Insurance Practice Test Two

An insured has a policy with an insurance company that becomes insolvent. The policy has $1600 of unearned premium. How much of this premium will the insured be able to recover from the Texas Property and Casualty Insurance Guaranty Association

$1600

If an auto policy has split limits of 30/60/25, how much will the policy pay for property damage in a single accident

$25,000 for property damage in a single accident

Which of the following liability exposures is most likely for a small specialty clothing retail boutique

Premises liability exposure

The policy conditions define

how parties to the contract must act following a loss

What is the consideration in a policy

something of value exchanged between parties, the premium amount paid at the time of application, and the promise to pay covered losses.

If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person

$50,000 because the first limit shown is the most the policy will pay for bodily injury to any one person

An agent completed a CE course in 2019. Until what year must the agent keep the records of completion

2023

Coverage for medical payments under a personal auto policy applies to expenses following a covered accident that are incurred and services rendered within what maximum time period

3 years

Which of the following would be covered by the broad theft endorsement on a dwelling policy

A camera the insured has with him on vacation

When transacting business in this state an insurer formed under the laws of another country is known as a/an

Alien insurer

In Texas, the Commissioner of Insurance is

Appointed by the governor

Which of the following clauses establishes the procedure for determining the amount of a loss when the insurer and the insured cannot agree of the value of property or amount of loss

Appraisal Clause

An employee is injured while visiting the employer's out-of-state site. How will the workers compensation benefits be determined

Benefits will be provided if the state was listed on the policy information page

Directors and officers liability insurance defends actions against a corporation orbits officers and directors alleging wrongful acts. With regard to the coverage provided, wrongful acts include any of the following

Breach of duty, misstatements, and neglect

Which of the following must an insurer obtain in order to transact insurance within a given state

Certificate of authority

A producer who fails to segregate premium monies from his own personal funds is guilty of

Commingling

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violate

Consideration

Which of the following is covered under the mail floater of a commercial inland marine policy ONLY if is sent by registered mail

Currency and unsold travelers checks, bullion, platinum and other precious metals, jewelry, watches, precious and semiprecious stones and similar property

Which of the following is a mandatory part of an insurance policy that varies with each individual policy

Declarations

The commissioner has full power and authority to do all of the following EXCEPT

Draft insurance laws

Professional liability coverage protects against legal liability resulting from

Errors and omissions

All of the following are found in the declarations section of a policy EXCEPT the

Exclusions

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of

False advertising

Events or conditions that increase the chances of an insured loss occurring are referred to as

Hazards

All of the following are additional liability coverage automatically provided in a homeowners policy EXCEPT

Personal injury

The pro rate liability clause is designed to protect the principle of

Indemnity

An additional loss that results from a direct loss of property is called a/an

Indirect loss

Which of the following is NOT consideration in a policy

The application given to a prospective insured

An employee who refuses services or refuses to cooperate with services provided by the rehabilitation commission will

Lose entitlement to supplemental income benefits

which of the following is the basis for a claim against an insurance policy

Loss

ABC Trucking hauls products for Acme, Inc. as a contract carrier. On one shipment, the driver stopped at a truck stop for lunch. Leaving the truck in the parking lot, he made certain that the truck was locked before leaving it. Upon returning to the truck, he discovered that someone had broken into the truck and stolen the cargo. Is ABC legally liable for this loss

No, the driver had taken reasonable measures to protect the property by locking the truck

What type of insurance policy insures against all risks of loss that are specifically excluded by the policy

Open peril policy

All of the following are factors in rating workers compensation insurance EXCEPT

Sales

The common policy condition is a modular part combined with other parts to create the contract. The common policy condition section contains provisions that are applicable to all lines of coverage that may be included in the policy. Which of the following provisions would be found in the common policy conditions section of the policy

The first named insured may cancel the policy at any time by giving written notice to the insurer

Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value

They are automatically provided with replacement cost coverage

Which of the following best expresses the purpose of a stated value contract

To pre-establish the amount of coverage available for property items that are difficult to value

Which of the following IS considered a work related injury/occupational disease under workers compensation law

Tom works as a painter in an auto body shop. The chemicals from the paint aggravate Tom's asthma to the point that he must be hospitalized for several days.

An advertising company has its annual holiday party for employees and customers, after which a customer who had too much to drink is involved in an automobile accident. Occupant of the car involved in the accident sue the company for serving the customer too much alcohol. Will the company's business owners policy provide cover

Yes, none fo the exclusions will apply

The primary purpose of a surety bond is to

make sure obligations are fulfilled

Which of the following does the term proximate cause refer to

negligence that leads to an injury

In Texas, unless higher optional limits are purchased, the maximum amount payable for all auto personal injury protection benefits arising out of a single accident shall not exceed

$2,500

How long is a waiting period upon purchase of flood coverage through NFIP

30 days

Which of the following is a method of claim settlement used in casualty insurance when the insured and insurer cannot agree on how to settle a claim

Arbitration

Directors and officers liability insurance defends actions against a corporation orbits officers and directors alleging wrongful acts. With regard to the coverage provided, wrongful acts include any of the following EXCEPT

Embezzlement

Losses caused by continuous or repeated exposure to condition resulting in injury to persons or damage to property that is neither intended nor expected is the definition of which of the following terms

Occurrence

Which of the following would be considered causes for flood conditions covered by the National Flood Insurance Program

Overflow of inland or tidal waves, unusual and rapid accumulation or runoff of surface waters from any source, or a mudflow

An insured relocated to another state for work. However, she still owns and insures a house in this state, but has had no one living in it for three months. She is also storing some furniture and clothes in the house. From an insurance standpoint, the insured's house is considered

Unoccupied

Frank's Steaks furnishes meat to steakhouses. An accident on the premises causes the building to lose refrigeration for 32 hours. The state inspectors will not allow the meat in the refrigerating units to be sold for human consumption, and Frank loses $18,500 in disposing of the meat. What coverage under Frank's BOP policy will cover the loss

Utility service- Direct Damage

Prior to state-directed workers compensation statutes being enacted, employees had

to sue an employer for the "loss" and prove that the employer was at fault