PA Exam
An applicant for an insurance license in Florida must submit which of the following A)A birth certificate. B) A driver's license. C) A passport. D) A set of fingerprints.
Answer: A set of fingerprints. Explanation: The person must submit a set of fingerprints.
Choosing between two right or legally acceptable choices is known as A) Making a legal decision. B) Making a moral decision. C) Making an ethical decision. D) Making an acceptable decision
Answer: Making an ethical decision Explanation: Choosing between two right (correct) or legally acceptable choices is known as making an ethical decision
Under the DP-3 special form, which of the following would be covered? A) Earthquake. B) Theft of outside lighting attached to the dwelling. C) Vandalism in a dwelling that has been vacant for 89 days. D) The gradual soot build-up on the siding of the covered dwelling from the insured's gas grill being used over a period of years.
Answer: Theft of outside lighting attached to the dwelling Explanation: The special DP-3 form provides open peril coverage on the structures. This covers the light because it is attached to the building.
Which of the following would NOT be excluded under the Commercial Property basic cause of loss form? A) Ordinance or law. B) Military action. C) A fire caused by earth movement. D) Earth movement.
C) A fire caused by earth movement A fire caused by earth movement would not be excluded, it would be covered by the basic cause of loss form attached to a Commercial Property policy.
The rental reimbursement provision (or transportation expense provision) of an automobile mechanical breakdown policy provides: A) $25 per day up to a maximum of $100. B) $15 per day up to a maximum of $75. C) $15 per day up to a maximum of $100. C) $25 per day up to a maximum of $75.
$15 per day up to a maximum of $75 Answer: Mechanical breakdown policies pay $15 per day up to a maximum of $75 to rent a vehicle while the covered vehicle is being repaired.
Sally's SUV has a mechanical breakdown while she was driving to work, so she had it towed to an auto repair shop. The inspection showed that the transmission failed. Sally files a claim on her MBI policy, but her insurer denied the claim. Which of the following would be a valid reason for this denial? A) Sally has not had the transmission fluid changed according to the manufacturer's recommendations. B) The transmission is not covered under an MBI policy. C) The vehicle has more than 50,000 miles. D) The transmission is covered under her regular auto insurance policy.
A) Sally has not had the transmission fluid changed according to the manufacturer's recommendations.
A gas line explodes outside of Mindy's Mending Shop, ruining her new landscaping. Which coverage extension of Mindy's Commercial Property policy would cover the cost of replacing the damaged trees and shrubs? A) Property On-Premises". B) "Newly Acquired Property". C) "Property Off-Premises". D) "Outdoor Property".
Answer: "Outdoor Property" Explanation: The coverage extension "Outdoor Property" adds coverage for trees and shrubs that were excluded in the "property not covered" section of the policy.
If the insured carries a DP-2 Dwelling form and insures the dwelling for 80% of its replacement cost value, what will he be paid if his 30-year-old roof sustains $10,000 in damages (disregarding any deductible)? A) $333 B) $5,000 C) $10,000 D) $8,000
Answer: $10,000. Explanation: If the insured carries 80% to value he would be entitled to full replacement cost coverage for his damaged roof
Which of the following is the additional limit provided by a standard Businessowners policy "Debris Removal" in the event that the policy limit is exhausted in paying the loss? A) $25,000. B) $20,000. C) $10,000 D) $15,000
Answer: $25,000 Explanation: The additional limit is $25,000 when the basic coverage provided by the policy is not enough. The basic coverage provides debris removal coverage up to 25% of the actual amount of the loss up to the policy limit. Sometimes the amount of the loss PLUS the debris cleanup will exhaust the limit and the company will pay up to an additional $25,000 for debris removal.
The standard BOP policy will provide coverage for all of the following incidental occupancies in a covered apartment building, EXCEPT: A) A small retail store occupying 10,000 square feet. B) A landscape contractor whose office occupies 1,500 square feet. C) A print shop that occupies 10% of the floor area of the apartment building. D) A contractor whose office occupies 20% of the floor area of the building.
Answer: A contractor whose office occupies 20% of the floor area of the building Explanation: A contractor's office is not classified as a "incidental occupancy" for a covered apartment building if it occupies more than 15% of the total floor area of the building
Under the comprehensive coverage of a Business Auto policy, which of the following would not be a covered loss? A) After sliding on an icy pavement, a driver hits a guard rail. B) Electrical wiring in the vehicle catches fire when the ignition is turned on. C) All four tires are removed and a truck is put on blocks while it is parked over the weekend, even though there is no evidence of forcible entry into the company parking lot. D) A vehicle has its tires slashed by an undetermined person.
Answer: After sliding on an icy pavement, a driver hits a guard rail Explanation: Since the vehicle sustained damage by hitting the guard rail, it is considered a collision claim. This is because the definition of collision includes the upset of a vehicle, its impact with another vehicle or object; anything else would be other than collision and thus be covered by comprehensive coverage
Which of the following statements is TRUE concerning the Businessowners policy?
Answer: BOP is a type of package policy that prepackages a group of coverage desirable to small businesses. Explanation: Unlike the Commercial Package policy, the BOP is "prepackaged" and the insured cannot select the coverage parts.
Which of the following statements best describes the process of mediation? A) It is the most common alternative dispute resolution (ADR) used to resolve claim disputes. B) Both parties select an impartial expert and those experts select a third. The decision reached by all three impartial experts is legally binding on the disputing parties C) Both parties present their dispute to a neutral third party, but no decision reached by the mediator is legally binding. D) Both parties present their dispute to a neutral third party and the decision of the mediator is legally binding.
Answer: Both parties present their dispute to a neutral third party, but no decision reached by the mediator is legally binding. Explanation: In mediation, both opposing parties present their dispute to an objective and neutral (impartial) third party who helps the parties analyze their dispute and devise a compromise. No decision reached in mediation is binding on either party, unless they come to an agreement and sign documents agreeing to the decision.
Under which of the following Aviation physical damage losses would a deductible apply? A) Fire caused by lightning. B) Theft or pilferage. C) A deductible applies to all Aviation physical damage losses. D) Fire caused by a collision.
Answer: Fire caused by a collision Explanation: The deductible does not apply to losses from fire, lightning, explosion, transportation, theft, robbery, or pilferage. However, the "in-motion" deductible does apply to losses from fire or explosion that occurs as a result of the collision of the aircraft.
Which of the following statements is TRUE regarding the definition of "mysterious disappearance" as it applies under a Crime insurance policy? A) Mysterious disappearance" may apply to any type of property theft. B) For "mysterious disappearance" to apply, theft of the property must be ruled out. C) The "mysterious disappearance" of property is only covered if the insured can prove the property was stored in an area where the safety of that property can be presumed. D) The "mysterious disappearance" of covered property is considered negligence on the part of the insured and is not covered.
Answer: For "mysterious disappearance" to apply, theft of the property must be ruled out. Explanation: For "mysterious disappearance" to apply under a Crime policy, theft of the property must be ruled out
Part D of the personal auto policy does NOT cover A) Earthquake B) Explosion C) Wind D) Freezing.
Answer: Freezing Mechanical and electrical breakdown, and leaving your car out in the bitter weather to freeze, is not covered under a Personal Auto policy. The other three perils are covered under the "other than collision" coverage if purchased.
When an insured suffers a property loss, he or she is obligated by the terms of the policy to do all of the following, EXCEPT A) Separate the damaged from the undamaged property. B) Mitigate the loss. C) Produce books and records relevant to the claim. D) Hire a public adjuster to represent them in the claims process
Answer: Hire a public adjuster to represent them in the claims process Explanation: The insured is not obligated to employ a 'public adjuster" to assist in the claim against the insurance company. It is an option on the part of the insured.
A formal request to an insurance company requesting a payment according to the terms of an insurance contract is known as A) A notice of lawsuit. B) A declaratory judgement request. C) An insurance claim. C) A service of process
Answer: Insurance Claim An insurance claim is a formal request to an insurance company requesting a payment based on the terms of an insurance policy (contract).
A public adjuster, licensed in Florida, also owns a roofing company. A hurricane has occurred and the Florida Governor has made a declaration of an emergency. He contacts a client and offers to assist in the loss estimation and help the client to submit a proof of loss. Which of the following is the licensed public adjuster permitted to do? A) Make the repairs to the clients home. B) Prepare loss repair estimates for the client. C) Contact a friend who will make the repairs and collect a referral fee. D) Make an offer for the salvage.
Answer: Prepare loss repair estimates for the client **A public adjuster may not participate, directly or indirectly, in the reconstruction, repair, or restoration of damaged property that is the subject of a claim adjusted by the licensee; may not engage in any other activities that may be reasonably construed as a conflict of interest, including soliciting or accepting any remuneration from, of any kind or nature, directly or indirectly; and may not have a financial interest in any salvage, repair, or any other business entity that obtains business in connection with any claim that the public adjuster has a contract or an agreement to adjust.
Commercial inland marine policies require the insured to submit a signed, sworn statement of loss A) Within 60 days of the date of the loss. B) Within 30 days of the insurer requesting it. C) Within 30 days of the date of the loss. D) Within 60 days of the insurer requesting it.
Answer: Within 60 days of the insurer requesting it Explanation: The insurer will need to request the sworn statement of loss and provide the method the insured will need to use to submit this statement. The statement itself is due within 60 days of the insured requesting it and providing to method to submit those forms.
Which of the following statements best describes the process of mediation? A) It is the most common alternative dispute resolution (ADR) used to resolve claim disputes. B) Both parties select an impartial expert and those experts select a third. The decision reached by all three impartial experts is legally binding on the disputing parties. C) Both parties present their dispute to a neutral third party, but no decision reached by the mediator is legally binding. D) Both parties present their dispute to a neutral third party and the decision of the mediator is legally binding.
C) Both parties present their dispute to a neutral third party, but no decision reached by the mediator is legally binding EXPLANATION: In mediation, both opposing parties present their dispute to an objective and neutral (impartial) third party who helps the parties analyze their dispute and devise a compromise. No decision reached in mediation is binding on either party, unless they come to an agreement and sign documents agreeing to the decision.
Which of the following losses would be covered by the EC peril of "Windstorm or Hail" under a Dwelling policy? A) An Awning B) Television C) Roof
A roof that suffered damage in a tornado Explanation: The roof is the only property that would be covered under the Dwelling EC peril of windstorm and hail.
Claims filed with the insurance company by the insured are known as A) First-party claims B) Third-party claims. C) Self-insured claims D) Subrogation claims.
Answer: First-party claims Claims filed against the insurance company by the insured are known as first-party claims.
An adjuster's report that contains all the facts, evidence and disposition of the claim and is considered to be the final report is known as the A) Full or formal report. B) Field report. C) Interim or status report. D) Settlement report.
Answer: Full or formal report The "full or formal report" is the final report containing all the information gathered on a claim
All of the following would be covered under a Builders Risk Policy, EXCEPT: A) Prospective buyer. B) Contractor. C) Owner. D) Sub-contractor.
Answer: Prospective buyer Explanation: A prospective buyer could not be added to the policy as an insured. They would not have an insurable interest in the property
Whose responsibility is it to complete a "proof of loss" A) The insurer's adjuster. B) The agent or producer. C) The insurer. D) The claimant.
Answer: The claimant Explanation: The claimant must complete the proof of loss form and submit it to the insurance company. A PUBLIC adjuster, if hired by the claimant, would assist with filling out the proof of loss.
Suggesting to the insured some improvements in their insurance coverage that would be beneficial for possible claims filed in the future, is NOT a violation of the ethics code. However, the other three answer choices ARE violations of ethics. Topic covered in the Florida Adjuster Laws & Regulations section of the course. A) Assumed names B) Legal name C) Name as specified in the Department records D) Approved name
Name as specified in the Department records Any advertisement by a public adjuster must state the full name as specified in Florida Department records of the public adjuster who has caused the advertisement to appear
Selena is a claims representative. She has reviewed and set the reserves for a claim. She asks her friend and fellow claims representative, Orville, to independently evaluate and set the reserve on the same claim file. Selena is using which of the following methods to set her claim reserves? A) Expert system method. B) Average value method. C) Roundtable method. D) Individual case method.
The correct answer is: Roundtable method Explanation: In this example, Selena is using the roundtable method which uses the consensus of two or more claim representatives who have independently evaluated the claim file.
After completing an inspection of an insured's 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:
Your answer: Suspend coverage immediately by red tagging the items until they are repaired, cleaned and pass reinspection.
Under the Personal Articles Floater, a loss is covered when it occurs: A) Anywhere in the world, except for fine arts. B) In the United States only. C) In the United States and Canada only. D) In the United States, Canada, and Mexico only.
Answer: Anywhere in the world, except for fine arts Explanation: The Personal Articles Floater covers covered property on a world-wide basis, except for fine arts, which is only covered in the US, its possessions, Puerto Rico and Canada.
The major difference in Section I of an HO-2 and an HO-4 form is: A) Coverage B. B) Coverage D. C) Coverage A. D) Coverage C.
Answer: Coverage A Explanation: The major difference is Coverage A - Dwelling. The HO-4 does not cover the dwelling as it covers only contents
In Florida, the records of an adjuster relating to a particular claim or loss must be retained in the adjuster's place of business for a period of: A) Not less than 6 months after completion of the adjustment. B) Not less than 2 years after completion of the adjustment. C) Not less than 3 years after completion of the adjustment. D) Not less than 5 years after completion of the adjustment.
Answer: Not less than 5 years after completion of the adjustment. Explanation: Records must be retained for a period of not less than 5 years after completion of the adjustment. This used to be 3 years, but changed to 5 years as of January 1st, 2018.
What is the penalty for transacting insurance in Florida without a license? A) $1,000 B) $10,000 C) $5,000 and imprisonment D) $10,000 and imprisonment
Answer: $5,000 and imprisonment EXPLANATION: Any person who knowingly transacts insurance or otherwise engages in insurance activities in this state without a license in violation of this section commits a felony of the third degree, punishable by a fine of up to $5,000, imprisonment not to exceed five years, or both fine and imprisonment.
In Florida, a notice of claim in the event of a hurricane or windstorm loss must be provided to the insurer within: A) 1 year. B) 2 years C) 30 months. D) 3 years.
Answer: 3 years Florida statutes require a notice of claim in the event of a hurricane or windstorm loss must be provided to the insurer within 3 year
Which of the following is covered property under the HO-3 form?I. Belongings of the insured's daughter, while she is away at college.II. The insured's pool table stored in the garage located under the bonus room of the insured dwelling.III. The insured's prize-winning show dog.IV. The personal property of a tenant who is renting the insured's bonus room. A) I, II, and III only B) I, II, III, and IV C) I and II only D) II and III only
Answer: I and II only Explanation: Pets, no matter how valuable, are excluded under Coverage C, as is the property of boarders or renters.
Claims adjusters have a close relationship to the legal profession but must be careful not to become involved in the unauthorized practice of law. Which of the following would be an example of an adjuster who is engaged in the unauthorized practice of law? A) The adjuster has transmitted settlement offers on behalf of the principal. B) The adjuster has managed claims in compliance with their state's adopted Unfair Claim Settlement laws. C) The adjuster has expressed an opinion, formed from a factual analysis, regarding the extent of damage or injury. D) The adjuster has drafted the legally binding settlement papers on a claim.
Answer: The adjuster has drafted the legally binding settlement papers on a claim Explanation: Adjuster are not permitted to draft any document that is intended to have a legally binding effect.
Before a risk is eligible for the Florida Workers' Compensation Joint Underwriting Association, which of the following must first occur A) The risk has suffered heavy losses. B) The employer has been declined by at least two carriers. C) The current rates paid are prohibitive. D) The employer must employ at least 100 people.
Answer: The employer has been declined by at least two carriers Explanation: Before a risk can be eligible for coverage under the FWCJUA, the employer must have been declined coverage by at least two carriers
Under a Businessowners policy, the "Hired and Nonowned Auto Liability" endorsement would cover A) The employer who uses his/her auto for personal use. B) Vehicles borrowed by the insured. C) The employee who uses his/her vehicle on personal business. D) The owner of a hired or non-owned vehicle.
Answer: Vehicles borrowed by the insured Explanation: This endorsement is used with the BOP when the insured does not carry coverage for liability under a Commercial Auto policy
When non-renewing a non-residential Commercial Property policy in Florida, the insurer must provide: A) 90-days advance written notice. B) 45-days advance written notice. C) 30-days advance written notice. D) 60-days advance written notice.
Answer: 45-days advance written notice Explanation: When non-renewing a non-residential Commercial Property policy in Florida, the insurer must provide 45-days advance written notice.
To be eligible for coverage under a standardized Dwelling policy, the insured must not allow more than _______ boarders to live on the premises. A) 3 B) 2 C) 5 D) 7
Answer: 5 Explanation: The Dwelling policies allow for no more than 5 boarders on the premises.
The Florida mandatory Homeowner endorsement form HO 01 09 amends the "Suit Against Us" provision, that allows the insured to bring a lawsuit against the insurer within: A) 2 years B) 3 years C) 5 years D) 10 years
Answer: 5 Years The ISO policy does not specify a number of years that the insured has to bring a suit, but Florida specifies it as 5 years.
Records of all adjusting contracts and estimates in Florida must be maintained in the adjuster's records for a minimum of: A) 3 years. B) 2 years. C) 1 year D) 5 years.
Answer: 5 years Florida adjusters must maintain any adjusting contracts or written estimates within their records for a minimum of 5 years.
Dwelling forms may be used to cover all of the following, EXCEPT: A) A farm house. B) A permanently installed mobile homes. C) A house with a maximum of 5 roomers or boarders. D) Dwellings under construction.
Answer: A farm house Explanation: Farm houses are not eligible for coverage under the Dwelling forms. All of the other answer choices ARE eligible for coverage.
All of the following are true concerning insurance binders in Florida, EXCEPT: A) Must be in writing. B) Can be made orally. C) Are considered temporary evidence of coverage. D) Must provide notice of cancellation or non-renewal if the binder exceeds 60 days.
Answer: Must be in writing Explanation: Binding coverage may be done orally or in writing. Florida law does not stipulate that binding coverage must be done in writing
Which of the following "additional coverages" under the Building & Personal Property coverage form does not increase the limit of liability of the policy? A) Preservation of Property. B) Electronic Data. C) Fire Department Service Charge. D) Pollutant Clean-Up and Removal.
Answer: Preservation of Property Explanation: The Preservation of Property additional coverage does not increase the limit of insurance.
Which of the following best describes when an aircraft is "in motion?" A) When the plane is being pushed from the gate by another vehicle. B) When the plane is moving under its own power or from momentum generated from its own power. C) When the plane's engines are creating movement. D) When the plane's landing gear has been deployed and is in contact with the ground.
Answer: When the plane is moving under its own power or from momentum generated from its own power Explanation: "In motion" describes anytime the plane is moving under its own power or from momentum generated by its own power.
What limits of liability under a personal auto policy satisfies the Florida Financial Responsibility Law? A) $10/20/10 B) $20/10/10 C) $10/40/10 D) $20/20/10
Answer: $10/20/10 Explanation: The minimum limits of liability required to satisfy the financial responsibility law in Florida are $10,000 each person/$20,000 for multiple injuries and $10,000 property damage to others. These are third party coverages. PIP are first party coverages.
Under a Personal Articles Floater, a pair of antique salt and pepper shakers is insured for $1,000. When one of the shakers is broken, the remaining shaker is worth only $200. How much will the insured receive for the loss without taking into account the deductible? A) $1,000. B) $800 C)$500 D) $200.
Answer: $800 Explanation: In this case, the loss would be determined by taking the value of the item that is remaining and deduct that from the limit of insurance
Flood coverage can be added to a Commercial Property policy by attaching the Flood Coverage Endorsement. If the endorsement is purchased and the property is already covered under a flood policy from the National Flood Insurance Program, then the coverage under this endorsement is considered to be: A) Primary. B) Excess over the NFIP maximum limits. C) Pro-rata with the NFIP policy. D) Not applicable.
Answer: B) Excess over the NFIP maximum limits EXPLANATION: If a NFIP policy is in force or was eligible for purchase at the time the commercial property policy was endorsed for flood coverage, then the endorsement becomes excess coverage over the NFIP policy maximum limits.
Which of the following losses would NOT be covered by an unendorsed Commercial Property policy with the special cause of loss form attached? A) Carolyn's Fine Gifts must shut down for a month to repair flood damage. B) When a riot breaks out in the town square, Bonnie's Boutique is looted and vandalized in the commotion. C) A tornado whips through town, leveling a warehouse belonging to Johnson's Industries. D) Allen's Appliances loses an entire warehouse in a fire caused by a lightning strike at a nearby power plant.
Answer: Carolyn's Fine Gifts must shut down for a month to repair flood damage Explanation: The loss of income due to the shut down of Carolyn's Fine Gifts would not be covered by the Special Cause of Loss form. The cause of the loss and the resulting shut down is FLOOD, which is an excluded peril.
When Chris' car is stolen from his apartment's parking lot, he heads down to the local dealership and buys a new car. Three months later, Chris decides he may as well report the stolen car to his insurer, so he can get some money for it. What is the most likely reason the insurer might deny his claim? A) Chris did not promptly report the stolen vehicle. B) Chris was not listed as an "insured. C) "Chris didn't protect his vehicle from being stolen. D) Chris already bought a new car.
Answer: Chris did not promptly report the stolen vehicle The "duties after a loss condition" specifies that the insured is required to report a claim promptly or the claim may be denied
An insured has suffered a property loss and reported the claim promptly. Which of the following is NOT an immediate duty of the adjuster who received the claim? A) Immediately seek subrogation rights against a third party. B) Verify the effective date of the coverage. C) Verify the proximate cause of loss. D) Determine those that have insurable interests in the property.
Answer: Immediately seek subrogation rights against a third party. Explanation: Subrogation of a claim occurs after the claim has been paid. Afterwards, the adjuster may seek subrogation against a third party who may have caused the loss.
Which of the following statements is correct regarding pollution coverage under the special cause of loss form of a Commercial Property policy? A) Pollution is always excluded. B) A gradual release of pollution is covered if the insured was unaware of the release. C) Coverage will apply on an "excess basis" if the insured carries other pollution coverage. D) It is excluded unless it was caused by a covered peril.
Answer: It is excluded unless it was caused by a covered peril Explanation: Coverage for damage caused by pollution is excluded under the special cause of loss form of the Commercial Property policy, UNLESS the release, discharge, or dispersal of that pollution was caused by a covered peril, such as fire or lightning.
Which of the following actions committed by a Florida adjuster would NOT be considered a breach of the adjuster code of ethics? A) Acting as an adjuster on a claim and then repairing the insured's property on that claim B) The adjuster gains financially from a sub-contractor who performs repairs on a claim the adjuster handled C) Suggesting to the insured some improvements in their insurance coverage that would be beneficial for possible claims filed in the future D) Charging a 25% fee to the insured on the amount of the claims recovery.
Answer: Suggesting to the insured some improvements in their insurance coverage that would be beneficial for possible claims filed in the future Explanation: Suggesting to the insured some improvements in their insurance coverage that would be beneficial for possible claims filed in the future, is NOT a violation of the ethics code. However, the other three answer choices ARE violations of ethics. Topic covered in the Florida Adjuster Laws & Regulations section of the course.
In which of the following situations would trees, shrubs, and other plants be covered by the Homeowners additional coverages? A) The insured's fruit trees are destroyed when an ember from a nearby brush fire lands on them and burns them. B) The insured's shrubs are destroyed when a 100-year snow storm hits the area and the weight of the snow is so heavy, it snaps the branches. C) The insured's 150-year-old oak tree is pushed over by high winds. D) The insured's fruit trees are ruined when snow and ice from a storm build up on the trees, causing large sections to break off and fall to the ground.
Answer: The insured's fruit trees are destroyed when an ember from a nearby brush fire lands on them and burns them. Explanation: The perils of wind, hail, and the weight of ice and snow are excluded under the Homeowners additional coverage for trees, shrubs and other plants. Therefore, the only situation that would be covered is: "The insured's fruit trees are destroyed when an ember from a nearby brush fire lands on them and burns them".
In Florida, when can an adjuster settle a third-party claim involving a minor with the parents of the child? A) When the claim is less that $20,000. B) When the claim is less than $15,000. C) When the claim is less than $10,000 D) When the claim is less than $5,000.
Answer: When the claim is less than $15,000 Explanation: Under Florida law, the adjuster should settle a third-party liability claim of an injured minor child with both parents of the injured child, presuming the settlement is for an amount not in excess of $15,000. If the settlement is for a larger amount, then it must be consummated through the Circuit or County Courts.
Which of the following is an ethical requirement according to Florida's Adjuster Code of Ethics? A) Adjusters should draft special releases in favor of the insured if there is any ethical method of doing so. B) Adjusters may not directly negotiate with a claimant who is represented by an attorney. C) Adjusters should not advise claimants of their rights under contracts and Florida laws unless the claimant specifically requests such advice. D) Adjusters must approach all aspects of the adjusting process with the best interest of their principle in mind and make all decisions in favor of their employer (insurer).
B) Adjusters may not directly negotiate with a claimant who is represented by an attorney.
The insurer and the Department of Insurance must be given a ______ advance notice if an insured brings a civil action action an insurer A) 30 day. B) 60 day C) 90 day D) 45 day
Answer: 60 Day Notice Explanation: As a condition precedent to bringing a civil action, the Department and the authorized insurer must have been given 60 days written notice of the violation. If the Department returns the notice for lack of specificity, the 60 day time period does not begin until a proper notice is filed.
An adjuster is engaged in the unauthorized practice of law if they perform any of the following duties, EXCEPT A) Drafting a legally binding document in the course of adjusting a claim. B) Providing information gained through the claims investigation to the principal. C) Filling in the blanks of a form with factual data. D) Expressing an opinion as to the extent of the loss as part of a factual analysis.
Answer: Filling in the blanks of a form with factual data Explanation: Filling in the blanks of a form with factual data is NOT engaging in the unauthorized practice of law.
Homeowners policies provide personal liability coverage that follows an insured anywhere in the world under: A) Coverage E. B) Coverage A. C) Coverage F. D) Coverage D.
Answer: Coverage E Explanation: Personal liability coverage for the insured under a Homeowners policy is found in Section II - Coverage E of the Homeowners policy.
Which of the following fidelity bonds guarantees both the honesty and faithful performance of the principal? A) Coverage form O. B) Standard form #25. C) Standard form #23. D) Standard form #24.
Answer: Coverage form O Explanation: Public Employee Bond - Coverage Form O guarantees both the honesty and faithful performance of the principal.
Which of the following would be considered a "breakdown" as defined in an Equipment Breakdown policy? A) Malfunctions after adjusting equipment. B) Leakage at any valve. C) The functioning of any safety or protective device. D) Pressure or vacuum equipment failure.
Answer: Pressure or vacuum equipment failure Explanation: "Pressure or vacuum equipment failure." is the only answer choice that IS considered a "breakdown". All of the other answer choices are on the list of items NOT considered to be a "breakdown".
All of the following statements regarding eligibility of self-storage facilities for a standard BOP policy are true, EXCEPT A) The facility cannot exceed two stories in height. B) The facility cannot exceed more than 500 individual self-storage units. C) The facility cannot be used to store items at a specific cold temperature to avoid spoilage. D) The facility cannot be used to store industrial chemicals.
Answer: The facility cannot exceed more than 500 individual self-storage units. Explanation: The BOP DOES NOT require a self-storage unit to be limited to no more than 500 individual self-storage units to be eligible for coverage. All of the other answer choices are eligibility requirements of the BOP for coverage of self-storage facilities.
Heather's house is fully insured with a DP-3 with a limit of $85,000. One day, the house is struck by lightning, and despite the fire department's efforts, burns to the ground. She still had a balance of $20,000 left on her mortgage at the time of the fire. What is the maximum indemnification that would go to Heather, the fire department, and her mortgage lender respectively? A) $64,500; $500; $20,000 B) $84,500; $1,000; $20,000 C) $65,000; $500; $20,000 D) $85,000; $1,000; $85,000
Answer: $65,000; $500; $20,000 Explanation: The maximum payable for the loss is the $85,000 policy limit which would be split at $20,000 for the mortgage lender and a $65,000 check for Heather. The policy also contains an additional coverage of $500 for fire department service charges. This is paid in addition to the policy limits. There is no mention in the question of the deductible amount so you do not assume there is one in answering this question.
How much can a public adjuster in Florida charge the client for services on a claim that is NOT the subject of a state emergency as declared by the Governor? A) 5% of the claim payment B) 10% of the claim payment C) 20% of the claim payment1 D) 5% of the claim payment
Answer: 20% of the claim payment Explanation: A public adjuster may not charge, agree to, or accept any compensation, payment, commission, fee, or other thing of value in excess of: A charge of 10% of the amount of insurance claim payments by the insurer for claims based on events that are the subject of a declaration of a state of emergency by the Governor. This provision applies to claims made during the period of one year after the declaration of emergency. A charge of 20% of the amount of all other insurance claim payments can be made.
An insured has purchased BAP (Business Automobile Policy) physical damage coverage against specified causes of loss. Protection applies to all of the following perils, EXCEPT: A) Theft. B) Fire. C) Falling objects. D) Vandalism.
Answer: Falling objects Explanation: This is named peril coverage (specified causes of loss) and is not nearly as broad as comprehensive coverage. This coverage form names the perils that will be covered and falling objects is not a named peril. Comprehensive covers anything other than collision.
In Florida, when a claim is in dispute and goes to mediation, who pays the mediation costs? A) They are paid by the insured who is disputing the claim. B) They are paid by the insurer, but only if the insured does not show up for the mediation. C) They are paid by the public adjuster working for the insured. D) They are deducted from the mediation award.
Answer: They are deducted from the mediation award Explanation: The mediation fees are deducted from the settlement awarded by the mediation process
Which of the following is a true statement regarding referral business of a public adjuster in Florida? A) A public adjuster can accept referrals from anyone and pay a fee B) A public adjuster can accept referrals from a licensed construction contractor C) A public adjuster cannot accept referrals and pay compensation except to another public adjuster D) A public adjuster cannot accept and pay for referrals from anyone
The correct answer is: A public adjuster cannot accept referrals and pay compensation except to another public adjuster. Explanation: A public adjuster, public adjuster apprentice, or any person acting on behalf of a public adjuster or apprentice may not accept referrals of business from any person with whom the public adjuster conducts business if there is any form or manner of agreement to compensate the person, whether directly or indirectly, for referring business to the public adjuster. A public adjuster may not compensate any person, except for another public adjuster, whether directly or indirectly, for the principal purpose of referring business to the public adjuster.
The insured awoke and found that a water line on his side of the water meter has broken. Several thousand gallons of water have escaped. The water company bills the insured for the loss of the water, because the breakage in the waterline occurred on his side of the water meter. The insurance company will: A) Deny the claim because water is excluded under Coverage C. B) Pay for the loss of the water under Coverage C. C) Pay for the loss of the water under Coverage B. D) Deny the claim because flood is never covered under a Homeowners form.
Answer: Deny the claim because water is excluded under Coverage C Explanation: The insurer will deny the claim because "water" is specifically excluded as personal property under Coverage C of the Homeowners policies.
Insurance adjusters have the "power to bind". Which of the following statements best describes what this means? A) The adjuster never acts with self-interest. B) The principal is bound to the decisions of the adjuster. C) Adjusters should not profit from a claim without the permission of the claimant. D) If a conflict of interest exists, the adjuster should not work on that claim.
Answer: The principal is bound to the decisions of the adjuster. Explanation: The adjuster's "power to bind" means that the decisions made by the adjuster bind the insurer (the principal).
All of the following are duties of the insurer in case of a loss as specified by insurance policies, EXCEPT A) To investigate a claim after a notice of loss has been submitted to them. B) To pay amounts to the insured or a third-party claimant that are at least as high as the national average of similar claim settlements. C) To indemnify the insured if coverage applies under their first-party coverage. D) To defend the insured in lawsuits and to pay defense costs if a claim is covered by the insured's liability policy.
B) To pay amounts to the insured or a third-party claimant that are at least as high as the national average of similar claim settlements. Explanation: Insurance claim settlement amounts are determined by a policy's limit of liability, not a national average that is paid on similar claims.
Unless otherwise provided by the policy of insurance or by statutes, an insurer must within____working days of its receipt of proof of loss statements begin such investigation as is reasonably necessary. A) 14 B) 10 C) 21 D) 30
Answer: 10 Days Explanation: The statutes require the insurer begin its investigation within 10 working days after receipt of proof of loss statements.
How long is a Florida public adjuster required to retain copies of written estimates of a loss that are provided to a A) 3 years B) 4 years C) 5 years D) 2 years
Answer: 5 years Explanation: Each public adjuster must provide to the claimant or insured a written estimate of the loss to assist in the submission of a proof of loss or any other claim for payment of insurance proceeds. The public adjuster must retain such written estimate for at least five years and make it available to the claimant or insured and the Department upon request.
Which of the following statements is true regarding "catastrophic ground cover collapse" in Florida? A) It provides broader coverage than "sinkhole collapse" coverage. B) It must be offered along with sinkhole collapse coverage. C) It provides more limited coverage than "sinkhole collapse" coverage. D) Is not permitted to be offered in certain areas of Florida.
Answer: It provides more limited coverage than "sinkhole collapse" coverage.. Explanation: Catastrophic ground cover collapse coverage provides more limited coverage than "sinkhole collapse" coverage.
An insured has his dwelling covered under a DP-2 policy. A 100-year snow storm hit the area where his covered dwelling is located and the weight of the ice and snow caused the roof to cave in. This caused extensive damage to the roof, the personal property inside the dwelling, the foundation of the home, the walkway leading to the outdoor swimming pool, and the pool itself. Which of damaged property would be covered by the policy? A) The roof and the personal property located inside the covered dwelling. B) The roof and the foundation of the home. All other damaged items are specifically excluded. C) The roof, personal property, and swimming pool. The foundation of the home and the walkway are excluded. D) The roof, the foundation, and the walkway are all covered as part of the structure.
Answer: The roof and the personal property located inside the covered dwelling. Explanation: The roof and the personal property inside the home are covered. All the other answer choices include items that are specifically excluded under the broad form peril "Weight of Ice, Snow or Sleet".
All of the following are reasons that an adjuster should keep very detailed log notes, EXCEPT: A) To assist in determining the negligent parties. B) To assist in determining if the claim is fraudulent. C) To produce notes that will support a fraudulent denial of claims. D) To be used in case of a future arbitration, mediation, or litigation proceeding.
Answer: To produce notes that will support a fraudulent denial of claims. Explanation: The adjuster's log notes are used to determine negligent parties, to assist in detecting fraud, to become a part of the claims file, and to be used in future proceedings. The log notes are not intended to produce a fraudulent record to deny a claim.
The "Business Income" additional coverage of the standard Businessowners policy provides coverage for "ordinary payroll coverage" for A) 30 days unless the insured selects and schedules a different amount. B) 60 days unless the insured selects and schedules a different amount. C) For 12 months in total. D) Until the employees can find other employment.
Answer: 60 days unless the insured selects and schedules a different amount Explanation: The insurance company pays for only the loss of business income sustained during the restoration period that takes place within 12 consecutive months after the date of the covered loss or damage. However, it pays for ordinary payroll expenses for only 60 days after the date of loss unless a higher number of days is on the declarations.
A Personal Articles Floater (PAF) is designed to protect property owners from damage or losses to personal property while in the process of transport. Which of these statements about a PAF is FALSE? A) A PAF is often used to insure cameras, furs, or fine art. B) A PAF only covers property in the continental United States C) A PAF is an open-peril policy. D) A PAF carries no deductible.
Answer: A PAF only covers property in the continental United States. Explanation: The question is asking which answer choice is false regarding a Personal Articles Floater. The floater provides world-wide coverage. The other three choices are all correct regarding the coverage on a PAF.
A licensee in Florida has moved and changed his address without notifying the Department within the required period of time. What monetary penalty can be imposed by the Department? A) A fine of up to $100.00 B) A fine of up to $250.00. C) A fine of up to $200.00. D) A fine of up to $300.00.
Answer: A fine of up to $250.00 Explanation: A fine not to exceed $250.00 for the first offense and a fine of $500.00 or suspension or revocation of the license for a subsequent offense can be applied.
Which of the following relieves the financial burden on the claimant by making certain payments to the claimant even before the claim is negotiated? A) Advance Payment B) Rehabilitative Payment C) Partial Release Settlement. D) Conditional Partial Release Settlement.
Answer: 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.
There are several different Commercial Property coverage forms that can be added to a Commercial Package policy. Which of the following is NOT described on a Commercial Property coverage form? A) Any property that is excluded from coverage. B) A description of the property being covered by the policy. C) The number of buildings the insured owns that are not covered by the policy. D) Any deductible that applies to the policy.
Answer: The number of buildings the insured owns that are not covered by the policy. Explanation: It would not be necessary to include a description of the buildings the insured owns that are not covered under the policy.
What penalty may be imposed upon a person who makes a fraudulent or false application for licensure in Florida? A) Refusal of, the non-renewal of, or the termination of the license B) Possible imprisonment of up to 6 month C) A possible fine of up to $3,500 D) All of the responses listed are correct.
Answer: All of the responses listed are correct Explanation: A cease and desist order would also be issued in this instance. If this order is violated the CFO has the power to impose an administrative fine of up to $50,000
All of the following are characteristics of a principal that a surety will scrutinize during the underwriting process, EXCEPT A) Capability B) Character C) Consideration D) Capital.
Answer: Consideration Explanation: Consideration is NOT one of the characteristics a surety would look for in a principal during the underwriting process. Capability, character, and capital ARE characteristics a surety will be looking for in a principal. Topic covered in the Surety Bonding chapter; Module A in the Virtual Classroom.
If an insured fails to report a claim in a timely fashion, the adjuster will immediately A) Deny the claim. B) Send the insured a reservation of rights letter. C) Cease the claims investigation. D) Seek the advice of the company's attorney.
Answer: Send the insured a reservation of rights letter Explanation: Failure to report a claim in a timely fashion denies the insurer of the opportunity to promptly investigate the circumstances of the claim. Valuable information from witness could be lost, as well as other physical evidence. When this occurs, the insurer will normally send the insured a reservation letter to protect the rights of the insurer.
The insured is covered under an HO-6 form. The Coverage A limit is $500,000. The insured also owns a separate three-car garage adjacent to the condominium building worth $100,000. Which of the following statements is true regarding coverage for the garage? A) The garage is not covered under the HO-6 form. B) The garage is covered under Coverage B - Other Structures. C) The garage is covered for 10% of the $500,000 limit as an additional amount of insurance. D) The garage is covered as part of the $500,000 Coverage A limit.
Answer: The garage is covered as part of the $500,000 Coverage A limit. Explanation: Under an HO-6 form, structures owned solely by the insured, other than the residence premises, but located at the residence premises, are covered as part of Coverage A. The garage is part of the Coverage A limit chosen by the insured.
Manny is purchasing a Commercial Property policy with a Business Income form included. Manny can select from any of the following as a method to provide coverage, while avoiding the coinsurance requirement, EXCEPT: A) The maximum monthly limit of indemnity optional coverage. B) The maximum period of indemnity. C) The monthly limit of indemnity. D) Agreed value.
Answer: The maximum monthly limit of indemnity optional coverage Explanation: The maximum monthly limit of indemnity optional coverage does not exist. The other three answer choices are all methods of coverage under a Business Income form that permits an insured to avoid the coinsurance requirement.
All of the following would be advantages to an insured or an insurer for purchasing or writing a Commercial Package policy, EXCEPT A) Packing policies together allows insurers to charge insureds lower premium rates. B) Duplicate policy language is eliminated in package policies, making them easier for insureds to understand. C) Packaging monoline policies together creates fewer working hours for insurers in servicing policies. D) Packaging monoline policies together can provide broader coverage under each coverage part than purchasing the policies separately.
Answer: Packaging monoline policies together can provide broader coverage under each coverage part than purchasing the policies separately.. Explanation: Packaging monoline policies together does NOT create a policy that provides broader coverage. The coverage parts would provide the exact same coverage whether they are included in a package policy or a monoline policy.
In Florida, a "primary adjuster" is defined a A) The adjuster who assigns claims to all other adjusters within an adjusting firm. B) The licensed adjuster who is responsible for the supervision of all individuals within an adjusting firm. C) The licensed adjuster, within an adjusting firm, who makes the primary contact with all claimants. D) The adjuster, within an adjusting firm, who has adjusted the greatest number of claims.
Answer: The licensed adjuster who is responsible for the supervision of all individuals within an adjusting firm Explanation: The licensed adjuster who is responsible for the supervision of all individuals within an adjusting firm is known as the "primary adjust
The Commercial Property condition known as "Concealment, Misrepresentation, or Fraud" calls for the policy A) To pay damages to the insured if the insurance company has intentionally concealed or misrepresented a material fact from the insured concerning what coverage the policy provides. B) To be cancelled if the insured intentionally concealed or misrepresented a material fact on the application for insurance. C) To be voided if the insured intentionally concealed or misrepresented a material fact on the application for insurance. D) To be nonrenewed at the policy expiration if the insured intentionally concealed or misrepresented a material fact regarding the covered property.
Answer: To be voided if the insured intentionally concealed or misrepresented a material fact on the application for insurance. Explanation: The Commercial Property condition known as "Concealment, Misrepresentation, or Fraud" calls for the policy to be voided if the insured intentionally concealed or misrepresented a material fact on the application for insurance.
Binders Keepers Inc. is a Florida insurance company that wrote less than $10 million in direct premiums last year. The company is submitting an anti-fraud plan as outlined by Florida law. All of the following statements is true regarding the plan as it pertains to Binders Keepers, Inc., EXCEPT: A) The company must hire an anti-fraud expert with at least 3 years experience to write the anti-fraud plan. B) A written description or chart outlining the organizational arrangement of the insurer's anti-fraud personnel who are responsible for the investigation and reporting of possible fraudulent insurance acts must be included with the plan. C) A description of the insurer's procedures for the mandatory reporting of possible fraudulent insurance acts must be included with the plan. D) The plan must include a description of the insurer's plan for the anti-fraud education and training of its claims adjusters or other personnel.
Answer: The company must hire an anti-fraud expert with at least 3 years experience to write the anti-fraud plan The company IS NOT required to hire an anti-fraud expert with at least 3 years experience to write the anti-fraud plan. The other three answer choices include items that must be included with the anti-fraud plan in Florida.
A homeowner insured in Florida suffers a windstorm loss to their dwelling and contents. There is a mortgage on the dwelling. How will the adjuster pay this claim? A) Issue a draft for all damages jointly to the insured and mortgagee B) Make payment for the dwelling damage payable jointly to the insured and mortgagee and pay the contents loss directly to the insured C) Make the payment for all damages directly to the insured D) Make the payment for all damages directly to the mortgagee
Answer: Make payment for the dwelling damage payable jointly to the insured and mortgagee and pay the contents loss directly to the insured Explanation: The adjuster will issue a draft jointly to the insured and mortgagee for the damage to the dwelling and a separate payment for the contents to the insured. The mortgagee has no insurable interest in the insured's contents.
An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a mutually agreeable settlement is known as: A) Appraisal. B) Arbitration. C) Mediation. D) Negotiation.
Answer: Mediation EXPLANATION: An alternative dispute resolution (ADR) method by which disputing parties use a neutral outside party to examine the issues and develop a mutually agreeable settlement is known as mediation.
Which of the following statements is TRUE regarding an "examination under oath"? A) An EUO is routinely requested by an insurer in first-party claims as part of a proper claims investigation. B) An EUO is always requested by an insurer in third-party liability claims to determine if the insured is actually liable for the injury or damage claimed. C) An EUO will only be requested by an insurer if they have reason to believe an insured has not been truthful in their account of the circumstances of the loss. D) An EUO will only be requested of witnesses in a claim investigation if they have evidence of fraud on the part of the insured or claimant.
Answer: An EUO will only be requested by an insurer if they have reason to believe an insured has not been truthful in their account of the circumstances of the loss Explanation: An EUO will only be requested by an insurer if they have reason to believe an insured has not been truthful in their account of the circumstances of the loss. If the insured swears to their account of the loss and it is later determined to be false, the insurer will have grounds to deny the claim and the insured could possibly face criminal charges for insurance fraud.
Which of the following statements is true regarding the theft coverage on an HO-8 form with the Florida mandatory special provisions endorsement attached? A) The Florida mandatory special provisions endorsement limits theft coverage on the HO-8 to $2,000 of coverage and only if the theft takes place on the residence premises. B) In Florida, the HO-8 theft coverage applies if the theft takes place both on or off the residence premises, but is limited to $500 of coverage. C) The Florida mandatory special provisions endorsement limits theft coverage on the HO-8 to $1,000 of coverage both on and off the residence premises. D) In Florida, the HO-8 theft coverage applies only if the occurrence takes place on the residence premises and is limited to $1,000 of coverage.
Answer: In Florida, the HO-8 theft coverage applies only if the occurrence takes place on the residence premises and is limited to $1,000 of coverage Explanation: The Florida mandatory special provisions endorsement specifies that the HO-8 theft coverage applies only if the occurrence takes place on the residence premises and is limited to $1,000 of coverage.
Which of the following is TRUE regarding the DP-2 Broad Form coverage for "artificially generated electrical current"? A)Loss to a computer as a result of an artificially generated electrical current will only apply if the computer was listed by name on the policy. B)A fire must be the result of the artificially generated electrical current for coverage to apply. C)Loss caused by an artificially generated electrical current only applies to home appliances, fixtures, and entertainment systems. D)Loss caused by an artificially generated electrical current provides coverage only when it is added by endorsement and an additional premium is paid.
B) A fire must be the result of the artificially generated electrical current for coverage to apply.. EXPLANATION: The DP-2 broad form perils only cover artificially generated electrical currents if a fire is the result. Topic covered in the Dwelling Insurance chapter; Module B of the Virtual Classroom.
Josef has owned residential commercial property in Florida for many years. He has covered his commercial buildings under a Commercial Property policy with Indemnify Insurance, Inc. for the past 15 years. Indemnify has decided to non-renew the policy, but must comply with Florida law when informing Josef of the non-renewal. In this scenario, which of the following statements is correct? A) Indemnify Insurance must provide Josef with advance written notice of 100 days. B) Indemnify Insurance must provide Josef with advance written notice of 60 days. C) Indemnify Insurance must provide Josef with advance written notice of 120 days. D) Indemnify Insurance must provide Josef with advance written notice of 30 days.
Answer: Indemnify Insurance must provide Josef with advance written notice of 120 days. Explanation: In Florida, when a commercial residential insured has had coverage with the same company or subsidiary, the insurer must provide the insured with advance written notice of 120 days.
Which of the following is NOT a correct statement regarding the ethical restraints of a Florida public adjuster during a state of emergency? A) A public adjuster shall not into any agreement with anyone to assist an insured or claimant and receive an amount that would exceed the limitation of the adjuster's permitted compensation. B) A public adjuster cannot accept payment from an insured claimant prior to an insurance settlement or claim payment from the insurer under a state of emergency as declared by the governor. C) As to any one insured or claimant, no public adjuster shall charge, agree to, or accept as compensation or reimbursement any payment, commission, fee, or other thing of value equal to more than 10% of the amount of any insurance settlement or claim payment. D) The adjuster during a state of emergency is permitted to make an offer to purchase the salvage of a covered claim and to expedite its removal.
Answer: The adjuster during a state of emergency is permitted to make an offer to purchase the salvage of a covered claim and to expedite its removal. Explanation: No public adjuster may require, demand, charge or accept any fee, retainer, compensation, commission, deposit, or other thing of value, prior to receipt by the insured or claimant of a payment on the claim by the insurer.
Robert is retired and lives in an older home in Maine. He has an old floor furnace to heat his home that is in need of repair and he forgets to have it checked. In the winter he stays in Florida for a month with his daughter. While Robert is away, the furnace malfunctions, allowing the temperature in the house to drop so low that all his water pipes freeze and burst, causing massive water damage. His house is covered under a Homeowners broad cause of loss form, that includes water damage from a heating or plumbing system. How will the adjuster handle this claim? A) Pay for all damage except the furnace. B) Deny the entire claim because of neglect of the insured. C) Pay for the furnace and the resulting water damage only. D) Pay for the water damage and depreciate the payment for the replacement of the furnace.
Answer: Pay for all damage except the furnace Explanation: In this case, most insurers would pay for all damage except the destroyed furnace. The policy does not pay for the wear and tear of a heating or air conditioning system. Even though the insured was neglectful, the ensuing damage resulting from the frozen pipes would be covered. If the insured had been advised by a contractor that the furnace needed immediate repairs and the insured failed to make them, most adjusters would deny the entire claim. This would then be considered an increased hazard not known to the insurer and intentional neglect on the part of the insured.
All of the following statements are TRUE regarding newly acquired property under a Personal Articles Floater, EXCEPT: A) Newly acquired property is automatically covered for 30 days. B) Newly acquired property is not required to be of the same class that is already covered by the policy to be covered. C) The automatic limit for newly acquired property is 25% of the amount of insurance coverage for that class of property or $10,000, whichever is less. D) There is no minimum deductible under the PAF.
Answer: Newly acquired property is not required to be of the same class that is already covered by the policy to be covered The statement that is NOT TRUE is: "Newly acquired property is not required to be of the same class that is already covered by the policy to be covered." This is because the newly acquired property is REQUIRED to be of the same class (category) as the property that is currently covered by the PAF.
Samantha has renewed her Commercial Property policy, and it will take effect in 7 days. 14 days prior to Samantha signing the renewal policy, the insurer adopted a form revision that included broadened coverage, with a slight increase in premium. Samantha would like her renewal policy to include this broadened coverage. Which of the following statements is true regarding the required method for Samantha to receive the broader coverage? A) The liberalization clause will not require that Samantha's renewal policy include the broadened coverage automatically because there is an additional premium to have the broadened coverage included. B) Samantha must do nothing to receive the broadened coverage because the insurer adopted the coverage within 45 days of the renewal (inception) of Samantha's policy, therefore the coverage will apply automatically due to the liberalization clause. C) Samantha must have a new policy written up to include the form revision, but the premium will remain the same. D) Samantha's renewal policy will not include the broadened coverage because the insurer adopted the new coverage more than 7 days prior to the inception date of Samantha's policy renewal.
Answer: The liberalization clause will not require that Samantha's renewal policy include the broadened coverage automatically because there is an additional premium to have the broadened coverage included Explanation: The liberalization clause will not require that Samantha's renewal policy include the broadened coverage automatically because there is an additional premium to have the broadened coverage included. The liberalization clause only provides for the broadened coverage to be automatically included if there is NOT an additional premium involved.
