Personal Lines Practice Exam 2

Which of the following exclusions would specifically fall under Coverage E? A-Contractual liability B-Bodily injury to a residence employee C-Falling objects D-Land

A-Contractual liability

Which of the following perils is NOT covered the DP-2? A-Damage caused by the weight of ice and snow B-Damage caused by falling objects C-Damage to pets, birds, or fish D-Damage caused by burglars

Damage to pets, birds, or fish

Which of the following would NOT be eligible for coverage under a personal auto policy? A-A trailer owned by the insured B-A vehicle purchased 90 days ago C-A vehicle listed on the declarations page D-A nonowned temporary substitute vehicle

B-A vehicle purchased 90 days ago

Which of the following is an example of a physical hazard? A-Bankruptcy B-Diabetes C-Carelessness D-Lying

B-Diabetes

The deductible under earthquake coverage is stated as what? A-Half of the policy premium B-Percentage of loss C-Flat dollar amount D-Percentage of the policy premium

B-Percentage of loss

Which of the following could be insured with replacement cost coverage under the flood insurance program? A-An apartment building B-A shed C-A single-family home D-A garage

C- A single-family home

Insureds covered under a Mobile Homeowners Policy move their mobile home to prevent it from being damaged by a fire. What is the maximum amount the policy will pay for this? A-$350 B-$500 C-$1,000 D-$5,000

B-$500

Which of the following situations would NOT be an acceptable reason to nonrenew a policy? A-The insured fails to pay the required premium B-The insured moves homes before the expiration date C-The insured has purchased similar coverage elsewhere D-The policy contains a binder clearly stating an expiration date

B-The insured moves homes before the expiration date

Which homeowners form provides open peril coverage for dwelling (Coverage A) and contents (Coverage C) A-Form 2 B-Form 3 C-Form 5 D-Form 8

C- Form 5

An insured has $5,000 of medical coverage under a personal policy at the time of a covered accident. The insured and 3 passengers are injured. The insured's medical expenses are $8,000. The first passenger's total $4,000; the second passenger's total $6,500; and the third passenger's total $1,200. How much will the policy pay under the medical payments coverage? A-$5,000 B-$8,000 C-$15,200 D-$19,700

C-$15,200

An insured has a maximum limit of coverage available under her liability policy during a policy year, regardless of the number of claims made or the number of accidents. Her limits are restored at at the policy anniverysity. WHat type of limit does the insured have? A-Combined single B-Per occurence C-Aggregate D-Split

C-Aggregate

You are at fault in an auto wreck out of state. How does your company adjust? A-By the other state's highest form B-Will not pay at all C-At least to the minimum required by that state D-The limit of your policy, no matter what the other state's, minimum

C-At least to the minimum required by that state

Which of the following is covered by auto other-than-collision (comprehensive) coverage? A-Portable CD player B-Awning attached to car for camping C-Electric equipment required for the normal operation of the car D-Radar detector

C-Electric equipment required for the normal operation of the car

To have insurable interest in the person or property covered by a property insurance policy, which of the following potential risks must the policyowner face? A-Property damage B-Illness C-Financial loss D-Physical injury

C-Financial loss

Using the pro rata method, if a property is covered by Company A for $20,000 and Company B covers the same property for $40,000, how much will Company A pay on a $24,000 loss? A-$20,000 B-$12,000 C-$8,000 D-$0

C-$8,000

Within how many business days must an insurance producer reply to an inquiry of the Commissioner relative to the business of insurance? A-5 B-10 C-15 D-30

C-15

If an insurance policy prohibits the insured from the relinquishing ownership of insured property that has been damaged, it is prohibiting? A-Subrogation B-Selling of property C-Abandonment D-Assignment

C-Abandonment

Every agent, broker, and adjuster must keep a record of all transactions that occur under their license. These records must be kept? A-In a safety deposit box at the financial institution where the licensee has an account B-At the licensee's residence address C-In a fireproof vault D-At the address listed on the license

D-At the address listed on the license

In a DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will? A-Only be applicable if the insured pays a higher deductible B-Only be applicable if the insured pays an additional premium C-Be increased by 10% D-Be reduced by 10%

D-Be reduced by 10%

Which form issues both buildings and personal property on an open peril basis? A-HO-2 B-HO-3 C-HO-4 D-HO-5

D-HO-5

Restoring an insured financially after a claim is known as? A-Indemnity B-Adhesion C-Restoration D-Reasonable expectations

A-Indemnity

This state provides for a temporary license for all of the following EXCEPT? A-A producer's time in the military service B-A Producer's retirement C-The death of a producer D-A producer's disability

B- A Producer's retirement

All of the following statements regarding personal property coverage in the homeowners program are correct EXCEPT? A-Earthquake coverage may be added by endorsement B-The HO-3 Policy covers the mysterious disappearance of personal property C-Coverage on money is limited to $200 D-Personal property coverage is usually 50% of the Coverage A limit

B-The HO-3 Policy covers the mysterious disappearance of personal property

What term includes losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected? A-Incident B-Additional Coverage C-Occurence D-Accident

C-Occurence

A situation occuring when property is insured by more than one policy, against the same hazard, in an amount exceeding the fair value of that property, is called? A-Fair value B-Indemnity C-Overinsurance D-Pro rata distribution

C-Overinsurance

To be valid, an insurance policy must have all of the following EXCEPT? A-Acceptance B-Consideration C-Offer D-Countersignature

D-Countersignature

For an insurance contract, the principle of utmost good faith means? A-The contract involves only the policyowner and the insurer B-Each party is equally responsible for the value of the policy C-The policyowner will be indemnified in case of loss D-Each party relies upon the truthfulness of the other

D-Each party relies upon the truthfulness of the other

Premiums collected on behalf of the Insurance company by an agent will be held in what capacity? A-Debit B-Security C-Rebate D-Fiduciary

D-Fiduciary

Slippery floors, reckless driving, or providing false information are examples of. A-Pure risks B-Causes of loss C-Perils D-Hazards

D-Hazards

An insured was involved in an accident that was caused by a tire blowing off. The insured was severely injured and incurred medical expenses of $100,000. The insured brought a recovery action against the manufacturers of the auto and the tires. The court held that the tire was the cause of the accident,. Who is required to pay for this loss? A-Both manufacturers share the loss B-Neither manufacturer would have to pay because of the "buyer beware" doctrine C-Manufacturer of the auto D-Manufacturer of the tire

D-Manufacturer of the tire

An insurance company that is owned by the policyholders is called a? A-Fraternal insurer B-Stock insurer C-Reciprocal insurer D-Mutual insurer

D-Mutual insurer

Policy limits are the maximum amount an insured may collect, or for which an insured protected under the terms of the? A-Insuring agreement B-Conditional receipt C-Application D-Policy

D-Policy

An insured has a personal auto policy with the following limits: 50/100/25. The number 25 refers to? A-Collision coverage B-Medical payment coverage Bodily injury liability coverage D-Property damage cover

D-Property damage cover

All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT? A-Insurers are not required to give customers a copy of the report B-It applies to credit reports ordered in connection with insurance, banking and employment C-The customer must be notified if adverse action is taken as a result of a report D-Reports may be sent to anyone who requests one

D-Reports may be sent to anyone who requests one

A golfer slices a tee shot and the ball goes through the window of a house beside the fairway. The broken glass is paid by? A-The property coverage of the golf course B-The golfer's homeowners liability coverage C-The homeowner's property coverage on the house D-The liability policy of the golf course

B- The golfer's homeowners liability coverage

An insurer must notify the consumer in writing that an investigation consumer report has been requested, within how many days of the initial request? A-3 days B-5 days C-10 days D-30 days

B-5 days

The purpose of purchasing an umbrella liability policy is to provide? A-Coverage that usually may only be added by endorsement B-Excess insurance over the primary liability policy C-Coverage to those who cannot obtain it on a regular market D-Coverage that is not readily available through an authorized insurer in the state

B-Excess insurance over the primary liability policy

An agent who includes statement which, when taken in context of the whole presentation, may tend to mislead or deceive the persons addressed has committed? A-Coercion B-Misrepresentation C-Defamation D-Twisting

B-Misrepresentation

Coverage C in homeowners policy forms offers all of the following EXCEPT? A-Coverage for loss of use B-Worldwide coverage C-Coverage for property of others D-Cover for property located at another residence premises

A-Coverage for loss of use

After a covered loss on a homeowners policy, the insured must do all of the following EXCEPT? A-Allow the insurer to inspect the property as often as reasonably necessary B-If requested, submit to an examination under oath C-Prepare an inventory of damaged and undamaged property, including bills, receipts, and related documentation D-Abandon the property involved to the insurer

D-Abandon the property involved to the insurer

When an insured auto is damaged by a hit and run or phantom vehicle, repairs made under Underinsured Motorist property damage may be subject to a maximum deductible of? A-$300 B-$500 C-$100 D-$200

A-$300

If a person issues an insurance contract from an unauthorized insurer, that person may be? A-Held personally liable for any claim B-Required to return all commissions from the sale C-Subject to prosecution D-Arrested and imprisoned

A-Held personally liable for any claim

What are the minimum required liability limits in motor vehicle liability policies issued in this state? A- 25/50/25 B-25/50/10 C-10/25/10 D-50/50/10

B-25/50/10

An agent tells an insured that if he replaces his current insurance policy with a newer one, his dividends will be higher and his premiums will be slightly lower. The policy, however, would not offer either one of these things. What type of misrepresentation is being committed? A-Distorting B-Replacement C-Twisting D-Rebating

C-Twisting

A business entity that wants to transact insurance business has one affiliated individual licensee. How many more does it need to transact insurance business in this state? A-None B-2 C-3 D-4

A-None

Whats information is found in the conditions part of an insurance policy? A-The description of the duties and obligations of the insured B-The persons or risks not covered under the policy C-The identity of the named insured D-The amount of coverage provided by the policy

A-The description of the duties and obligations of the insured

When an insured purchases an insurance policy from an independent insurance agency, the policy may be cancelled for any of the following reasons, EXCEPT? A-The insurance agency's contract with the insurance company is terminated B-The insured submits a fraudulent claim under the policy C-Nonpayment of premium D-Misrepresentation in obtaining the policy

A-The insurance agency's contract with the insurance company is terminated

A single property insurance that can provide coverage for multiple classes of property at one location, or one or more classes of property at multiple locations, with one total amount of coverage and no single item assigned a specific amount of coverage is called? A-Blanket insurance B-Reporting form insurance C-Group property insurance D-Block insurance

A-Blanket insurance

The property policy condition that automatically provides broader coverage when an insurer makes recisions to a current policy edition without charging the insured additional premium is called the? A-Liberalization clause B-Assignment clause C-Duplicate overage clause D-Other insurance clause

A-Liberalization clause

Which of the following statements is CORRECT regarding the Commissioner of Insurance in this state? A-The Commissioner is elected to the office B-The records of the Commissioner and insurance filings in his or her office are closed to the public C-The commissioner can be an officer for an insurer D-The commissioner has an office at the state capitol only

A-The Commissioner is elected to the office

Which of the following statements is true regarding advertising that the Insurance Guaranty Association would ensure payment of benefits in the event of insurer insolvency? A-It is an unfair trade practice to mention the Association in advertisements B-Insurers may choose whether to mention the Association in advertisements, but if they choose to do so, they must first pay a fee to the Department of Insurance C-If insureds join the Association, they will be protected financially if their insurers become insolvent D-All advertisements of an insurer must mention coverage by the Association

A-It is an unfair trade practice to mention the Association in advertisements

All are legal defenses against a claim of negligence EXCEPT? A-Assumption of risk B-Absolute liability C-Intervening cause D-Contributory negligence

B-Absolute liability

All of the following statements are TRUE about earthquake coverage in property policies EXCEPT? A-Coverage can be purchased separately for an additional premium B-Coverage is commonly provided through a federally-funded program C-Coverage is excluded by most property forms D-Coverage may be added to by endorsements

B-Coverage is commonly provided through a federally-funded program

How often are insurers required to renew agents' appointments? A-Annual B-Every 2 years C-Every 3 years D-Appointments are perpetual; no renewal required

B-Every 2 years

All of the following are unfair claims settlement practices EXCEPT? A-Failing to acknowledge pertinent communication regarding a claim B-Suggesting negotiations in settling the claim C-Refusing to pay claims without conducting an investigation D-Failing to implement reasonable standards for setting claims

B-Suggesting negotiations in settling the claim

When an insurer acquires the insured's rights against a third party for the purposes of receiving indemnification for loss, this is called? A-Transfer of liability B-Liberalization C-Subrogation D-Indemnity

C-Subrogation

Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination? A-Charging the insured higher premiums based on her race B-Making malicious statements about the insured based on his race C-Charging different premium rates to the insureds in different insuring classes D-Charging the insured higher premiums based on life expectancy

A-Charging the insured higher premiums based on her race

Which statement best describes agreement as it relates to insurance contracts? A-Each party must offer something of value B-One party accepts the exact terms of the other party's offer C-The intent of the contract must be legally acceptable to both parties D-All parties must be capable of entering into a contract

B-One party accepts the exact terms of the other party's offer

Which of the following describes an insurer's responsibility for payment under a policy, as stated in the common policy provisions? A-Utmost good fait B-Premiums C-Limits of liability D-Consideration

C-Limits of liability

If a high risk indivdual seeks to obtain insurance coverage but is unable to do so through the general insurance market, what type of insurance may they seek? A-Group Insurance B-Conditional Insurance C-Reinsurance D-Surplus lines Insurance

D-Surplus lines Insurance

Which method of dealing with risk is applied when insurance is purchased? A-Transfer B-Sharing C-Avoidance D-Reduction

A-Transfer

If a person whose license has been temporarily suspended demands a hearing, the Commissioner must hold the hearing within how many days after receipt of the demand? A-20 B-40 C-15 D-30

D-30

Which of the following components is NOT part of a policy structure? A-Definitions B-Benefits C-Declarations D- Additional coverage

D-Additional coverage

What organization was formed to assist applicnats in securing essential property insurance? A-Department of Insurance B-Washington Property and Casualty Insurance Guaranty C-Industry placement facility D-Washington Essential Property Insurance Inspection and Placement Program

C-Industry placement facility

In order to get a nonresident license in this state, a licensed producer from another state must A-Apply for a nonresident license and pay a fee B-Pass the nonresident state exam C-Represent an agency located in this state D-Surrender his or her license in the state of residence

A-Apply for a nonresident license and pay a fee

Which of the following exposures is NOT covered under a homeowners policy? A-Medical payments to an insured B-Unscheduled personal property damage C-Bodily injury to others D-Personal liability

A-Medical payments to an insured

Regarding property insurance, "fair value" means? A-The replacement cost of property, less depreciation B-The replacement cost of property, less property taxes C-The market value of property D-The replacement cost of property

A-The replacement cost of property, less depreciation

An insured's limit of liability applies to a total of damages for bodily injury and property damage resulting form one accident, which may be used in any combination of amounts, not to exceed the single limit. What type of limit does this insured have? A-Aggregate B-Per occurrence C-Combined single D-Split

C-Combined single

Which of the following is NOT an indicator of a competent party? A-Comprehension of contract B-Business profession C-Legal Age D-Mental proficiency

B-Business profession

The term functional replacement cost refers to? A-Endorsements B-Major classes of property provisions C-Property loss valuation D-Deductibles

C-Property loss valuation

A house insured with a homeowners policy has been blown off its foundation by a tornado. It must be demolished and removed so a replacement house can be built. Which of the following is true about debris removal? A-HO policies do not cover debris removal B-An additional 5% of the policy limit may be paid for debris removal C-Because the full policy limit must be paid for the house, there is no coverage for debris removal D-It will be paid if the debris removal endorsement has been added

B-An additional 5% of the policy limit may be paid for debris removal

When an insurer pays for the cost to exchange damaged property with new property of similar kind and quality, it is called? A-Market value B-Stated amount C-Replacement cost D-Actual cash value

C-Replacement cost

Which of the following is not one of the separate accounts of the Washington Property and Casualty Insurance Guaranty Association? A-All other applicable insurance (unless excluded) B-Longshore and Harbor Workers Compensation Act Insurance C-Automobile insurance D-Mortgage insurance

D-Mortgage insurance

Policies insuring against loss resulting from liability for bodily injury, death, or property damage must also cover damages from owners or operators of all of the following EXCEPT? A-Hit-and-run vehicles B-Phantom vehicles C-Underinsured motor vehicles D-Motorcycles

D-Motorcyles

During the 120-day period after receiving notice of cancelling of an agency contract, the agency can continue to perform which of the following transactions? A-Appoint agent B-Bind coverage C-Write new business D-Perform routine adjustments of losses

D-Perform routine adjustments of losses

Washington law requires that an agent, broker, or adjuster must have a place of business? A-That is open to the public at least 6 days per week B-That has an outdoor sign that is clearly visible for at least 500 feet C-Located in a commercial building D-That is accessible to the public

D-That is accessible to the public

An insured has decided to never drive another vehicle and wants to transfer his auto insurance policy to his wife. What does the insured need to transfer the policy? A-The written consent of the insurer B-An auto policy cannot be transferred C-Nothing, because the wife is automatically included as an insured D-The written consent of all other insureds covered by the policy

A-The written consent of the insurer

Which statement is an accurate description of life insurance policy dividends? A-They are paid as return of premium to policyowners by stock insurers B-They are guaranteed to be paid and they are taxable as income C-They are likely to be larger in nonparticipating policies D-They are not taxable and are not guaranteed

D-They are not taxable and are not guranteed

Which of the following would be considered covered auto on your personal auto policy? A- Your pickup truck used for deliveries of your retail business B-Your farm tractor C-Your farm wagon being towed by your tractor D-Your farm wagon being towed by your pick up truck

D-Your farm wagon being towed by your pick up truck