Insurance Quiz Questions

A person is injured after slipping on a wet floor in a grocery store. Insurance against which of the following exposures would provide coverage? A)Products liability B)Completed operations liability C)Operations D)Premises

Premises

Of the Dwelling Forms, which one of the following provides the broadest coverage? A)Special B)Specific C)Premier D)Standard

Special

Insurance companies that advertise in Texas must keep copies of advertisements on file for at least: A)5 years. B)3 years. C)1 year. D)10 years.

3 years.

What are the 2 flood insurance programs that are available? A)Emergency program and the regular program B)State program and the federal program C)Occurrence program and the claims-made program D)Basic program and the Special program

Emergency program and the regular program

Which of the following is not specifically excluded from the personal effects floater? A)Tickets B)Passports C)Souvenirs D)Artificial limbs

Souvenirs

How much will the personal auto policy pay for a rental car if the insured vehicle is stolen? A)Nothing B)$30 per day, up to $900 maximum C)$25 per day, up to $650 maximum D)$20 per day, up to $600 maximum

$20 per day, up to $600 maximum

When a small restaurant is damaged by a tornado, the owners are forced to close for 1 month while the property is repaired. The building suffers damages of $20,000. The owners estimate they will lose $50,000 in business receipts. To keep their staff, the owners must continue to pay salaries totaling $5,000. Ignoring any deductible, how much of the direct loss will the businessowners policy (BOP) pay? A)$20,000 B)$55,000 C)$50,000 D)$75,000

$20,000

The list of perils covered under a policy is found in which part of the policy? A)Insuring agreement B)Conditions section C)Declarations page D)Exclusions section

Insuring agreement

Which one of the following is NOT an element of a valid contract? A)Competent parties B)Intent C)Legal purpose D)Consideration

Intent

Which of the following losses could be covered under a crime insurance policy? A)Theft committed by a hotel maid B)Loss due to seizure of property by government authority C)Indirect losses D)Theft committed by the insured

Theft committed by a hotel maid

Which of the following events is NOT considered an occurrence for insurance purposes? A)Long-term exposure to chemicals B)Slipping and falling on icy pavement C)Being struck by a falling object D)Wearing out clothing

Wearing out clothing

Coverage C of the commercial general liability policy will cover reasonable medical expenses incurred within how many years of the accident? A)5 B)2 C)1 D)3

1 year

The businessowners policy will pay reasonable expenses for A)3 months from date of accident B)5 years from date of accident. C)1 year from date of accident D)6 months from date of accident

1 year from date of accident

A producer whose license has expired will be required to retake the licensing exam if the license has been expired for more than: A)60 days. B)1 year. C)6 months. D)30 days.

1 year.

An insurer who cancels a personal auto policy for nonpayment of premium must give how many days notice to the insured? A)10 B)7 C)30 D)60

10

Julia purchases a new car for her daughter. How many days does she have to add it to her policy? A)45 B)10 C)14 D)30

14

How many hours of continuing education is an agent responsible to complete in any 2-year license period? A)15 B)12 C)24 D)26

24 hrs

For personal property coverage, who is NOT insured by a homeowners policy? A)The named insured B)A live-in housekeeper requested by the named insured C)A nonresident uncle D)A 20-year-old resident

A nonresident uncle

Which one of the following situations would most likely be covered by a commercial general liability (CGL) policy? A)A surfboard falls off a shelf and injures a shopper. B)An office worker's finger is injured in an electric pencil sharpener. C)Manufacturing exhaust kills a crop of tomatoes in a nearby field. D)An employee drives his auto into his employer's garage door.

A surfboard falls off a shelf and injures a shopper.

A person becomes seriously ill after eating unrefrigerated raw oysters from a street vendor. When the vendor is sued for negligence, what defense might best be used? A)Assumption of risk B)Comparative negligence C)Immunity D)Last clear chance

Assumption of risk

Which of the following is NOT an exclusion in the commercial auto policy liability section? A)Completed operations B)Contractual liability C)Care, custody, and control D)Bail bonds

Bail bonds

What does the liberalization clause do to a property policy? A)Broadens coverage B)Eases the criteria for concealment or fraud C)Waives the premium in some situations D)Gives the insurer subrogation rights

Broadens coverage

In homeowners policies, what does Coverage A insure? A)Other structures B)Extra expenses C)Personal property D)Dwelling

Dwelling

Which one of the following risks is insurable? A)Whole B)Speculative C)Partial D)Pure

Pure

While driving down the street, an insured swerves to avoid a pedestrian, goes over a curb, and damages a neighbor's fence. Which of the following will pay for the repairs to the fence? A)The driver's automobile policy under the property damage liability provisions B)The driver's automobile policy under the collision provisions C)The driver's general liability policy D)The insured's homeowners policy

The driver's automobile policy under the property damage liability provisions

All of the following are property coverage forms EXCEPT A)base B)basic C)special D)broad

base

An employee is delivering packages for her employer but is using her own vehicle. The employee hits a pedestrian. The employer may be held liable because of the doctrine of A)gross negligence B)workers' compensation C)employer liability D)vicarious liability

vicarious liability

The following perils may be insured against under a basic dwelling policy EXCEPT A)lightning B)flood C)vandalism and malicious mischief D)fire

flood

A property that is vacant is described as having an absence of A)furniture B)people and property C)people D)property

people and property

Fire would be an example of a A)hazard B)loss C)risk D)peril

peril

An insured who owns a convenience store arrives at the store one morning and finds the door unlocked. There is no sign of forced entry, but several items—including money in the cash register—are missing. Based only on this information, the insured has suffered a A)robbery B)theft C)burglary D)disappearance

theft

In commercial crime insurance, shoplifting is classified as A)malicious mischief B)robbery C)burglary D)theft

theft

Under Coverage C—Personal Property, the homeowners policy (HO-3) covers property owned or used by an insured. When jewelry valued at $5,000 is stolen from the residence, the policy will pay A)$0 B)$1,500 C)$5,000 D)$1,000

$1,500

What is the maximum amount that the businessowners policy will pay for property damage to an outdoor sign NOT attached to a building? A)$2,500 B)Policy limit C)$1,000 D)$500

$2,500

If the policy limits of the Building and Personal Property Coverage Form have been exhausted, how much additional coverage is available for debris removal? A)$25,000 B)25% of the amount of the actual loss C)25% of the policy limit D)$10,000

$25,000

Two personal auto policies cover 1 vehicle. Company A's limit of liability is $100,000 and Company B's limit of liability is $300,000. How much will Company A pay for a liability loss in the event of an accident when the damages total $100,000? A)$100,000 B)$75,000 C)$25,000 D)$50,000

$25,000

Under an HO-2 policy with a coverage limit of $50,000 on the dwelling, what is the amount of personal property coverage that would be available? A)$30,000 B)$50,000 C)$20,000 D)$25,000

$25,000

An insured purchased a dwelling policy with $40,000 of coverage. The insured also purchased an automatic increase in insurance endorsement that increases the face amount of the policy by 4% each year. What will the coverage amount be when the insured pays the renewal premium for the 3rd year the policy is in effect? A)$43,264 B)$40,000 C)$41,600 D)$44,995

$43,264

Bryce owns a $50,000 lake cabin that he has insured for $40,000. He sustains a $5,000 covered loss. According to the principle of indemnity, how much will his insurer pay? A)$5,000 B)$50,000 C)$4,000 D)$40,000

$5,000

An insured has a commercial property policy with a Causes of Loss—Broad Form with a $250 deductible. During a snowstorm, a $750 rooftop sign is destroyed. How much will the policy pay for the sign? A)$1,000 B)$0 C)$500 D)$750

$500

Credit card fraud is covered under a homeowners policy to a maximum of what amount? A)$500 B)$1,000 C)$2,000 D)$100

$500

The dwelling policy will provide how much additional coverage for a fire department service charge? A)$500 B)$750 C)$1,000 D)$250

$500

The standard deductible for property losses on a BOP is A)$1,000 B)$250 C)$1,500 D)$500

$500

The furniture Harold purchased 10 years ago was destroyed in a fire. The furniture cost $9,000 when new and has depreciated by $5,000. It would cost $12,000 to replace this furniture today. What is the actual cash value of Harold's destroyed furniture? A)$3,000 B)$7,000 C)$9,000 D)$5,000

$7,000

Bill and Marge have a HO-2 policy insuring their main residence for $150,000. How much coverage do they have for personal property kept at their summer cottage? A)$30,000 B)$15,000 C)$75,000 D)$7,500

$7,500

Brenda's Bakery, which is covered by a businessowners policy, sustains a fire loss of $50,000 to the building, and $25,000 in content damages is incurred. In addition, a customer and an employee are injured in the fire. Medical payments for their injuries amount to $2,000 for the injured customer and $3,000 for the injured worker. Brenda's business income is $5,000 per month, but she is unable to conduct any business for 60 days as a result of the fire. Assuming Brenda has adequate limits to cover this loss, how much will her policy pay? A)$77,000 B)$87,000 C)$90,000 D)$75,000

$87,000

The insured has a homeowners policy (HO-3) with a $100,000 liability limit and a $1 million personal umbrella policy with a self-insured retention of $1,000. When a child is seriously injured on the insured's property, a jury awards the plaintiff $2 million. Given only these facts, for what amount is the insured personally responsible? A)$2 million B)$900,000 C)$1,000 D)$1 million

$900,000

In order to nonrenew a personal auto policy, an insurer must provide how many days' advance notice to the policyholder? A)45 B)20 C)30 D)10

30 days

An insurer will consider an injured worker to have reached maximum medical improvement when: A)3 years have passed since the injury occurred. B)2 years have passed since the date income benefits were first due. C)the condition can only be remedied by surgery. D)the employee's impairment rating is less than 50%.

2 years have passed since the date income benefits were first due.

Under the medical payments coverage of a personal auto policy, the insurer pays for medical expenses and funeral services incurred within how many years from the date of an accident? A)3 B)2 C)5 D)1

3

When the insurer and the insured cannot agree on the value of a loss, the matter is submitted to disinterested parties for resolution. Under a standard appraisal clause, how many parties are involved in determining the value of the loss? A)2 B)1 C)5 D)3

3 parties

When does flood insurance take effect? A)30 days after the date of application and payment of premium B)As soon as the policy is issued C)As soon as the agent binds coverage D)As soon as the insured pays the 1st premium

30 days after the date of application and payment of premium

How many coverage parts are there to a workers' compensation policy? A)3 B)2 C)6 D)1

6

How long does coverage apply for the civil authority additional coverage? A)72 hours after the action and for 5 consecutive weeks B)36 hours after the action and for 3 consecutive weeks C)72 hours after the action and for 4 consecutive weeks D)48 hours after the action and for 5 consecutive weeks

72 hours after the action and for 4 consecutive weeks

Under Texas workers compensation law, lifetime income benefits are paid at what percentage of the employee's average weekly wage? A)100%. B)25%. C)50%. D)75%.

75%

Texas insurance code stipulates that the maximum amount of controlled business an agent can write during any calendar year is A)50% of the total premium volume written. B)10% of the total premium volume written. C)75% of the total premium volume written. D)25% of the total premium volume written.

75% of the total premium volume written.

Which one of the following could be insured under Coverage B of a homeowners policy? A)A detached garage rented to a neighbor to store his sports car during the winter B)A detached garage rented to a friend to change the oil for neighbors at a discounted price C)A garage next to the house with only the roof connecting the two D)A detached garage with a second-floor room rented by a travel agent for several representatives to book cruises over the telephon

A detached garage rented to a neighbor to store his sports car during the winter

If a dispute arises over whether an insured is entitled to uninsured motorists coverage, what process is used to settle the dispute? A)Subrogation B)Appraisal C)Arbitration D)Negotiation

Arbitration

An insured owns a pet lion that is caged on the homeowner's property. The owner takes great care to warn neighbors of the possible danger by posting signs, fencing the yard, and locking the cage at all times. When a neighbor's child manages to open the cage and is bitten, what type of liability would apply to the lion owner? A)Vicarious liability B)Absolute liability C)Premises liability D)Contractual liability

Absolute liability

Physical damage losses under the personal auto policy are reimbursed on what basis? A)Market value B)Actual cash value or cost to repair or replace, whichever is less C)Actual cash value or cost to repair or replace, whichever is greater D)Functional replacement cost

Actual cash value or cost to repair or replace, whichever is less

Joe's Plumbing has leased a fleet of vans to be used by his plumbers while going from job to job. Which of the following endorsements is especially important in this situation? A)Mobile equipment B)Individual named insured C)Additional insured—lessor D)Drive other car coverage

Additional insured—lessor

Who represents the insurance company and is and a direct link between the company and the insureds? A)A policyowner B)The insured C)An insurance agent D)A policyholder

An insurance agent

The liberalization provision will do which of the following? A)Automatically broaden coverage without additional premium if there is a revision to the policy B)Protect the insured against a cancellation of the policy C)Require the insurer to liberalize the conditions of the policies D)Allow the insurer to set the property values

Automatically broaden coverage without additional premium if there is a revision to the policy

Ted's TV shop has a fire, and the shop must be closed for repairs for several months. Ted cannot generate an income while his shop is not open for business. Which additional coverage will pay for the revenue loss while the shop is closed? A)Business Income B)Extra Expense C)Business Compensation Insurance D)Indemnity Income

Business Income

Damage caused by burglars is excluded under which of the Dwelling Forms? A)All forms exclude damage caused by burglars B)Special Form C)Basic Form D)Broad Form

Basic Form

Which one of the following statements regarding workers' compensation laws is CORRECT? A)Workers' compensation is optional. B)An injured worker must prove negligence on the part of the employer. C)Benefits are paid to workers injured on the job, regardless of who is at fault. D)Workers' compensation is governed at the federal level.

Benefits are paid to workers injured on the job, regardless of who is at fault.

Which one of the following acts involves visible signs of forced entry or exit? A)Burglary B)Breaking and entering C)Robbery D)Theft

Burglary

A contractor built a home for a family. Four months after the family moved into the home, the kitchen sink fell on a family member's foot and broke it. This is an example of what type of loss? A)Insured contracts B)Completed operations C)Premises liability D)Personal injury

Completed operations

Joan and Steven have applied for automobile insurance with ABC Auto Insurers. They were NOT asked and did NOT tell the agent that their neighbor, George, who lost his driver's license due to drunk driving, uses one of their cars on a regular basis to drive to work. Once the company found out about George after he had an accident, they denied the claim, citing what legal concept as the reason? A)Concealment B)Breach of warranty C)Fraud D)Misrepresentation

Concealment

The amounts of coverage and limits of liability are found in which of the following sections of a policy? A)Definitions B)Declarations C)Conditions D)Insuring agreement

Declarations

If an insurance company is organized in Detroit, where it maintains its home office, the company is classified in Michigan as what kind of company? A)Local B)Foreign C)Domestic D)Preferred

Domestic

Which of the following forms is NOT eligible to be written as part of a commercial package policy? A)Boiler and machinery coverage forms B)Commercial property coverage forms C)Dwelling property coverage forms D)Commercial crime coverage forms

Dwelling property coverage forms

Which one of the following is an example of a peril? A)Gasoline stored on the premises B)Earthquake C)Illness D)Indifference

Earthquake

John's dog bites a friend who is visiting John's house. Which part of John's homeowners policy, if any, would cover the visitor's ensuing medical expenses? A)Coverage F only B)Coverage E only C)Loss is excluded because it was caused by an animal owned by the insured D)Either Coverage E or Coverage F

Either Coverage E or Coverage F

The insured is in a hurry to get to work, fails to halt at a stop sign, speeds through an intersection, and strikes another vehicle. That vehicle hits another car that then jumps a curb and injures a pedestrian. What is the proximate cause of the accident? A)Leaving late for work B)Failing to avoid an accident C)Failing to stop at a stop sign D)Speeding

Failing to stop at a stop sign

Which one of the following is NOT an exclusion found in Section I of the homeowners policies? A)Failure of the insured to care for the property before the loss B)Power failure occurring away from the insured's premises C)Water damage from flood or surface water D)Earth movement such as earthquake, mudflow, and landslide

Failure of the insured to care for the property before the loss

Which one of the following requires that insurance applicants be advised that a consumer report may be requested on them and the scope of any investigation resulting from the application? A)Fair Disclosure Act B)Financial Freedom Act C)Freedom of Privacy Act D)Fair Credit Reporting Act

Fair Credit Reporting Act

Which one of the following types of property is NOT covered by a dwelling policy? A)3 apartment dwellings B)Mobile homes on permanent foundations C)Farm dwellings D)Row houses

Farm dwellings

To be defined as a robbery , an event must include which of the following conditions? A)Fear or threat of violence B)Mysterious disappearance C)Visible signs of forced entry or exit D)Bodily injury

Fear or threat of violence

Which one of the following bonds is purchased to protect an employer from the actions of dishonest employees? A)Surety B)Performance C)Fidelity D)Corporate

Fidelity

What is the term for an individual who occupies a position of trust when handling the financial affairs of another? A)Fiduciary B)Trustee C)Superior D)Consultant

Fiduciary

After business hours, someone breaks into the insured's lot behind his car dealership and steals a customer's auto. Which of the following coverages would apply to this loss? A)Premises-operations coverage in the commercial general liability coverage form B)Garagekeepers coverage in the garage coverage form C)Liability coverage in the garage coverage form D)Liability coverage in the Business Auto Coverage Form

Garagekeepers coverage in the garage coverage form

How does the dwelling policy provide theft coverage? A)It is automatically included in the policy. B)It is only included in the DP-2 and DP-3. C)It must be added by endorsement. D)It is included in the DP-3 only.

It must be added by endorsement.

Jonathan and Mary have 2 sons. Steve lives at home and the other son, Stan, lives in an apartment across town. Jonathan wants to buy a car for Stan so he can get a job after his college classes. Jonathan titles the car in both his name and Stan's name and wants to add the car to his automobile policy. Which endorsement will provide this coverage? A)Miscellaneous type vehicle B)Drive other car C)Joint ownership coverage D)Extended, nonowned coverage for named individual

Joint ownership coverage

Jane's sister, Maggie, who lives with Jane and just sold her car, drives Jane's sports car to a party. On the way home, Maggie loses control of the car, hits a parked car, and rolls the car. Maggie dies as a result of her injuries. What coverage will reimburse Jane for Maggie's funeral expenses? A)Medical payments coverage B)Liability coverage C)Uninsured motorists coverage D)No coverage available for funeral expenses

Medical payments coverage

In which of the following areas would PAP coverage typically NOT extend? A)Hawaii B)Mexico C)Canada D)Puerto Rico

Mexico

An auto policy would provide coverage for an auto driven in all of the following places EXCEPT A)Alberta, Canada B)Paducah, Kentucky C)Mexico City, Mexico D)Honolulu, Hawaii

Mexico City, Mexico

Joan is a music teacher who teaches piano to 20 students who come to her home for weekly lessons. Which endorsement does Joan need to add to her homeowners policy to make sure she is covered if a student is injured on her property? A)Personal injury B)Personal liability C)Permitted incidental occupancy D)Business pursuit

Permitted incidental occupancy

The Federal Employers' Liability Act (FELA) covers which of the following types of workers? A)Corporate CEOs B)Harbor workers C)Railroad employees D)Crews of ocean-going vessels

Railroad employees

Which of the following is an example of property that might be insured on a valued basis? A)Rare painting B)Jewelry C)Coin collection D)Golf equipment

Rare painting

Which department within an insurance company organization is typically responsible for helping to cover the insurer's exposure to loss? A)Actuarial department B)Loss control department C)Accounting department D)Reinsurance department

Reinsurance department

Of the following statements regarding employment practices liability (EPL) insurance, which is NOT correct? A)The policy covers legal costs whether the company wins or not. B)Retaliation is not covered in an EPL policy. C)Wrongful termination, failure to promote, and discrimination are covered in an EPL policy. D)Harassment is covered in an EPL policy.

Retaliation is not covered in an EPL policy.

Self-insurance is an example of what type of risk management? A)Avoidance B)Retention C)Transference D)Reduction

Retention

Which of the following HO-3 endorsements will change coverage on specifically identified personal property from named peril to open peril? A)Scheduled personal property B)Special personal property C)Personal property replacement cost D)Increased limit on personal property

Scheduled personal property

George just returned from Europe with a beautiful Swiss watch valued at $10,000. He is concerned that his homeowners policy will not provide enough coverage. His insurance agent suggests that he add which endorsement to adequately cover his watch? A)Special property limits B)Personal property replacement cost endorsement C)Scheduled personal property endorsement D)Coverage C—Personal Property

Scheduled personal property endorsement

Which one of the following is NOT a factor in determining eligibility for coverage under a particular homeowners form? A)Intended use B)Square footage C)Occupancy D)Dwelling type

Square footage

Which one of the following determines the amount of a workers' compensation claim? A)State law B)Agreement of the parties C)Federal law D)Mandate of the Commissioner

State law

Mary was involved in an accident with another driver. The car was damaged. Her insurance company reimburses her for the damage and seeks recovery from the negligent driver. What is this process called? A)Subrogation B)Other insurance C)Arbitration D)Retention

Subrogation

Which of the following legal principles allows insurance companies to collect from a negligent third party damages it paid to an insured? A)Risk transfer B)Assignment C)Subrogation D)Indemnity

Subrogation

Which of the following statements about the businessowners policy (BOP) is NOT correct? A)Tenants improvements are not covered under a BOP B)Land is not covered under a BOP. C)Aircraft is not covered under a BOP. D)Motor vehicles are not covered under a BOP.

Tenants improvements are not covered under a BOP

Bob's Trucking Company contracts with boat companies to haul its boats as well as boat parts. Bob is concerned that he has enough coverage if he is contracted to haul a trailer owned by the boat company. What coverage should be used to provide this coverage? A)Hired autos B)Nonowned trailers C)Specifically described autos D)Trailers in insured's possession

Trailers in insured's possession

Purchasing insurance is an example of what type of risk management? A)Transfer B)Avoidance C)Retention D)Reduction

Transfer

Which one of the following is considered a hazard? A)Lightning B)Fire C)Explosion D)Trash

Trash

Which one of the following is NOT an appurtenant structure for purposes of a homeowners policy? A)Storage shed B)Fence C)Tree D)Swimming pool

Tree

Other additional coverages in the businessowners policy include all of the following EXCEPT: A)Pollutant cleanup B)Money orders counterfeit money. C)Trees and detached signs D)Fire department service charge

Trees and detached signs

Which marine policy would an owner of goods most likely purchase to insure a single shipment of property from Chicago to Los Angeles? A)Inland marine block B)Bailee's customers insurance C)Cargo liability D)Trip transit insurance

Trip transit insurance

Which one of the following statements pertaining to risk is NOT correct? A)Only pure risks are insurable. B)Pure risk involves only the chance of loss; there is never a possibility of gain or profit. C)A stock market venture is an example of a pure risk. D)Uncertainty regarding financial loss is the definition of risk; therefore, it is characteristic of both pure and speculative risks.

Uncertainty regarding financial loss is the definition of risk; therefore, it is characteristic of both pure and speculative risks.

Which of the following terms is the process of evaluating the risk and exposures to potential clients? A)Interviewing B)Researching C)Underwriting D)Applying

Underwriting

Which one of the following terms indicates that an insurance contract contains the enforceable promises of only one party? A)Unilateral B)Adhesion C)Aleatory D)Conditional

Unilateral

Which of the following terms describes a building in which no one is present but to which the occupants intend to return? A)Uninhabited B)Occupied C)Unoccupied D)Vacant

Unoccupied

Mary's purse was stolen from her as she walked down the sidewalk. She has an HO-2 policy. Will Mary's policy cover this loss subject to the deductible? A)Yes—if Mary has added the scheduled personal property endorsement to her policy. B)No—theft is not a covered peril in the HO-2. C)Yes—theft is a covered peril under all of the homeowners forms. D)No—the loss occurred away from the insured premises.

Yes—theft is a covered peril under all of the homeowners forms.

All of the following are considered bailees EXCEPT A)a shoe repair shop B)a barber shop C)a tailor and alterations business D)a dry cleaner

a barber shop

Coverage for workers' compensation may be obtained from all of the following EXCEPT A)private insurance carriers B)a commercial general liability policy C)the Federal Employers' Liability Act D)self-insurance

a commercial general liability policy

When a policy is written on a reporting basis, a premium is paid at the beginning of the policy period that is based on an estimate of what the final premium will be. This is called A)an audited premium B)a total premium C)a deposit premium D)a final premium

a deposit premium

A person who stands in a special relationship of trust to another person is A)a fiduciary B)a bailee C)an obligee D)a surety

a fiduciary

An insurance company organized in Pennsylvania, with its home office in Philadelphia, is licensed to conduct business in New York. In New York, this company is classified as A)a domestic company B)a foreign company C)a regional company D)an alien company

a foreign company

Faulty wiring causes a fire that destroys a building. The faulty wiring is considered to be A)a peril B)an indirect cause C)a hazard D)a proximate cause

a hazard

Actual loss of business income payments by an insurer may include the following EXCEPT A)net income that would have been earned B)continuing normal operation expenses C)payroll expenses D)amount required to repair property damage that caused suspension of business

amount required to repair property damage that caused suspension of business

An insurance company that has a certificate of authority from the Department of Insurance is known as A)an admitted carrier B)an nonadmitted insurer C)a domestic insurer D)an eligible carrier

an admitted carrier

When asked about the payment of dividends by a prospect, an agent states that policy dividends are guaranteed, even though this guarantee is not included in the policy. This is an example of: A)defamation. B)unlawful inducement. C)twisting. D)misrepresentation.

misrepresentation.

The Building and Personal Property Coverage Form can be used to insure each of the following types of property EXCEPT A)property belonging to others B)outdoor fixtures C)plants and shrubs held for sale D)money

money

Dishonesty on the part of an insured is an example of a A)physical hazard B)moral hazard C)morale hazard D)peril

moral hazard

When business is placed with a nonadmitted insurer, all of the following are correct EXCEPT A)the insured must be given a disclosure that the policy is placed with a nonadmitted carrier B)the policy is not protected by state guarantee associations C)each state insurance department determines which types of risks may be put in the excess market D)an agent can place business directly with a surplus lines company

an agent can place business directly with a surplus lines company

The purpose of insurance is to A)eliminate hazards B)transfer risk C)eliminate risk D)reduce adverse selection

transfer risk

Coverage E in the dwelling policy provides coverage for A)fair rental value B)personal liability C)medical payments D)additional living expense

additional living expense

All of the following statements about surplus lines insurance are true EXCEPT A)the insured usually must be given a disclosure stating that the policy is placed with a nonadmitted carrier B)each state insurance department determines which types of risks may be put in the surplus and excess market C)agents can place directly with surplus lines companies D)policies are usually not protected by state guaranty associations

agents can place directly with surplus lines companies

A dwelling policy can be used to insure all of the following EXCEPT A)duplexes B)an apartment building with 6 units C)lake cabins D)rental homes

an apartment building with 6 units

Matt has just been nonrenewed by his auto insurance company because he had 3 speeding tickets and 2 at-fault accidents in the last 9 months. Matt will most likely need to obtain insurance from A)an out-of-state company B)a surplus lines company C)an assigned risk plan D)his neighbor's agent

an assigned risk plan

A policy may be amended only with A)a warranty B)a declaration C)a condition D)an endorsement

an endorsement

The type of professional liability policy that provides coverage for insurance agents, as well as certain other types of professionals, is typically referred to as A)an errors and omissions policy B)a contractual liability policy C)a malpractice policy D)a directors and officers policy

an errors and omissions policy

A condition or situation that presents a possibility of loss is A)an exposure B)a peril C)a law of large numbers D)a proximate cause

an exposure

Following the date of issue, an agent license expires in: A)five years. B)one year. C)two years. D)three years.

two years.

An occurrence is best described as something that A)may take place over time B)is expected C)happens when no one is present D)is intentional

may take place over time

The commercial crime policy covers loss to money and securities outside the insured's premises while money or securities are in the care and custody of a A)bank employee B)custodian C)messenger D)watchperson

messenger

Twisting is a form of A)misrepresentation B)defamation C)rebating D)coercion

misrepresentation

Insurance issued to Texas residents by companies not licensed to do business in Texas would be classified as: A)unlisted insurance. B)alien insurance. C)unlicensed insurance. D)unauthorized insurance.

unauthorized insurance.

An employee who suffers an injury covered by workers compensation is entitled to all of the following health care services EXCEPT: A)rehabilitation therapy. B)emergency treatment. C)vocational training. D)cosmetic surgery for aesthetic reasons.

cosmetic surgery for aesthetic reasons.

The covered auto is defined in the policy as all of the following EXCEPT A)any trailer owned by the insured or spouse B)any auto shown in the declarations C)any additional auto acquired in the past 30 days D)any auto used as a temporary substitute while an insured auto is being repaired

any additional auto acquired in the past 30 days

An all-risk or open perils policy protects against A)only stated perils B)any peril except those that are specifically excluded C)any peril D)named perils unless otherwise excluded

any peril except those that are specifically excluded

The Commissioner of Insurance is: A)appointed by the governor to a 4-year term. B)elected by Texas citizens to a 4-year term. C)appointed by the governor to a 2-year term. D)elected by Texas citizens to a 2-year term.

appointed by the governor to a 2-year term.

All of the following factors must be involved to establish negligence EXCEPT A)breach of legal duty owed B)damages C)legal duty owed D)approximate cause

approximate cause

The insured has an accounts receivable coverage form added to the commercial inland marine coverage form. When a fire destroys the insured's records, coverage is provided for all of the following EXCEPT A)uncollectible sums B)extra collection fees C)bad debts D)reconstruction of records

bad debts

For a loss to be covered under the TRIA, the cause of the loss must A)result in losses in excess of $10 million B)be certified as an act of terrorism C)be the result of criminal activity D)result in loss of life

be certified as an act of terrorism

The scheduled personal property endorsement provides a separate schedule of insurance for all of the following categories EXCEPT A)musical instruments B)camera equipment C)belongings while traveling D)jewelry

belongings while traveling

All of the following are basic parts of an insurance contract EXCEPT A)binders B)exclusions C)declarations D)conditions

binders

Section II of a homeowners policy covers all the following EXCEPT A)bodily injury to one of the insured's resident family members B)bodily injury to others C)liability for loss of use of another's property D)property damage of another caused by the insured

bodily injury to one of the insured's resident family members

Individuals that represent only one company, are independent contractors, and are not employees of the insurer are known as A)MGAs B)independent agents C)captive (exclusive) agents D)general agents

captive (exclusive) agents

The purpose of the extended reporting period in a commercial general liability policy is to provide A)coverage for events that happen up to 5 years after a claims-made policy has expired B)coverage for events that have happened before the policy became effective C)coverage for claims made after the policy expires D)additional time for the insured to make monthly reports of information for rating purposes

coverage for claims made after the policy expires

A hotel has added a guest's property endorsement to its commercial crime coverage form. A guest at the hotel removes her jewelry and leaves it wrapped in a towel at the front desk while she uses some exercise equipment. When she finishes her workout, the jewelry is gone. The policy provides A)coverage for the guest's jewelry in the amount shown on the declarations page B)coverage for jewelry only inside a safe-deposit box inside the insured's covered premises C)no coverage because the guest was negligent D)no coverage because the jewelry was not in the insured's possession

coverage for the guest's jewelry in the amount shown on the declarations page

Helene owns an exclusive dress shop catering to wealthy clients. Helene observes a shopper walking out of the store with a dress that had not been paid for. She stops the customer and calls the police. The customer claims that she was only taking the dress out to the sidewalk to show her husband. The customer sues Helene for personal injury. Helene's businessowners policy will A)deny coverage because of the intentional injury exclusion B)defend Helene and pay any judgments against her C)deny coverage because false arrest is not covered under personal and advertising injury D)defend Helene and pay any judgments against her if she has added the personal injury endorsement to her businessowners policy

defend Helene and pay any judgments against her

All of the following can be designated as an insured under a commercial general liability policy EXCEPT A)family members of the insured for their personal activities B)the insured's legal representative C)a real estate management firm D)employees of the named insured, as it relates to the business

family members of the insured for their personal activities

All of the following are homeowners Section II additional coverages EXCEPT A)first aid provided to the insured B)claim expenses C)first aid provided by the insured D)damage to property of others

first aid provided to the insured

A tavern owner has a CGL policy. A patron who claims he was injured when the bartender forcibly removed him from the premises sues both the tavern owner and the bartender. Under the CGL's duty to defend provision, the policy would A)have no duty to defend because the damages are not covered B)have no duty to defend the bartender because he is not an insured C)defend the insured in the lawsuit only if it has merit D)defend the insured in the lawsuit, even if it is groundless

have no duty to defend because the damages are not covered

When faced with a known violation of insurance law, the Commissioner likely would: A)automatically suspend the violator's license for 120 days. B)order the case to federal court. C)issue a cease and desist order. D)cite the violator for a felony.

issue a cease and desist order.

The Commissioner has the power to: A)write and enact new legislation and statutes affecting the business of insurance. B)appoint a stock insurance company board of directors. C)authorize a mutual insurance company sale of stock. D)issue certificates of authority to insurers.

issue certificates of authority to insurers.

Liability policies provide certain supplementary payments that are A)paid in addition to the policy's regular limit of liability B)included in the policy's occurrence limits C)paid only if the insured is found to be legally liable D)included in the policy's aggregate limits

paid in addition to the policy's regular limit of liability

Premium credits for all of the following will lower the insurance premiums for the owner of a mobile home EXCEPT A)tie-down credit B)installing an automatic sprinkler system C)reducing Coverage C limit to 40% of Coverage A D)installing an insurer-approved alarm system, fire system, or both

reducing Coverage C limit to 40% of Coverage A

A contract in which one insurer cedes all or part of a risk to another insurer is known as A)a participating policy B)assuming insurance C)reinsurance D)retro insurance

reinsurance

An insurance binder is best described as A)temporary, short-term evidence of coverage B)a bound collection of rules, rates, and forms C)a temporary agreement to pay a claim pending final settlement D)a rate manual supplied by one of the rating organizations

temporary, short-term evidence of coverage

The bailee policy pays A)the insurer B)all of the parties involved C)the bailee D)the bailor

the bailor

An insured has a $60,000 Special Form (DP-3). When a covered loss in the amount of $10,000 damages the attached garage, how much of that amount is paid under the Coverage B—Other Structures? A)$10,000 B)$1,000 C)$6,000 D)$0

$0

A person who examines and assesses risks for persons seeking or renewing property and casualty insurance is a (n): A)risk manager. B)reinsurer. C)insurance counselor. D)surplus lines agent.

risk manager.

A dwelling policy can insure all of the following types of personal property EXCEPT A)motorized wheelchairs B)sailboats C)lawnmowers D)furniture

sailboats

An insurance company takes possession of a damaged auto it has covered. When the company becomes the legal owner of the auto, it is exercising the right of A)liability B)leasing C)salvage D)condemnation

salvage

In a flood policy issued by the NFIP, all of the following would be considered a flood EXCEPT A)overflow of inland waters B)mudslide C)collapse of land as a result of excessive erosion due to flood D)sewer backup into a home

sewer backup into a home

A bailee is A)a temporary reprieve from liability B)someone who has taken temporary custody of another person's property for a special purpose C)a bond posted to free someone from jail D)someone who escorts litigants into a courtroom

someone who has taken temporary custody of another person's property for a special purpose

The risk that involves the chance of both loss and gain is A)pure risk B)whole risk C)speculative risk D)impure risk

speculative risk

An insured has a $70,000 dwelling policy (DP-1 basic) with a $500 deductible. While the insured is on vacation, burglars enter the house and steal several items. The total loss is estimated to be $5,000. How much of that loss will be paid under the policy? A)$4,500 B)$0 C)$5,500 D)$5,000

$0

An insured has an unendorsed $50,000 special form (DP-3) dwelling policy. The insured's dog bites a child, and the parents sue the insured for $500 for the child's medical bills, $1,000 for rabies shots, and $5,000 for pain and suffering. How much will the policy pay? A)$0 B)$1,500 C)$500 D)$6,500

$0

An insured purchases a commercial property policy with a Causes of Loss—Special Form that covers risks of direct physical loss. The policy has a $5,000 deductible. An earthquake causes $150,000 in damages to the property. What amount will the policy pay? A)$0 B)$145,000 C)$100,000 D)$150,000

$0

An insured's claims-made CGL policy just expired after having been in effect for 1 year. The policy included a supplemental extended reporting period endorsement to cover claims filed after the end of the 60-day basic extended reporting period. When a $5,000 claim is filed 3 years later for a loss that occurred during the 60-day basic extended reporting period, how much will the policy pay? A)$5,000 B)$1,000 C)$0 D)$2,500

$0

An insured has a $40,000 Dwelling Special Form (DP-3) policy. After hosting an afternoon party, the insured discovers that the family's credit cards and ATM cards are missing. If the cards are used, what coverage is provided under Coverage C—Personal Property, and why? A)$20,000. Coverage C provides up to 50% of the dwelling amount for loss of personal property. B)$0. Coverage C excludes coverage for credit cards. C)$4,000. Coverage C provides up to 10% of the dwelling amount for loss of personal property. D)$0. Coverage C provides insurance only for the insured's personal property.

$0. Coverage C excludes coverage for credit cards.

An insurance company requires an insured to attend and testify during a 5-day trial. As a result, the insured is not paid his standard $4,000 per week salary. What total amount will the supplementary payments section of the commercial general liability coverage form reimburse the insured for lost earnings? A)$0 B)$1,250 C)$1,000 D)$4,000

$1,250

The insured has an auto policy with liability limits of 30/60/10. He negligently runs off the road and causes $70,000 damage to an apartment building. How much will the policy pay for the damage to the building? A)$50,000 B)$25,000 C)$70,000 D)$10,000

$10,000

The federal government is not obligated under the TRIA to make payments for any portion of losses that exceed how much annually? A)$100 billion B)$1 billion C)$100 million D)$5 million

$100 billion

Bob has a liability policy in the amount of 300/500/100. How much coverage does he have per occurrence for property damage liability? A)$100,000 B)$300,000 C)$500,000 D)$50,000

$100,000

Crystal's home, which is located in Dallas, is destroyed in a fire. The home is insured for $100,000 under a fire insurance policy. After the loss, it is determined that the home's actual cash value is $75,000 and its replacement cost is $125,000. How much would the insurance company pay for this loss? A)$125,000.00 B)$175,000.00 C)$75,000.00 D)$100,000.00

$100,000.00

What is the minimum deductible for a single-family dwelling insured as a preferred risk in the regular flood program? A)$750 each for building and contents B)$750 total for both building and contents C)$1000 each for building and contents D)$1000 total for both building and contents

$1000 each for building and contents

A house has a replacement cost of $150,000. To make sure that the replacement cost provision of a homeowners policy applies, the minimum policy amount for the dwelling should be A)$120,000 B)$150,000 C)$100,000 D)$300,000

$120,000

An insured owns an office building valued at $200,000. He carries a deductible of $1,000. The building sustains a loss of $40,000. If the insurance policy carries an 80% coinsurance clause, how much coverage must the insured carry to ensure that the loss is paid in full? A)$160,000 B)$200,000 C)$80,000 D)$192,000

$160,000

Operating a motor vehicle without the required insurance is a misdemeanor punishable by a fine of between: A)$175 and $350 for the first offense. B)$1,000 and $3,000 for subsequent offenses. C)$350 and $1,000 for the first offense. D)$175 and $350 for subsequent offenses.

$175 and $350 for the first offense.

Abby's beauty parlor suffers a loss caused by lightning. Her parlor sustains $10,000 of building damage and $5,000 personal property loss. Her fire department also charged her $1,000. To meet current building codes, her cost to repair her building was an additional $2,000. What will her BOP pay, assuming that her limits are adequate? A)$17,000 B)$16,000 C)$18,000 D)$15,000

$18,000

The insured is a tenant in a shopping mall. A fire starts in the insured's store, resulting in the following damages: business personal property, $15,000; damage to fixtures installed by the insured, $2,000; damage to property belonging to customers, $1,000; and smoke damage to the ceiling and walls, $8,000. How much will the insured's Building and Personal Property Coverage Form pay for this loss? A)$15,000 B)$18,000 C)$17,000 D)$26,000

$18,000

Unless a greater penalty is specified by law, an administrative penalty for a violation of the Texas Insurance Code may not exceed: A)$5,000.00 B)$15,000.00 C)$25,000.00 D)$50,000.00

$25,000.00

What is the maximum daily amount paid under the CGL's Supplementary Payments provision for the insured's loss of earnings? A)$500 B)$1,000 C)$100 D)$250

$250

An insured has an $80,000 dwelling policy with a $500 deductible. In addition to the house, the property includes a detached garage, storage shed, and an artist's studio. During a thunderstorm, the garage and storage shed are damaged by lightning. The loss is $3,000 to the garage and $1,000 to the shed. What amount is covered by the policy? A)$3,500 B)$4,000 C)$0 D)$3,000

$3,500

The minimum limits under the Texas Motor Vehicle Safety Responsibility Law are: A)$20,000 per person, $40,000 per accident for Bodily Injury, and $25,000 for Property Damage. B)$30,000 per person, $60,000 per accident for Bodily Injury, and $15,000 for Property Damage. C)$30,000 per person, $60,000 per accident for Bodily Injury, and $25,000 for Property Damage. D)$25,000 per person, $50,000 per accident for Bodily Injury, and $20,000 for Property Damage.

$30,000 per person, $60,000 per accident for Bodily Injury, and $25,000 for Property Damage.

To meet Texas' financial responsibility law, personal auto policies must be written with minimum limits of: A)$25,000/$50,000/$20,000. B)$20,000/$40,000/$25,000. C)$30,000/$60,000/$25,000. D)$15,000/$30,000/$15,000.

$30,000/$60,000/$25,000.

An insured buys a business income policy with a maximum policy limit of $100,000 and a 25% monthly limit of indemnity. How much can the insured collect if the lost income is $40,000 in the 1st month and $10,000 in the 2nd month? A)$65,000 B)$25,000 C)$35,000 D)$50,000

$35,000

An insured has a value reporting form that requires monthly reporting. A standard penalty applies for late or underreporting. On June 30, the insured reports that the values as of May 31 were $300,000. When the insured files a claim for a loss that occurred on May 20 in the amount of $60,000, the insurance company checks the actual inventory as of May 31 and finds that it was $500,000. What amount will the insurance company pay? A)$500,000 B)$36,000 C)$60,000 D)$300,000

$36,000

Adam's Appliances sustains a fire loss and has the following losses: damage to the building is $15,000, damage to contents is $7,000, debris removal is $5,000, and damage to valuable papers and records is $15,000. What will his businessowners policy pay, assuming his limits are adequate? A)$27,000 B)$37,000 C)$32,000 D)$42,000

$37,000

An insured has a homeowners policy for $60,000 on the dwelling. Lightning completely destroys the home, which has a replacement cost of $40,000. How much will the insured receive? A)$6,000 B)$60,000 C)$40,000 D)$20,000

$40,000

Sue has a personal articles floater with $20,000 worth of jewelry coverage. She purchases a ring worth $6,000. The ring is stolen from her the following week. How much can she collect from her insurance carrier? A)$1,500 B)$5,000 C)$4,500 D)$6,000

$5,000

The insured has a building with a replacement cost of $200,000 but has insured it for only $100,000. An 80% coinsurance provision is present in the policy. When an $80,000 loss occurs, the policy will pay A)$40,000 B)$100,000 C)$80,000 D)$50,000

$50,000

Bill is hurt while he is a customer at Sue's flower shop, which is covered by a businessowners policy. He is awarded $50,000 for bodily injury. He also has incurred $2,000 for medical expenses for the 1st year after the injury and another $1,000 reported in the 2nd year. How much will Sue's businessowners policy pay assuming she has enough insurance? A)$53,000 B)$50,000 C)$3,000 D)$52,000

$52,000

John is thinking about buying a new bicycle. While test-driving a 10-speed bicycle at Paul's bike shop, John was thrown from the bike after the front wheel came off. He is awarded $55,000 for bodily injury, as the court found Paul's shop negligent for not closing the quick-release lever. Paul has $600 in lost earnings for the 2 days he had to be in court. What would his policy pay, assuming he has enough insurance? A)$55,600 B)$55,500 C)$55,000 D)$55,250

$55,500

Two insurance policies apply to Monica's home. The limit for Policy A is $100,000, and the limit for Policy B is $50,000. Both policies have a pro rata other insurance clause. If she suffers a $9,000 covered loss to her home, how much will Policy A pay? A)$4,500 B)$6,000 C)$9,000 D)$3,000

$6,000

Bill and Marge suffer the following losses as the result of a severe storm: $3,900 wind damage to their roof; $1,000 loss of income because a boarder in their house had to move; $1,250 in repair costs to prevent further loss to covered property; and $500 in medical expenses when Marge was hit by part of the falling roof. How much will their HO-3 policy pay for these losses, assuming all losses are within the applicable policy limits and ignoring any deductible that may apply? A)$5,150 B)$3,900 C)$6,650 D)$6,150

$6,150

Ted's TV shop employees are installing a TV at Mandy's home. While doing so, they drop the TV, causing damage to the TV in the amount of $250. They also damage the floor and wall in the amount of $700. What will Ted's BOP policy pay, assuming his limits are adequate? A)Nothing B)$250 C)$700 D)$950

$700

Jennifer owns a house valued at $500,000. She purchases a policy insuring it for $300,000 with an 80% coinsurance clause and a $1,000 deductible. Faulty wiring causes a fire that results in a loss of $100,000. How much will the policy pay? A)$239,000 B)$59,000 C)$74,000

$74,000

The Motor Carrier Act of 1980 mandated that trucking operators file proof of pollution liability. Vehicles with a gross vehicle weight of 10,000 lbs. or more must carry specific limits of liability. Which of the following is NOT required by the Motor Carrier Act? A)$5 million for interstate transportation of large quantities of certain hazardous materials, such as compressed gas, radioactive materials, explosives, or oil B)$750,000 for interstate transportation of nonhazardous property C)$1 million for interstate or intrastate transportation of oil or other hazardous waste D)$750,000 for intrastate transportation of nonhazardous property

$750,000 for intrastate transportation of nonhazardous property

Frank's house has a replacement cost of $250,000. His HO-3 policy has a Coverage A limit of $180,000 and a $500 deductible. A fire causes a loss of $10,000. What is the most Frank can collect for his loss? A)$10,000 B)$9,000 C)$7,200 D)$8,500

$8,500

An insured lives in a house covered by an $80,000 Special Form (DP-3) policy. While the insured is on vacation, someone breaks into the house and steals $5,000 in electronic equipment. The damage to the door is estimated at $800. What coverage is provided by the DP-3 policy? A)$0 B)$5,800 C)$5,000 D)$800

$800

Under the medical payments coverage of a personal auto policy, the insurer pays for medical expenses and funeral services incurred within how many years from the date of an accident? A)3 B)2 C)5 D)1

3 years

An insurer may cancel a personal automobile policy on its 12-month anniversary by providing how many days' advance notice of its intent? A)10 B)30 C)20 D)5

30

Under the commercial articles coverage form additional acquired property is automatically covered for up to A)45 days if it is a type of property already covered by the form B)10 days if it is a type of property already covered by the form C)60 days if it is a type of property already covered by the form D)30 days if it is a type of property already covered by the form

30 days if it is a type of property already covered by the form

If an insured has a claims-made commercial general liability policy with the basic extended reporting period, the insurer will pay for losses after the policy has been canceled as long as the occurrence is reported within 60 days of cancellation and the claim is filed within how many years? A)10 B)1 C)5 D)3

5

If the shrubs in front of a house burn when the house catches fire, how much is the insured entitled to recover for the shrubs under his HO-3? A)Replacement cost B)5% of the limit on Coverage A with a maximum of $500 for any 1 shrub C)Policy limit D)$500

5% of the limit on Coverage A with a maximum of $500 for any 1 shrub

Ace Insurance Company and Acme Insurance Company each insure the same building for the same amount. Both policies contain a pro rata other insurance clause. In the event of a partial loss, how much of the loss will Acme pay? A)One-third—the insured is the third party to the contract and must bear a proportionate share of the loss. B)50%—each insurer will pay half the amount of the loss. C)None—second-named insurers always provide excess coverage. D)100%—although, Acme will have the right to subrogate the claim against Ace Insurance Company.

50%—each insurer will pay half the amount of the loss.

An insurer may refuse to renew a commercial auto liability policy if the insurer gives written notice to the insured at least how many days before the policy expires? A)7 B)30 C)60 D)10

60

The insured must send a signed statement of loss to the insurance company within how many days? A)90 B)60 C)45 D)30

60

In the Dwelling Forms, damage from vandalism is not covered if the building has been vacant for more than A)14 consecutive days B)90 consecutive days C)30 consecutive days D)60 consecutive days

60 consecutive days

The basic extended reporting period included in the commercial general liability (CGL) form covers claims made up to 5 years after the end of the policy period, as long as an occurrence is reported within how long after the end of the policy period? A)1 year B)30 days C)5 years D)60 days

60 days

Vandalism or malicious mischief losses to property on the residence premises are not covered if the dwelling has been vacant for A)60 or more consecutive days B)10 or more consecutive days C)25 or more consecutive days D)100 or more consecutive days

60 or more consecutive days

Employees are entitled to receive income benefits equal to what percentage of their average weekly wage following an injury? A)50%. B)100%. C)70%. D)75%.

70%.

When a workers compensation injury results in death of the employee, the employee's beneficiaries are entitled to: A)75% of the employee's average weekly wage. B)a lifetime income equal to 70% of the employee's wages. C)a lump sum of $100,000. D)nothing since the employee is the only person entitled to benefits

75% of the employee's average weekly wage.

Under the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) the federal government's share of compensation that exceeds the insurer's TRIPRA deductible is A)75% B)70% C)80% D)85%

80%

Losses to the dwelling and other structures are paid at replacement cost as long as the insured carries an amount of insurance equal to or greater than A)20% of the buildings replacement cost B)80% of the building's replacement cost C)80% of the buildings actual cash value D)50% of the buildings replacement cost.

80% of the building's replacement cost

An emergency insurance license is valid for: A)180 days. B)30 days. C)90 days. D)60 days.

90 days.

What is one of the major differences between the application of commercial blanket bond's policy limit versus a blanket position bond's policy limit? A)A blanket position bond's policy limit applies separately to each loss. A commercial blanket bond's policy limit applies separately to each employee involved in a loss. B)A commercial blanket bond's policy limit applies aggregately for each loss. A blanket position bond's policy limit applies aggregately for each employee in that position. C)A blanket position bond's policy limit applies aggregately for each loss. A commercial blanket bond's policy limit applies aggregately for each employee in that position. D)A commercial blanket bond's policy limit applies separately to each loss. A blanket position bond's policy limit applies separately to each employee involved in a loss.

A commercial blanket bond's policy limit applies separately to each loss. A blanket position bond's policy limit applies separately to each employee involved in a loss.

Which one of the following parties is the principal in a surety bond? A)A contractor who has signed a contract to build an addition to a residence B)The insurance company that has provided the bond to guarantee the performance of the contractor's work C)The homeowner who will pay the contractor for the work D)The workers who have contracted with the builder to perform the work

A contractor who has signed a contract to build an addition to a residence

What is the definition of a fiduciary? A)An institution that handles trust accounts for the wealthy B)A person who determines policy rates at an insurance company C)An insurance agent who sells policies worth more than $1 million in death benefits D)A person in a position of trust and confidence who handles the affairs and funds of others

A person in a position of trust and confidence who handles the affairs and funds of others

The insured has a named peril policy that covers hail, fire, wind, and lightning. Which one of the following events would be covered? A)A rainstorm that causes the insured's basement to flood B)A roof that collapses from heavy snow C)A window that is broken in a riot D)A roof that is damaged in an electrical storm

A roof that is damaged in an electrical storm

Which one of the following situations is covered under a commercial general liability (CGL) policy? A)An insured boat rams another boat. B)A shopper is injured when a shelf of merchandise collapses. C)An insured car strikes a pedestrian. D)An insured's customer is killed while traveling in the insured's bus.

A shopper is injured when a shelf of merchandise collapses.

Businessowners liability coverage will cover losses due to which of the following occurrences? A)A fire that damaged the owner's exterior sign B)Theft of the owner's weekly receipts C)A suit brought by a competitor for libel D)An accident in which the owner's car was involved

A suit brought by a competitor for libel

Which of the following statements regarding bond agreements is CORRECT? A)The cost of a surety bond reflects the surety's anticipation that a loss will occur. B)A principal may be asked to provide subrogation rights to the surety, in case a loss occurs. C)If a default occurs, the surety may institute legal action against the obligee. D)A surety bond serves as a guarantee of performance

A surety bond serves as a guarantee of performance.

Insurance companies that are nonadmitted insurers fall into 2 categories. They are either an authorized nonadmitted carrier or an unauthorized nonadmitted insurer. What type of license would a person need to sell for an authorized nonadmitted insurer? A)A property and casualty license issued by the state B)An life and health insurance license C)personal lines license issued by the state D)A surplus lines license

A surplus lines license

Which of the following occurrences would be included under the definition of a personal injury? A)A tenant is evicted by his landlord and sues the landlord for invasion of privacy and wrongful eviction. B)An employee is injured lifting a heavy carton and sues his employer for costs. C)A customer is injured in a department store when a sign falls on her, and she sues the store for medical costs and pain and suffering. D)An individual is fired from her job and sues her employer for unemployment benefits.

A tenant is evicted by his landlord and sues the landlord for invasion of privacy and wrongful eviction.

A warranty is a statement made by the applicant regarding the risk to be insured. Which of the following statements is NOT true about warranties? A)A policy can be canceled if the warranty is false. B)A warranty must refer to a material fact. C)A warranty is part of the contract. D)A warranty is guaranteed to be true.

A warranty must refer to a material fact.

Which of the following is NOT an example of an insurable interest? A)A man's interest in the improvements he has added to his leased apartment B)A woman's interest in the home she owns C)A woman's interest in property that she hopes her uncle will leave to her in his will D)A dry cleaner's interest in his customers' clothing in his custody, care, or control

A woman's interest in property that she hopes her uncle will leave to her in his will

The TRIA removes the exclusion of coverage for which of the following causes of loss? A)Intentional acts B)Acts of terrorism C)Damage caused in the act of committing a crime D)War

Acts of terrorism

Jim and his family are considering a move to the West Coast but are very concerned about earthquakes. Jim called an insurance agent for advice. What is the best advice the agent could give Jim about adequately covering his new home for possible earthquake damage? A)Adding the earthquake endorsement will provide the coverage needed. B)A separate earthquake policy should be purchased to provide full coverage for earth movement. C)A state insurance fund will cover any damage that occurs. D)The homeowners policy automatically provides earthquake coverage.

Adding the earthquake endorsement will provide the coverage needed.

Agency is a relationship in which one person is authorized to represent and act for another person, or for a corporation. The person authorized to act on behalf of the other is called an A)Insured B)Principal C)Corporation D)Agent

Agent

A bid bond guarantees to the entity awarding the contract that the bidding contractor, if selected, will undertake the contract and will furnish a performance bond for the project. What will the bond do if the contractor does not take the job? A)Agree to pay difference between the selected contractor's bid and the bid that is then accepted, plus a 10% penalty for the trouble caused B)Pay the entity for the entire contract C)Agree to pay difference between the selected contractor's bid and the bid that is then accepted, plus a 20% penalty for the trouble caused D)Agree to pay difference between the selected contractor's bid and the bid that is then accepted

Agree to pay difference between the selected contractor's bid and the bid that is then accepted

Which term correctly describes an insurance company that has been organized outside the United States or its possessions? A)Remote B)Domestic C)Alien D)Foreign

Alien

Which one of the following statements regarding worker's compensation insurance is NOT correct? A)All employers domiciled in Texas are required to obtain workers compensation insurance coverage for their employees. B)Workers compensation provides compensation to employees who are injured on the job, regardless of fault or negligence on the part of either the employer or employee. C)Workers compensation's primary advantage for the injured employee is that it provides a quick and certain means of compensation. D)Workers compensation protects the employer from tort liability.

All employers domiciled in Texas are required to obtain workers compensation insurance coverage for their employees.

Which of the following statements regarding automobile liability insurance is CORRECT? A)The financial responsibility law protects automobile owners from drivers who obtain insurance from foreign insurers. B)Not all insurers offer personal injury protection with automobile liability coverage. C)Only owners of automobiles that are between one and five years old are required to carry automobile insurance. D)All insurers must offer policyowners the option of buying insurance for losses resulting from accidents involving both uninsured and underinsured motorists.

All insurers must offer policyowners the option of buying insurance for losses resulting from accidents involving both uninsured and underinsured motorists.

Under an auto policy, Other than Collision coverage would apply to which of the following situations? A)An insured breaks a window to gain access because the keys were left inside. B)A car rolls over after hitting a patch of ice. C)An insured has her car parked at an airport, and a suitcase is stolen from the car. D)All of a car's tires are stolen.

All of a car's tires are stolen.

Which of the following is an example of adverse selection? A)A contractor hires a worker who is always on time and does an excellent job. B)An 18-year-old male buys a sports car, and the bank requires automobile insurance. C)A 26-year-old marathon runner applies for health insurance. D)A husband and wife buy a new house, and the mortgage company requires homeowner insurance.

An 18-year-old male buys a sports car, and the bank requires automobile insurance.

Which of the following statements about risk retention groups is NOT true? A)An RRG is owned by its members. B)An RRG typically writes workers' compensation insurance for its members. C)Each group is made up of members who are in the same or very similar industries. D)Risk retention groups are insurance companies.

An RRG typically writes workers' compensation insurance for its members.

Which one of the following is an example of misrepresentation? A)An insurer advertises a life insurance policy without mentioning that premiums may be paid quarterly instead of annually. B)An agent offers a housewarming present to anyone who purchases homeowners' insurance from him. C)An agent convinces a prospect to replace his existing homeowner's policy with a new, more expensive policy that provides more coverage. D)An agent leads a buyer of an auto policy to believe that she will be covered when driving others' cars when she will not.

An agent leads a buyer of an auto policy to believe that she will be covered when driving others' cars when she will not.

Which of the following statements about workers' compensation is NOT correct? A)Workers' compensation covers work-related injuries. B)An employee who is eligible for workers' compensation coverage may sue a negligent employer. C)Most occupations are subject to state workers' compensation laws. D)An employee must accept the benefits mandated by law.

An employee who is eligible for workers' compensation coverage may sue a negligent employer.

Which one of the following is NOT an injury that would be covered by workers compensation? A)An accident occurs while an employee is driving a forklift from a truck to the warehouse. B)The injury occurs when an employee slips on a wet floor while changing clothes in the employee locker room. C)An employee who returns from lunch intoxicated cuts his hand with an electric saw. D)Several workers are injured when the hydraulic lift that moves automobile parts collapses.

An employee who returns from lunch intoxicated cuts his hand with an electric saw.

Bill's construction company had an experience modification factor added to his workers' compensation policy. How might this affect his premium? A)This will not affect his premium. B)An experience modification factor is applied as a method of rewarding those employers with better-than-average loss experience. C)An experience modification factor is applied as a method of rewarding those employers with better-than-average loss experience and penalizing those with poorer experience. D)An experience modification factor is applied as a method of penalizing those employers with poor experience.

An experience modification factor is applied as a method of rewarding those employers with better-than-average loss experience and penalizing those with poorer experience.

Which of the following statements concerning Texas' continuing education law is NOT correct? A)At least half the hours of continuing education must be earned in a classroom or equivalent setting. B)General Lines - Property and Casualty agents must complete 24 hours of continuing education, including 2 hours of ethics. C)Course completion records must be kept for four years after the date of completion. D)An individual who has continuously held a license as an insurance agent for at least 10 years is exempt for the continuing education requirements.

An individual who has continuously held a license as an insurance agent for at least 10 years is exempt for the continuing education requirements.

Which of the following types of business would be better covered by a CGL than a BOP? A)A 12-unit apartment building B)An accountant's office C)A greeting card store D)An oil refinery

An oil refinery

Which of the following transit policies protects the shipper or receiver of goods against loss of goods in transit incoming and outgoing all year long? A)Bill of landing B)Annual transit policy C)Trip transit policy D)Property in transit

Annual transit policy

An agent in the XYZ Insurance Company, equipped with business cards, sample XYZ policies, and an XYZ rate book, informs a prospect that XYZ has given him unlimited binding authority. The prospect assumes this is true. Given the prospect's assumption, which of the following correctly defines the agent's authority in this case? A)Binding B)Implied C)Express D)Apparent

Apparent

All of the following are basic ways in which underwriters assign rates EXCEPT: A)Experience (merit) rating B)Judgement rating C)Manual (class) rating D)Application rating

Application rating

Robert and Carolyn live in a busy city and decide that the solution to not getting into a car accident is to avoid riding in or owning a car. Which of the following methods describes this philosophy? A)Transfer B)Retention C)Loss control D)Avoidance

Avoidance

All of the following coverages can be found in the businessowners policy EXCEPT A)business income B)liability C)extra expense D)workers' compensation

workers' compensation

An insured owns 4 stores. As inventory is sold, the insured transfers new inventory from the other locations to the store making the sales. Which type of policy would best fit this insured's needs? A)Specific policy B)Blanket policy C)Scheduled policy D)Value reporting policy

Blanket policy

Bobby, age 16, borrows his parents' car without their permission and gets into an accident. Which of the following statements about coverage under the parents' personal auto policy is CORRECT? A)Bobby is covered by his parents' policy because he is a family member. B)Bobby is covered by his parents' policy because he is included in the definition of named insured. C)Bobby is not covered because it was not his car. D)Bobby is not covered for this accident because he used the car without permission.

Bobby is covered by his parents' policy because he is a family member.

Which one of the following statements describes a major difference between surety bonds and insurance? A)Insurance has 3 parties to the contract. Bonds have only 2. B)Different types of companies sell bonds and insurance. C)Insurance contracts give the insurer the right to recover from third parties. Bonds only permit the surety to recover from its insured. D)Bonds guarantee something will happen. Insurance protects if something happens.

Bonds guarantee something will happen. Insurance protects if something happens.

Which of the following is NOT one of the requirements for a building to be eligible for coverage under a flood insurance policy? A)Building is principally above the ground B)Building has walls and a roof C)Building is fixed to a permanent site D)Building is owner-occupied

Building is owner-occupied

What is the most coverage available for a single-family dwelling covered under the regular flood program? A)Building—$35,000, and contents—$10,000 B)Building—$300,000, and contents—$100,000 C)Building—$250,000, and contents—$100,000 D)Building—$250,000, and contents—$150,000 Explanation

Building—$250,000, and contents—$100,000

The Inside the Premises—Robbery or Safe Burglary of Other Property insuring agreement in the commercial crime policy covers which one of the following perils? A)Alteration of a check issued by the insured B)Employee theft C)Disappearance of money while transported by armored car D)Burglary by a security guard while a store is closed

Burglary by a security guard while a store is closed

Paul purchases a small bicycle shop and wants to buy insurance to cover his business exposures. Which of the following contracts would provide Paul with the best protection? A)Commercial property policy B)Businessowners policy C)Professional liability policy D)Business liability coverage policy

Businessowners policy

ABC State Insurance Company has agents who are under a contract that allows them to sell only ABC State Insurance Company policies. Which distribution system describes ABC State Insurance Company's organization? A)Group B)Direct C)Independent D)Captive

Captive

Which of the following is considered a uninsured/underinsured motor vehicle? A)Car owned by the state insurance department B)A dune buggy used off-road C)Car furnished by an employer to an aunt living in the insured's household D)Car insured for less than the limits required by the state

Car insured for less than the limits required by the state

Which of the following is NOT a type of surety bond? A)Collateral B)Performance C)Fiduciary D)Bid

Collateral

While backing her car into a parking space on a neighborhood street, Melanie struck a fire hydrant with her bumper. Which coverage under Melanie's personal auto policy (PAP) will cover the damage to the bumper? A)Collision B)Liability C)Medical payments D)Comprehensive

Collision

Dennis purchased a small manufacturing firm and wants to purchase coverage for the premises-operations and products-completed operations exposures. Which of the following types of insurance should he purchase? A)Commercial general liability B)Boiler and machinery C)Comprehensive general liability D)Employment practices liability

Commercial general liability

Mark wants to purchase a policy for his manufacturing company to include premises liability, products liability, and completed operations. Which policy would cover all of these losses? A)Personal injury liability B)Contractual liability C)Products and completed operations liability D)Commercial general liability

Commercial general liability

While on a tour of a toy manufacturer's warehouse, a child severely cuts her finger. The toy manufacturer's insurer will cover the claim if the manufacturer carried which one of the following types of insurance? A)Workers' compensation B)Commercial property C)Employment practices liability D)Commercial general liability

Commercial general liability

The provisions of the Terrorism Risk Insurance Act of 2002 apply to which of the following lines of insurance? A)Homeowners B)Commercial property C)Dwelling D)Automobile

Commercial property

In Texas, insurance laws and regulations are administered by the: A)Commissioner of Insurance. B)Governor. C)Legislature. D)State Senate Finance Committee.

Commissioner of Insurance.

Which of the following entities could bring an errors and omissions claim against an insurance agent? A)Clients an agent represents and state insurance departments B)Companies an agent represents and state insurance departments C)Companies an agent represents, clients they represent, and state insurance departments D)Companies an agent represents and clients they represent

Companies an agent represents and clients they represent

Which one of the following best defines a hazard? A)Condition that increases the chance of a loss B)Cause of a loss C)Uncertainty of a loss D)Unexpected loss

Condition that increases the chance of a loss

The procedure for resolving a disagreement between an insured and an insurance company about a loss is described in which of the following parts of an insurance policy? A)Insuring agreement B)Conditions C)Exclusions D)Declarations

Conditions

A therapist owns office space in a commercial office building that is legally organized as a condominium. Which of the following best protects the therapist's business personal property? A)Unit owners form (HO-6) B)Condominium association coverage form C)Commercial package policy (CPP) D)Condominium commercial unit owners form

Condominium commercial unit owners form

An insurance company issued a homeowners policy that included ambiguous language regarding how a loss was settled. The insured sued the insurance company and won. The judge stated that due to the ambiguous language in the contract, the decision must be made in favor of the insured. The judge was basing this decision on which of the following types of insurance contract? A)Aleatory contract B)Contract of adhesion C)Unilateral contract D)Conditional contract

Contract of adhesion

Which of the following coverages would protect a policyholder for assumed liability under a construction contract to install water lines for a city? A)Incidental contracts B)Independent contractors C)Contractual liability D)Completed operations

Contractual liability

An insured suffers a covered loss to some rental property that forces the tenant to move to another location. Under which section of the dwelling policy would the insured receive payment during the time the property is being repaired? A)Coverage D—Fair Rental Value B)Coverage E—Additional Living Expense C)Coverage A—Dwelling D)Coverage B—Other Structures

Coverage D—Fair Rental Value

Which of the following coverages in the homeowners policy is used to protect Sam when a friend files suit after falling down basement stairs that Sam is repairing? A)Coverage E—Personal Liability B)Coverage D—Loss of Use C)Coverage A—Dwelling D)Coverage F—Medical Payments

Coverage E—Personal Liability

A businessowner purchases a commercial general liability (CGL) policy that includes a supplemental extended reporting period. The effective dates of the policy are December 31, 2007-December 31, 2008. The businessowner is sued over an incident that occurs on April 15, 2008, but is not discovered or reported until June 30, 2009. What coverage, if any, will the policy provide? A)Coverage is granted because the reporting period has not expired. B)Coverage is denied because the owner was sued. C)Coverage is granted because the incident occurred during the policy term. D)Coverage is denied because the reporting period expired.

Coverage is granted because the reporting period has not expired.

Which of the following statements regarding employee theft is NOT true? A)The insurer pays only the amount of the loss that exceeds the deductible. B)Coverage is automatically canceled for employees causing the loss. C)Coverage is not canceled for employees causing the loss. D)The insured must notify the insurer as soon as possible of any loss insured against.

Coverage is not canceled for employees causing the loss.

The insured is looking for the amount of coverage in a property and casualty policy. This information would be found in the A)endorsements B)conditions C)declarations D)liberalization clause

declarations

Paul's bicycle shop is covered by a businessowners policy. Pete, a customer, is injured when he slips on the wet floor. Where would Paul find coverage in his policy? A)Personal injury B)Bodily injury C)Medical expenses D)Personal injury and medical payments

Medical expenses

Wilson owns a 4-family apartment building. Which Dwelling Form(s) would provide coverage against building damage caused by the freezing of plumbing, heating, air conditioning, and sprinkler systems? A)DP-1 B)DP-1 and DP-2 C)DP-3 only D)DP-2 and DP-3

DP-2 and DP-3

A property owner wants to insure both the rental property and any of the tenant's belongings if they are stolen. Which policy would you recommend and why? A)DP-3 Special Form and a separate tenants policy to cover personal property B)DP-1 Basic Form because the property owner needs only named perils coverage C)DP-2 Broad Form because it automatically provides the extended coverage endorsement (ECE) D)DP-3 Special Form because it includes coverage for personal property

DP-3 Special Form and a separate tenants policy to cover personal property

Aircraft hull insurance will provide coverage for which of the following? A)Damage to or loss of the aircraft hull, fuselage, and personal injury caused B)Damage to or loss of the aircraft hull, fuselage, and medical payments C)Damage to or loss of the aircraft hull, fuselage, and property damage to others D)Damage to or loss of the aircraft hull, engines, electronic navigation, and communication equipment

Damage to or loss of the aircraft hull, engines, electronic navigation, and communication equipment

Which one of the following components of an insurance contract contains information about the risk, the effective date of coverage, deductible, premium amounts, coinsurance percentage, and location of the insured property? A)Insuring agreement B)Declarations page C)Conditions D)Definitions

Declarations page

Fred operates a delivery service. One day, while a customer was directing Fred as he backed his delivery van up to the customer's loading dock, Fred accidentally hit a parked car. The owner of the car filed a claim against both Fred and the customer. Fred's business automobile policy will do which of the following? A)Defend both Fred and the customer up to the policy limits B)Not defend Fred or the customer because the loss occurred on the customer's premises C)Defend the customer, but deny coverage for Fred because he wasn't liable D)Defend Fred, but deny coverage for the customer who needs his own policy

Defend both Fred and the customer up to the policy limits

Of the following occupations, which would NOT use an errors and omissions policy to provide coverage for professional losses? A)Doctor B)Attorney C)Consultant D)Insurance agent

Doctor

Which of the following policy provisions restricts certain risks from coverage? A)Insuring agreement B)Declarations C)Exclusions D)Conditions

Exclusions

What kind of insurance company is an insurance company owned by its policyowners (insureds)? A)Mutual B)Domestic C)Stock D)Parent

Mutual

Under Texas law, an insured may do which of the following with regard to the provision of uninsured motorists property damage? A)Reject the coverage by notifying the insurer of his intention to do so. B)Double the amount of the coverage upon written request to the insurer. C)Elect coverage for the same amount as the policy's liability limit. D)Reduce the coverage below the liability limit of the policy.

Elect coverage for the same amount as the policy's liability limit.

A fire destroys the new clothes an employee has brought in to work to show her friends. Coverage applies under the insured's Building and Personal Property Coverage Form because the clothes are an employee's personal property. When the insurance company settles, who will receive the payment? A)Store where the clothes were charged with a credit card B)Employee C)Insured business owner D)Payroll department

Employee

Which one of the following is an optional coverage under the businessowners policy? A)Business income B)Personal effects C)Valuable papers D)Employee dishonesty

Employee dishonesty

Which one of the following individuals is likely to have a valid workers' compensation claim? A)Employee injured while performing a task for which he had not yet been trained B)Retired employee injured while visiting his old workplace C)Employee who suffers a diabetic coma from failure to take prescribed medicine D)Sole proprietor injured in an auto accident while driving to a friend's house

Employee injured while performing a task for which he had not yet been trained

Which of the following insuring agreements of the commercial crime coverage form would best protect an insured from losses caused by an employee's deceit? A)Inside the Premises—theft of money and securities B)Inside the Premises—robbery or safe burglary of other property C)Employee theft D)Forgery or alteration

Employee theft

Which of the following individuals would be eligible for workers' compensation benefits? A)Employee who has an auto accident on the way home from work B)Employee who falls on a wet factory floor C)Employee who falls in a restaurant while on her lunch break D)Employee who has a heart attack on the job

Employee who falls on a wet factory floor

Which of the following is NOT a source of information important to an underwriter? A)Government bureaus B)Consumer reports C)Employer reference D)Agent or producer comments

Employer reference

An ex-employee files suit against her former employer. She believes she was dismissed for missing work to perform jury duty. Which one of the following policies would cover damages paid to the employee if she proves her case? A)Director and officers (D&O) liability B)Employment practices liability (EPL) C)Commercial general liability (CGL) D)Errors and omissions (E&O)

Employment practices liability (EPL)

Which policy provides coverage for professional liability? A)Personal umbrella policy B)Homeowners policy C)General liability policy D)Errors and omissions policy

Errors and omissions policy

Ralph asks his insurance agent to explain how the homeowners policy covers stolen jewelry. The agent spends some time explaining how, when, where, and what jewelry theft coverage exists in the policy. As a result, Ralph believes that his $5,000 watch is covered in full under the basic policy. After the watch is stolen, Ralph is surprised to learn that he has only limited coverage. What legal doctrine might Ralph rely upon to get full coverage for his loss? A)Estoppel B)Reasonable expectation C)Utmost good faith D)Adhesion

Estoppel

Which one of the following statements about workers' compensation insurance is NOT correct? A)Every type of employment is subject to workers' compensation laws. B)Workers' compensation policies provide benefits for rehabilitation. C)Coverage for lost wages is a benefit of workers' compensation insurance. D)Self-insurance of workers' compensation is permitted.

Every type of employment is subject to workers' compensation laws.

Which of the following is NOT a basic way in which underwriters assign rates? A)Expense rating B)Experience rating C)Manual rating D)Judgement rating

Expense rating

Which type of authority does an insurer give to its agents by means of the agent's contract? A)General B)Express C)Implied D)Fiduciary

Express

Boone's Manufacturing has several long-term contracts with customers. These contracts run for 5 years and uniformly provide that they are automatically canceled if Boone is unable to meet supply dates. If Boone's building is destroyed, it can be rebuilt in 9 months. What form of Time Element Coverage is best suited to protect Boone's against the potential loss of income from the long-term contracts? A)Business Income without extra expense B)Business income with extra expense C)Extra expense coverage D)Leasehold interest coverage

Extra expense coverage

Which one of the following forms would be most appropriate to protect against a suspension of business operations for an insured that cannot afford to have its operations interrupted? A)Business income with a monthly limit of indemnity B)Extra expense insurance C)Extended business income insurance D)Business income with the agreed value option

Extra expense insurance

Which of the following actions would NOT be considered an unfair claim settlement practice in Texas? A)Failing to provide an explanation of the basis in the policy for denying a claim. B)Requiring insureds to provide federal income tax statements as part of the investigation of workers' compensation claims. C)Failing to affirm or deny coverage of claims within 10 days. D)Failing to implement guidelines for claim investigations.

Failing to affirm or deny coverage of claims within 10 days.

Which one of the following is NOT an example of an unfair claim settlement practice? A)Not attempting in good faith to promptly settle a claim when liability is clear. B)Knowingly misrepresenting pertinent facts to claimants. C)Refusing to pay a claim without conducting an investigation. D)Failing to examine a claimant under oath.

Failing to examine a claimant under oath.

The agent has many responsibilities to the applicant. One involves a trust relationship between the agent and the insured regarding the insured's finances and confidentiality. In this case, the agent acts in what capacity? A)Attorney-in-fact B)Special agent C)Fiduciary D)Consultant

Fiduciary

Every state requires that each person be able to prove he is financially prepared if involved in an accident. Suppose your state requires minimum liability limits of 25/50/10. What is the name of that law? A)Unsatisfied judgment law B)Compulsory insurance law C)Tort law D)Financial responsibility law

Financial responsibility law

All states have financial responsibility laws that require each driver to prove that he can pay for bodily injury or property damage liability losses arising out of auto accidents. These are also known as A)Out-of-state coverage B)Supplementary insurance coverage C)Financial responsibility laws D)Other insurance coverage

Financial responsibility laws

Which one of the following perils is normally excluded in a difference in conditions (DIC) policy? A)Earthquake B)Flood C)Radioactive contamination D)Fire

Fire

Which one of the following exposures to loss is NOT covered by the equipment breakdown protection coverage form? A)Spoilage damage B)Fire or combustion explosion C)Utility interruption D)Business income

Fire or combustion explosion

Who is responsible for making the premium payments due under a commercial package policy? A)Insurance company B)First named insured C)Agent D)All named insureds

First named insured

If an agent's insurance license has been revoked, how long must he wait before applying for another license? A)One year. B)Six months. C)Two years. D)Five years.

Five years.

Which of the following damages is covered Under Part D—Coverage for Damage to the Insured's Auto? A)Freezing B)Wear and tear C)Flood D)Mechanical breakdown not resulting from total theft

Flood

An insurance company that sells insurance only to people who meet specific membership requirements is known as what kind of insurance company? A)Mutual B)Fraternal C)Reciprocal exchange D)Stock

Fraternal

Joan and Steven have applied for automobile insurance with ABC Auto Insurers. When the agent asks if anyone else drives the car, they lie and do not tell him that their neighbor, George, who lost his driver's license due to drunk driving, uses one of their cars on a regular basis to drive to work. Once the company found out about George after he had an accident, they denied the claim, citing what legal concept as the reason? A)Breach of warranty B)Fraud C)Misrepresentation D)Concealment

Fraud

Which one of the following would NOT be paid as supplementary payments under Part A of the personal auto policy? A)Interest accruing after a judgment is entered which was defended by the insurer B)Expenses the insurer incurs in investigating claims C)The insured's lost earnings up to $200 per day because of court appearances D)Funeral expenses for the insured

Funeral expenses for the insured

Which one of the following commercial auto coverages covers automobiles in the insured's care? A)Garagekeepers B)Business auto C)Liability D)Comprehensive

Garagekeepers

Under the Texas Insurance Code, which of the following factors may an insurer use to determine a rate for insurance? A)Garaging location. B)Race. C)Age. D)Sex.

Garaging location.

Who does a surety bond protect? A)Obligee B)Obligor C)Surety D)Principal

Obligee

Robert wants open perils coverage on his dwelling and named perils coverage for his personal property. Which homeowners form should he choose? A)HO-4 B)HO-2 C)HO-3 D)HO-6

HO-3

Which one of the following homeowners forms provides open perils coverage? A)HO-8 B)HO-2 C)HO-4 D)HO-3

HO-3

Which homeowners policy would be written to cover personal property only? A)HO-2 B)HO-4 C)HO-3 D)HO-5

HO-4

Which one of the following homeowners forms is used to cover tenants or renters? A)HO-6 B)HO-2 C)HO-4 D)HO-5

HO-4

Which of the following unendorsed policies provides open perils coverage on Coverage C—Personal Property? A)HO-5 B)HO-2 C)HO-3 D)HO-8

HO-5

Janet, an employee of Carla's Computer Repair, is injured while playing baseball for the company-sponsored softball team. Under which policy would Janet find coverage for her injuries? A)Part two of workers' compensation B)Part one of workers' compensation C)Health insurance D)Parts one and two of workers' compensation

Health insurance

Tammy was struck by a hit-and-run driver and suffered injuries to her neck. Which part of her personal auto policy, if any, will cover this loss? A)Her policy will not cover the loss; she must sue the other driver to recover these expenses. B)Her liability coverage pays her medical bills. C)Her uninsured motorists coverage pays her medical bills. D)Her collision coverage pays the medical bills.

Her uninsured motorists coverage pays her medical bills.

Which one of the following acts constitutes an unfair practice involving false advertising? A)Accepting an applicant's signed application without collecting an initial premium. B)Hinting that a competing insurer is suffering a financial crisis. C)Using statistics about vehicle accidents in an advertisement for car insurance. D)Quoting the high school football coach's statements about his new car in your agency's advertisement.

Hinting that a competing insurer is suffering a financial crisis.

Doreen's printing shop delivers finished items to local customers. Doreen usually makes the deliveries herself, but when she is too busy, one of her employees will use his own car to drop off products with her customers. What type of an endorsement would cover Doreen's liability? A)Extra expense endorsement B)Employee vehicle endorsement C)Drive other car endorsement D)Hired auto and nonowned auto liability endorsement

Hired auto and nonowned auto liability endorsement

An insured owns a personal auto policy and a homeowners policy. He purchases a new TV and puts it in the trunk of his car. On the way home he hits another car, and the crash totally destroys the TV. The damage to the TV is covered by which insurance policy? A)Umbrella B)Medical expense C)Homeowners D)Auto

Homeowners

Who would use a HO-6 homeowners form? A)Owner of a duplex B)Tenant of a rental house C)Owner of a rental house D)Owner of a condominium

Owner of a condominium

Which of the following is covered by ocean marine insurance? A)Imports B)Personal floaters C)Domestic shipments D)Commercial property floater risks

Imports

Which of the following categories is covered by ocean marine insurance? A)Imports and exports B)Commercial floater risks C)Instrumentalities of transportation or communication D)Domestic shipments

Imports and exports

Jim borrows a company van to take his son to college. As the trip takes more than 10 hours, he would like to share the drive with Julia, his wife. What endorsement should Jim add to the company commercial auto policy to make sure he has the proper coverage? A)Individual named insured B)Additional insured C)Employees as insureds D)Drive other car coverage

Individual named insured

Which of the following types of insurance covers exposures that involve property and merchandise while in transit or "floating"? A)Inland marine insurance B)Shipper's insurance C)Ocean marine insurance D)Personal property insurance

Inland marine insurance

Which of the following is an example of control (reduction) as a method of handling risk? A)Reducing coverage B)Installing a burglar alarm C)Buying insurance to reduce the risk D)Increasing a deductible

Installing a burglar alarm

An auto is sold for salvage value following payment of a loss. Who receives the proceeds? A)Claimant B)Lien holder C)Insurance company D)Insured

Insurance company

In most cases, an injured employee receives payments under workers' compensation insurance from whom? A)Insurance company B)Employer C)State Department of Employment D)Division of Workers' Compensation

Insurance company

Part A of the personal auto policy would apply in which of the following situations? A)Garage mechanic while test-driving the insured's auto B)Insured's 13-year-old son who, while playing with the car, starts it and lets it roll into the street, damaging other parked cars C)Driver using the insured vehicle to transport people for a fee D)Driver who intentionally causes an accident

Insured's 13-year-old son who, while playing with the car, starts it and lets it roll into the street, damaging other parked cars

The common policy declarations of the commercial package policy would provide which of the following information? A)Insured's business description B)Modifications to coverage C)Duties of both parties to the contract D)Perils insured against

Insured's business description

In an insurance transaction, who does a licensed agent legally represent? A)National Association of Insurance Commissioners B)Insurer C)Applicant D)State insurance department

Insurer

Which one of the following statements regarding personal liability coverage is CORRECT? A)It is added by endorsement to the homeowners policy. B)It is added by endorsement to the dwelling policy, but automatically included in the homeowners policy. C)It is automatically included in both the dwelling and homeowners policies. D)It is added by endorsement to both the dwelling and homeowners policies.

It is added by endorsement to the dwelling policy, but automatically included in the homeowners policy.

Cecil sells his car and buys another one to replace it. How does the liability coverage in his personal auto policy apply to the replacement vehicle? A)It is not covered until Cecil notifies the insurance company. B)It is not covered—Cecil must cancel the existing policy and purchase a new one for the replacement vehicle. C)It is automatically covered for 14 days, but Cecil must notify the insurer for coverage to continue beyond that point. D)It is automatically covered.

It is automatically covered.

For a homeowners policy, which one of the following statements about insuring personal property normally kept at a residence other than the residence premises is CORRECT? A)It is covered only if the insured has paid an additional premium. B)It is not covered when located off the residence premises. C)It is covered for up to 10% of the Coverage C limit. D)It is covered for the full limit worldwide, whether on or off premises.

It is covered for up to 10% of the Coverage C limit.

What is the purpose of MCS-90, the endorsement for motor carrier policies of insurance for public liability? A)It covers the company when parking a trailer in an interstate location for pickup. B)It provides proof that the company carries an amount of insurance required by law. C)It provides for coverage for the company when hit by an uninsured driver. D)It excludes pollution only in the event the auto liability is assumed under a contract.

It provides proof that the company carries an amount of insurance required by law.

Bob's construction company, based in Wisconsin, is doing a job in Illinois. Bob's declaration page for his workers' compensation policy lists Minnesota, Iowa, Illinois, and Wisconsin as states where he will do work. Pete, an employee working in Illinois, is injured on the job. How would Bob's policy respond? A)It will pay benefits based on Illinois workers' compensation laws. B)It will pay benefits only if Bob is held liable. C)Pete may choose coverage under the benefits that are best for him. D)It will pay benefits as if Pete had been injured in Wisconsin.

It will pay benefits based on Illinois workers' compensation laws.

While driving to work one morning, Joe is hit from behind by a car driven by Sam. Joe is injured and taken to the hospital where he is admitted with a broken shoulder and other internal injuries. During the police investigation, it is determined that Sam was 100% negligent and did not have automobile insurance. What coverage will indemnify Joe for his injuries? A)Joe's uninsured motorist bodily injury coverage B)The state's unsatisfied judgment coverage C)Sam's uninsured motorist bodily injury coverage D)Joe's bodily injury liability coverage

Joe's uninsured motorist bodily injury coverage

Joe is the general contractor building a new shopping center. He has hired subcontractors to do some of the work for him. What will cover the employees of the subcontractor if the subcontractor does not take out workers' compensation coverage? A)Joe's workers' compensation policy B)The subcontractors must sue the employer for coverage C)The Federal Employers' Liability Act D)Assigned risk plan

Joe's workers' compensation policy

John and Mary are a hardworking married couple. They own a sole proprietorship that sells farm produce. John has an additional sole proprietorship where, as an individual, he makes wood kitchen cabinets. John also owns a partnership with his brother, James, in which they make custom furniture. Which of these people is an insured under John's commercial general liability (CGL) policy? A)John, Mary, and James B)John only C)John and James D)John and Mary

John and Mary

If John's father transfers ownership of a house to John, which one of the following statements regarding insurance on the house is CORRECT? A)John can buy insurance because he has an insurable interest. B)John's father must retain his policy on the house. C)John must purchase the house from his father to obtain an insurable interest in it. D)John's father must assign his policy to John as well.

John can buy insurance because he has an insurable interest.

Which of the following is NOT a common requirement for a business to be eligible for a businessowners policy (BOP)? A)Businesses occupying up to 35,000 square feet. B)A majority of the operation is located on-premises. C)Revenues of $6 million or less. D)Less than 25 employees.

Less than 25 employees.

If the monthly limit of indemnity option has been selected under the Business Income Coverage Form, how much will an insurer pay for loss of business income for each month of loss (assume the declarations page shows a limit of insurance of $150,000 and a fraction of 1/3)? A)Lesser of $50,000 or the actual loss for each month B)$100,000 C)$50,000 D)Lesser of $100,000 or the actual loss for each month

Lesser of $50,000 or the actual loss for each month

Which of the following amounts is the maximum that an insurer will pay in case of a loss? A)Limit of liability B)Actual cash value C)Condition D)Loss reserve

Limit of liability

Pete owns a business that sells alcoholic beverages. A person Pete sold alcohol to injures a third party. Pete is sued by this third party and needs what kind of protection? A)Commercial packaged policy with employers' protective endorsement B)Businessowners policy C)Liquor liability/dram shop liability D)Commercial general liability with an employer's protective endorsement

Liquor liability/dram shop liability

Guides to insurance companies' financial integrity and claims-paying ability are published regularly by rating services. All of the following are rating services EXCEPT A)M. Best, Inc. B)Fitch's C)Standard & Poor's D)Lloyd's of London

Lloyd's of London

Which one of the following would be considered a temporary substitute vehicle under the terms of the personal auto policy? A)Company car provided by an employer B)New car purchased by the insured 3 days ago C)Truck borrowed from a friend while moving D)Loaner vehicle provided by an auto repair shop

Loaner vehicle provided by an auto repair shop

Which of the following is NOT one of the requirements for a loss to be paid under the uninsured motorists coverage of the personal auto policy? A)Insured is legally entitled to damages B)Loss involves property damage to insured's auto C)Other vehicle meets policy's definition of uninsured vehicle D)Loss is sustained by an insured

Loss involves property damage to insured's auto

Coverage D in homeowners insurance is for what type of loss? A)Loss of use B)Personal property C)Dwelling D)Personal liability

Loss of use

An insurance company may measure its underwriting profitability by using which of the following ratios? A)Capacity ratio B)Return on equity ratio C)Loss ratio D)Investment ratio

Loss ratio

Jane insures her car with ABC Insurers. Which of the following individuals best describes a family member on Jane's policy? A)Uncle Joe visiting from Texas B)Robert, her ex-husband who moved out last week C)Maggie, her older sister, who lives with Jane D)Renee, a friend, who lives with Jane

Maggie, her older sister, who lives with Jane

Which of the following claims would most likely be covered under Texas' workers' compensation law? A)Beatrice sustained a head injury when she fell down the stairs at her workplace. It is later determined that Beatrice was legally intoxicated when the injury occurred. B)Gertrude and her husband argued before she left for work. Later that day, her husband stormed into the restaurant where Gertrude works and punched her in the face. C)Jerry broke his ankle playing softball at his employer's annual picnic. He was not required to attend the picnic as a condition of his employment. D)Mark was struck by lightning while attempting to finish a roof repair for his employer.

Mark was struck by lightning while attempting to finish a roof repair for his employer.

Which one of the following is NOT an additional coverage found in homeowners policies? A)Market valuation B)Loss assessment C)Fire department service charge D)Debris removal

Market valuation

Mary and Sue are customers in Paul's bicycle shop. Mary and Sue are both injured when a stack of bicycles fall on them because they were trying to get a bike off the top shelf. Which of the following statements best describes how Paul's standard businessowners policy would provide coverage in regards to Mary and Sue's injuries? A)Mary and Sue would receive payments for up to the policy limits under the medical expenses coverage, whether or not Paul is found to be legally liable. B)Mary and Sue would receive payments for up to policy limits under the bodily injury, supplementary, and medical expenses coverages. C)Mary and Sue would receive payments for up to the policy limits under the personal injury liability and medical expenses coverages. D)Mary and Sue would receive payments under the bodily injury liability coverage, even if it is determined that Paul is not legally liable.

Mary and Sue would receive payments for up to the policy limits under the medical expenses coverage, whether or not Paul is found to be legally liable.

Which one of the following would NOT be covered under an employment practices liability insurance policy? A)Mass layoffs of employees B)Wrongful discharge C)Age discrimination D)Sexual harassment

Mass layoffs of employees

Which policy would provide coverage for a surgeon when his patient is injured because of the doctor's failure to correctly perform a heart operation? A)General liability B)Medical malpractice C)Personal umbrella D)Homeowners

Medical malpractice

Coverage C in the Commercial General Liability policy covers A)Medical payments B)Personal injury liability C)Advertising injury liability D)Bodily injury and property damage liability

Medical payments

Which one of the following is NOT a supplementary payment provided in the commercial general liability policy? A)Premiums for court bonds B)Costs of investigation and defense C)Medical payments D)Costs of judgment interest

Medical payments

What type of endorsement would be used to insure a recreational vehicle under the personal auto policy? A)Motor home endorsement B)Miscellaneous type vehicle endorsement C)Extended vehicle endorsement D)Joint ownership coverage

Miscellaneous type vehicle endorsement

Which one of the following hazards can be described as a careless attitude or general indifference on the part of the insured toward the occurrence of loss? A)Morale B)Physical C)Legal D)Moral

Morale

Which one of the following businesses would be eligible for a businessowners policy? A)Manufacturing facility B)Public parking garage C)Neighborhood bar D)Motel with 2 floors

Motel with 2 floors

Which of the following is NOT an eligibility requirement for a homeowners policy? A)No more than 4 families occupy the home B)Named insured is the owner-occupant of dwelling C)Dwelling is a seasonal residence D)Named insured lives on a farm

Named insured lives on a farm

The Broad Form/HO-2 policy provides which type of coverage? A)Named perils coverage for personal property coverage, and open perils coverage for dwelling coverage B)Named perils coverage for dwelling and personal property coverage C)Open perils coverage for dwelling and personal property coverage D)Open perils coverage for dwelling coverage only

Named perils coverage for dwelling and personal property coverage

Premiums for workers' compensation are based on the amount of payroll and rates established for various occupational classifications set by the A)state's Department of Insurance B)National Council on Compensation Insurance C)insurance companies D)federal government

National Council on Compensation Insurance

John and Gina met with their insurance agent who asked a series of questions that identified what they owned, what coverage they needed, how much money they wanted to spend on this coverage, and all possible sources of paying for this coverage. What analysis is the insurance agent completing? A)Needs B)Hazard C)Loss D)Risk transference

Needs

Bob's Auto Repair stores its customers' autos inside its building overnight. A fire destroys the building and everything in it. Bob's commercial general liability policy will pay for which of the following? A)Damage to the customers' autos and for the value of Bob's work already performed on them B)Value of Bob's work on the autos but not the damage to the customers' autos C)Damage to the customers' autos but not the value of Bob's work D)Neither the damage to the customers' autos nor the value of Bob's work

Neither the damage to the customers' autos nor the value of Bob's work

Greg is a truck driver with Home Furnishings, Inc., and delivers furniture to customers. Jeff is a salesman with Home Furnishings and accompanies Greg on a delivery run to an important customer. On the way, Greg runs a red light, hits a bus, and rolls the delivery truck. Jeff is seriously injured. Which coverage under the unendorsed commercial auto policy will pay for Jeff's injuries? A)Bodily injury liability B)Medical payments C)Uninsured motorist D)No coverage available under the commercial auto policy for this loss Explanation

No coverage available under the commercial auto policy for this loss

Monica uses her car for her skin-care business. One night, she drives the car to meet a friend at a restaurant. While driving home, Monica loses control of the car, hits a parked car, and rolls the car over. Monica is severely injured and taken to the hospital. Will medical payments coverage reimburse Monica for her medical bills? A)No, there is no coverage for injuries while occupying a vehicle used for the insured's business. B)No, her collision coverage would pay for the medical bills less the deductible. C)No, she would be covered under the bodily injuries coverage. D)No, the coverage for injuries would be covered under workers' compensation.

No, there is no coverage for injuries while occupying a vehicle used for the insured's business.

Steve meets with his agent to apply for an automobile insurance policy on his 2 personal cars. In reviewing the policy, Steve finds he is not willing to accept the duties listed in the conditions section. He signs the application but adds a note deleting the duties to the insurer. Is this acceptable to the company? A)No—the agent has to make this request in writing. B)Yes—the insured has the ability to change the policy at the time of the application. C)No—a written endorsement by the insurer is the only way to change the policy. D)Yes—as long as the request is done in writing.

No—a written endorsement by the insurer is the only way to change the policy.

Which one of the following statements about occurrence liability policies is CORRECT? A)Occurrence policies cover losses that happen after a specified retroactive date. B)Occurrence policies do not have a coverage trigger. C)Occurrence policies cover events that happen after the policy is in effect, but before it expires. D)Occurrence policies are only used for products-completed operations exposures.

Occurrence policies cover events that happen after the policy is in effect, but before it expires.

Which one of the following is NOT a commercial general liability exposure? A)Products manufactured or sold B)Operations by employees C)Operation of automobiles D)Owned premises

Operation of automobiles

If a vehicle collides with a boulder that came tumbling down the side of a mountain, what coverage would pay for the damage? A)Collision B)Uninsured motorist C)Other than Collision D)Supplementary payments

Other than Collision

If the insured hits a deer while driving his own vehicle, which part of the personal auto policy will pay to repair the vehicle? A)Medical payments B)Collision C)Other than Collision D)Liability

Other than Collision

What part of the personal auto policy covers losses caused by malicious mischief, vandalism, hail, or floods? A)Other than Collision B)Collision C)Liability D)Property damage

Other than Collision

Which one of the following auto policy coverages would pay for damage to the insured's car that the insured motorist caused by hitting a farmer's cattle while driving through the country? A)Collision B)Uninsured Motorists C)Other than Collision D)Liability

Other than Collision

One of Susan's jobs as the office manager for Acme Insurance is to drop off the daily deposits at the bank on her way home from the office. If Susan is robbed one night while making the deposit, what crime form will provide coverage to Acme Insurance for the loss? A)Outside the Premises B)Employee theft C)Funds Transfer Fraud D)Inside the Premises - theft of money and securities

Outside the Premises

Which one of the following is NOT a benefit of workers' compensation insurance? A)Lost wages B)Pain and suffering C)Medical expenses D)Rehabilitation costs

Pain and suffering

Which one of the following would be classified as a general damage? A)Pain and suffering B)Lost wages C)Damaged property D)Medical bills

Pain and suffering

While driving to work, Leonard is eating his breakfast, reviewing his appointment book, and talking on his cell phone. He runs a red light and collides with a commuter van. The van's occupants are hospitalized. Which part of Leonard's personal auto policy covers the occupants' injuries and damage to the van? A)Part A B)Part C C)Part D D)Part B

Part A

Medical Payments Coverage is Part B in the personal automobile policy. All of the following statements about medical payments coverage are correct EXCEPT A)coverage is available if an injury occurs while getting into or out of a vehicle B)Part B covers reasonable expenses for services incurred within 5 years of the date of injury C)no coverage is available if the vehicle is being used as a residence D)coverage is provided for the named insured if hit by a car while walking along a road

Part B covers reasonable expenses for services incurred within 5 years of the date of injury

Doug, who is 7 years old, accidently throws a baseball through the neighbor's kitchen window. Which part of the homeowners policy will pay for the damages to the window? A)Part D B)Part E C)Part B D)Part F

Part E

Which one of the following types of property is NOT covered under the Building and Personal Property Coverage Form? A)Patios and walkways B)The cost of labor for work done on customer's property in the insured's possession C)Property that is 75' from the insured premises D)Improvements made by a tenant to the building

Patios and walkways

Sue, an employee of Paul's Bicycle Shop, was on a service call repairing some bicycles at Bill's home. On her way back to the shop, she was involved in an automobile accident and injured. Where would Sue find coverage? A)Both Paul's auto policy and workers' compensation policy B)Her own auto policy C)Paul's auto policy D)Paul's workers' compensation policy

Paul's workers' compensation policy

Which of the following is NOT a determining factor in work-related injuries? A)Circumstances B)Pay grade C)Time D)Place

Pay grade

Which of the following bonds guarantees that bills for labor and materials will be paid to the contractor as they are due? A)Contract B)Payment C)Performance D)Completion

Payment

Paul purchased Utility Services—Time Element Coverage for his bicycle shop. Of the following, which statement best describes the type of coverage Paul purchased with this endorsement? A)Payment for damage to property due to power outages that occur with utility services B)Payment for damage to property due to utility interruption C)Payment for loss of business income due to a covered loss involving certain utility services D)Payment for loss of business income for any type of utility interruption

Payment for loss of business income due to a covered loss involving certain utility services

How would a loss be adjusted under a homeowners policy with an insurance-to-value clause if a homeowner failed to carry coverage of at least 80% of the replacement cost of the home? A)Cost to replace the property B)Cost to repair the property C)Payment of the actual cash value or a proportional share of the loss, whichever is greater D)100% of the loss

Payment of the actual cash value or a proportional share of the loss, whichever is greater

Assume that a toy store has a fairly stable inventory except in November and December, when its inventory triples. What is the best way to insure the increase in the amount of coverage needed? A)Peak season endorsement B)Business income and extra expense endorsement C)Blanket policy D)Value reporting form

Peak season endorsement

Which of the following limits does NOT apply to Workers' Compensation Part Two—Employers Liability? A)Per property damage B)Per accident C)Per employee D)Policy limit

Per property damage

What type of bond is used by a contractor to guarantee that work will be completed to specifications? A)Performance B)Permit C)Bid D)Bail

Performance

Which of the following is a contract bond? A)Public official bond B)Performance bond C)Fidelity bond D)Judicial bond

Performance bond

What is the actual cause of a loss? A)Hazard B)Peril C)Proximate cause D)Risk

Peril

Which of the following individuals is NOT an insured under Section I of the homeowners policies? A)Resident relative of the insured B)The spouse of the named insured C)Person younger than 21 who is in the care of the named insured D)Person hired by the insured to perform work on the insured premises

Person hired by the insured to perform work on the insured premises

Which of the following statements about flood insurance is NOT correct? A)Sewer backup into a dwelling is not considered flood and is not covered. B)There are two types of flood insurance programs available: emergency and regular. C)A flood includes an overflow of inland or tidal waters D)Personal property in a basement or outside in the yard is covered.

Personal property in a basement or outside in the yard is covered.

Which of the following items may be covered under Coverage C—Personal Property of a homeowners policy? A)Animals B)Personal property of the insured located anywhere in the world C)Property belonging to the insured's boarder D)Aircraft parts

Personal property of the insured located anywhere in the world

Sandy and Stewart had a fire loss, and the insurance company reimbursed them for their damaged personal property. They believed that they did not get enough for this property because the settlement was based on actual cash value. Which endorsement would have provided a better loss settlement? A)Coverage C—Personal Property increased limits B)Scheduled personal property endorsement C)Personal property replacement cost endorsement D)Special limits of liability

Personal property replacement cost endorsement

Which of the following items could be insured under Coverage C of a homeowners policy? A)Exotic birds B)Personal property usually located in a secondary residence C)Snowmobile D)Motorized go-kart

Personal property usually located in a secondary residence

The personal auto policy coverage applies to losses, accidents, or occurrences that take place during the policy period in all the following locations EXCEPT A)Alberta, Canada B)San Juan, Puerto Rico C)Dover, Delaware D)Phillipsburg, St. Martin

Phillipsburg, St. Martin

Barbara is demonstrating a floor model of her company's product in its showroom when something goes wrong with the demonstration and the customer is injured. This is an example of what type of loss? A)Products liability B)Personal injury C)Completed operations D)Premises liability

Premises liability

Marcus, an employee at the Beautiful Home Gift Store, dropped and broke a customer's purchase while carrying it to the customer's car. The resulting loss would be considered which of the following under the store's commercial general liability policy? A)Personal injury B)Products-completed operations C)Products liability D)Premises-operations

Premises-operations

Which one of the following is NOT an agent responsibility? A)Explaining the coverage B)Prepaying the initial premium C)Collecting the initial premium D)Delivering the policy

Prepaying the initial premium

What is a no-stacking rule? A)Prevents the insured from receiving full coverage from both collision and property damage B)Prevents the insured or injured person from collecting medical payments from more than 1 policy or coverage, such as uninsured motorist C)Allows the insured to waive the deductible under Other than Collision coverage D)Allows the insured to receive payment from only 2 insurance policies in the household

Prevents the insured or injured person from collecting medical payments from more than 1 policy or coverage, such as uninsured motorist

Who are the 3 parties to a surety bond? A)Insurance company, agent, and policyholder B)Principal, obligee, and surety C)Principal, agent, and surety D)Insured, agent, and beneficiary

Principal, obligee, and surety

When an insurance company cancels a policy, what is the method used to determine the premium due? A)Flat B)Pro rata C)Short-rate D)Premature

Pro rata

Which of the following classes of property are NOT specifically excluded from coverage C—personal property? A)Credit Cards B)Property away from the residence C)Animals, birds, or fish D)Property rented to others off of the residence premises

Property away from the residence

If an agent is unable to place business with an admitted insurer or a company licensed to do business in the state, where would he look to place this type of risk? A)Fiduciary market B)State-assigned risk market for nonadmitted carriers C)Surplus lines market D)Export lines market

Surplus lines market

Which of the following is covered by the jewelers block coverage form? A)Property being worn by the insured B)Property exhibited in a showcase away from the premises C)Property in transit by mail (unless registered mail) D)Property that is sold but not delivered

Property that is sold but not delivered

Yacht policies provide physical damages and liability coverage. What is the liability section called? A)Protection and indemnity insurance B)Protection and medical payments insurance C)Protection liability insurance D)Owners protection and indemnity insurance

Protection and indemnity insurance

What is the primary purpose of workers' compensation? A)Provide compensation to employees for injuries arising out of their employment B)Pay benefits to employees who are temporarily laid off C)Provide accident insurance for employees, both on and off the job D)Improve employees' working conditions

Provide compensation to employees for injuries arising out of their employment

What is the primary purpose of workers' compensation laws? A)Providing benefits to workers who are laid off B)Providing job security C)Making the workplace a safer environment D)Providing compensation to employees who have sustained injury, illness, or death during the course of employment

Providing compensation to employees who have sustained injury, illness, or death during the course of employment

Which one of the following acts is considered an unfair or deceptive act or practice? A)Representing a binder as evidence of insurance. B)Issuing policies at a higher premium rate for higher risk insureds. C)Encouraging an agent to sell only one type of businessowners' policy. D)Providing for the payment of part of the agent's commission to the insured.

Providing for the payment of part of the agent's commission to the insured.

An insured has a CGL policy and hires a contractor to complete some work on a building. Which of the following is the best way to protect the insured from having to personally pay for damages as a result of the contractor's operations? A)Add the contractor as a named insured to the insured's CGL policy. B)Purchase a professional liability policy. C)Exclude any independent contractors from the insured's CGL policy. D)Purchase an owners and contractors protective (OCP) liability policy.

Purchase an owners and contractors protective (OCP) liability policy.

Transferring is a method of handling risk. Which of the following best describes the concept of transfer? A)Purchasing insurance B)Buying a car with a friend to share the risk C)Having a cosigner sign off on the risk and take all financial responsibility D)Avoiding situations where there is a high risk for loss

Purchasing insurance

An insurance company domiciled in New Jersey and conducting business in Texas is a (n): A)interstate company. B)domestic company. C)alien company. D)foreign company

foreign company.

Which one of the following is part of the formula for calculating the actual cash value of a dwelling? A)Original market value B)Replacement cost C)Assessed value D)Purchase price

Replacement cost

Which of the following phrases best describes actual cash value? A)Original cost minus depreciation B)Replacement cost minus depreciation C)Original cost minus appreciation D)Replacement cost plus appreciation

Replacement cost minus depreciation

Joan and Steven have applied for automobile insurance with ABC Auto Insurers. The ABC agent asked Joan and Steven if their resident 18-year-old son, Henry, has had any moving traffic violations in the past 2 years. Both answer no. The fact is that Henry had 4 speeding tickets, but never told his parents. What legal concept does this scenario describe? A)Misrepresentation B)Warranty C)Representation D)Fraud

Representation

Which of the following is NOT a requirement of a dwelling policy? A)Covers hunting cabins in rural areas B)Not required to be owner occupied. C)Covers rental homes D)Required to be owner occupied

Required to be owner occupied

Richard and his wife own 2 family cars. In addition, Richard is given a company car to makes sales calls. He occasionally uses the company car for personal use and is concerned that he may not have sufficient company coverage. Which of the following is the best advice his agent can give him? A)Richard can add the company car to his automobile policy as car number 3. B)Richard can add the extended nonowned coverage for named individual endorsement to his policy. C)Richard has to rely on the coverage his company gives him and follow their usage rules. D)Richard can add the drive other car endorsement to his policy.

Richard can add the extended nonowned coverage for named individual endorsement to his policy.

Which homeowners endorsement is used to insure high-value items of personal property? A)Scheduled personal property B)Personal effects C)Personal property replacement cost D)Business pursuits

Scheduled personal property

Knowingly lying on an application to obtain coverage would be an example of A)fraud B)recession C)concealment D)misrepresentation

fraud

Cathy is going to open up her own hair salon. She wants to be certain her policy will provide business liability coverage. Cathy may open her salon in any of the following places EXCEPT A)Toronto, Canada B)Blue Mountain, Alabama C)Sedro Woolley, Washington D)Seville, Spain

Seville, Spain

Which of the following methods of canceling a policy is used when a policyholder cancels her policy before it reaches its natural expiration? A)Pro rata B)Flat C)Long-rate D)Short-rate

Short-rate

Which type of return premium computation is used when the policyholder cancels a policy? A)Flat B)Aggregate C)Short-rate D)Pro rata

Short-rate

Commercial property insurance covers outdoor signs attached to the building and has a per sign payout limit. Which form would a business purchase if it wanted to less restriction on coverage? A)Commercial articles coverage form B)Equipment dealers coverage form C)Sign coverage form D)Accounts receivable coverage form

Sign coverage form

Which of the following property may be insured under a flood policy issued by the NFIP? A)Silo B)Fence surrounding insured's property C)Automobile D)Trees

Silo

Which one of the following dwellings would a HO-3—Homeowners Form cover? A)Office building B)Apartment building C)Single-family home D)Condominium

Single-family home

Which of the following categories is NOT covered by inland marine insurance? A)Stationary property B)Domestic shipments C)Instrumentalities of transportation D)Commercial floater risks

Stationary property

Henry is a pilot who just purchased his first Cessna Skyhawk single-engine airplane. He asks his insurance agent about aviation liability insurance and learns that this type of insurance is part of a special line of insurance business requiring a different agent. To which special line of insurance business is the agent referring? A)Umbrella lines B)Surplus lines C)Personal lines D)Fraternal lines

Surplus lines

The personal auto policy offers physical damage coverage. One of the coverages is comprehensive. All of the following causes of loss are specifically covered under comprehensive EXCEPT A)earthquake B)flood C)theft D)freezing

freezing

If an agent is unable to place business with an authorized insurer or a company licensed to do business in the state, where would he look to place this type of risk? A)Surplus lines market B)Fiduciary excess lines market C)State-assigned risk market for nonadmitted carriers D)Export lines market

Surplus lines market

Which business auto coverage symbol allows coverage of all vehicles, including owned, nonowned, and hired autos? A)Symbol 8 B)Symbol 1 C)Symbol 4 D)Symbol 3

Symbol 1

The Business Auto Coverage Form uses symbols to denote the vehicles to which each of the policy's coverages applies. Which symbol is the most restrictive? A)Symbol 7 B)Symbol 9 C)Symbol 1 D)Symbol 2

Symbol 7

Patrick's Widget Company has a small fleet of owned cars used by local salespeople. Most of the salespeople, however, travel to other cities and rent cars to make sales calls. Which coverage should Patrick include on his commercial auto policy to cover this exposure? A)Symbol 8—hired autos only B)No coverage available for rental cars under the commercial auto policy C)Symbol 7—specifically described autos only D)Symbol 9—nonowned autos only

Symbol 8—hired autos only

How is burglary defined? A)The use of force to enter a premises after business hours B)Uninvited entry onto the premises of another with the intent to commit an illegal act C)Taking of property from inside the premises by a person unlawfully entering or leaving the premises as evidenced by marks of forcible entry or exit D)Illegal entry onto the premises of another

Taking of property from inside the premises by a person unlawfully entering or leaving the premises as evidenced by marks of forcible entry or exit

The designated entity that provides residential insurance to applicants who are unable to obtain property insurance through the standard market is the A)Texas Windstorm Insurance Association. B)Texas Mutual Insurance Company. C)Texas Property and Casualty Guaranty Association. D)Texas Fair Access to Insurance Requirements (FAIR) plan.

Texas Fair Access to Insurance Requirements (FAIR) plan.

Which of the following statements about the Dwelling Basic Form (DP-1) is CORRECT? A)The DP-1 is an open perils policy. B)The policy covers fire, lightning, and all types of explosion. C)The DP-1 provides coverage for appurtenant structures. D)The policy is designed to provide broad coverage for personal property.

The DP-1 provides coverage for appurtenant structures.

Ralph is a conductor employed by American Cross-Country Railway System. He routinely travels from Chicago to Los Angeles, and was injured falling from a train platform while helping passengers. Which of the following provides bodily injury coverage for Ralph? A)The U.S. Longshoremen's and Harbor Workers' Compensation Act B)The Federal Employees' Compensation Act C)The Jones Act D)The Federal Employers' Liability Act

The Federal Employers' Liability Act

The insuring agreement section of a policy describes A)description of the property insured B)duties of the insured after a loss C)losses excluded D)perils insured against

perils insured against

Bob is employed as the ship's navigator on an American flagged ship in Duluth, Minnesota, and is injured as a result of the owner's negligence. Under which law would Bob find coverage? A)The Health Care Reform Act B)The Federal Employees' Compensation Act C)The Jones Act D)The Longshore and Harbor Workers' Compensation Act

The Jones Act

Which of the following is a requirement for a temporary insurance license? A)The applicant must demonstrate high ethical standards. B)The applicant must have a sponsoring company. C)The applicant must complete a prelicensing course. D)The applicant must successfully pass a licensing examination.

The applicant must complete a prelicensing course.

What is the benefit for the employee covered by either the Federal Employers' Liability Act or the U.S. Longshoremen's and Harbor Workers' Compensation Act? A)The benefits are the same as for workers' compensation, but federal law requires coverage to be purchased here. B)The benefits are broader than workers' compensation coverage. C)Federal law requires eligible companies to purchase this coverage. D)There is no advantage to these employees because these terms simply describe how coverage is purchased for the exposures that they have.

The benefits are broader than workers' compensation coverage.

Stephanie is an agent in a local insurance agency. While visiting a client in his home, Stephanie accidentally leaves a coffee cup on an antique coffee table, damaging the wood surface. She asks her sales manager whether she has coverage under her homeowners policy. Which of the following is the best advice given to Stephanie? A)The business pursuits endorsement should be added to your homeowners policy to protect you if you personally damage property while conducting business. B)You need to buy a commercial liability policy. C)The personal injury endorsement should be added to your policy to provide coverage for injury or damage you may cause to a client. D)Your homeowners policy provides coverage for this exposure.

The business pursuits endorsement should be added to your homeowners policy to protect you if you personally damage property while conducting business.

Which of the following describes a personal contract? A)The contract is a promise made only by one party. B)The contract insures a property. C)The contract protects the individual who owns the property. D)The persons involved may void the contract.

The contract protects the individual who owns the property.

Occupational diseases are covered under workers' compensation. All of the following are occupational diseases EXCEPT A)exposure to chemicals on the job that lead to cancer B)cancer contracted by workers working with asbestos C)chicken pox that is contracted at work D)black lung disease for a coal miner

chicken pox that is contracted at work

The retroactive date of a claims-made professional liability policy is which of the following? A)The date the policy expires B)The inception date of the policy C)The earliest date an event or loss may occur and be eligible for coverage under the policy D)The date that no claims can be submitted

The earliest date an event or loss may occur and be eligible for coverage under the policy

Mary was involved in an accident with a hit-and-run driver. Her car was damaged. Which of the following items would be covered under the collision coverage in the personal auto policy? A)Mary's luggage in the trunk is destroyed. B)The front windshield is shattered. C)The vehicle is stolen before the tow truck can tow it to the body shop. D)The vehicle is towed to the body shop.

The front windshield is shattered.

Roberta shares carpool expenses with co-workers. During her turn driving to work, she is involved in an accident in which one of her passengers is injured and her car is damaged. How does her personal auto policy respond? A)The insurance company will not cover the auto repairs. B)The insurance company will not cover the auto repairs or injuries. C)The insurance company will cover the auto repairs and injuries. D)The insurance company will only cover the auto repairs.

The insurance company will not cover the auto repairs or injuries.

Which of the following is NOT one of the requirements for a claim to be covered by the Texas Property and Casualty Insurance Guaranty Association? A)The total amount of the claim does not exceed $500,000. B)The policy was issued by an insurer licensed to do business in Texas. C)The claimant was a Texas resident when the loss occurred. D)The policy under which the claim was filed is covered by the Association.

The total amount of the claim does not exceed $500,000.

Which of the following statements is TRUE regarding the termination provision? A)The insurer may cancel or nonrenew an auto policy at any time during the term of the policy. B)The insurer may only cancel the policy at renewal. C)The insurer must provide written notice to the insured for policy cancellation or nonrenewal. D)The insured may only cancel the policy at renewal.

The insurer must provide written notice to the insured for policy cancellation or nonrenewal.

The insurer retains certain rights under the conditions section of a workers' compensation policy. Which of the following is one of those conditions? A)The insurer retains the right to inspect the insured's workplace for insurability at any time. B)The insurer does not have the right to inspect the insured's workplace for insurability at any time. C)The insurer retains the right to inspect the insured's workplace for insurability when the insured can arrange it. D)The insurer retains the right to adjust the premium if the loss experience becomes worse.

The insurer retains the right to inspect the insured's workplace for insurability at any time.

Max and Sam are neighbors who get into an argument over the placement of their common property line. The argument becomes a fight in which Sam's nose is broken. Sam sues Max for his medical expenses. How will Max's homeowners policy respond to this loss? A)It will pay Sam's medical bills under Part E—Personal Liability. B)It will pay Sam's medical bills under the first aid additional coverage endorsement. C)The insurer will deny the claim because of the intentional injury exclusion. D)It will pay Sam's medical bills under Part F—Medical Payments to Others.

The insurer will deny the claim because of the intentional injury exclusion.

An insured rents a car while on vacation in Canada and causes an accident. What coverage is provided for this loss under the personal auto policy? A)The loss is not covered. B)The loss is covered if the insured has purchased a foreign country endorsement. C)The loss is covered if the insured has purchased a rental car endorsement. D)The loss is covered under an unendorsed policy.

The loss is covered under an unendorsed policy.

Which of the following is NOT an element of an insurable risk? A)The loss must have a determinable value. B)The loss must be due to chance. C)The loss must be accidental from the insured's perspective. D)The loss must be catastrophic.

The loss must be catastrophic.

What is meant by aggregate limit of liability? A)The maximum amount the policy will pay per policy period, regardless of the number of claims B)The most the insurance company will pay to one person C)The most the insurance company will pay for defense costs D)The maximum amount payable in any one occurrence

The maximum amount the policy will pay per policy period, regardless of the number of claims

Which one of the following statements about the standard mortgage clause is CORRECT? A)The mortgagee has no rights under the policy. B)The mortgagee can only collect from the policy with the prior written consent of the policyowner. C)The mortgagee is the only party that can submit claims under the policy. D)The mortgagee may have to pay the premium if the insured fails to do so.

The mortgagee may have to pay the premium if the insured fails to do so.

Bridgepoint Accounting Services is a limited liability company. Who are the insureds? A)The named insured, directors, and managers B)The named insured, named insured's spouse, and the named insured's employees C)The named insured, managers, and the named insured's employees D)The named insured only

The named insured, managers, and the named insured's employees

If a California resident with a personal auto policy with the minimum liability limits has an accident in a state that requires higher limits, which of the following will occur? A)The loss is not covered. B)The policy will provide the higher limits, but the insured must first pay the additional premium. C)The policy will automatically provide the required higher limits at no extra charge. D)The insured must first purchase an other states coverage endorsement.

The policy will automatically provide the required higher limits at no extra charge.

Which of the following statements pertaining to insurance companies is CORRECT? A)A stock company is owned by its policyholders. B)The primary purpose of a stock company is to earn a profit for its stockholders. C)Both mutual and stock companies have stockholders. D)In a mutual company, insureds are not owners of the company.

The primary purpose of a stock company is to earn a profit for its stockholders.

After Acme Construction wins a bid to build an office complex, the owner demands that Acme purchase a payment bond to cover electrical and heating subcontractors. What guarantee is the owner seeking from Acme Construction by demanding the payment bond? A)The surety will complete and deliver the work free of any liens or encumbrances. B)The obligee will complete and deliver the work free of any liens or encumbrances. C)The fidelity will complete and deliver the work free of any liens or encumbrances. D)The principal will complete and deliver the work free of any liens or encumbrances.

The principal will complete and deliver the work free of any liens or encumbrances.

Which one of the following losses would be covered under the Inside the Premises—Robbery or Safe Burglary of Other Property insuring agreement in the commercial crime policy? A)The silent partner in a jewelry wholesale business steals a shipment of diamonds. B)A business owner files suit to recover property wrongly taken by a taxing authority and to recover her legal fees. C)The safe at a furniture store is taken after the store is burglarized. D)The county taxing authority seizes and sells a taxpayer's merchandise to satisfy a tax debt.

The safe at a furniture store is taken after the store is burglarized.

Which of the following statements regarding flood coverage is TRUE? A)The standard deductibles are $2000 under the emergency program and $1000 for the regular program. B)Sewer backup into a dwelling is considered a flood and is not covered. C)Agents have the authority to bind coverage on flood policies. D)Personal property in a basement or outside in the yard is covered

The standard deductibles are $2000 under the emergency program and $1000 for the regular program.

The boatowners policy provides liability and physical damage coverage. What is the value and size of a boat eligible for the boatowners policy? A)The value is less than $25,000, the watercraft is less than 26' in length, or both B)The value is less than $15,000, the watercraft is more than 30' in length, or both C)The value is more than $25,000, the watercraft is more than 30' in length, or both D)The value is more than $15,000, the watercraft is more than 15' in length, or both

The value is less than $25,000, the watercraft is less than 26' in length, or both

Which of the following statements about umbrella policies is NOT correct? A)They are written only for commercial risks. B)Losses that are excluded by the underlying policy but covered by the umbrella are subject to the umbrella's retention limit. C)They provide coverage above the limits of underlying policies. D)If the insured fails to keep the underlying coverage in force, the umbrella policy will not cover the amount of loss that would have been paid by the underlying policy.

They are written only for commercial risks.

Which of the following statements about commercial umbrella liability insurance is NOT true? A)They provide catastrophic liability coverage for business risks. B)They exclude catastrophic liability coverage for business risks. C)The policy will only pay once the policy limits on an underlying policy have been met. D)They require another policy to be in place before they can be issued.

They exclude catastrophic liability coverage for business risks.

License and permit bonds are required by government entities, including states, cities, and towns, from individuals requesting permission or license to take certain actions that may affect the public. What do these bonds do? A)They guarantee that the business owner will complete the contract in accordance with the terms of the contract. B)They protect the governmental units from the dishonest acts of their employees. C)They guarantee that the principal will perform the described activity in conformance with the specifications, terms, and codes governing such activities. D)They permit someone to seek a remedy in a court of equity.

They guarantee that the principal will perform the described activity in conformance with the specifications, terms, and codes governing such activities.

Which of the following statements about dwelling policies is CORRECT? A)They may be used to insure rental homes. B)Liability coverage is automatically included in a dwelling policy. C)The building must be occupied to be insured. D)Theft can be covered under an unendorsed dwelling policy.

They may be used to insure rental homes.

All of the following statements regarding Part D- coverage for damage to your auto are correct EXCEPT A)This coverage pays for direct and indirect loss to the named insured's rental or borrowed cars B)This coverage pays for direct and indirect loss to the named insured's covered auto C)This coverage is commonly known as physical damage coverage. D)This coverage covers all personal property in the vehicle.

This coverage covers all personal property in the vehicle.

Brian, the owner of a small boutique, is covered by an unendorsed businessowners policy. He detains Susan, a customer, for shoplifting. The police come, and Susan is not charged with any crime. Susan is very upset with Brian and sues his store for damages. Where might Brian find coverage for this loss? A)This coverage is included in the businessowners policy under personal injury. B)Brian's businessowners policy will cover this loss under bodily injury. C)Brian's businessowners policy does not provide coverage, as he did not buy a separate endorsement. D)This coverage is not covered in businessowners policy and cannot be purchased in the standard market.

This coverage is included in the businessowners policy under personal injury.

All of the following statements about the notice to applicant in the Fair Credit Reporting Act are true EXCEPT A)A notice to applicant must be issued to all applicants for life or health insurance coverage. B)This notice must be given to the consumer no later than ten days after a report is requested C)The agent must leave this notice with the applicant along with the receipt. D)A consumer may make a written request for a complete disclosure of the nature and scope of the investigation underlying the report.

This notice must be given to the consumer no later than ten days after a report is requested

Which one of the following is NOT a use of auto symbols in the commercial auto policy? A)To determine which rating territory applies to the covered autos B)To identify which coverage applies to which vehicle C)To customize the policy to the insured's needs by selecting the appropriate coverage D)To determine how coverage will apply to vehicles acquired after the policy effective date

To determine which rating territory applies to the covered autos

Why do insurance policies usually define who is considered an insured under the policy? A)To specify who is not insured B)To specify beneficiaries of the policy C)To specify the exclusions in a policy D)To specify who is covered in addition to the named insured

To specify who is covered in addition to the named insured

Bob's Trucking Company contracts with boat companies to haul its boats and boat parts. The trailers are left at an interchange for pickup. What physical damage coverage is important for Bob to have to cover this exposure? A)Trailer interchange coverage B)Truckers conditions C)Liability D)Physical damage coverage

Trailer interchange coverage

Under the Building and Personal Property Coverage Form, how much will an insurer pay for fire department service charges? A)Up to $2,000 B)Up to $500 C)Actual charges D)Up to $1,000

Up to $1,000

Which one of the following best describes a short-rate cancellation? A)Upon cancellation, all earned premium is returned minus overhead expenses incurred. B)Upon cancellation, the insurer returns all unearned premium. C)Upon cancellation, 100% of the premium is returned. D)Upon cancellation, the insurer keeps all earned premium plus overhead expenses incurred.

Upon cancellation, the insurer keeps all earned premium plus overhead expenses incurred.

Recently the local utility company's main power supply depot was damaged by high winds. Mike, who owns a TV store, wants to make sure he has coverage for damage to all the TV components demonstrated in his store if the power goes out. What does Mike need to purchase? A)Nothing, these utility services are covered in all businessowners policies B)Utility Service—Time Element Coverage C)Utility Services—Direct Damage Coverage D)Utility Services Coverage

Utility Services—Direct Damage Coverage

Jennifer and David signed a homeowners insurance application for coverage on their home. They did not divulge that last year their garage burned down after their 16-year-old son left a cigarette burning. The agent sent in the application and a policy was issued. When another fire occurred 2 months after the policy was issued, the company voided the policy because the agent would not have sent in the application if he had known of the prior loss. Which contract principle does this situation describe? A)Reasonable expectations B)Utmost good faith C)Contract of adhesion D)Waiver and estoppel

Utmost good faith

Which of the following terms is used to describe an empty building that is not being used? A)Absent B)Unoccupied C)Vacated D)Vacant

Vacant

Which of the following endorsements is used to provide coverage based on actual values at certain locations at specific times? A)Value reporting endorsement B)Peak season endorsement C)Spoilage endorsement D)Ordinance or law coverage endorsement

Value reporting endorsement

Which one of the following principles is used to describe liability for the actions of another person? A)Implied liability B)Absolute liability C)Strict liability D)Vicarious liability

Vicarious liability

Which of the following terms describes an insured's oral or written statement that becomes part of an insurance contract and can void a policy if they are breached? A)Representation B)Misrepresentation C)Waiver D)Warranty

Warranty

All of the following coverages may be part of a commercial package policy EXCEPT A)crime B)farm C)inland marine D)personal auto

personal auto

Which of the following is NOT a peril covered under the personal property coverage in the HO-3—Special Form? A)Water damage B)Malicious mischief C)Freezing D)Hail

Water damage

If a building has been vacant for more than 60 consecutive days before a loss occurs, which one of the following types of damages will be covered under a Building and Personal Property Coverage Form? A)Building glass breakage B)Vandalism C)Attempted theft D)Weight of snow, ice, or sleet

Weight of snow, ice, or sleet

After a fire damages a home, how much is the insured entitled to recover for buying materials to board up the windows under the homeowners policy? A)Whatever it will reasonably cost B)No coverage available C)5% of the Coverage A limit D)$500

Whatever it will reasonably cost

Ann and her agent meet to discuss automobile insurance. The agent completes an application for coverage, takes Ann's check for $200, and mails the application to the insurance company. Two weeks later, Ann receives the policy in the mail. When did the consideration take place? A)When the agent submitted the application B)When the agent quoted the premium C)When the company mailed the application D)When Ann wrote the premium check

When Ann wrote the premium check

Which one of the following coverages is NOT available under the commercial package policy? A)Inland marine B)Commercial property C)Workers' compensation D)Commercial auto

Workers' compensation

The amount of payment that comes into play when an insured fails to carry the sufficient amount of insurance is sometimes referred to as the A)claims penalty B)agreed value C)stated payment D)coinsurance penalty

coinsurance penalty

Which one of the following statements about workers' compensation insurance is CORRECT? A)The Social Security Administration handles the administration of workers' compensation benefits. B)Employers liability insurance is the same as workers' compensation coverage. C)The legal foundation for workers' compensation is the doctrine of tort liability. D)Workers' compensation benefits apply without regard to the employer's negligence.

Workers' compensation benefits apply without regard to the employer's negligence.

What type of coverage is typically found in a professional liability policy? A)All liability exposures that the insured has B)Wrongful acts, errors, or omissions the insured commits C)Wrongful acts, errors, or omissions the insured commits, and in some cases, bodily injury D)Business contractual obligations of the insured

Wrongful acts, errors, or omissions the insured commits, and in some cases, bodily injury

Joan and Steven have applied for automobile insurance with ABC Auto Insurers. The ABC agent asked Joan and Steven if their resident 18-year-old son, Henry, has had any moving traffic violations in the past 2 years. Both answer no. The fact is that Henry had 4 speeding tickets, but never told his parents. Once the company found out about Henry's record, they declined the application citing misrepresentation as the reason. Did Joan and Steve misrepresent Henry's driving record? A)No. The representation was not material. B)No. They answered to the best of their knowledge. C)No. They must have known about the tickets, but the company could not prove it. D)Yes. Though not fraudulent, the misstatement was material

Yes. Though not fraudulent, the misstatement was material.

All of the following properties can be insured under an unendorsed homeowners policy EXCEPT A)a duplex that is owner-occupied B)a mobile home that is owner-occupied C)a home under construction that the owner intends to occupy D)a townhouse that is owner-occupied

a mobile home that is owner-occupied

Howard borrows his neighbor's car because his son took his car to college for a week while moving into the dorm. Under Howard's automobile policy, his neighbor's car is considered A)a nonowned automobile B)an uninsured automobile C)an owned automobile D)a temporary substitute automobile

a nonowned automobile

Directors and officers may be held liable for all of the following EXCEPT A)the performance of an act in an improper manner B)a person's failure to conform to the performance of an act in a proper manner C)the commission of an illegal act D)a person's failure to perform an act he has a duty to perform

a person's failure to conform to the performance of an act in a proper manner

All of the following vehicles are eligible for coverage under the PAP EXCEPT A)a four-wheel drive SUV B)a private-passenger auto C)a minivan with a 7,500 gross vehicle weight D)a pickup with a gross vehicle weight of 15,000 pounds

a pickup with a gross vehicle weight of 15,000 pounds

Howard borrows his neighbor's car because his car is in the body shop after his oldest son had an accident on a trip home from college. Under Howard's automobile policy, his neighbor's car is considered A)an owned automobile B)a temporary substitute automobile C)a nonowned automobile D)an uninsured automobile

a temporary substitute automobile

A personal auto policy provides coverage for all for the following drivers of an insured car EXCEPT A)the insured's child who attends school in another state B)the insured's spouse C)a thief who steals the car D)a neighbor who uses the car with the insured's permission

a thief who steals the car

All of the following are covered as business personal property EXCEPT A)leased computers B)wall-to-wall carpeting C)accounts receivable D)exterior building glass

accounts receivable

A policy under which the insured and insurer agree on the property value and list the value in the policy is known as A)an actual cash value policy B)a block policy C)a floater policy D)an agreed value policy

an agreed value policy

Barney's Breads and Bakery store needs workers' compensation coverage for his 7 employees. He could purchase coverage from all of the following sources EXCEPT A)a private insurance carrier B)the state fund C)self-insurance or group insurance if available D)an assigned risk plan

an assigned risk plan

A business loses money because it was forced to close after a fire on the premises. This loss is described as A)a proximate cause B)an indirect loss C)a direct loss D)a named peril

an indirect loss

The property coverage in the unendorsed Businessowners policy is written on A)an open perils basis B)a named peril basis C)a limited liability basis D)a valued basis

an open perils basis

Jeffrey bought a car yesterday for his daughter to drive to school and her job. Under Jeffrey's automobile policy, this car is considered A)an uninsured automobile B)a nonowned automobile C)a temporary substitute automobile D)an owned automobile

an owned automobile

All of the following are the insured's duties following a loss EXCEPT A)assisting the investigator during the claim investigation procedure B)completing a detailed proof of loss C)protecting the property from further damage D)giving prompt notice of claim to the agent or insurer

assisting the investigator during the claim investigation procedure

Under the CGL form, insured contracts include all of the following EXCEPT A)obligations required by local ordinance to indemnify a municipality (except in connection with actual work done for that municipality) B)contracts for the lease of the premises C)assumption of an architect's liability for any injury or damage arising out of the insured's rendering or failure to render professional services D)elevator maintenance agreements

assumption of an architect's liability for any injury or damage arising out of the insured's rendering or failure to render professional services

Jordan is attending the NBA playoffs and has front row seats. One of the players attempts to make a basket and the ball bounces off the court, hitting Jordan in the face. The defense that will most probably used is A)proximate cause B)contributory negligence C)comparative negligence D)assumption of risk

assumption of risk

The unendorsed businessowners liability coverage excludes A)auto liability B)bodily injury liability C)personal and advertising injury liability D)products liability

auto liability

While personal injury protection (PIP) benefits under an auto policy are paid without regard to fault, an insurer may not pay benefits for any injury: A)under $1,500. B)caused to the insured by the insured. C)caused by an underinsured driver. D)caused by a public vehicle.

caused to the insured by the insured.

In describing the concept of subrogation, the insurer claims the right to A)sue a third party B)send the disputed claim into arbitration C)collect damages from the insured D)collect from a negligent third party

collect from a negligent third party

Agents have certain responsibilities when dealing with applicants and insureds. All of the following are agent responsibilities EXCEPT A)explaining coverages B)field underwriting each risk C)collecting the commission from the applicant D)periodically reviewing the insured's coverage

collecting the commission from the applicant

Automobile comprehensive coverage insures all of the following perils EXCEPT A)fire B)glass breakage C)collision D)theft

collision

Depending on the circumstances, a passenger injured in an automobile accident may be able to recover under all of the following coverages EXCEPT A)medical payments B)collision C)liability D)uninsured motorist

collision

All property policies contain exclusions. An insured may be interested in covering these gaps. A difference in conditions policy bridges these gaps by covering events A)commercial property policies otherwise exclude and excluding coverages normally found in a commercial property policy. B)commercial liability policies otherwise exclude. C)commercial property policies otherwise exclude. D)commercial property policies otherwise exclude and including coverages normally found in a commercial property policy.

commercial property policies otherwise exclude and excluding coverages normally found in a commercial property policy.

All of the following items are covered under Coverage A of a businessowners policy EXCEPT A)portable fire extinguishers B)repairs to the building C)fixtures D)computers and photocopiers

computers and photocopiers

Both parties rely on statements made to each other when writing a contract. This contract is known as a A)contract of utmost good faith B)unilateral contract C)conditional contract D)speculative contract

contract of utmost good faith

Adding the personal injury endorsement to the homeowners policy protects the insured against all of the following EXCEPT A)slander B)invasion of privacy C)libel D)contractual liability

contractual liability

Agents who solicit and procure insurance for themselves, their families, and their business associates (and not for the general public) are said to engage in: A)rebating. B)controlled business. C)surplus lines insurance. D)unauthorized insurance.

controlled business.

All of the following are grounds for a license application to be denied EXCEPT: A)intentionally making a material misstatement on the application. B)conviction of any misdemeanor. C)obtaining a license to write controlled business. D)misappropriation of money belonging to an insured.

conviction of any misdemeanor.

Aviation insurance provides coverage for liability arising from the operation of an aircraft. All the following statements are true EXCEPT A)coverage is provided only for the owner B)bodily injury to passengers is covered C)medical payments for injuries to passengers, regardless of fault, is covered D)property damage liability is covered

coverage is provided only for the owner

Craig was driving his family in his owned station wagon on vacation in Wisconsin when a deer ran out in the road and collided with the front end of the wagon. Craig had the car towed to the nearest town, where the only car repair shop told him that it would take at least a week to get the parts to repair the engine. Craig's automobile policy provides coverage for transportation expenses. All of the following statements about transportation expenses are correct EXCEPT A)no deductible applies B)coverage starts 48 hours after a car is damaged by an Other than Collision loss C)the maximum coverage is $600 D)there is a $20-per-day limit for expenses

coverage starts 48 hours after a car is damaged by an Other than Collision loss

An insured bank has a commercial crime coverage form with all 7 coverage parts. During a particularly busy day, an employee is given false account information and electronically transfers a large sum of money to another account in another bank. The amount of this improper funds transfer is A)covered under the Outside the Premises insuring agreement B)covered under the Funds Transfer Fraud insuring agreement C)excluded under the Inside the Premises—theft of money and securities insuring agreement D)excluded under the Computer Fraud insuring agreement

covered under the Funds Transfer Fraud insuring agreement

In automobile insurance, the term supplementary payments refers to payments A)covering reasonable expenses incurred at the insurer's request and other specified expenses that are not subject to the policy limit B)received by the insured directly from the person or persons who caused the loss C)made by the insured for damages exceeding the policy limit D)made by the insurance company for the insured's own medical expenses to supplement any other medical insurance

covering reasonable expenses incurred at the insurer's request and other specified expenses that are not subject to the policy limit

The liability coverage in the Business Auto Coverage Form covers all of the following EXCEPT A)expenses to settle claims for losses due to an accident B)bodily injury suffered by others as a result of the insured driving a covered auto C)damage to the covered auto D)damage to property of others as a result of an accident involving a covered auto

damage to the covered auto

The nationwide marine definition provides insurance underwriters with A)prefiled rates for transportation and communication risks B)strict guidelines for pricing unusual risks such as bridges and property floaters C)greater freedom in pricing and coverage for development for unusual risks D)definitions for which type of property were eligible for inland marine insurance coverage.

definitions for which type of property were eligible for inland marine insurance coverage.

When an ordinance or law coverage endorsement is added to a property policy, all the following consequential losses are covered EXCEPT A)demolition costs for the undamaged portions of the building B)direct damage caused by an interruption of utility services C)cost to remove the building debris D)increased cost of construction because of stricter building codes

direct damage caused by an interruption of utility services

Four separate property coverages are provided by the homeowners policy under Section 1. Coverage A covers: A)loss of use B)dwelling and structures attached to the dwelling. C)personal property D)other structures

dwelling and structures attached to the dwelling.

All of the following losses or damages would be covered under the commercial property Causes of Loss—Broad Form EXCEPT A)weight of snow or ice B)falling objects C)earth movement D)glass breakage

earth movement

A commercial property policy with the Causes of Loss—Basic Form covers all of the following perils EXCEPT A)sinkhole B)volcanic action C)sprinkler leakage D)earthquake

earthquake

All of the following perils are covered under the DP-2 Broad Form EXCEPT A)freezing of pipes B)loss caused by fireplace smoke C)falling objects D)earthquake

earthquake

An injury that occurs to an employee who is traveling to and from work is NOT covered under workers compensation when the: A)employee is directed to proceed from one place to another as a condition of employment. B)employee is traveling on personal errands. C)transportation is paid for by the employer. D)transportation is provided in the employer's vehicles.

employee is traveling on personal errands.

All of the following risk exposures are covered by the liability section of the businessowners policy EXCEPT A)personal and advertising injury B)product liability C)premises liability D)employers liability

employers liability

An insured who needs coverage against the breakdown of boilers and other machinery and equipment should purchase A)commercial property coverage B)equipment breakdown coverage C)comprehensive general liability coverage D)difference in conditions coverage

equipment breakdown coverage

All of the following are grounds for revoking an agent's license EXCEPT: A)defrauding an applicant. B)failing to remit premiums to the insurer. C)defrauding a policyholder. D)failing to compare his or her policies with a competitor's policies.

failing to compare his or her policies with a competitor's policies.

An insurer may cancel a commercial auto policy for any of the following reasons EXCEPT: A)failure to pay parking fines when due. B)inability of the insurer to renew a reinsurance agreement. C)an increase in the hazard insured against. D)fraud in obtaining the policy.

failure to pay parking fines when due.

A claims-made policy covers claims that are? A)first reported during the policy period, provided the event occurred after the retroactive date (if any) stated in the policy B)triggered by an incident that took place during the policy period, regardless of when the claim is made C)triggered by an incident that took place during the policy period, if the claim is made within 2 years of the incident D)first reported during the policy period, provided the event occurred before the retroactive date (if any) stated in the policy

first reported during the policy period, provided the event occurred after the retroactive date (if any) stated in the policy

An individual whose insurance license has been revoked may not file another licensing application for: A)five years after the effective date of revocation. B)three years after the effective date of revocation. C)one year after the effective date of revocation. D)eight years after the effective date of revocation.

five years after the effective date of revocation.

All of the following are excluded under collision or Other than Collision coverages EXCEPT A)road damage to tires B)damage to awnings, cabanas, or other equipment C)damage due to wear and tear D)flood damage

flood damage

Mary was involved in an accident with a hit-and-run driver. The car was damaged. Mary must comply with all of the following duties EXCEPT A)protecting the car against further damage B)permitting the insurer to inspect the damaged car C)calling the police D)following the hit-and-run driver to get a valid identification

following the hit-and-run driver to get a valid identification

Part Two, employers liability insurance, of a workers' compensation insurance policy includes all of the following limits of liability EXCEPT A)for all compensation paid under benefits required by workers' compensation law B)for each employee injured by disease during the policy term C)for all bodily injury by disease during the policy term D)for all bodily injury arising from a single accident

for all compensation paid under benefits required by workers' compensation law

Payments for losses that cannot be precisely measured, such as the loss of companionship of spouse from another, are called A)special damages B)spousal damages C)general damages D)punitive damages

general damages

The Commissioner of Insurance is appointed by the: A)governor. B)State Guaranty Association. C)state attorney general. D)legislature.

governor.

Builders risk coverage that is written with the Causes of Loss—Basic Form will cover loss caused by A)collapse B)earthquake C)hail D)falling objects

hail

A bailee is a person or organization who A)operates pumps on ships B)has temporary possession of someone else's personal property C)issues bail bonds D)has given property to another to hold

has temporary possession of someone else's personal property

Bailee's customers insurance is purchased by businesses that A)provide bail bonds B)store their property in public warehouses C)have customer's property in their possession D)sell bailing equipment to boat owners

have customer's property in their possession

Thomas has expanded his restaurant to include a parking lot next door with valet service. His insurance agent is recommending that Thomas buy garagekeepers coverage. He advises Thomas that all of the following exposures would be covered by this coverage EXCEPT A)if a car stored in the parking lot is stolen by a restaurant employee B)if there is collision damage to a customer's car while being parked by Thomas's employee C)if a nearby gas station explodes and a car parked in the lot is damaged D)if a car stored in the parking lot is stolen

if a car stored in the parking lot is stolen by a restaurant employee

XYZ Insurance Company gives its agents authority that was not formally expressed or communicated. The authority given to the agents by XYZ can be called A)implied authority B)express authority C)apparent authority D)traditional authority

implied authority

The attempt to restore the policyholder to the same financial condition enjoyed before a loss is called A)self-insurance B)coinsurance C)subrogation D)indemnification

indemnification

The principle that restores someone to the condition he enjoyed before a loss is A)insurance B)risk transfer C)indemnity D)risk reduction

indemnity

A DP-2 policy would cover losses from all of the following perils EXCEPT A)weight of ice, snow, or sleet B)damage by burglars C)falling objects D)infestation of insects

infestation of insects

All of the following are exclusions under a liability policy EXCEPT A)bodily injury to an employee B)losses covered by workers' compensation laws C)bodily injury to the insured D)injuries or damages caused unintentionally by the insured

injuries or damages caused unintentionally by the insured

Common exclusions with a liability policy would typically include all of the following EXCEPT A)damage to property in the insured's care, custody, or control B)damage to property owned by the insured C)injuries or damages caused unintentionally by the insured D)injuries or damages caused intentionally by the insured

injuries or damages caused unintentionally by the insured

The difference between Coverage E and Coverage F in the farm personal property coverage form is A)Coverage E applies to other private structures while Coverage F applies to loss of use B)insurance is scheduled under Coverage E but a blanket limit applies to Coverage F C)Coverage E is for liability while Coverage F is for medical payments D)Coverage E is a reporting form but Coverage F is not

insurance is scheduled under Coverage E but a blanket limit applies to Coverage F

The garage policy covers all of the following EXCEPT A)insured's medical bills B)insured's premises and operations C)insured's automobile liability D)insured's products and completed operations

insured's medical bills

The coverages offered by an insurance policy are described in the A)definitions section B)conditions section C)declarations page D)insuring agreement

insuring agreement

The commercial property conditions form contains circumstances that apply to all commercial property coverage forms, unless a coverage form contains a condition to the contrary. Commercial endorsements that apply to more than one part of a commercial package policy (CPP) are called A)inclusion B)interpolicy C)interline D)provisional

interline

In workers' compensation insurance, the experience modification factor A)depends on the amount of the deposit premium B)is related to a benefits plan C)is based on the number of employees D)is applied as a method of rewarding those employers with better-than-average loss experience

is applied as a method of rewarding those employers with better-than-average loss experience

All of the following are characteristics of Lloyd's Associations EXCEPT A)it is an insurance company B)is insurance provided by individual underwriters, not companies C)its members are individually liable for the contracts in which they enter D)it insures unusual risks like a hole-in-one contest

it is an insurance company

When an employer has employees use their own autos in connection with the employer's business, the employer should purchase A)nonowned auto liability B)hired auto liability C)extended employee liability D)third-party auto liability

nonowned auto liability

The Terrorism Risk Insurance Act of 2002 addresses only a defined category of terrorism losses. To come within the new federal program, an act of terrorism must be certified as such by the Secretary of the Treasury and must have all the following characteristics EXCEPT A)it must have been committed by someone acting on behalf of a foreign person or foreign interest, as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the U.S. government by coercion B)it must be a violent act or an act that is dangerous to human life, property, or infrastructure C)it must have resulted in damage within the United States, to an air carrier as defined in the U.S. code, to a U.S. flag vessel or other vessel based principally in the United States and insured under U.S. regulation, or on the premises of any U.S. mission (e.g., an embassy or consulate) D)it must produce property and casualty insurance losses in excess of $30 million

it must produce property and casualty insurance losses in excess of $30 million

The law of large numbers states that the A)smaller the number of risks combined into one group, the larger the loss will be to any one individual in that group B)larger the number of risks combined into one group, the smaller the loss will be to any one individual in that group C)larger the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred D)smaller the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred

larger the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred

The purpose of employers' liability insurance is to provide A)liability protection where workers' compensation does not apply B)excess workers' compensation benefits C)insurance for high-risk employers D)voluntary workers' compensation benefits

liability protection where workers' compensation does not apply

The purpose of the conditions section of an insurance policy is to A)cover unique insurable exposures of the insured B)alter the general provisions of the insuring agreement C)eliminate uninsurable perils D)list the obligations of the insured and the insurance company

list the obligations of the insured and the insurance company

All of the following losses of cattle would be covered under a Broad Form farm policy EXCEPT A)loss due to accidental shooting of the cattle by a neighbor B)loss due to attacks by wild animals C)loss due to disease D)loss due to an accident while loading into railroad cars

loss due to disease

Lifetime income benefits are paid until the covered employee's death for all of the following EXCEPT: A)loss of one finger. B)total and permanent loss of sight in both eyes. C)loss of both feet at or above the ankle. D)loss of both hands at or above the wrist.

loss of one finger.

All of the following statements about a loss sustained crime insurance form are true EXCEPT A)coverage is for up to 1 year after the policy expires B)losses that occur after the policy expiration are covered C)losses sustained within the policy period are covered D)losses that are discovered within a year of expiration are covered

losses that occur after the policy expiration are covered

The standard workers' compensation policy imposes all of the following duties on the employer EXCEPT A)provide for immediate medical services as required by law B)make voluntary payments to an injured employee C)cooperate with the insurance company D)immediately notify the insurance company of a work-related injury

make voluntary payments to an injured employee

All of the following are considered additional coverages in the Businessowners Policy EXCEPT A)collapse B)debris removal C)mechanical breakdown D)increased cost of construction

mechanical breakdown

Driving too fast and not wearing a seat belt are examples of A)morale hazards B)physical hazards C)moral hazards D)risks

morale hazards

All of the following vehicles can be insured under an unendorsed personal auto policy EXCEPT A)motorcycles B)rental cars C)newly acquired vehicles D)trailers hitched to the insured vehicle

motorcycles

Workers' compensation laws vary from state to state. The categories of coverage are elective or compulsory. In compulsory states, the basic methods of providing coverage are monopolistic or competitive. The monopolistic method is when the insurance A)must be purchased from a company approved by the state's Department of Insurance B)must be purchased from the state-run insurer C)may be purchased from a company approved by the state's Department of Insurance D)may be purchased from the state-run insurer

must be purchased from the state-run insurer

An insurance company owned by its policyholders, who receive a return of unused premiums in the form of policy dividends, is a A)risk retention group B)mutual company C)reciprocal company D)stock company

mutual company

In the commercial crime forms, the definition of theft does NOT include A)burglary B)theft C)robbery D)mysterious disappearance

mysterious disappearance

Tim purchased an auto policy for his new car. There are no other insureds listed on the declarations. Tim is considered the A)insurer B)named insured C)first named insured D)additional insured

named insured

Under a Business Income Coverage form, business income is A)net income plus continuing expenses, including payroll B)gross income C)net income plus continuing expenses, excluding payroll D)net income after taxes

net income plus continuing expenses, including payroll

Mary is a customer at Bob's Bait Shop, which is covered by a businessowners policy. Bob's auto strikes her when she is leaving the store parking lot. Mary has medical payments expenses of $450. Bob will find coverage A)under Bob's businessowners policy if he purchased hired and nonowned auto coverage B)never because the businessowners policy does not cover this type of loss C)in Bob's businessowners policy under bodily injury D)in Bob's businessowners policy under bodily injury and medical payments

never because the businessowners policy does not cover this type of loss

Harold owns a sports bar. As a promotion, he offers customers tastings of new German beers. One customer, after several samples, drives off and injures another person. The injured party sues the driver and Harold. Harold's commercial general liability policy will A)not cover the loss because of the liquor liability exclusion B)cover the loss under the products-completed operations insuring agreement C)cover the loss under the bodily injury and property damage insuring agreement D)cover the loss under host liquor liability because Harold did not actually sell the beer

not cover the loss because of the liquor liability exclusion

An insured owns a small neighborhood grocery store. During a storm, a piece of the roof falls on the sidewalk. Several people are in the store at the time, but no one is injured. Under the insurance definition of negligence, such an insured would be held A)not legally liable B)negligent C)strictly liable D)legally liable

not legally liable

An insured speeds through a residential neighborhood, almost striking several children. Under the insurance definition of negligence, such an insured would be held A)strictly liable B)not legally liable C)legally liable D)negligent

not legally liable

Symbol 4 of the business automobile policy applies to only those autos owned by the business that are A)over 1 ton B)not private passenger autos C)over 50 ton D)specified in the policy

not private passenger autos

The property coverage in the businessowners policy would cover losses due to all of the following perils EXCEPT A)off-site power failure B)vandalism C)riot D)fire

off-site power failure

Under workers' compensation law in Texas, income benefits may not be paid for an injury unless the injury results in disability that lasts longer than: A)48 hours. B)two year. C)one month. D)one week.

one week.

The Special Form (DP-3) covers the dwelling and other structures for A)broad form perils only B)extended coverage perils C)named perils D)open perils

open perils

All of the following items are excluded from coverage under a Building and Personal Property Coverage Form EXCEPT A)currency or securities B)patios or other paved surfaces C)automobiles held for sale D)outdoor furniture

outdoor furniture

Comprehensive coverage pays for all of the following damages EXCEPT A)explosion B)overturning of the auto C)glass breakage D)hitting a deer

overturning of the auto

When a loss occurs, the Causes of Loss—Special Form requires the insurance company to A)pay for decay or deterioration losses B)pay for all losses not specifically excluded or limited by the policy C)pay for all losses to the insured property D)prove that the insured used defective materials if a collapse occurs during construction

pay for all losses not specifically excluded or limited by the policy

Bob has a workers' compensation policy with the ABC Insurance Company. One of his employees is injured in the course of employment. All of the following are duties of Bob EXCEPT A)paying for the medical bill of the injured employee B)cooperating with the insurer in the investigation, settlement, or defense of a claim C)providing information to the insurer about the injury D)providing medical services as required by workers' compensation

paying for the medical bill of the injured employee

A corporation located in Chicago has added an extortion-commercial entities endorsement to its commercial crime coverage form. One of the directors of the corporation is captured and held for a $3 million ransom in La Paz, Bolivia. The policy A)excludes coverage in foreign countries B)pays only if Bolivia is listed on the endorsement schedule as a covered territory C)pays only if there is a threat of bodily harm D)excludes coverage for directors and officers who are traveling in foreign countries

pays only if Bolivia is listed on the endorsement schedule as a covered territory

The garage coverage form is designed to cover vehicle dealers, including dealers that have repair facilities on the premises. The form includes all of the following EXCEPT A)personal damage B)garagekeepers C)physical damage D)liability

personal damage

Aviation physical damage coverage, also known as aircraft hull insurance, covers all of the following EXCEPT: A)controls B)personal effects C)engines D)electronic navigation

personal effects

All of the following could create an employers' liability loss EXCEPT A)legal defense costs B)an employee not covered by the workers' compensation law C)lawsuit brought by an injured worker's spouse D)personal injury

personal injury

All of the following are optional property coverages under the businessowners policy EXCEPT A)money and securities B)mechanical breakdown C)personal property off premises D)outdoor signs

personal property off premises

Extensions of coverage are available under the business and personal property form if the A)amount of building insurance is $100,000 or greater B)insured carries both building and personal property insurance C)insured has declared an amount of insurance applicable to each extension D)policy indicates that 80% or higher coinsurance applies or the insured has purchased a reporting form

policy indicates that 80% or higher coinsurance applies or the insured has purchased a reporting form

All of the following additional coverages are included in homeowners forms EXCEPT A)reasonable repairs B)property removed C)pollution removal D)debris removal

pollution removal

In the insurance business, the insurance company is also known as the A)agent B)policyowner C)principal D)insured

principal

All of the following coverages are typically included in the supplementary payments of a liability policy EXCEPT A)loss of earnings B)property damages the insured is found legally liable for C)first aid to others at the time of the accident D)defense costs

property damages the insured is found legally liable for

All of the following constitute the transaction of insurance EXCEPT: A)receiving a policy application. B)receiving insurance commissions. C)purchasing an insurance policy. D)collecting insurance premiums.

purchasing an insurance policy.

In states that use the workers' compensation competitive state funds method, all of the following would typically be viable options available to an employer EXCEPT A)purchasing coverage from the state fund only B)purchasing coverage from a private insurance company C)if the employer meets certain criteria, providing coverage through self-insurance D)purchasing coverage from the state fund

purchasing coverage from the state fund only

The insurer of an insurance company is known as a A)mixed group B)reciprocal C)re-insurer D)service organization

re-insurer

A group of individuals who agree to share each other's losses is known as a A)mixed group B)reinsurer C)service organization D)reciprocal company

reciprocal company

The garage coverage form is designed specifically for all of the following EXCEPT A)a repair shop on the dealer's lot B)auto dealers C)rental car companies D)truck dealers

rental car companies

Section II of the homeowners policy provides liability coverage for all of the following EXCEPT A)use of a 17-foot sailboat B)actions of a domestic animal in the care of the insured C)renting the garage to a jewelry maker D)actions of a residence employee

renting the garage to a jewelry maker

The definition of actual cash value is A)replacing damaged property with similar property that performs the same function as the damaged or destroyed property B)the cost of replacing damaged or destroyed property at the time of a loss C)replacement cost plus depreciation D)replacement cost minus depreciation

replacement cost minus depreciation

All of the following are benefits specified by workers' compensation laws EXCEPT A)medical expenses B)lost wages C)rehabilitation benefits D)retirement plan contributions

retirement plan contributions

In a claims-made liability policy, the specific date shown in the declarations indicating the first date events are covered by the policy is called its A)retroactive date B)policy period C)inception date D)reporting period

retroactive date

A chance, possibility, or uncertainty of loss is known as a A)proximate cause B)risk C)peril D)hazard

risk

Uncertainty regarding financial loss is also known as A)hazard B)insurance C)peril D)risk

risk

A parking valet at a hotel uses a guest's car to do a personal errand and damages the car in a collision. The guest has a personal auto policy (PAP). The insurance company will pay the claim and A)subrogate against the parking valet B)relieve the parking valet of legal liability for the loss C)recover any additional loss from the lienholder D)subrogate against the named insured

subrogate against the parking valet

Certain transactions that may be legally conducted by nonadmitted insurers without requiring a certificate of authority are known as A)surety insurance B)surplus lines coverage C)difference on conditions coverage D)commercial general liability coverage

surplus lines coverage

A personal auto insurer may cancel a policy for all of the following reasons EXCEPT: A)nonpayment of premium. B)submission of a fraudulent claim. C)the continuance of the policy would violate the law. D)the age of the insured.

the age of the insured.

All commercial package policies must include A)commercial auto coverage B)commercial crime coverage C)5 or more coverage parts D)the common policy declarations and the common policy conditions

the common policy declarations and the common policy conditions

Towing and labor coverage covers all the following EXCEPT A)towing costs after a breakdown B)labor for changing a tire at the scene of a breakdown C)towing costs after an accident D)the cost of a fan belt replaced at the scene of a breakdown

the cost of a fan belt replaced at the scene of a breakdown

Bart keeps a dog that is known in the neighborhood to be vicious. One day the dog attacks a neighbor while she is working in her own yard. The court orders that the animal be put to sleep. Bart's homeowners policy will cover all of the following expenses related to this incident EXCEPT A)damage to the neighbor's yard B)damage to the neighbor's clothing C)the cost to have the dog put to sleep D)the neighbor's medical expenses

the cost to have the dog put to sleep

All of the following statements are TRUE regarding an insured's duties to the insurer after a loss to an insured dwelling EXCEPT A)the insurance company must be notified of the loss B)undamaged property must be protected from further loss C)the damaged property must be appraised D)the insured must furnish proof of loss

the damaged property must be appraised

In Texas, a personal auto policy may be canceled for any of the following reasons EXCEPT: A)the insured is age 55 or older. B)the insured submits a fraudulent claim. C)the member of the insured's household has his driver's license revoked. D)nonpayment of premium.

the insured is age 55 or older.

An insured fails to pay his homeowners insurance premium. The mortgagee becomes aware of this fact and remits the premium to the insurance company. Shortly thereafter, the insured sets fire to his home in an attempt to receive payment for the loss. Any loss payment settlement would be made to A)the mortgagee B)the insured C)the insured and the mortgagee D)neither the insured nor the mortgagee

the mortgagee

When calculating premiums for a workers' compensation policy, the insurer will multiply the job classification rate by A)the number of $100 payroll units paid to employees in each job classification B)a risk factor provided by the National Association of Insurance Commissioners C)the total payroll for the company D)the number of employees in each job classification

the number of $100 payroll units paid to employees in each job classification

The insured rear-ends another vehicle that is stopped at a red light. The driver of the car struck by the insured is badly injured. The insured, his daughter, and her friend were in the car and were also injured. Part B of the insured's personal auto policy will pay medical expenses for all of the following EXCEPT A)the occupant of the car struck by the insured B)the insured's daughter's friend C)the insured D)the insured's daughter

the occupant of the car struck by the insured

If an employee refuses to accept benefits provided by the Texas Rehabilitation Commission, the employee must forfeit: A)death benefits that would be payable during rehabilitation. B)the supplemental income benefits that would have been payable. C)compensation for any future injuries. D)all workers compensation benefits paid to date.

the supplemental income benefits that would have been payable.

In insurance, a waiver is best considered as A)a warranty B)the voluntary surrender of a known right C)the suspension of a policy right D)a material representation

the voluntary surrender of a known right

Medical payments coverage in the commercial general liability policy covers injuries to A)third parties regardless of liability B)third parties for which the insured is legally liable C)the insured's employees D)the insured

third parties regardless of liability

Liability insurance covers A)third-party losses B)second-party losses C)only the insured D)first-party losses

third-party losses

Workers' compensation laws cover employees in the course of employment. Some classes of workers, such as domestic servants, are exempt but may be covered by a voluntary compensation endorsement. This endorsement agrees to pay benefits A)only if the employer requests that benefits be paid B)to employees who are exempt only C)to all employees D)to employees not covered or exempt

to employees not covered or exempt

With regard to insurance, risk can be defined as A)uncertainty of financial gain B)uncertainty of financial loss C)certainty of financial loss D)certainty of financial gain

uncertainty of financial loss

At the national level, the federal government provides all of the following types of insurance EXCEPT A)federal crop insurance B)flood insurance C)war risk insurance D)unemployment insurance

unemployment insurance

The condominium association coverage form may include all of the following property EXCEPT A)unit owners' personal property B)alterations that are part of the building C)refrigerators, dishwashers, or stoves that are within the individual units D)owners' business personal property

unit owners' personal property

The limit of liability under the dwelling under construction endorsement is provisional. If a loss occurs, the amount paid will be based on the A)face amount of policy B)actual amount of loss C)completion date D)value of the partially completed home

value of the partially completed home

The greatest difference between the Dwelling Basic Form (DP-1) and the Broad Form (DP-2) is that the DP-2 automatically includes coverage for A)vandalism and malicious mischief (VMM) B)flood C)fire and lightning D)earthquake

vandalism and malicious mischief (VMM)

All of the following vehicles are exempt from the compulsory insurance law EXCEPT: A)vehicles for which a bond has been filed with the Department of Insurance. B)vehicles that are used exclusively on public highways. C)vehicles that are self-insured. D)vehicles for which a cash deposit has been made with the state treasurer.

vehicles that are used exclusively on public highways.

An errors and omissions policy could be issued to cover the following occupations EXCEPT A)insurance agents B)accountants C)veterinarians D)architects

veterinarians

In legal terms, voluntary relinquishment of a known right is called a A)waiver B)withdrawal C)concealment D)warranty

waiver

Statements made on an application that are guaranteed to be true are A)misrepresentations B)warranties C)representations D)promises

warranties

Personal auto liability insurance provides coverage in all of the following situations EXCEPT A)when the insured uses the auto as a taxi B)when the insured's 12-year-old child takes the auto for a joy ride C)when a relative living in the same household as the insured takes the auto without permission D)when the insured accepts money for using the auto in a car pool

when the insured uses the auto as a taxi

Trees, shrubs, and other plants are covered as additional coverages for Coverages A-The coverage is limited to certain perils, however. All of the following perils are covered when causing damage to a tree or shrub EXCEPT A)theft B)wind C)riot D)explosion

wind

Workers' compensation pays A)only when the employer is negligent B)only when another employee is negligent C)without regard to fault D)only when the employee is at fault

without regard to fault

Premiums for workers' compensation policies are based upon the A)number of employees and the total payroll B)work classification, number of employees, and the total payroll C)type of business involved and the total payroll D)type of business involved and the number of employees

work classification, number of employees, and the total payroll