Law and Ordinance. is correct. The extended coverage (EC) perils do NOT include the Law and Ordinance (Increased Cost of Construction) coverage.

Which of the following is NOT an "alternative dispute resolution" (ADR) used to deal with coverage disputes in the claim settlement process?

Negotiation. Mediation. Arbitration. Litigation. Litigation. is correct. Litigation is NOT an ADR. Alternative dispute resolutions are used to avoid litigation. ADRs are an "alternative" to litigation.

A ship has suffered damage and sunk. Which of the following would respond to cover the loss of the ship?

Protection and indemnity coverage. Shipper's fees. Hull Insurance. Cargo coverage. HULL INSURANCE

A coverage extension included on the Building and Personal Property coverage form provides coverage for business personal property temporarily stored in a detached trailer within 100 feet of the insured building for:

VA limit of $5,000 unless higher limits are purchased. A limit of $10,000 unless higher limits are purchased. A limit of $2,000, which is the highest limit available. A limit of $5,500, which if the highest limit available. A limit of $10,000 unless higher limits are purchased. is correct.

The type of claims investigation that looks at the possibility of a third-party being responsible for the loss is known as:

A claimant investigation. An insured investigation. A prior claim investigation. A subrogation investigation. A subrogation investigation. is correct The insurer will conduct a subrogation investigation if there is a possibility that a third-party is responsible for the loss and may be liable for damages.

Rush is covered under a Standard Fire policy and suffers a loss to his home and personal property. The limit of liability listed on the policy itself is $120,000. The ACV of his loss is $55,000. To repair or replace the property with materials of like kind and quality would cost $72,000. Rush's insurable interest in the property is $42,000 as he has a mortgage and some liens on personal property. What is the amount of the claim settlement Rush will receive?

$120,000. $55,000. $42,000. $72,000. $42,000. is correct. The policy pays the smallest of the amount specified in the policy, the actual cash value at the time of the loss, the amount it would cost to repair or replace, and the insurable interest the insured has in the property. This would make Rush's settlement amount $42,000.

The aircraft physical damage (hull) deductible is normally expressed as:

A percentage of the value of the aircraft. A flat deductible selected by the insured at policy inception. A disappearing deductible that gradually reduces the amount as the aircraft depreciates. A franchise deductible that applies only when the minimum value of the loss specified in the policy is reached. A percentage of the value of the aircraft. is correct.

What type of bond guarantees that if a bid is accepted, the bidder will satisfy further bonding requirements?

A performance bond. A bid bond. A payment bond. A maintenance bond. A bid bond. is correct. One of the guarantees of a bid bond is that if the principal's bid is accepted, he/she will satisfy further bonding requirements to purchase bonds such as performance or payment bonds.

Which of the following Equipment Breakdown coverages applies to direct damage to covered property located at a premises described in the Declarations?

A. Expediting expenses coverage B. Business income and extra expense coverage C. Spoilage damage coverage D. Property damage coverage Property damage coverage

The record of complaints that all insurers in Texas must maintain must indicate all of the following, EXCEPT:

A. The total number of complaints. B. The license number of the person within the insurance company that generated the complaint from the client. C. The nature of each complaint. D. The classification of complaints by line of insurance. b. The license number of the person within the insurance company that generated the complaint from the client.

Lara is moving to Europe for two years in order to take advantage of a promotion at her job. She will not take her 4-seat propeller plane with her. What type of Aviation policy would be best for Lara to purchase for coverage on her plane while it is in storage and she is in Europe?

All Risks - Ground and Flight. Admitted Aircraft Liability. Hangarkeepers Liability. All Risks - Not in Motion. All Risks - Not in Motion. is correct. Because the plane will not be in motion, the best insurance to purchase would be the "Not in Motion" coverage.

When the Personal Liability Supplement is purchased as a monoline policy, all of the following are required conditions, EXCEPT:

Assignment. Liberalization. Death. Bankruptcy. Liberalization. is incorrect. The correct answer is: Bankruptcy.There is not a condition in the Personal Liability policy outlining what the insured must do in case of bankruptcy.

Which of the following common law defenses of employers with regard to workers' compensation claims is specifically barred from use by the laws of some states?

Assumption of risk. Contributory negligence. Negligence of a fellow worker. Comparative negligence. Contributory negligence. is incorrect. The correct answer is: Negligence of a fellow worker.

Which of the following is NOT one of the three main (general) coverages of the Building & Personal Property coverage form?

Building coverage. Property damage liability coverage. Business personal property coverage. Personal property of others coverage. Personal property of others coverage. is incorrect. The correct answer is: Property damage liability coverage.

Darryl is a worker who is injured in the United States and brings a lawsuit against his employer. All of the following are locations where Darryl is permitted to bring the suit, EXCEPT:

Canada. Any state of the United States. Puerto Rico .Mexico. Mexico. is correct.

An adjuster tells an insured that a claim will be paid. When the insurer attempts to deny the claim, it is prevented from doing so because of the adjuster's statement. This is an example of:

Fiduciary binding. Express waiver. Estoppel. An unfair claim settlement practice. Express waiver. is incorrect. The correct answer is: Estoppel. The insurer is "estopped" from denying the claim due to the statement of the adjuster, acting as the insurer's fiduciary agent.

The perils most frequently covered by a Difference in Conditions policy are:

Flood and volcanic eruption. Earthquake and volcanic eruption. Earthquake and flood. Collapse and flood. Earthquake and flood. is correct. Earthquake and flood coverage is almost always excluded under property policies, therefore these two coverages are the most frequently written DIC policies or endorsements.

A company that repairs customers' aircraft may need which of the following coverages to pay for the accidental damage to the customers' aircraft while it is in the insured's care, custody, or control?

Hangarkeeper's liability coverage. Airport liability coverage. Bailee's liability coverage. Aircraft physical damage coverage. Hangarkeeper's liability coverage. is correct.

All of the following are excluded under the 1943 Standard Fire policy, EXCEPT:

Loss of property to fire after it was removed from a burning home, but left outside in the elements for two weeks following the fire. The theft of property after it had been removed from the insured premises to protect it from further loss. The covered property is vacant for more than 60 days. The risk of fire to the property is increased by the neglect of the insured. The theft of property after it had been removed from the insured premises to protect it from further loss. is correct.

Max has his home covered under a DP-2 form. During a storm, a large oak tree in Max's yard splits in two and one side of the tree falls against the back wall and roof of the covered dwelling. Which of the following accurately describes the coverage that will apply to Max's loss?

Max will be covered for the damage to both the exterior of his dwelling and the interior of his dwelling. is correct. EXPLANATION: Under the "Falling Objects" broad form peril, Max would first be covered for damage to the exterior of his dwelling. However, because there was damage to an exterior wall and the roof, leaving the interior of his dwelling open to the elements, he will also be covered for damage to the inside of his dwelling. The "Falling Objects" peril specifically states that the falling object itself is NOT covered. Therefore, the tree would not be covered.

Which of the following would be considered an Unfair Claim Settlement Practice?

Offering insureds less than what they request in their loss notice. Refusing to pay a claim after conducting a thorough investigation. Failing to deny coverage of a claim within a reasonable amount of time after concluding the investigation. Raising an insured's premium rates after paying a claim. Failing to deny coverage of a claim within a reasonable amount of time after concluding the investigation. is correct. An insurer must accept or deny coverage of a claim within a reasonable time period after completing an investigation or they will be committing an unfair claim settlement practice.

The insured auto dealer has opted to include Part IV - Garage Physical Damage coverage to her policy. Which of the following symbols must be indicated on the Declarations page of the policy for physical damage coverage to apply?

Symbol 30. Symbol 31. Symbol 21. Symbol 29. Symbol 31. is correct.Symbol 31 indicates that physical damage coverage will be provided for the auto dealers' vehicles including owned autos, autos held for sale, and autos held on consignment, or trailer dealers.

The standardized Building and Personal Property Coverage form requires the insured to submit a signed, sworn proof of loss statement:

Within 30 days of the loss. Within 30 days of the insurance company's request. Within 60 days of the insurance company's request. Within 45 days of the loss. Within 60 days of the insurance company's request. is correct.

Which of the following statements best describes the term "fiduciary".

A person who submits a claim to their insurance company. A person who has been bonded as honest and trustworthy. A person who is entrusted with the assets of another. A person who holds a fiduciary's license. A person who is entrusted with the assets of another. is correct. Insurance companies, agents, producers and adjusters have a fiduciary responsibility to their clients in the collection and handling of premiums, claim payments, and return of unearned premium. All of these items are "assets" that the fiduciary has been entrusted to handle.

If the Navigational Limits or Lay-Up period shown on the Declarations page of a standardized Yacht policy is breached because of something out of the control of the insured:

A. No action needs to be taken unless the breach is ongoing for more than 30 days. B. No action is necessary at all. C. The insurer must be notified within 10 days after the breach and any additional premium that is due must be paid. D. The insurer must be notified within 10 days after the breach and no additional premium is assessed. The insurer must be notified within 10 days after the breach and any additional premium that is due must be paid.

Which of the following is a TRUE statement regarding how bullion and manuscripts are covered under the 1943 New York Standard Fire policy?

Bullion and manuscripts are excluded under the policy. Bullion or manuscripts may be covered, but only if they are specifically named in the policy. Bullion and manuscripts are included under the coverage for personal property. A separate endorsement must be purchased for bullion and manuscripts and attached to the policy. Bullion or manuscripts may be covered, but only if they are specifically named in the policy. is correct.

Systems that permit multiple adjusters to work on the same claim simultaneously and in conjunction with other claims professionals are known as:

Diary or suspense systems. Journal or chronicle systems. Knowledge or log systems. Reminder or journal systems. Diary or suspense systems. is correct A diary or suspense system provides the information needed for multiple adjusters to work on the same claim simultaneously and in conjunction with other claims professionals.

Section I of the Businessowners policy places limitations on coverage for certain losses if they are not caused by a specified cause of loss. All of the following are specified causes of loss under the policy, EXCEPT:

Fire or lightning. Sinkhole collapse. Water damage. Building glass breakage. Building glass breakage. is correct.

Gavin operates a small manufacturing plant and is covered under a Commercial Property Business Income form. Under which of the following scenarios will Gavin be covered?

His loss of profit while out of business as a result of a fire loss. His loss of earnings as the result of a market decline. His employees' loss of earnings when they went on strike. His loss of earnings as a result of a discontinued product line. His loss of profit while out of business as a result of a fire loss. is correct. The loss of income as a result of a "direct physical loss" is the only scenario listed that the business income form will cover.

Holden is a staff adjuster for Binders Keepers, Inc., an insurance company. He has been engaged in an investigation of a third-party claim against an insured. Holden has advised his principal, Binders Keepers, Inc. that while performing the investigation, he found that it is very likely that the insured was not negligent and probably would not be found liable for the claim if the third-party decided to bring a lawsuit. Holden:

Is performing his fiduciary responsibilities to his principal by providing factual data gained through the claims investigation. Is engaging in quid pro quo. Has made a material misrepresentation. Is engaging in the unauthorized practice of law. Is engaging in the unauthorized practice of law. is correct.

Which of the following is NOT an example of an unfair claim settlement practice?

Knowingly misrepresenting pertinent facts to claimants.Failing to acknowledge communication within a reasonably prompt period. Failing to examine a claimant under oath. Not attempting in good faith to promptly settle a claim when liability is clear. Not attempting in good faith to promptly settle a claim when liability is clear. is incorrect. The correct answer is: Failing to examine a claimant under oath.

All of the following sections are included on the Business and Personal Property coverage form, EXCEPT:

Optional Coverages. Business Personal Property Coverage Extensions. Perils Insured Against. Business Personal Property. is incorrect. The correct answer is: Perils Insured Against. The perils insured against are including on a cause of loss form that is attached to the Building and Personal Property coverage form, it is not included on the form.

The "additional coverages" of the Homeowners forms pay for all of the following losses, EXCEPT:

Reasonable temporary repairs to property damaged due to a covered peril. Financial loss to the insured resulting from the unauthorized use of his/her credit card. The sudden cracking of a hot water heating system within the insured dwelling. Damage to glass that is part of the covered dwelling. The sudden cracking of a hot water heating system within the insured dwelling. is correct.

Which of the following types of investigations would an adjuster undertake to determine if the medical treatment a claimant is receiving is appropriate for the injuries claimed?

A medical investigation. A prior claim investigation. A claimant investigation. An accident scene investigation. A medical investigation. is correct.

Which of the following vehicles would NOT be eligible for coverage under a personal automobile policy?

A newly acquired vehicle owned by the insured. A pick up truck not used for business. An SUV. A vehicle leased for 4 months. A newly acquired vehicle owned by the insured. is incorrect. The correct answer is: A vehicle leased for 4 months. To be eligible for coverage under a personal automobile policy, a leased vehicle must be leased for 6 months or longer.

Which of the following is an "other coverage" provided on a DP-1 form?

A. Glass or Safety Glazing Material. B. Fire Department Service Charge. C.Collapse. D. Trees, Shrubs, and Other Plants. FIRE DEPARTMENT SERVICE CHARGE

Products being imported from Great Britain into the United States would be covered by:

Ocean marine policies. Commercial property floaters. Commercial inland marine policies. Trip transit policies. Commercial inland marine policies. is incorrect. The correct answer is: Ocean marine policies.

Which of the following statements is TRUE if an insured would like to include Commercial Inland Marine forms to a Commercial Package Policy?

The insured must select controlled Commercial Inland Marine forms to add to a Commercial Package Policy. The insured will be told by his/her agent that Commercial Inland Marine forms cannot be added to a Commercial Package Policy. The insured must select noncontrolled Commercial Inland Marine forms to add to a Commercial Package Policy. The insured would not need Commercial Inland Marine if he/she already has Commercial Property coverage included in a Commercial Package Policy. The insured must select controlled Commercial Inland Marine forms to add to a Commercial Package Policy. is correct.

All of the following are reasons that an adjuster should keep very detailed log notes, EXCEPT:

To assist in determining the negligent parties. To assist in determining if the claim is fraudulent. To produce notes that will support a fraudulent denial of claims. To be used in case of a future arbitration, mediation, or litigation proceeding. To produce notes that will support a fraudulent denial of claims. is correct.

The workers' compensation plan covering land-based maritime workers is called:

U.S. Longshore and Harbor Workers' Compensation Act. The Jones Act. The Federal Employers Liability Act. The Federal Employees Compensation Act. U.S. Longshore and Harbor Workers' Compensation Act. is correct.

The Texas insurance code specifies that "misrepresentation" includes all of the following, EXCEPT:

Any false statement. Making a statement with the intent to mislead. Any untrue statement of material fact. Any omission of a material fact. Any false statement. is correct.Making "any false statement" is not considered a misrepresentation. The false or untrue statement must be material.

All of the following statements are TRUE regarding the "Equipment Breakdown" coverage extension of the standard Businessowners policy, EXCEPT

Provides coverage for direct damage to covered equipment. The damage must be caused by a sudden and accidental breakdown. The damage can be caused by a gradual wear and tear of parts within the equipment. The equipment must be located at the premises described in the Declarations. The damage can be caused by a gradual wear and tear of parts within the equipment. is correct.

George Wilson is covered under a standard Personal Auto policy. Which of the following policy coverages would apply when a deer leaps onto Mr. Wilson's car and causes extensive damage?

Part D - Other Than Collision (Comprehensive). Part A - BI & PD Liability. Part D - Collision. Part C - Uninsured Motorists Coverage Part D - Other Than Collision (Comprehensive). is correct.

Mr. Thompson carries the minimum auto liability limits in his state. He drives his car to New York which requires bodily injury limits of $25/50 and a wrongful death limit of $50/100 and no-fault coverage. If he has an accident in New York what coverage would he have?

The coverage will automatically be modified to comply with the New York requirements. The insurance company will not raise the limits to those required in New York. The insured must pay an additional premium to have their limits increased before entering the state. Mr. Thompson will have to ask his company for higher limits before the trip. The coverage will automatically be modified to comply with the New York requirements. is correct. Most insurance companies would automatically modify the coverage to comply with the requirements of the other state. No additional premium is required, nor does permission have to be obtained

Underinsured motorist coverage provides first-party protection to an insured after an accident in which of the following situations?

A. The other driver has insufficient liability limits and is "at-fault". B. The other driver has no insurance and is "at-fault". C. The other driver has no insurance but is not "at-fault". D. The insured driver has insufficient liability limits and is "at-fault". The other driver has insufficient liability limits and is "at-fault

All of the following would be excluded by the basic cause of loss form under a Commercial Property policy, EXCEPT:

Damage caused to the covered buildings electrical system by a power surge. A water pipe that bursts and damages the interior of the building. Water leaks from the sprinkler system in the building, causing wall and floor damage. Damage to flooring that occurs when water seeps from the dishwasher in the corporate kitchen for several months. Water leaks from the sprinkler system in the building, causing wall and floor damage. is correct. Water leaking from an automatic sprinkler system IS COVERED by the basic cause of loss form attached to a Commercial Property policy.

Which of the following would be covered under Coverage A - Building of the Business and Personal Property coverage form if the damage was caused by a covered cause of loss?

Damage to a new window display built at the expense of the insured who is a tenant in the commercial building .Damage to the insured's lawn mower used by the company maintenance crew. Damage to a computer dropped off by the owner to be repaired by the insured computer repair shop. The value of the labor, materials, or supplies the insured business had already used to repair a lawn mower dropped off at the insured location by its owner for servicing when a fire destroyed it. location. Damage to the insured's lawn mower used by the company maintenance crew. is correct.

Which of the following would NOT be determined by a court when an insurer has filed a declaratory judgment action?

If a particular exclusion would apply to the claim that is the subject of the action. If a particular insuring agreement would provide coverage for the claim that is the subject of the action. The type and amount of damages that will be paid to a plaintiff for the claim that is being disputed. The amount of other insurance that would apply to a claim if other policies cover the loss. The type and amount of damages that will be paid to a plaintiff for the claim that is being disputed. is correct. The court would not determine the type and amount of damages that will be paid to a plaintiff for the claim that is being disputed in a declaratory judgement action. The court WOULD make this type of determination if the claim is disputed and goes to trial for litigation

Under a standard Equipment Breakdown policy, the loss settlement is:

On an actual cash value basis for all covered losses, if the the claim is reported within 24 months. On an actual cash value basis for all covered losses. On a replacement cost basis, if the repair or replacement, is made within 18 months of the loss. On a replacement cost basis, if the repair or replacement, is made within 24 months of the loss. On a replacement cost basis, if the repair or replacement, is made within 24 months of the loss. is correct.

Temporary total disability benefits are paid under which section of the NCCI standardized workers' compensation policy?

Part Two. Part Four. Part One. Part Three Part Three. is incorrect. The correct answer is: Part One. Part One of the standardized workers' compensation policy is the part of the policy where you will find the statutory benefits paid. Temporary total disability benefits are statutory benefits.

What is generally excluded on the Condominium Commercial Unit-Owners form?

The improvements and betterments of the unit owner. Hostile fire damage. Building coverage. Inside appliances and fixtures. Building coverage. is correct Coverage for the building is generally excluded from the Condominium Commercial Unit-Owners form as that should be covered on the Condominium Association form. Topic covered in the Commercial Property Policies chapter; Module F of the Virtual Classroom.

Selena is a claims representative. She has reviewed and set the reserves for a claim. She asks her friend and fellow claims representative, Orville, to independently evaluate and set the reserve on the same claim file. Selena is using which of the following methods to set her claim reserves?

Expert system method. Average value method. Roundtable method. Individual case method. Roundtable method. is correct.

Under which of the following Aviation physical damage losses would a deductible apply?

Fire caused by lightning. Theft or pilferage. A deductible applies to all Aviation physical damage losses. Fire caused by a collision. A deductible applies to all Aviation physical damage losses. is incorrect. The correct answer is: Fire caused by a collision. The deductible does not apply to losses from fire, lightning, explosion, transportation, theft, robbery, or pilferage. However, the "in-motion" deductible does apply to losses from fire or explosion that occurs as a result of the collision of the aircraft.

Texas adjusters must keep records of their continuing education compliance beyond four years if the adjuster:

Has taken a claims certification course to meet the CE requirement. Is a nonresident that has designated Texas as their home state for licensing purposes. Holds a nonresident license and completed their continuing education requirements in their home state. Has been notified that the records or the licensee's compliance is the subject of an investigation. Has been notified that the records or the licensee's compliance is the subject of an investigation. is correct.

A Texas adjuster has adjusted a claim under a policy type for which he is not licensed. This is considered a:

Misdemeanor and is punishable by a fine of not more than $1,000. Misdemeanor and is punishable by a fine of not more than $500, confinement in the county jail for not more than six months, or both. Felony and is punishable by a fine of $10,000 and confinement in the federal penitentiary for not more than 1 year .Felony and is punishable by a fine of not more than $500, confinement in the county jail for not more than six months, or both. Misdemeanor and is punishable by a fine of not more than $500, confinement in the county jail for not more than six months, or both. is correct

The Part A - Liability section of the Personal Auto policy will cover all of the following, EXCEPT:

Only damages caused by those who are considered "insureds" under the policy. Only damages that the insured is legally liable to pay. Only the damages to the insured's automobile in the accident. Only damages for bodily injury and property damage that result from an automobile accident. Only damages caused by those who are considered "insureds" under the policy. is incorrect. The correct answer is: Only the damages to the insured's automobile in the accident. Part A - Liability pays:Only damages caused by those who are considered "insureds" under the policy;Only damages that the insured is legally liable to pay;Only damages for bodily injury and property damage that result from an automobile accident.

Which of the following describes a moral hazard?

Faulty wiring. An arsonist applying for property insurance. Laziness and apathy. Twelve appliances plugged into one electrical outlet. An arsonist applying for property insurance. is correct. A moral hazard is presented by applicants or insureds who would cheat, lie or commit other crimes to benefit from insurance coverage. Faulty wiring and overuse of electrical outlets are physical hazards. Laziness and apathy are morale hazards.

The Insurance Commissioner/Director/Superintendent of any state is NOT responsible for which of the following duties?

Holding hearings to resolve conflicts involving insurance matters. Attending NAIC meetings and conventions. Creating rules to assist in the regulation of insurance laws in the state. Writing insurance laws to regulate the insurance industry within the state. Writing insurance laws to regulate the insurance industry within the state. is correct. Writing laws is a function of the legislative branch of the state government. Just as the Governor or the President do not write laws, the state Insurance Commissioner does not write insurance laws.

Which of the following statements is NOT TRUE regarding the implied warranties of an Ocean Marine policy?

If the insured does not comply with the implied warranties, the policy will be void. Implied warranties are binding. The implied warranties are attached to the policy as an endorsement. Implied warranties are understood, not actually written, by the parties to the contract. The implied warranties are attached to the policy as an endorsement. is correct.The implied warranties are NOT attached to the policy as an endorsement. They are not written in the policy at all.

Jack rents a home to Tanya and maintains a DP-3 policy on the dwelling. Tanya accidentally leaves the oven on all day while she is out, her Lasagna catches fire, burning Jack's house to the ground, along with all the contents located inside. Which of the following items would be covered under Coverage C of Jack's DP-3 policy?

Jack's appliances. The fire damage to the structure. Tanya's personal property. Damage to Tanya's items in the attached garage. Jack's appliances. is correct. Coverage C is for personal property (contents). Since this is Jack's policy, it will cover his appliances but nothing belonging to Tanya (her renters insurance would cover it). The damage to the structure would be covered under Coverage A of Jack's policy.

Which of the following is TRUE regarding deductibles that pertain to Part D of the standardized Personal Automobile policy?

The deductible amount scheduled on the policy for Part D - Collision is $250 and for Part D - Other Than Collision is $500. Any adjustment to these amounts must be made by endorsement.A deductible of $250 is standard for Part D and applies to both the "Collision" or "Other Than Collision" coverage.A single deductible amount, chosen by the insured, applies to both the "Collision" coverage and the "Other Than Collision" coverage.There are separate deductible amounts, chosen by the insured, for the "Collision" coverage and the "Other Than Collision" coverage. There are separate deductible amounts, chosen by the insured, for the "Collision" coverage and the "Other Than Collision" coverage. is correct.

Which of the following losses would be covered by the EC peril of "volcanic eruption" under a standard Dwelling form?

The cracks in the ceiling of the dwelling due to the earthquake preceding a volcanic eruption. The damage to an exterior patio from a large bolder that was dislodged due to an aftershock. The exterior siding of the dwelling that was ruined by the ash that settled on it from the erupting volcano. The cracked foundation of the covered dwelling resulting from the earthquake that caused the volcanic eruption. The exterior siding of the dwelling that was ruined by the ash that settled on it from the erupting volcano. is correct.The exterior siding would be covered because it was damaged by the ash from the volcano. All the other answer choices would not be covered because they are associated with an earthquake.

Which of the following statements is NOT true regarding a "prompt notice of loss" provided by the insured to their insurance company?

This notice should be provided at the time of the loss on property damage claims. This notice should be provided only after the insured has determined the extent of the loss or damage and confirmed that the amount will be higher than the insured's deductible. This notice should be provided immediately when the insured is presented with a third-party claim against them. This notice should be provided immediately if the insured feels that there has been an occurrence for which a liability claim may be submitted against them in the future. This notice should be provided only after the insured has determined the extent of the loss or damage and confirmed that the amount will be higher than the insured's deductible. is correct. The statement that is NOT true is: "This notice should be provided only after the insured has determined the extent of the loss or damage and confirmed that the amount will be higher than the insured's deductible." The determination of the amount of the loss and if the deductible applies will be made after the claims investigation has been concluded.

Part F of the standard Personal Automobile policy states that the policy can be terminated within the first 60 days for any reason other than non-payment of premium if:

A. At least 20-days' notice is provided to the insured. B. At least 30-days' notice is provided to the insured. C. At least 10-days' notice is provided to the insured. D. Another type of policy option is provided by the insurer. At least 20-days' notice is provided to the insured.

Talia is a licensed adjuster in Texas. She has been so busy adjusting claims over the past two years, that she realizes a month before her license is scheduled to expire that she hasn't taken any continuing education courses. She applies to the Texas Department for an extension to obtain her CE credits citing her busy work schedule. Which of the following statements best describes how the Texas Department will likely answer Talia's request?

The extension will likely be granted but only if Talia's employer submits documentation that she did not have time to complete the CE hours due to her busy work schedule. The extension will likely be denied because the Texas Department does not grant extensions to obtain CE credit for any reason. The extension will likely be denied because the Texas Department does not grant extensions to obtain CE credit based on business reasons. The extension will likely be granted for any reason cited by Talia because the Texas Department realizes how busy claims adjusters are. The extension will likely be denied because the Texas Department does not grant extensions to obtain CE credit for any reason. is incorrect. The correct answer is: The extension will likely be denied because the Texas Department does not grant extensions to obtain CE credit based on business reasons. Continuing education is required as a prerequisite to holding the license that permits the employment. The employment itself cannot be used as an excuse for not completing the continuing education requirements required to hold that employment.

Which of the following statements is NOT TRUE regarding FAIR Plans?

A FAIR Plan cannot deny coverage because of environmental hazards that are beyond the insured's control. A FAIR Plan provides fair access to property insurance to those that cannot obtain coverage in the standard market. A FAIR Plan cannot deny coverage to anyone because their roof is in need of repair. Each state has its own FAIR Plan and set their own laws and regulations associated with it. Each state has its own FAIR Plan and set their own laws and regulations associated with it. is incorrect. The correct answer is: A FAIR Plan cannot deny coverage to anyone because their roof is in need of repair.A FAIR Plan CAN deny coverage to someone whose roof is in need of repair. The Plan will usually make coverage contingent upon repairs being made.

An additional coverage provided by Part D of the Personal Watercraft policy includes coverage for "salvage liability". This is best described as:

A maritime law that states that any salvage from watercraft belongs to the state where the watercraft was being used at the time of the accident. Coverage for damage caused to another vessel by the salvage of the damaged watercraft. A maritime law requiring watercraft owners to recover items that have gone overboard. Coverage for bodily injury caused to others when the covered watercraft collides with another boat or a dock. A maritime law requiring watercraft owners to recover items that have gone overboard. is correct The additional coverage for "salvage liability" refers to a maritime law requiring watercraft owners to recover items that have gone overboard.

The Texas code pertaining to unfair practices defines a "written communication" as all of the following, EXCEPT:

A fax. An email with an attachment that must be opened to be read. An encrypted email that must be transcribed in order to be read. A published pamphlet. A published pamphlet. is incorrect. The correct answer is: An encrypted email that must be transcribed in order to be read. An encrypted email that must be transcribed in order to be read is not considered to be a "written communication" according to the Texas code.An encrypted email that must be transcribed in order to be read is not considered to be a "written communication" according to the Texas code.

All of the following would be covered under Part B - Medical Payments of the Personal Auto policy, EXCEPT:

Injuries sustained by the insured's mother when a tree falls on the automobile while she is sitting inside the automobile while it is parked in the driveway. Injuries sustained by an elderly man riding in the insured vehicle after having paid the insured to take him to the grocery store. Injuries sustained by the insured when using his father's pickup truck to pick up furniture he recently purchased. Injuries sustained by a neighbor who carpools with the insured and who, while getting into the insured's car, slips, falls, and injures her knee. Injuries sustained by a neighbor who carpools with the insured and who, while getting into the insured's car, slips, falls, and injures her knee. is incorrect. The correct answer is: Injuries sustained by an elderly man riding in the insured vehicle after having paid the insured to take him to the grocery store.

Barry's insured watercraft is disabled while on the lake one Sunday afternoon. His motor completely stopped and will not start again. Barry calls George, a mechanic who rides out to the section of the lake where Barry and his boat are stranded. George brings a new starter for the engine and spends the next hour replacing it. When George is finished installing the new starter, the engine still sputters and will not start. Barry then calls a towing service to tow the boat back to the dock and into storage where George can take a closer look. Barry's Watercraft policy has a $250 deductible. The cost of the starter was $80 and the towing bill was $100. How much will Barry's standard Watercraft policy pay under the "Towing and Assistance Expense" coverage, assuming this is the only occurrence Barry has claimed during the current policy period?

$100 because this coverage only applies to the towing bill. $180 because the deductible does not apply to the coverage. $0 because Barry's deductible is higher than the entire bill for parts and towing. $80 because this coverage only applies to parts that are purchased in an attempt to get the watercraft running again. $100 because this coverage only applies to the towing bill. is incorrect. The correct answer is: $180 because the deductible does not apply to the coverage. The policy will pay $180 under the "Towing and Assistance Expense" coverage because the deductible does not apply to the coverage and pays up to $500.

Cameron has his home covered under a Homeowners policy and his limit for bodily injury is $100,000. He also purchased a Personal Umbrella policy with a $1,000,000 limit of liability. Cameron is sued and a judgement was made against him for $500,000. To trigger his Umbrella policy, his Homeowners policy must pay $100,000, but he finds that the insurance company from which he purchased his Homeowners policy has become insolvent. How will the Umbrella insurer pay the claim (disregarding any retention limit)?

The Umbrella policy will become primary when the underlying insurer becomes insolvent, and will pay the $100,000, plus the remaining $400,000 due under the Umbrella policy. The Umbrella policy will pay nothing. The underlying insurance must be kept in place for the Umbrella policy to pay any amount. The Umbrella policy will not become primary when the insurer carrying the underlying insurance becomes insolvent, but will pay the $400,000 as if the underlying insurer had paid its $100,000 limit of liability. The Umbrella policy will become primary when the underlying insurer becomes insolvent, but will only pay the underlying policies limit of $100,000, and only $300,000 of the remaining judgement, for a total of $400,000. The Umbrella policy will not become primary when the insurer carrying the underlying insurance becomes insolvent, but will pay the $400,000 as if the underlying insurer had paid its $100,000 limit of liability. is correct. The Umbrella policy will not replace the underlying insurance when that insurer becomes insolvent, but will pay the $400,000 as if the underlying insurer had paid its $100,000 limit of liability.