Missed Exam Questions 4

Sam's home located in a rural area is insured under a DP-2 dwelling form with a $500 deductible. He experiences a fire at his home and has to call the local volunteer fire department to extinguish the fire. He receives a bill from the fire department in the amount of $800. How much of the bill from the fire department will his policy pay?

$500. The policy will provide $500 to pay for fire department charges incurred when the fire department is called to save or protect covered property from a peril insured against. This coverage is additional insurance and no deductible applies.

The mandatory recoupment of the federal share through policyholder surcharges under Terrorism Risk Insurance Program Reauthorization Act of 2015 was increased from 133% to:

140%. The TRIA Reauthorization Act of 2015 mandates that the goverment recoup 140% of the difference between the actual amount it has paid and the required retention, up from 133%.

Policies issued under the National Flood Insurance Program provide removal coverage for property which is moved to another location to protect it from a flood. This coverage applies for up to:

45 days. Removal coverage is designed to avoid loss if the property can be moved elsewhere for protection against flood damage. This coverage is provided for up to 45 days.

A leased vehicle is considered to be a covered auto under the personal auto policy (PAP) if it is a private passenger auto leased for at least:

6 consecutive months The policy states, "a private passenger type auto, pickup, or van will be deemed to be owned by a person if leased for a continuous period of at least 6 months."

What is an administrator's bond?

A bond required by the court of the administrator of the estate of the deceased. An administrator bond (probate bond) is required by a probate court to protect the administration of a will, estate, or guardianship.

An auto is described in the schedule of the hired autos endorsement to a business auto policy. For purposes of BAP coverage, this auto will be considered:

A covered auto owned by the named insured When this endorsement is used for specified hired autos, they are treated as covered autos as if owned by the named insured.

Under which of the following are the invoices presented under a claim paid with no attempt to obtain a separate release?

A walk-away release Under a "walk-away" release, the bills presented are paid with no attempt to obtain a separate release, although the wording on the draft or check may also serve as a form of release. After a certain amount of time has passed with no further contact with the claimant, the file is considered closed.

Which of the following relieves the financial burden on the claimant by making certain payments to the claimant even before the claim is negotiated?

Advance Payment Most adjusters are given the authority to make advance payments when liability is clear. This relieves the financial burden on the claimant when funds are needed immediately. The remainder of the claim is negotiated and settled at a later date.

The doctrine which relates to legal liability is:

All of the responses listed are correct. In the common law of negligence, the doctrine of res ipsa loquitur (Latin for "the thing speaks for itself") states that the elements of duty of care and breach can be sometimes inferred from the very nature of an accident or other outcome, even without direct evidence of how any defendant behaved.

Under the Terrorism Risk Insurance Program Reauthorization Act of 2015, which of the following would be considered a certified act of terrorism that would be covered?

An act which results in damage causing more than $5 million dollars in losses, within the United States, or outside the United States in the case of United States air carriers, vessels and/or missions that is not committed as an act of a declared war and is certified by the Secretary of the Treasury in consultation with the Secretary of Homeland Security, meets all the criteria to be a certified act of terrorism. Neither the Senate or the President can certify an act of terrorism.

Under the Coverage A insuring agreement of the commercial general liability policy, the bodily injury or property damage must be caused by:

An occurrence The CGL policy provides coverage on an occurrence basis which also includes accidents.

The authority the public believes the agent has based on the agent's actions is known as:

Apparent Authority Apparent authority is the authority the public believes the agent has which seems to be apparent by the agent's actions.

Which of the following fit the category of court or litigation bond, which are sometimes called financial guarantee bonds?

Bail bonds Bail bonds, are considered a court bond because they are required to guarantee a person's appearance in court as required by the court. Failure to appear in court represents a default under the bond.

In which of the following cases of alleged negligence is there no legal duty owed?

Bill was restoring an antique auto at his auto store's garage when Jeff drove by the garage. Jeff slowed his car and looked over his shoulder to admire the antique car. Suddenly his car struck a telephone pole. He charged Bill for damages.. Bill does not owe Jeff for the damages his vehicle sustained. Jeff was negligent for not being more attentive while driving.

The physical damage coverage for an auto dealer's vehicles held for sale is covered on the garage policy:

Blanket basis The physical damage coverage is provided on a blanket basis since it would be difficult to list each vehicle on the declarations page.

Which of the following types of losses will NOT be excluded by Thomas Drug Company's CGL policy?

Bodily injury to a customer arising out of a forklift being used by the insured. The use of "mobile equipment" like a forklift on or off the insured's premises is covered under the CGL policy. Property in the insured's care, custody or control is excluded. Pollution is also excluded as well as injuries to employees.

Fidelity bonds which apply coverage to an employee or employees acting in collusion with others are called:

Commercial blanket bonds. The commercial blanket bond's limit applies separately to each employee involved in the loss whether acting alone or in collusion with other employees. However, in case of a loss only the bond limit will apply to the entire loss.

In a legal sense, the term "person" includes:

Companies too

Dwelling forms may be used to insure residential structures which:

Contain no more than 4 occupancy units. This will vary to some extent by state. The industry standard is no more than 4 occupancy units.

Under the HO-5, if the insured carries insurance coverage that falls between 80 to 100% of the full value of the structure, which of the following would replacement cost coverage NOT cover?

Contents Replacement cost coverage does not apply to contents unless replacement cost for contents coverage is purchased by endorsement.

Which of the following would not be covered by garage liability?

Costs the insured sustains to recall defective products. Garage liability coverage includes automobile liability and commercial general liability as well, but products being recalled are excluded from the ISO form. This is because liability insurance is to cover something that occurs and products are recalled to prevent something from occurring.

Which of the following is true regarding debris removal under the dwelling forms?

Coverage is included in the dwelling and contents coverage.. Debris removal is part of the limit of coverage. It does not have a specific limit and is tied to the overall limits of the dwelling and contents coverage. Coverage is limited to "reasonable expenses" to remove the debris.

What does the "employer's non-ownership coverage" under a business auto policy cover?

Covers the employer when the employee is using their vehicle on company business. . The purpose of the coverage is to protect the employer and not the employee when the employee uses his or her vehicle on company business and is involved in an at-fault accident that may bring the employer into a claim with the claimant.

An insured auto dealer has purchased garage policy physical damage coverage against specified causes of loss. Which of the following losses will not be covered by the policy?

Damage resulting from the collision of the truck carrying a covered auto with another vehicle.. A specified cause of loss is named perils coverage and collision is not one of the named perils. Collision is a separate physical damage coverage requiring the upset of the covered vehicle, or its impact with another vehicle or object.

Ocean marine protection and indemnity (P&I) coverage usually insures the ship owner against liability for all of the following EXCEPT:

Damage to or loss of another ship caused by a negligent collision.. Hull coverage is required to cover the damage to the ship. P&I provides legal liability coverage for injuries and certain types of damages. Damage to another ship is not covered under the P&I coverage. Coverage can be provided under the hull coverage form for this coverage to other vessels. This is called the "running down clause".

Which of the following losses is not excluded under trailer interchange coverage?

Damage to trailers while not connected to a power unit. The trailer interchange coverage applies whether the trailer is attached or unattached to a power unit. Coverage is provided under an agreement while the trailer is in the insured's possession.

"Additional Coverages" in a Homeowner Policy would cover:

Debris removal Debris removal is included as an extension of coverage. It is not an additional amount of coverage. However, if the combined loss and debris removal exceed the policy limit for damaged property, an additional 5% of the property coverage limit will be allowed for debris removal.

The limits of liability are found in which of the following sections of a casualty policy?

Declarations The declarations section of a policy includes the identity and address of the named insured, the policy term or period, the amount of insurance or limits of liability, the policy premium, and any applicable deductibles. The conditions section spells out the duties of the insured in case of a loss. Insuring agreements are the promises and obligations of the insurer. Definitions are in the policy to add clarification to the meaning of certain important terms.

The "other insurance clause" is included in insurance policies to deal with:

Duplicate policies Occasionally, more than one policy is issued to provide the same coverage on the same risk. This clause spells out the method of determining the liability of each policies in case of a loss.

Fidelity bonds are used to cover:

Employee dishonesty. As the name implies fidelity bonds provide coverage for theft by an employee in a job related situation.

Which of the following best exemplifies the fundamental tradeoff in workers compensation laws?

Employees are provided no-fault benefits for most work-related injuries in exchange for the loss of the right to sue the employer for damages.. Workers compensation laws provide medical, disability, and death benefits to employees injured at work without regard to fault. In exchange for these automatically - provided benefits, the employee loses the right to sue the employer for damages in most cases.

An insured wishing to cover the employee while driving their own car on company time would need the following endorsement?

Employees as insureds The "employee as insured" endorsement (CA 99 33) would cover the employee when also sued in an accident while driving their car on company time.

The professional liability of a lawyer would be addressed by which type of insurance?

Errors and Omissions. Errors and omissions insurance is a type of professional liability insurance covering attorneys and other professionals who are blamed by others for various wrongful acts.

Which of the following auto endorsements would include family members as insureds?

Extended non-owned auto The extended non-owned auto endorsement includes members of the household when driving a non-owned vehicle.

Which of the following auto endorsements would include family members as insureds?

Extended non-owned auto. The extended non-owned auto endorsement includes members of the household when driving a non-owned vehicle.

Which of the following would be considered a consequential loss under a dwelling policy?

Food spoilage in a freezer as a result of a fire in the house.. Food spoilage resulting from a covered peril cutting off the electricity would be an example of a consequential loss.

Which of the following would be covered under the mobile equipment endorsement?

Fork lift. Some types of mobile equipment that operates in a given state must be licensed, and evidence of liability insurance provided. Sometimes these are added to the commercial auto policy by using the mobile equipment endorsement.

A franchised auto dealership would need:

Garage liability coverage A franchised auto dealership would need garage liability because it includes auto liability as well as commercial general liability coverage.

The owner's policy of auto liability insurance does all of the following, EXCEPT:

Guarantees coverage continuance under any condition. Coverage continuance cannot be guaranteed.

An insurance contract is considered:

I. Aleatory. II. Unilateral. III. Adhesive. IV. Conditional.

When is it appropriate for an adjuster to secure a non-waiver agreement with the insured?

If there is a question of coverage A properly executed non-waiver agreement allows the insurance company to complete a thorough investigation without implying that coverage is available for the loss.

Under a claims-made CGL, which of the following would not be covered?

Injury or damage which occurred prior to the retroactive date. Only occurrences that occur AFTER the retroactive date are covered.

In Oklahoma automobile law, which of the following is true regarding the "stacking" of the uninsured motorist limits of coverage?

Is not permitted The "stacking" of limits apply to an insured that owns more than one vehicle and carries uninsured motorist coverage on both vehicles. In some states, the insured can make a claim for this coverage under both vehicles when involved in an uninsured motorist claim, thereby doubling the coverage. This is not permitted in Oklahoma.

All of the following statements regarding the Motor Carrier Act of 1980 are correct, EXCEPT:

It requires truckers to certify that they are able to meet financial obligations arising from physical damages of their trucking operations. The Motor Carrier Act applies to liability only. The MCS-90 form is used to indicate that the vehicle in question has coverage including pollution liability for specifies limits being defined by what is being hauled.

The National Flood Insurance Program will reimburse for loss of use of a home if it is flooded for:

Loss of use is not covered under the NFIP policy Loss of use coverage is not provided by NFIP under either the Emergency or Regular Programs

Which of the following statements is false concerning "no-fault" auto insurance?

Negligence must be proved. In no-fault, a threshold is usually established for injuries where negligence does not have to be proved. In cases where there have been permanent injuries the right to sue is still retained.

A major difference between surety bonds and insurance contracts is:

No transfer of risk occurs when a surety bond is issued.. Premiums on bonds are actually service fees - modest charges made for use of the surety's backing to establish financial responsibility.

Which of the following perils is covered for earth movement under the DP-2 dwelling form?

None of the responses are correct. The dwelling forms exclude virtually all forms of earth movement. Earthquake coverage can be added by endorsement.

Tom Smith has a gun collection and he and his wife are covered under an HO-3 homeowner policy. His wife has an art collection that is covered under a scheduled personal property endorsement. A flood occurs and all of the insured's property is destroyed. What property, if any, is covered and what deductible would apply?

Only the art collection would be covered without a deductible.. The personal articles form does not exclude flood coverage so the art collection is covered. Flood is excluded under the homeowner policy so all of the other property, including the gun collection, is not covered.

In ocean marine insurance, each of the following is true about the term "general average" EXCEPT:

Only the party having an interest in the lost property suffers a loss. . It means partial loss (as opposed to total loss) of ship and cargo which has resulted from a voluntary and deliberate sacrifice made for the benefit of all concerned. All parties must share in the loss. In "particular average" only one party shares in the loss.

An employee who injured his shoulder and could no longer perform his/her original job but was rehabilitated to perform another job would be classified under which type of disability?

Permanent partial .

Investment consultants should purchase which of the following policies to protect themselves from errors and omissions?

Professional Liability. Errors and omissions coverage does not involve bodily injury or property damage, which is provided by other types of policies. This is why professional liability coverage is needed. Medical malpractice insurance does cover bodily injury.

All of the following are factors in establishing negligence, except:

Property. Proximate Cause is

Surety bonds guarantee the fulfillment of specific obligations. Each of the following may be the subject of a surety bond, EXCEPT:

Protection of funds handled by employees. The insured would need an employee dishonesty fidelity bond to cover the loss of funds handled by employees as a result of their dishonest acts. The insured would also need other coverages to provide protection for loss of funds from a source other than employees.

All of the following are reasons for cancellation of a commercial insurance policy, EXCEPT:

Several large claims.. Several large claims is not a reason for canceling a policy.

Which of the following would be a violation regarding the sharing of commissions?

Sharing commissions or paying a finders fee to an unlicensed person. An agent may not share commissions with an unlicensed person nor pay a finders fee.

The "named non-owner coverage" endorsement" is used to provide personal auto coverage for:

Some people do not own autos but still have an insurable exposure when they rent a vehicle or drive a vehicle they do not own. Even though they may purchase coverage from the rental car company or the person's vehicle they borrow has coverage, there may be a need to provide excess liability coverage because of a serious accident.

What endorsement may be used on the dwelling policy to keep values current with the replacement cost of the buildings?

The Automatic Increase Endorsement. The "automatic increase endorsement" is used to keep the coverage current as a result of inflation on construction costs.

Claims paid under which of the following will reduce the aggregate limit under the commercial general liability policy?

The Per Occurrence Limit. Claims paid under this limit are deducted from the aggregate limit and the remaining amount is all the insured has available for future occurrences until the policy is renewed.

Whose responsibility is it to see that a ship is seaworthy?

The Ship Owner The ship owner is ultimately responsible to see that the ship is sea worthy. This is an implied warranty in ocean marine insurance.

Which of the following is included in the declarations page of the homeowner policy?

The address of the insured location. The address of the insured location is on the declarations page of the policy.

In terms of fidelity bonds, what does "name scheduled" refer to?

The bond covers only those persons listed by name on the bond's schedule.. Some fidelity types of coverage do not provide blanket coverage for all employees. As such, coverage is provided for only those individuals named on the schedule attached to the bond.

In order for a "release of all claims" to be valid, what MUST occur?

The check must be cashed.

Which of the following is NOT a correct statement in determining the cost of a "comparable automobile" when a physical damage loss has a occurred?

The computerized method must use values that are fair market values in the local market areas and does not include markets in other parts of the United States.

When an insurance agent is writing a CGL policy and he/she has a choice of using an "occurrence" form or a "claims-made" form, he/she should be aware that the main difference between the two forms is:

The coverage trigger A coverage "trigger" is something that clearly defines when coverage begins and ends under a policy. The two forms differ as to when coverage is "triggered."

If an employee is injured in a job related accident, who makes the selection of the attending physician?

The employer The employer selects the physician who will provide care. If the employer does not make a timely designation or neglects to provide medical care, the employee may choose a treating physician.

An insured who had a $500,000 primary liability policy purchased a $1 million Umbrella liability policy with a $2,000 self-insured retention limit. Later, the insured allowed the required underlying primary policy with a limit of $100,000 to expire. A week after that, the insured became liable for a $100,000 loss that is not excluded by the provisions of either the primary policy or the Umbrella policy. How will this loss likely be settled?

The insured will pay the full $100,000 loss.. Because the insured allowed the required underlying policy to expire, he is responsible for the $100,000 loss. The Umbrella policy does not recognize a reduction in the underlying limits nor the non-renewal of underlying coverage.

A shopper in the supermarket drops a bottle of salad oil and it breaks open on the floor in the aisle. An employee begins to clean up the spill. Halfway through the clean up he realizes that it is time for his break and he proceeds to the break room, intending to finish the clean up after his break. During his absence a customer slips on the oil that has not yet been cleaned up and is injured. Is the store liable?

The store is liable because they had notice of a dangerous condition and failed to remedy it. As soon as the employee becomes aware of the spilled oil the store has notice. The store is directly responsible for any accidents that subsequently occur because the hazard has not been removed.

Under Coverage F - Medical Payments of the homeowners program, what is the time limit for expenses to be covered following an accident?

Three years. Coverage F refers to medical payments coverage. It pays without regard to the negligence of the insured. All covered expenses up to the specified limit are paid for up to three years.

All of the following are true about workers compensation benefits, EXCEPT:

Waiting periods apply to medical and disability benefits. Workers compensation laws in most states have waiting periods before disability income benefits are paid. Waiting periods do not apply to medical benefits.

The first effort to provide insurance for land transportation risks involved an extension of ocean marine coverage known as the:

Warehouse to warehouse" clause This is called the "warehouse to warehouse" clause. Coverage applies from the warehouse from which the goods are shipped to the warehouse of the recipient.

When is a self-insured retention applied in an umbrella policy?

When the umbrella policy covers a liability claim excluded by primary policies. Umbrella policies may cover a liability claim which is excluded by primary liability policies; in those cases, the umbrella imposes a self-insured retention.

Would a claim under Employer's Liability Insurance for an employee on business temporarily in France be covered?

Yes, since the employee was outside the coverage territory temporarily . Employer's Liability coverage excludes bodily injury occurring outside the United States of America, its territories or possessions, and Canada, but this exclusion does not apply to bodily injury to a citizen or resident of the United States of America or Canada who is temporarily outside these countries.

A burglar apprehended in Smith's Jewelry Store by Mr. Smith, the owner, puts up a fight and suffers a broken jaw as a consequence. The burglar sues Smith's Jewelry Store for bodily injury. Will the store's CGL policy provide defense of the suit?

Yes. Although intentional, the injury was committed by Mr. Smith to protect himself and his property and is therefore covered.. The claim is covered because Mr. Smith was trying to protect himself and his property by using reasonable force. If the burglar did not have a weapon and Mr. Smith shot him there might be a coverage problem.

Jane becomes injured in an auto accident caused when she took her eyes off the road to send a text message on her cell phone. This is an example of a:

morale hazard. A morale hazard is one arising out of an insured's indifference to loss.