NC Exam

Which policy provision or clause is designed to prevent the violation of the principle of indemnity?

"Other Insurance" provision

Under the additional coverages of the standardized BOP, how much is the limit for "Pollutant Clean-Up and Removal" if caused by a covered loss?

$10,000 in each policy year

An insured is covered by a $300k CGL policy and a $1million Commercial Umbreall with a $2000 SIR limit. An occurrence resulted in $400k of personal injury damages that are not excluded by either policy. Shortly thereafter, the insurer providing the CGL policy became insolvent. How much of the damages would be covered by the Commercial Umbrella policy?

$100,000

Section I of the Homeowners forms provides up to how much when the insured is assessed by a corporation or property owner's association for damage to property owned collectively, but only if it was damaged by a peril insured against under Coverage A of the policy

$1000

If an injury leaves facial or head scars which seriously disfigure the person, or causes the loss or permanent injury to an important organ of the body, the employee may be awarded additional compensation not to exceed:

$20,000

An insured carries property insurance with a limit of $25,000 and an 80% coinsurance requirement. The covered building, however, is worth $40,000. How much would she collect in the event of a total loss?

$25,000; coinsurance only affects partial losses and not a total loss

Supplementary payments under the liability section of a Commercial Auto policy include reasonable expenses incurred by the insured including loss of earnings up to how much per day?

$250

Hannah must take time away from work to help assist in the investigation of a claim that was made against her BOP policy. The policy will pay for Hannah's actual loss of earnings up to:

$250 per day

In NC the motor vehicle liability policy law requires owners of motor vehicles to carry limits of:

$30/60/25

The Homeowners "additional coverages" includes up to how much for grave markers including mausoleums on or away from the residence premises by a peril insured against?

$5000

An insured is covered under a DP-2 broad form Dwelling policy. A water pipe has frozen and burst and the insured has suffered floor and ceiling damage to his home. The cost to remove and replace the walls to get to the pipe is $300. The cost to repair the floor is $400. The ice that burst must now be replaced and costs $200. How much will the insurer pay?

$700 - the form will not cover the pipe that burst and caused the damage

The Motor Carrier Act of 1980 requires those hired to transport nonhazardous property to carry a minimum limit of liability of:

$750 thousand

The NC mandatory special provisions form amends the standardized DP-2 and DP-3 Dwelling forms to provide _________ for the "additional living expenses" coverage.

10% of the coverage limit

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

18 years of age

Aan insured has received ACV payment from the adjuster for a covered loss. At the time he is satisfied, but he later changes his mind and wants full replacement value. How many days does he have to submit the receipts to get the replacement cost payment under a HO-3 form?

180 days

Under the North Carolina personal automobile policy, the number of days an insured has to report a newly acquired vehicle to the insurer is:

30

The "Business Income" additional coverage of the standard BOP provide coverage for "ordinary payroll coverage" for

60 days unless the insured selects and schedules a different amount

The insured has sustained a loss of income from a covered peril under his BOP. What deductible applies to his "loss of income" coverage?

A "time deductible" of 72 hours

Fiduciary Bond

A court bond guaranteeing that a person appointed by a court to administer the property or interests of others will faithfully perform his or her duties.

Mediation

A method of settling disputes outside of court by using the services of a neutral third party, called a mediator. The mediator acts as a communicating agent between the parties and suggests ways in which the parties can resolve their dispute. Not legally binding

HO-1 Basic Form

A named peril form on both dwelling structures and contents. The HO-1 is very similar to the DP-1 basic dwelling policy except vandalism and theft are included.

HO-2 (broad form)

A named peril form on both dwelling structures and contents. The HO-2 is very similar to the DP-2 Broad Form dwelling fire policy, except theft is included.

DP-2 Broad Form

A named peril policy that adds several more perils. Includes all DP-1 coverage.

Statute of Limitations

A requirement that a plaintiff file a lawsuit within a specific period of time after the clause of the lawsuit has occurred, which is oftentimes when the injury occurred or was discovered

A structure is insured in excess of its value in NC and suffers a total loss. No endorsements are attached to the policy to insure for replacement cost. How will the loss be settled?

ACV of structure at time of loss

Self-insured retention (SIR)

An amount that is deducted from claims that are payable under an umbrella liability policy and that are not covered at all by any primary policy.

Reservation of rights letter

An insurer's letter that specifies coverage issues and informs the insured that the insurer is handling a claim with the understanding that the insurer may later deny coverage should the facts warrant it.

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Any Auto

Which of the following expenses would be covered in full or in part by the "supplementary payments" section of the personal automobile policy? Bail bonds, loss of earnings for attendance at trials or hearings, post judgement interest, arbitrator's fees

Bail bonds, loss of earnings for attendance at trials or hearings, and post judgement interest

DP-1 Basic Form

Can be written for any amount on a ACV basis. Covers basic fire, lightening and internal explosion. Other Perils must be endorsed.

An insured is covered under a CGL policy. He would like to purchase another policy to increase the limits of insurance for his commercial liability exposures. What policy should he consider?

Commercial Umbrella or Excess Liability policy

Information about the premium and policy limits, the identity and address of the named insured, and the policy period is found in which part of an insurance policy?

Declarations page

Which sections of the Standard Fire policy are found on the first page of the policy?

Declarations page and Insuring Agreement

Employee dishonest protection would be provided under which type of bond?

Fidelity bond

Coverage F: Medical Payments to Others

For injuries that arise even where the insured is not liable for the injury Does not apply to the insured or members of the insured's household Not liability coverage and is not base on fault

Under which Commercial Crime insuring agreement is defense costs covered?

Forgery or Alteration

Which standard Homeowners forms does not provide any amount of coverage under the Coverage A - Dwelling insurance agreement?

HO-4 (this is a policy for tenants that covers their personal property)

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Hired autos

Advertising Injury Liability

Liability resulting from damage caused to a business by the misrepresentations of another. Also can include theft of a copyrighted trademark.

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Non-owned autos

A claim is made on an excess liability policy. It is discovered during the claims investigation, that the underlying liability policy and the excess liability policy have different inception and expiration dates. The adjuster finds that the different dates has created a situation where the underlying policy was not in effect at the time of occurrence, and therefore cannot trigger the excess liability policy to pay the claim. This situation is known as:

Nonconcurrency

Accidents that occur while the work is being done are considered covered under the:

Operations Liability coverage.

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Owned Private Passenger Auto

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Owned autos only

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Owned autos other than private passenger autos

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Owned autos subject to compulsory uninsured motorist law

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Owned autos subject to no-fault

Which insuring agreement of the Personal Auto policy would provide coverage for the damage caused to the other driver's car when the insured was at fault for an accident?

Part A - Liability

The part of a standard workers' compensation policy that contains the cancellation procedures is:

Part Six - Conditions

An insured has an expensive boat and is purchasing insurance to cover it. He is discussing the deductible and his agent suggests a deductible amount that he could pay if theHull of his boat was severely damaged. Which type of deductible would be best?

Percentage deductible (This type of deductible is a percentage of the total amount it would take to repair the hull of the boat if it was severely damaged.)

A contracting company built a porch on a building for an insured. One year after the porch was completed it collapsed, causing injury to the homeowner. This type of accident would be considered a:

Products and Completed Operations Liability Loss

HO-3 (special form)

Provides the best coverage for the money. It is the most popular HO coverage form, and is all risk on the dwelling and other structures, and contents are still named peril.

What are the methods of risk management?

Retained, shared, transferred, avoided, or reduced

Nonconcurrency

Situation that exists when the same property is covered by more than one policy, but the policies are not identical as to the extent of coverage provided.

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Specifically described autos

A policy that prescribes a method for resolving a disputed claim regarding the value of property or the amount of property loss is known as:

The appraisal clause

ImpairedA company installs a central air conditioning system in a newly constructed office building. The system is defective and will not work, delaying the opening of the building and costing the building owner lost rental revenue. Is the owner's claim covered under their CGL policy?

The claim is not covered because of loss of use of "impaired property" exclusion

Experience modification factor

The factor applied to reduce the premium when loss experience is better than expected.

Mr York had his pickup truck stolen while it was parked in a "no parking" zone outside his office. the value of the truck was $18,500. In addition, tools valued at $200, extra tires and hubcaps for the truck valued at $550 and a tarp worth $50 were in the truck. Mr. York has a CL deductible of $500 and a CM deductible of $250. The insurance will pay what amount?

The loss of the truck plus the extra tires and the hubcaps would be considered in this claim. These total $19.050 less the deductible of $250, equalling $18,800

The declarations section of an insurance policy contains:

The name and address of the insured, duration of policy, name of insurer, limits of liability, deductibles, etc

Mary left an expensive ring on her bedroom dresser before leaving on a business trip. When she returned nothing seemed disturbed in her home, but her ring was gone. Under the terms of her HO-3 policy, this loss would be considered:

Theft/Presumption of theft

DP-3 Special Form

Under this Dwelling coverage form: dwelling and other structures are covered for all direct physical damage (open peril), except for perils specifically excluded.

Under a surety bond, the "principal" is the party that:

agrees to fill an obligation. (The bond guarantees the performance of the principal. A building contractor would be an example of a principal under a performance bond.)

What coverage does not need to be added to a Garage Coverage form by endorsement for coverage to apply? Uninsured motorists, Personal Injury Protection, Medical payments coverage, collision

collision

Contractor Joe has borrowed funds from a bank in order to finance a construction project. A surety bond which guarantees the lender that the contractor will use the borrowed funds to finish the contract free and clear of all liens is known as a:

completion bond

Replevin Bonds

court action to determine the rightful owner of personal property

HO-7

covers mobile homes and house trailers

Insurance adjusters have the "power to bind", which means:

decisions made by the adjuster bind the insurer (the principal)

HO-4 (contents broad form)

designed for tenants who rent apartments, houses, or rooms

HO-6 (unit owners form)

designed for the owners of condominium units and cooperative apartments

The NC Insurance Underwriting Associate provides:

essential property insurance for beach area property

Insurance Information and Privacy Protection Act

establishes standards for the collection, use, preservation, and disclosure of information gathered during insurance transactions,

Public Official bonds are meant to

guarantee faithful performance of the elected or appointed public official

NC law prohibits any Fire insurance policy covering property within the state to be issued for a term:

longer than 7 years

Uninsured motorist coverage and medical payments coverage under a Business Automobile policy are:

not covered by the policy unless added by endorsement.

A hostile fire is defined in the standard fire policy as:

one that burns beyond it's intended boundaries

The "Medical Expenses" coverage of Section II of the BOP will pay the reasonable expenses for first aid, medical services, and funeral services within:

one year from the date of the accident

The insured and her 18 year old son who lives in the insured's household are crossing the street when both of them are struck by a drunk driver. The Part B - Medical Payments coverage of the insured's personal auto policy will:

provide coverage for both the insured and her son

Bailee Coverage

provides coverage for the legal liability of damage or destruction of a bailor's property while under the care of a bailee.

HO-5 Comprehensive Form

provides open perils coverage ("all-risks coverage") on the dwelling, other structures and personal property.

An adjuster has uncovered some discrepancies in matters pertaining to a claim, and is unable to contact the insured to discuss these matters. What should the adjuster do in this situation?

send a reservation of rights letter to the insured's last known address

After completing an inspection of an insured pressure equipment and fire suppression systems, the inspector determines that the pressure equipment needs to be repaired and the suppression systems have not been cleaned and inspected in the time frame required by the policy. The insurer will:

suspend coverage immediately by red tagging the items until they are repaired, cleaned, and pass reinspection

In a trial, the duty of a party to prove that the facts it claims are true is known as:

the burden of proof

If an employee is injured where the employee is exposed to the same injurious agent at the place of business of more than one employer, who should the claim be filed against?

the employer where the employee was last injuriously exposed

When a claims representative is collecting information from a third party claimant, what information should be obtained first?

the nature and extent of the injuries or property damage claimed

Medical payment claims can be made up to how many years from the date of the injury under the Farm liability coverage?

three

Providers of continuing education are required to provide licensees with a certificate of course completion. How long must licensees maintain this certificate?

three years

During a tornado, a house is destroyed when a section of a wall is blown down, knocking over a heater, which sets the house on fire and creates smoke. What is the proximate cause for this loss

tornado

Proximate cause

unbroken chain of events that leads to a loss