Practice Quiz Questions

A man's insurer has decided to cancel his policy. How much notice of the cancellation must the insured receive?

30 days

The Mail Coverage Form is always written on a reporting form basis; after the end of each reporting period shown in the declarations, reports are due within:

30 days

Failure of an insurer to perform under the terms of an insurance policy may result in:

An assessment against the insurer imposed by a court

In Kansas, what would not be a legal reason for the nonrenewal of a personal auto policy?

An insured has filed two or more physical damage claims during the policy period.

What would be excluded as a "large risk" for the purpose of rate filing?

An insured that has paid $100,000 or more for workers compensation or employers liability insurance coverage.

A professional liability policy that has been in effect for more than 90 days may be cancelled for any of the following reasons, EXCEPT: A. Changes in the exposure or operations that were not present at the policy inception. B. The filing of a claim. C. Nonpayment of a premium due. D. Material misrepresentation in obtaining the coverage.

B. The filing of a claim.

Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value? A. They are subject to a $1,000 deductible. B. They are automatically provided with replacement cost coverage. C. They qualify for maximum compensation under the flood insurance program. D. They are excluded from the flood insurance policy.

B. They are automatically provided with replacement cost coverage.

Marine insurance policies provide coverage in which circumstance?

Both from the point of origination of the shipment to the point of destination and when the title of the insured property passes from seller to the buyer

In Kansas, which of the following would not be a legal reason for the nonrenewal of a personal auto policy? A. The Commissioner orders the insurer to reduce its premium volume to preserve financial integrity. B. When the insured has demonstrated mental or physical impairments that would cause suspension or revocation of driver's license. C. An insured has filed two or more physical damage claims during the policy period. D. The insurer ceases to transact auto insurance in Kansas.

C. An insured has filed two or more physical damage claims during the policy period.

Which of the following categories of insurance would NOT be considered "special risks" and exempt from the rate filing rules in Kansas? A. Inland Marine B. Boiler and machinery risks C. Small commercial risks that are manual rated D. Highly protected rates

C. Small commercial risks that are manually rated

What must an insurer obtain in order to transact insurance within a given state?

Certificate of Authority

Which of the following is NOT considered unfair rate discrimination? A. Charging a different rate to individuals of the same rating class solely because of the geographic location of the risk. B. Individuals of the same rating class are refused insurance, refused renewal policies, or have the amount, extend or kind of coverage limited or restricted. C. Individuals of the same rating class are refused insurance. D. Different premiums result for policyholders with similar exposures but different expense factors, so long as the rates reflect these differences accurately.

D. Different premiums result for policyholders with similar exposures but different expense factors, so long as the rates reflect these differences accurately.

All of the following statements describe the concept of strict liability EXCEPT: A. Claimants may need to provide proof that a product defect caused an injury. B. It is imposed regardless of fault. C. It is applied in product liability cases. D. It is imposed on defendants engaged in hazardous activities.

D. It is imposed on defendants engaged in hazardous activities.

Which of the following is NOT an unfair claims settlement practice? A. Making claim payments not accompanied by a statement setting forth the coverage under which payments are made B. Delaying the investigation or payment of claims by requiring submission of both preliminary claim reports and formal proof of loss that contain substantially the same information C. Failing to settle claims promptly, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy D. Providing a reasonable explanation of the basis for the denial of a claim

D. Providing a reasonable explanation of the basis for the denial of a claim

In Kansas, the Commissioner conducts examinations of rating organizations:

Every 5 years

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

False advertising

An insurance company is domiciled in Montana and transacts insurance in Wyoming. What term best describes the insurer's classification in Wyoming?

Foreign

In order to be considered for coverage by the FAIR Plan, an applicant must:

Have been rejected for property insurance by 3 insurers in the standard market.

The extension of coverage under the Commercial Fine Arts Floater includes coverage for newly acquired property for a maximum of:

$10,000

An insured owns a building that is valued at $400,000. To comply with the 80% coinsurance provision of his insurance policy, how much should he insure the property for?

80% of the property's replacement cost or more.

Which of the following is NOT a possible punishment for a violation of general provisions of the Kansas Insurance Code? A. A maximum fine fo $10,000 for a willful violation B. A monetary fine up to $1,000 if a violation is nonwillful C. Suspension of license D. Cease and desist order

A. A maximum fine of $10,000 for a willful violation; the proper fine in this scenario is $2,000 for a willful violation

The definition of "large risks" would apply to which of the following? A. The insured has paid total premiums of at least $50,000 for property insurance. B. The insured has paid total premiums of at least $50,000 for multiple lines policies. C. Total insured property values are at $3 million. D. The insured's gross revenue is at least $5 million.

A. The insured has paid total premiums of at least $50,000 for property insurance.

Which of the following is NOT one of the available additional coverages in the builders risk form? A. Vandalism B. Debris removal C. Fire department service charge D. Pollutant cleanup

A. Vandalism

What type of liability would a person who owns wild animals have?

Absolute

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be:

Authorized

Which of the following is NOT covered under accounts receivable coverage form? A. Expenses to reestablish the record, if possible, and collection expenses that are in excess of normal costs. B. Any loans required to offset uncollectible amounts. C. Interest on loans required to offset undercollectible amounts pending payment of the insurance proceeds. D. Sums due the insured that are uncollectible due to a covered loss.

B. Any loans required to offset uncollectible amounts.

Which of the following property would not be eligible for coverage under a marine or inland marine coverage form? A. A radio transmitting tower B. Money kept in a safety deposit box at the bank C. Wedding gifts while at the reception area of a church D. An individual's Rolex wrist watch

B. Money kept in a safety deposit box at the bank

All of the following statements concerning coinsurance are true EXCEPT: A. The insured agrees to maintain insurance equal to some specified percentage of the value of the property. B. If the insurance carried is less than required, the insurance may not cover the whole loss. C. The coinsurance formula will also be applied to total losses. D. It is used to help adequacy and equity in rates.

C. The coinsurance formula will also be applied to total losses.

In Kansas, what would allow an insurer to cancel an automobile insurance policy that has been in force for more than 60 days?

Conviction of a third moving violation in the past 18 months.

"Large" risks are exempt from rate filing rules. Which of the following would be exempt from Rate filing? A. Total insured property values of $5,000,000 or more. B. An insured whose total annual gross revenue is $10,000,000 or more. C. An insured that has paid total premiums of $100,000 or more for multiple lines policies. D. All of the Above

D. All of the Above

Prior to placing business with an unauthorized insurer, an excess lines agent must: A. Obtain written permission of the client. B. Provide the client with a statement that the coverage will be obtained from an insurer not authorized to do business in Kansas. C. Provide the client with a statement that the insurer's name appears on an approved list issued by the Commissioner. D. All of the above.

D. All of the above.

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT: A. An offer of employment B. Stocks, securities, or bonds C. An offer to share in commissions generated by the sale D. Dividends from a mutual insurer

D. Dividends from a mutual insurer

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

Direct Loss

Individuals in the business of selling construction equipment and mobile equipment should insure with:

Equipment dealers coverage form

Which insurance principle 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

An additional loss that results from a direct loss of property is called:

Indirect Loss

Perils under which kind of insurance contract stem from ocean marine insurance but are located on land?

Inland marine

In Kansas, an insurance rate will be considered unfairly discriminatory if:

It fails to reflect the differences in losses and expenses among policyholders.

How does the mobilehome endorsement affect the other overage of law or ordinance in a homeowners policy?

It removes the coverage.

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

Occurence

What type of insurance policy insures against all risks of loss that are not specifically excluded by the policy?

Open peril policy

The people who sell insurance products to the public are called:

Producers

The form used in the settlement of first-party losses that includes the date and description of the occurrence and the amount of loss claimed is called:

Proof of Loss

A situation in which a person can only lose or have no change represents:

Pure Risk

The policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called:

Subrogation

The transfer of an insured's right to seek damages from a negligent party to the insurer is found in what clause?

Subrogation

A driver's auto insurance policy was cancelled. His insurer will probably notify him about possible coverage through:

The Kansas Automobile Insurance Plan

When an insurance company cancels an automobile liability insurance policy, the insured must be notified of possible eligibility for coverage in the Kansas Automobile Insurance Plan, unless:

The cancellation is due to nonpayment of premiums.

Negligence is defines as:

The failure to do what a reasonable prudent person would do under given circumstances.

When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be:

The proximate cause

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market:

This is illegal as you cannot intimidate with intent to restrict fair trade or create a monopoly.

What is the purpose of the FAIR Plan?

To help applicants get property and casualty insurance

When and insurer charges a different rate to individuals of the same rating class because of the geographic location of the risk, this is called:

Unfair discrimination

Insurable Interest in a property policy must be proven:

at the time of the loss

After which perils must the insurer furnish the insured with a proof of loss form within 10 days?

fire and tornado

The definition of "theft" encompasses both:

robbery and burglary

Coverage under a Floor Plan Merchandise form is written on a reporting form basis that requires the insured to file reports with the insurer. What is the time frame for those reports?

within 30 days after the end of each month

What is the fine for failing to complete CE requirements?

$100

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

$250,000

An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?

$30,000

What is the maximum dollar amount of coverage available to insure a residential dwelling under the FAIR Plan?

$400,000

If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person?

$50,000 because the first number is the amount for bodily injury to one person

How long is the policy period for NFIP flood insurance?

1 year

In order to be considered for coverage under the FAIR plan, applicants must be rejected by how many insurance companies?

3

In order to become licensed as an excess lines agent, a resident insurance producer must have been licensed in Kansas for:

3 years

Under the conditions of a Film Coverage Form, how long must the insured maintain records of each production?

3 years after the policy expires

An insurer must submit a notice of agent appointment electronically through the NIPR within how many days of appointment?

30 business days

When an insurer wishes to deny renewal of an automobile insurance policy, advanced written notice to the named insured must be given at least how many days before the expiration of the current term?

30 days

Insurance companies must file their rates for personal lines insurance at least:

30 days prior to using

How long is the Commissioner's term in office?

4 years

An applicant for a resident producer license in Kansas has failed his licensing examination 3 times. When will the applicant be allowed to retake the exam?

6 months after the last attempt

Excess lines agents are required to remit premium taxes to the State of Kansas in the amount of:

6% of the gross premium

When an insurer wishes to nonrenew a commercial insurance policy, it must provide the first named insured with how many days of advance written notice of this action?

60 days

Which of the following other coverages is NOT included in the basic form dwelling policy? A. Breakage of glass B. Removal coverage C. Personal property temporarily away from the insured premises D. Tenant's improvements, alterations, and additions

A. Breakage of Glass

In Kansas, property and casualty insurance rates must be:

Adequate

A policy that insures all property at multiple locations for a single amount is referred to as:

Blanket

An insured is driving her car through a residential area when she loses control and crashed into a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have?

Combined single

An insured's business is damaged because of a fire, and they are forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this?

Consequential

Which of the following risks would NOT be eligible for coverage under a homeowners policy? A. An applicant who lives in a duplex that she does not own. B. An applicant who owns and lives in a duplex. C. An applicant who owns and lives in a single-family dwelling that also contains incidental business activities. D. An applicant who owns and lives on a commercial farm.

D. An applicant who owns and lives on a commercial farm.

When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of:

Defamation

The reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against is known as:

Loss

What provides coverage on property that is involved in shipping on navigable waters?

Marine

What best describes the nature of an insurer's membership in the FAIR plan?

Membership is optional

What is covered by the contractors equipment floater in an unfiled inland marine insurance?

Mobile equipment during transportation to and from the job site.

What policy consists of the declarations and conditions, endorsements, and other attachments applicable to a single line of insurance?

Monoline

The special cancellation and nonrenewal provisions contained in personal automobile insurance applies to:

Pickup trucks used in a farming operation

An excess, or surplus, lines license permits an insurance producer to:

Place insurance risks with unauthorized insurers.

What kind of form can an insured submit that describes the nature of the loss, the incident that caused the loss, and the monetary amount of the loss?

Proof of Loss form

Inland marine insurance is used to cover which type of property?

Property that is mobile in nature and is being transported over land

What type of damages may be awarded by the court to create disincentives that discourage behavior that is deemed highly undesirable by society?

Punitive

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of:

Rebating

A couple was walking to their car after seeing a movie. As they walked to the car, a man wearing a ski mask approached them, pulled out a gun, and demanded they turn over their cash. They turned over their property, and the man ran off. What is this an example of?

Robbery

What are two types of compensatory damages?

Special and general

An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have?

Specific

Property insurance that provides $100,000 coverage for a building and $50,000 coverage for a personal property at a single location is called:

Specific Coverage

Events in which a person has both the chance of winning or losing are classified as:

Speculative Risk

A property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use what loss valuation method?

Stated Amount

Proof of loss statements must be completed by:

The insured

What is the most likely to occur if it is determined by the audit that the deposit premium was too high?

The insured will receive a return premium

The regulation of the insurance industry primarily rests with:

The state