Personal Lines- Example Questions

Which of the following would NOT be considered unfair discrimination by insurers? - cancelling individual coverage based on the insured marital status -assigning different risk classifications to applicants based on gender - discriminating in benefits and coverages based on the insureds habits and lifestyle - charging applicants with similar health histories different premiums based on their ethnicity

Discriminating in benefits and coverages based on the insureds habit and lifestyle

If, after a hearing, the commissioner finds that a producer has committed any insurance unfair trade practice, the commissioner may revoke or refuse to renew the producers license, place the licensee on probationary status, or suspend a licensee for up to

36 months

Which of the following terms best describes a trembling or shaking of the earth that is volcanic or seismic in origin?

Earthquake

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?

False advertising

The mechanism used to pay covered claims and prevent financial losses to claimants and policyowners when an insurance company becomes insolvent is a

Guaranty Association

Events or conditions that increase the chances of an insured loss occurring are referred to as

Hazards

An insured is involved in an auto accident in another state. The state has a financial responsibility law that specifies limits of liability higher than the limits shown in the declarations. What amount will the insureds policy pay?

Higher limits

Which of the following would NOT qualify as a hired auto? - An auto hired by an employer - AN auto leased from a commercial rental company - An auto rented for personal use - An auto borrowed from an employee

An auto borrowed from an employee

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Consideration

Which of the following examples of losses paid under an HO-3 also would be paid under an Ho-2 homeowners policy? - Damage to the dwelling caused by the insured when moving furniture -Accidental scorching caused when a hot iron is placed on a counter top -Interior damage caused by water seeping under shingles on roof -Damage to the dwelling caused by lava or dust from a volcanic eruption

Damage to the dwelling caused by lava or dust from a volcanic eruption

In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called

Self-insured retention

what are the two types of compensatory damages?

Special and General

When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as

Stated Amount

In property insurance, actual cash value is defined as which of the following?

replacement cost at the time of the loss, less depreciation

An insured relocated to another state for work. However, she still owns and insures a house in this state, but has had no one living in it for 3 months. She is also storing some of furniture and clothes in the house. From an insurance standpoint, the insured's house is considered

unoccupied

A stock insurer is defined as an insurer...

with its capital divided into shares and owned by its stockholders

When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays:

the excess over the self-insured retention

Which of the following is the closest term to an authorized insurer? - liscensed -legal -admitted -certified

Admitted

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of

Twisting

In the personal auto policy, owned trailers being towed by an insured auto are automatically covered for

Uninsured motorist coverage

Concerning insurance, the definition of a fiduciary is

a producer/broker who handles insurer funds in a trust capacity.

Which method of loss valuation is contrary to the basic concept of indemnity?

Replacement cost

All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT - premiums on appeal bonds in any suit the insurer defends -up to 250 for bail bonds required because of a covered accident -up to 100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident - up to 200 a day for loss of earnings due to attendance at hearings or trials

-up to 100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident

Roger was issued a temporary license thirty days ago. How much longer can he legally serve under this license?

150 days

The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to...

250,000

Although the commissioner must examine the affairs, transactions, records, and assets of each authorized insurer as often as deemed advisable, each authorized insurer must be examined at least once every

5 years

If an insured is covered under a mobile homewoners policy and moves the mobile home to protect it from a covered peril , the policy will pay up to

500

With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto? - a vehicle leased to the name insured for 12 months by a leasing company - A vehicle that is titles and insured by the named insured but is driven principally by the named insured's son who is resident of the household - A vehicle rented for the insureds personal use - A vehicle that is titled to another person, but is being used with permission by an insured.

A vehicle that is titled to another person, but is being used with permission by an insured.

What is a certificate of insurance?

A written document showing the types and amounts of insurance that have been issued to the insured

Which of the following is used in the formula for calculating the actual cash value of a property? - stated value - fair market value - agreed value - replacement cost

Replacement Cost

Mobile homeowners policy is structured the same as a?

Homeowners Policy

Which insurance principles states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

Indemnity

Which of the following best describes a misrepresentation? - discriminating among individuals of the same insuring class - issuing sales material with exaggerated statements about policy benefits - making a deceptive or untrue statement about a person engaged in the insurance business - making a maliciously critical statement that is intended to injure another person

Issuing sales material with exaggerated statements about policy benefits

All of the following statements describe the concept of strict liability except: - it is imposed on defendants engaged in hazardous activities - claimants may need to provide proof that a product defect caused an injury - it is imposed regardless of fault - it is applied in product liability cases

It is applied in product liability cases

Which of the following statements is NOT true regarding a personal umbrella liability policy? - It may cover certain exposures not provided under the primary layer -It may require the payment of a self insured retention -It provides excess liability coverage over underlying personal liability -It provides errors and omissions coverage for an agency

It provides errors and omissions coverage for an agency

Which of the following is a common exclusion found in Part D: Coverage for Damage to Your Auto of a PAP? - towing and labor - mechanical breakdown - glass breakage - riot or civil commotion

Mechanical breakdown

Losses caused by continuous or repeated exposure to conditions resulting in injury persons or damage to property that is neither intended nor expected is the definition of which of the following terms?

Occurrence

The medical payments coverage in a personal auto policy will pay reasonable medical expenses for all of the following except: - A friend injured while driving the insured's vehicle with permission - The insured is injured while exiting a friends mobile home - The insured is injured by a motor vehicle while crossing the street -The insured child sustains injuries when the car she is in rolls down a hill

The insured is injured while exiting a friends mobile home

Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? - The insured would have to pay the self insured retention limit - The insured would be responsible for the amount required as underlying limits in the event of a claim - It would have no effect on the umbrella policy - The policy will be cancelled

The insured would be responsible for the amount required as underlying limits in the event of a claim

Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy? - the insured would have to pay the self insured retention limit - The insured would be responsible for the amount required as underlying limits in the event of a claim - It would have no effect on the umbrella policy - The policy will be cancelled

The insured would be responsible for the amount required as underlying limits in the event of a claim

All of the following are true regarding physical damage coverage EXCEPT: - losses to non-owned autos will be covered the same as the broadest coverage available for any covered auto. - the policy will pay up to 20 a day up to a maximum of 600 for rental transportation - The insurer will pay for direct and accidental loss to a covered auto minus any applicable deductible - The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle

The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered

an unfair trade practice

In order to get a nonresident license in this state, a producer must

apply and pay a fee to a non-resident state that reciprocates

To legally transact insurance in this state, an insurer must obtain which of the following? - certificate of insurance - certificate of authority - power of attorney - business entity license

certificate of authority

What term includes damage where the insured peril was the proximate cause of loss?

direct loss

Under the personal auto policy, liability for bodily injury resulting from the insured's use of a nonowned automobile is

provided by the insureds policy on an excess basis