More insurance
a
How is the premium paid for the businessowners policy? A. One indivisible premium B. Itemized premium C. Pro rata liability premium D. Separate premium for property and for liability
a
How many continuing education hours must be completed on the subject of ethics every license renewal period? A. 2 B. 4 C. 5 D. 10
b
How many days after an injury that results in a disability do income benefits begin to accrue? A. 7 days B. 8 days C. 10 days D. 14 days
c
If a car is stolen and left in a snowbank, causing the radiator to freeze and sustain heavy damage, is the damage covered by the auto policy? A. No, freezing is never covered. B. No, that is never covered. C. Yes, freezing exclusion is removed if the car is stolen. D. Yes, there is no exclusion for freezing.
a
The obligation to compensate injured workers without regard to fault or negligence is known as A. Absolute liability. B. Employers liability. C. Elective liability. D. Compulsory liability.
b
Which of the following describes an insurer's responsibility for payment under a policy, as stated in the common policy provisions? A. Premiums B. Limits of liability C. Consideration D. Utmost good faith
c
Which of the following entities is considered the principal? A. The director of the insurance company B. The head of the Department of Insurance C. The insurer issuing a policy D. The producer or agent soliciting the policy
a
Which of the following is the other major coverage provided by the businessowners liability coverage form? A. Medical payments B. Personal liability C. Auto liability D. Employers liability
c
Which of the following provisions is usually found in homeowners policies and provides a replacement cost settlement to policyholders who carry adequate insurance? A. Actual cash value B. Pro rata C. Insurance to value D. Coinsurance
b
A builder's risk form is most often written as which of the following? A. Specific value form B. Completed value form C. Scheduled form D. Reporting form
c
A structure that is not inhabited by anyone and stores no property is considered A. Empty. B. Derelict. C. Vacant. D. Unoccupied.
c
For an additional premium, the extended coverages written on the basic form dwelling policy would cover which of the following? A. Glass breakage B. Fire C. Riot D. Vandalism
d
The applicant for property insurance owns a building in which combustible materials are stored in the furnace room. From an underwriting standpoint, this risk would likely be considered a A. Speculative risk. B. Moral hazard. C. Physical hazard. D. Morale hazard.
b
Two men are partners in a moving company. They have two trucks used to move property of others. They should insure their trucks under a A. Commercial auto fleet policy. B. Business auto policy. C. Personal auto policy. D. Garage liability coverage form.
c
Using the pro rata method, if a property is covered by Company A for $20,000 and Company B covers the same property for $40,000, how much will Company A pay on a $24,000 loss? A. $20,000 B. $12,000 C. $8,000 D. $0
d
What do individuals use to transfer the risk of loss to a larger group? A. Insurable interest B. Indemnity C. Exposure D. Insurance
d
When does the insurer's duty to defend a suit or claim end in a commercial general liability policy? A. When defense costs equal the applicable limit of insurance. B. When both loss payments and defense costs equal the applicable policy limit. C. When the insured agrees to the settlement. D. When loss payments equal the applicable limit of insurance.
b
Workers compensation rating is developed by applying a rating bureau job classification rate to which of the following? A. Minimum wage B. Job title C. Payroll D. Non-cash compensation
c
Under the employee theft coverage, when a covered employee is found to have participated in a dishonest act, the coverage for that employee will terminate A. On the anniversary of the bond. B. Upon employee's conviction. C. Immediately. D. In 30 days.
d
How soon does the period of restoration for business income coverage begin after the direct loss? A. Immediately B. 24 hours C. 48 hours D. 72 hours
a
In reference to insurable interest, which of the following is NOT an element of insurable risk? A. Personal B. Blood C. Financial D. Business
c
All of the following considerations in determining which state's law applies when a worker is required to travel into another state and is injured while working in the other state EXCEPT A. The normal location where the employee works. B. The state where the employee was hired. C. The insurer's chartered location or domicile. D. Place where the accident occurred.
d
And insurer's right to take possession of property after having paid for the loss is referred to as the right to A. Exchange B. Retain C. Replace D. Salvage
c
Which of the following best depicts the law of large numbers? A. Large groups offer less opportunity for loss. B. The larger the group is, the more likely it will be to get a good choice. C. The larger the pool of risks under study, the more accurate the predictions will be. D. Larger groups produce healthier applicants.
b
All of the following are ways to handle risk EXCEPT A. Transfer B. Elimination C. Avoidance D. Reduction
b
An insured's diner suffered a fire loss. In addition to the damage caused by the fire, the floor covering had to be replaced because of the water damage. It took four weeks for the repairs to be completed. The insured was without income for that period of time. The insured's policy includes both direct and indirect loss coverage. What part of the loss would be paid as indirect loss? A. The entire loss would be paid as direct loss by fire. B. The loss of income for the time the diner was closed. C. The cost of replacing the floor covering due to the water damage. D. Both the loss of income and the cost of flooring.
b
A stock insurer is defined as an insurer A. Who pays dividends to its policyowners. B. Owned by its stockholders. C. Owned by its policyowners. D. That invests at least 20% of its premium income in the stock market.
b
A trucking company has a $1 million umbrella policy in place. The businessowner agrees to maintain a 200/500/100 limit on auto liability, and a personal liability of $400,000. After a car accident, the business is sued. Injuries are awarded to a single injured party in the amount of $300,000. It turned out that the business actually carried only 100/250/50 auto liability limits. What is the total amount the umbrella policy will pay? A. $50,000 B. $100,000 C. $200,000 D. $300,000
d
If a fire erupts in the kitchen and spreads to the upstairs bedroom, resulting in the destruction of furniture, what type of loss has occurred? A. Indirect B. Consequential C. Proximate D. Direct
d
Which of the following statements is correct regarding the debris removal coverage under the businessowners policy (BOP)? A. It pays for cleanup or removal of pollutants from land or water. B. It pays for removal of the debris of the insured's damaged automobile. C. The debris of covered property must be reported in writing within 270 days of the loss. D. The insured's limit of liability is 25% of the sum of the direct loss payment plus the deductible amount.
c
Which of the following would NOT generally be included in the supplementary payments portion of a liability policy? A. Expenses the insured incurs, as part of defense, at the company's request B. Loss of earnings due to the accident C. Damage to property owned by the insured D. Cost of first aid to others at the time of an accident
a
Workers compensation rating is developed by applying a rating bureau job classification rate to which of the following? A. Payroll B. Noncash compensation C. Minimum wage D. Job title
d
You are at fault in an auto wreck out of state. How does your company adjust? A. The limit of your policy, no matter what the other state's minimum B. By the other state's highest form C. Will not pay at all D. At least to the minimum required by the state
a
Homeowners policies consider all of the following insured locations EXCEPT A. A strawberry patch owned by the insured. B. Land owned by the insured on which his new home is under construction. C. An individual cemetery plot. D. The hotel ballroom rented by the insured for a family reunion.
b
In a personal auto policy (PAP), a covered auto includes all of the following EXCEPT A. A nonowned temporary substitute vehicle. B. A van used in the delivery business. C. A trailer owned by the insured. D. A farm implement being towed behind the insured's pickup.
c
Insurers must file all recent forms for Commissioner's approval within how many days prior to use? A. 10 days B. 30 days C. 60 days D. 90 days
c
John had a disagreement with his insurer on the value of his damaged property. After making a written demand, both John and the insurer each selected an appraiser. The appraisers then agreed on a fair value without having to select an umpire. What conditions did John use? A. Notice of Claim B. Fair Value C. Appraisal D. Arbitration
b
Section III of the business auto policy provides physical damage coverage. All of the following are physical damage coverages that may be selected coverages EXCEPT A. Collision coverage B. Limited peril coverage C. Specified causes of loss coverage D. Comprehensive coverage
d
Space Age Rockets makes model rocket supplies and has 12 employees. The company is located in Atlanta, GA. Georgia has compulsory workers compensation laws. Space Age's owner thinks that his company is too small and unprofitable to carry the workers comp plan mandated by the state. Possible consequences of noncompliance include all of the following EXCEPT A. Closure of the business as a public nuisance by state officials. B. Payment for injuries in monetary amounts stipulated by the state with respect to workers compensation plans. C. Payment of fines and penalties as dictated by state compliance authorities. D. Forced payment of billing for services rendered by any private insurer that "binds" coverage based on an employee's request for coverage.
c
Supplementary payments on a CGL provide all of the following EXCEPT A. Pre-judgment and post-judgment interest. B. The cost of bonds to release attachment. C. Up to $500 a day for lost earnings and $2000 for the cost of bail bonds. D. $100 in gasoline costs by the insured driving a witness to and from court.
a
The defendant being released on a surety bail bond is the A. Principal B. Surety C. Obligee D. Insured
d
When Symbol 7 is provided, which of the following statements is true with regards to newly acquired autos? A. They are covered only until the end of the policy term. B. They are not covered until the insurer is notified. C. They are automatically covered only for 30 days. D. They are covered if they are used to replace previously owned autos with that coverage.
d
Which method of dealing with risk is applied when insurance is purchased? A. Sharing B. Avoidance C. Reduction D. Transfer
b
Coverage B - Personal and Advertising Injury Liability responds to claims arising from A. Premises and operations injury claims. B. Suits alleging infringement of a copyright. C. Scope of patent protection. D. Failure of products to perform as advertised.
d
An insurer filed a new policy form and endorsements with the Commissioner 60 days ago. The insurer has not heard back from the Commissioner. What can the insurer assume? A. The form has been rejected. B. The insurer must send a follow-up request. C. The Commissioner needs a 30-day extension. D. The form has been approved.
a
Your friend's dog that you are keeping while the friend is out of town bit a visitor in your home. Does your homeowners liability coverage apply? A. Yes, the coverage would apply for any animal in your care. B. Yes, if the visitor has no health coverage. C. No, because the dog is not yours. D. No, because injury to others by animals is not covered.
d
An insurer may cancel a homeowners insurance policy that has been in effect for more than 60 days for any of the following reasons EXCEPT A. Increase in the hazard that is within the control of the insured that would require an increase in the premium rate. B. The named insured does not pay the premium when due. C. The insured submits a fraudulent claim. D. The insured submits a claim against the policy.
a
If an insurance policy has the additional coverage provision, how does it affect the policy premium? A. There is no additional premium. B. Premium will be recalculated when a specific loss covered by this provision occurs. C. Additional premium will be assessed. D. Premium will be calculated on a pro rata basis based on the amount of additional coverage.
b
Loss valuation is best described as the process of A. Accepting or denying coverage based on historical evidence of an applicant's property losses. B. Determining an appropriate value for repair or replacement of property following a specific loss. C. Providing equal benefits for a wide array of covered properties. D. Defining the replacement costs of property in relation to competitor insurers' cost of the same type.
d
Replacement cost is defined as A. The market value of Property of like kind and quality. B. Full replacement of property with like kind and quality, less an allowance for physical deterioration and depreciation. C. Payment of the full policy limits in the event of a total loss. D. Full replacement of property at its current cost, new and without reduction for depreciation.
a
The supplementary payments section of the commercial general liability policy would cover A. Court costs assessed against the insured in a suit. B. Loss of the insured's earnings, up to $300 a day. C. Up to the policy limit for bodily injury or property damage. D. Up to $500 for the cost of required bail bonds.
d
Which of the following entities is eligible for a businessowners policy? A. Places of amusement B. Automobile sales and servicing operations C. Manufacturing operations D. Convenience stores
b
An insurer must be fair in underwriting and must pay all covered losses of any insured. For the faithful execution of these duties, an insurer has the right to A. Implement strict guidelines for the initiation of claims against all policies. B. Accept the payment of premiums for all policies currently in force. C. Use flexible underwriting standards so as to exclude higher-risk insureds. D. Employ any and all resources available to avoid paying legitimate claims.
d
The broad cause of loss form in the commercial property policy contains three perils in addition to the basic form perils. Which of the following is NOT one of those three perils? A. Water damage B. Weight of snow, ice, or sleet C. Falling objects D. Utility services
c
Which of the following is FALSE concerning liability coverage of a business auto policy? A. The company will pay any interest accruing between time of judgment and payment. B. The company will defend any suit alleging bodily injury (BI) or property damage (PD) covered by the policy. C. The company will reimburse the insured for all loss of earnings. D. The company will pay the premium on any appeal bond.
b
Which of the following is a method of establishing a premium on large commercial accounts? A. Experience modification factor B. Retrospective rating C. Premium discount D. Merit rating plan
c
Which of the following would be covered under a building and personal property coverage form? A. Personal property while airborne B. Underground pipes C. Outdoor sign D. Building foundations
a
Which part of the policy clarifies the terms that are used throughout the policy? A. Definitions B. Conditions C. Insuring agreement D. Declarations
a
Which statement best describes agreement as it relates to insurance contracts? A. One party accepts the exact terms of the other party's offer. B. The intent of the contract must be legally acceptable to both parties. C. All parties must be capable of entering into a contract. D. Each party must offer something of value.
a
All of the following are true about the cancellation provision of a commercial insurance policy EXCEPT A. The insurer is required to provide proof that the insured received the cancellation notice prior to cancelling the policy. B. The insurer is required to give advance notice of its intended cancellation to the insured. C. The insurer may cancel the policy by mailing or delivering written notice of cancellation to the first name insured. D. The insured may cancel the policy at any time by mailing or delivering written notice of cancellation to the insurer.
c
Although a businessowners policy (BOP) will cover fire damage legal liability, which of the following statements is true? A. There is a limit of $500 set on fire damage legal liability in all cases. B. The general aggregate applies to fire damage legal liability. C. The general aggregate does not apply to fire damage legal liability. D. Pollution caused by fire will be covered because pollution is covered in a BOP.
d
If an insurer declares that the value of a loss is $5,000, but the insured is confident that the amount of the loss is substantially different, which of the following would most likely be used to settle the dispute? A. Small claims court B. Umpire hearing C. Third party settlement D. Arbitration
a
Reports required by the Texas Department of Insurance based on complaints about unfair settlement practices must contain information about all of the following EXCEPT A. The resident state of the claimants. B. The total number of claims. C. The total number of complaints. D. How the claim was settled.
c
What is designed to assume risks that are generally unacceptable to the normal insurance market? A. Multi-risk plans B. Limited risk capacity C. Residual markets D. All-risk plans
d
The commercial general liability Coverage Part A - Bodily Injury and Property Damage provides coverage for which of the following? A. Hired autos B. Employers C. Machinery D. Premises
a
An insured has extended coverage on her dwelling that includes coverage for vandalism and malicious mischief. One evening, she is sitting in her living room when she hears a crash and the sound of glass breaking. She runs to the door and discovers a brick has been thrown through her glass door. To inform her insurer of a possible claim, she fills out a form detailing the events leading to the loss. What is the name of the form? A. Notice of claim form B. Appraisal form C. Proof of loss form D. Mortgagee Rights form
c
An insurer may decline to renew a Homeowners policy if the insured has filed how many claims under the policy in any 3-year period? A. One B. Two or more C. Three or more D. Five or more
d
Homeland Housing Corp holds a mortgage on a property that John and Carol Thomas purchased. John and Carol have a Homeowners policy with Home Protection Insurance which has a mortgage clause naming Homeland as a loss payee. If John and Carol suffer a fire to their home A. Homeland would be considered the sole claimant and receive loss reimbursement from Home Protection Insurance. B. The Thomases will be considered sole claimants and receive loss reimbursement from Home Protection Insurance. C. John and Carol will be considered co-claimants and receive loss reimbursement from Home Protection Insurance. D. The Thomases and Homeland will be considered co-claimants and receive loss reimbursement from Home Protection Insurance.
a
A small appliance manufacturer in this state provides products around the globe. A customer in Switzerland is injured using one of its products. If the appliance manufacturer is found liable for the damages, why would it's commercial general liability policy cover the customer's claim for bodily injury? A. The appliance was manufactured in the United States. B. The commercial general liability policy extends rights to Switzerland. C. The appliance manufacturers did not have a permit to sell globally. D. The appliance manufacturer is negligent.
a
In order to receive transportation expenses under the personal auto policy following damage to your auto caused by collision, you must have A. Collision coverage B. Uninsured motorist property damage C. Supplementary payments D. Other-than-collision coverage
c
Which would NOT be covered by an insured's uninsured motorist coverage? A. The insured's car is hit by someone whose auto insurer is insolvent. B. The insured's son is struck by a hit-and-run driver. C. The insured causes a head-on collision with the car of an uninsured motorist. D. The insured's neighbor borrowed the insured's car and was hit by an uninsured motorist.
a
Business auto coverages apply only to those autos that are identified as covered autos in the declarations by entry of the appropriate numerical symbol. Which symbol affords the broadest coverage? A. 1 B. 2 C. 7 D. 9
b
Coverage C in homeowners policy forms offers all of the following EXCEPT A. Coverage for property located at another residence premises. B. Coverage for loss of use. C. Worldwide coverage. D. Coverage for property of others.
d
The commercial crime coverage that would cover losses resulting from the theft of money, securities and other property by employee is A. Funds transfer fraud. B. Forgery or alteration. C. Inside the premises - theft of money and securities. D. Employee theft.
b
The insured was judged at fault in an automobile accident. He has 100/300 bodily injury liability coverage. Three other individuals were injured in the vehicle hit by the insured. They were awarded damages of $150,000, $75,000, and $75,000. What amount, if any, was not covered by his insurance policy? A. All of the damages were covered by his insurance policy. B. $50,000 C. $100,000 D. $150,000
c
Under Business Personal Property limit - Seasonal Increase, if no percentage is specified in the declarations, seasonal fluctuations will automatically increase the limit for business personal property by A. 10% B. 15% C. 25% D. 50%
a
Upon payment for a loss, the insured is obligated to surrender to the insurer the right to sue a negligent third-party. This is called A. Subrogation B. Indemnity C. Insurable interest D. Entirety
a
When insurance is written on a dwelling form, which of the following types of property would be insured under Coverage B (Other Structures)? A. A garage separated from the dwelling B. Materials and supplies used for construction or repair of the dwelling C. A laundry room attached to the dwelling D. Building equipment and outdoor equipment
b
Which of the following statements is CORRECT regarding business income coverage under the businessowners policy (BOP)? A. The business income coverage has a monthly limitation and a set benefit period. B. The business income losses are payable for 12 consecutive months following the occurrence. C. The business income coverage is subject to coinsurance limitations of 50%. D. The business income coverage has an aggregate dollar limit.
