Practice Test 8
Which of the following is not covered under aircraft physical damage insurance? a. personal effects b. fuselage c. landing gear d. wings
a. personal effects
Under Coverage A- Building of the BOP form, which of the following is NOT covered? a. completed additions, and additions under construction b. all permanently installed fixtures, machinery, and equipment c. outdoor fixtures d. valuable papers and records
d. valuable papers and records
A leased vehicle is considered to be a covered auto under Personal Auto Policy (PAP) if it is a private passenger auto leased for at least: a. 6 consecutive months b. 48 hours c. 30 consecutive days d. 1 year
a. 6 consecutive months
How is personal property of a dwelling covered under a farm policy? a. ACV basis b. Stated amount basis c. agreed amount basis d. replacement cost basis
a. ACV basis
A ship has negligently collided with another ship and caused severe damage. What coverage would apply to cover this claim? a. hull insurance with the running down clause b. protection and indemnity c. inchmaree clause d. towage clause
a. hull insurance with the running down clause
When an insured is fulfilling the duty of proving a loss by taking an inventory of the damaged property, who pays the expenses incurred by the insurer? a. the insured b. the insurer c. the adjuster will provide funds to pay for these expenses d. who pays these expenses will be negotiated at the settlement of the claim
a. the insured
Under Section II of a Homeowners policy, a cemetery plot owned by the insured is considered to be: a. an excluded location b. an insured location c. a non-insured location d. an additional location
b. an insured location
All Homeowners form provide the "Property Removed" additional coverage for up to how many days? a. 10 days b. 60 days c. 30 days d. 20 days
c. 30 days
What is the term used to describe the circumstance when a state requires its employers to buy coverage from a state-designed Workers Compensation program? a. compulsory b. elective c. competitive d. monopolistic
d. monopolistic
Gavin the named insured under a Personal Auto policy, his daughter Tabitha, and two of her friends are riding in the covered auto when Gavin accidentally runs a stop sign, striking another vehicle. Everyone in Gavin's vehicle was injured as well as the driver and two passengers in the other car. Who would be covered for their injuries under Part A of Gavins policy? a. Gavin and Tabitha b. Gavin, Tabitha, and Tabithas friends c. Gavin, Tabitha, Tabithas friends, the driver and passengers in the other car d. the driver and passengers in the other car
d. the driver and passengers in the other car
Which of the following dwelling forms provides broad perils coverage for personal property? a. DP-2 and DP-3 only b. DP-1, DP-2 and DP-3 c. DP-3 only d. DP-2 only
a. DP-2 and DP-3 only
Which of the following may be included in the Commercial Package Policy? I. Commercial Auto II. Commercial Inland Marine III. Equipment Breakdown coverage IV. Aviation a. I, II, and III b. I and II c. II and III d. I, II, III, and IV
a. I, II, and III
When insurance is written on a Dwelling form, each of the following types of property would be insured under Coverage A, Except: a. a detached garage b. an attached laundry room c. an attached carport d. materials in the yard intended for construction of a new addition to the home
a. a detached garage
Which of the following statements is FALSE concerning coverage under the Business Auto Policy? a. medical payments coverage is automatically provided b. it may be used to cover specifically described autos only c. if written to cover "any auto", non-owned and hired autos are automatically covered d. whether newly acquired autos are automatically covered depends upon the applicable coverage symbol
a. medical payments coverage is automatically provided
Which of the following loss valuations can be stated as "we agree to pay the cost to repair or replace without deduction for depreciation" a. actual cash value b. replacement cost c. agreed amount d. stated amount
b. replacement cost
Which of the following is a general summary of a policy? a. the insurance contract b. binder c. certificate of insurance d. a coverage form
c. certificate of insurance
The original Terrorism Risk Insurance Act of 2002 defined an act of terrorism as a violent act or any act that is dangerous to all of the following, EXCEPT: a. human life b. property c. infrastructure d. reputation
d. reputation
In most states, which of the following most accurately describes an "admitted insurer"? a. an insurer that can transact insurance in the state under a certificate of authority b. an insurer with admitted assets that exceed liabilities c. an insurer with a board of directors authorizing it to transact business in the state d. an Insurer that accepts applicants without regard to race, gender or religion
a. an insurer that can transact insurance in the state under a certificate of authority
In which part of an insurance contract would you expect to find a description of the duties and obligations of the insured? a. conditions b. insuring agreement c. the exclusions d. declarations
a. conditions
All of the following are eligible risks for Commercial Inland Marine insurance, EXCEPT: a. goods manufactured in the United States for export to other countries b. domestic shipments traveling over land c. bridges and radio towers d. tools and machinery owned by a contractor
a. goods manufactured in the United States for export to other countries
Which of the following would be covered by the NFIP? a. reasonable expenses to protect the property when endangered by flood b. water spray damage c. interior damage caused by frozen pipes d. mudslides
a. reasonable expenses to protect the property when endangered by flood
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
a. the facility cannot exceed two stories in height b. the facility cannot exceed more than 500 individual self-storage units
An insured has purchased a "claims made" CGL policy to replace an "occurrence" policy that was previously carried. The new "claims-made" policy contains a retroactive date of 01/01/14. A claim that occurred 12/15/13 would be denied under the "claims-made" form for which of the following reasons? a. the retroactive date eliminates coverage for claims occurring before the date b. "claims-made" coverage has more exclusions c. the previous "occurrence" forms should provide the coverage for the claim d. the insured would have to purchase the laser beam endorsement for coverage to apply
a. the retroactive date eliminates coverage for claims occurring before the date
Coverage F under the farm forms covers which of the following? a. unscheduled personal property b. scheduled personal property c. scheduled real property coverage d. blanket real property coverage
a. unscheduled personal property
Under "pollution cleanup and removal" coverage under the standard ISO BOP form, when must a loss be reported? a. within 180 days b. within 60 days c. immediately d. within 90 days
a. within 180 days
Jim Johnson has an automobile policy with a combined single limit of $50,000. He is involved in an accident where he is at fault and incurs the following expenses: $30,000 bodily injury judgement $30,000 property damage judgement $5,000 damage to traffic light $6,000 attorneys fees for his defense $300 in premiums for appeal bond $75 in bail bond premiums for related traffic violations What is the max his insurance company will pay? a. $50,000 b. $56,375 c. $65,000 d. $71,375
b. $56,375
Conrad is a contractor with Builders Risk coverage written on a reported value basis on his current construction job. He started cleaning the land on May 1st, digging the basement on May 13th, pouring the foundation on May 31st, blocking the basement walls on June 5th, flooring the first floor above the basement on June 15th, and constructing the walls of the first floor on June 30th. When did Conrad's Builders Risk policy begin providing coverage? a. June 5th b. June 15th c. May 1st d. May 13th
b. June 15th
Tom rents half of a duplex. During a severe storm, lightning strikes a tree in the front yard and it falls, causing damage on Tom's side of the duplex. Which of the following losses would be covered by Tom's HO-4 policy? a. the removal of the tree and debris costing hundreds of dollars b. Toms TV and entertainment system that were damaged when the tree fell through the roof c. Toms attached carport that was damaged when the tree ripped it from the side of the house d. Toms roof and front wall that were damaged when the tree fell on the house
b. Toms TV and entertainment system that were damaged when the tree fell through the roof
Which of the following would be considered an "incidental occupancy" under a Homeowners policy? a. an automotive repair business conducted in an unattached garage on the insured premises b. an art studio located inside the insureds home where occasionally she holds classes c. an accountants office with a separate entrance for clients to enter and exit d. a beauty salon located in a converted garage of the insured dwelling
b. an art studio located inside the insureds home where occasionally she holds classes
Which of the following is an example of the "assumption of risk" defense against negligence? a. george suffered a broken leg when he was walking into the locker room after playing a game of basketball and slips in a pool of liquid soap left on the floor by the custodian b. fred, in a hurry to get to work, takes a shortcut over a bridge marked "condemned" that subsequently collapses under the weight of his car c. diana was seriously injured in an auto accident with a driver who license has been revoked d. henry, while walking to his mailbox, was accidentally hit in the head with a baseball thrown by his neighbors son
b. fred, in a hurry to get to work, takes a shortcut over a bridge marked "condemned" that subsequently collapses under the weight of his car
The limits of Employers Liability section of a standard workers compensation policy are: a. listed in the conditions section of the policy b. listed on the information page c. set by state law d. set low enough that the employer will pay a significant portion of a claim
b. listed on the information page
An insured has fabricated a claim that would appear to be legitimate. What kind of hazard would this act represent? a. physical hazard b. moral hazard c. morale hazard d. it is a peril, not a hazard
b. moral hazard
The insured is wearing a diamond ring while on vacation in Europe. Her ring is valued at $1500. It is stolen. What coverage would apply under her Homeowners policy? a. The claim will be denied because they were out of the US b. the policy will pay the loss less the deductible c. the loss has exceeded the theft limit d. theft is not covered for jewelry valued in excess of $1000
b. the policy will pay the loss less the deductible
Which of the following represents the amount of coverage a Homeowners policy will provide for personal property located in a self-storage facility? a. 5% of the Coverage C limit of $5,000 whichever is greater b. 10% of the Coverage C limit of $1,000 whichever is smaller c. 10% of the Coverage C limit of $1,000 whichever is greater d. $1000
c. 10% of the Coverage C limit of $1,000 whichever is greater
Which of the following is covered property under the HO-3 form? I. belongings of the insureds daughter, while she is away at college II. the insureds pool table stored in the garage located under the bonus room of the insured dwelling III. the insureds prize winning show dog IV. the personal property of a tenant who is renting the insureds bonus room a. I, II, and III only b. I, II, III, and IV c. I and II only d. II and III only
c. I and II only
Which insuring agreement of the Personal Auto policy would provide coverage for the damage caused to the other drivers car, when the insured was at fault in an accident? a. Part D- Physical Damage b. Part B- Medical Payments c. Part A- Liability d. Part C- Uninsured Motorists
c. Part A- Liability
The standardized Personal Auto policies contain all of the following, EXCEPT: a. four separate insuring agreements with their own separate exclusions b. a common declarations page c. a common conditions page d. four separate insuring agreements with separate coverages provided under each of them
c. a common conditions page
The requirements of the Employment Retirement Income Security Act compel employers to cover their professional liability exposure for honest errors and omissions regarding benefit plans by purchasing: a. environmental liability b. employment practices liability c. fiduciary liability d. directors and officers liability
c. fiduciary liability
If a ships captain must jettison a disproportionate amount of his policyholders cargo in order to save the ship, there is a provision in the Ocean Marine policies that will spread that lost among all of the insureds with the ship. What is this provision called? a. free of particular average clause b. cost in freight clause c. general average clause d. free on board clause
c. general average clause
The Valuable Papers and Records coverage extension of the Building and Personal Property coverage form pays for: a. the cost to duplicate the records from computer data storage b. the cost of the records themselves, including money and accounts receivable c. a limit of $2,000 per insured location is provided to cover losses to valuable papers and records by a covered cause of loss d. for the research to be performed to restore the lost information on the valuable papers and records
d. for the research to be performed to restore the lost information on the valuable papers and records
The optional coverage for "Money and Securities" under a standard BOP provides for the loss of money and securities used in the insureds business as a result of all of the following, EXCEPT: a. theft b. disappearance c. destruction d. fraud
d. fraud
Tara's hair salon was already having a bad year when a client slipped and broker her arm on a worn out piece of flooring, and sued the salon for $500,000. Tara had recently purchased an Excess Liability policy and she was hoping that she could cover the claim with the new excess policy, leaving her underlying CGL policy untouched. THis is not possible because: a. all excess liability policies have a 10% per occurrence clause b. tara did not purchase enough coverage under her excess liability policy c. there is an imposed waiting period of 45 days on all excess liability policies d. the coverage under an excess liability policy are only triggered when the underlying policy's limits have been exhausted
d. the coverage under an excess liability policy are only triggered when the underlying policy's limits have been exhausted
Which of the following is not excluded by Section II- liability of the Business Auto policy? a. cost to defend the insured b. work related injuries to employees c. intentional injuries caused by the insured d. damage to property owned by the insured
a. cost to defend the insured
Surety bonds guarantee the fulfillment of specific obligations. Each of the following may be the subject of a surety bond, EXCEPT; a. protection of funds handled by employees b. payment of a debt c. meeting contractual commitments d. performance of certain duties
a. protection of funds handled by employees
Sarah is shopping at a grocery store and wants to purchase a bottle of juice. The aisle is marked off with a rope awaiting the clerk to clean up a previously broken bottle and spill on the floor. Sarah moves the rope to get the item and slips and falls on the floor, cutting her face on the scattered glass. Which of the following would be the defense that the insurance company would most likely use in this situation? a. breach of duty on part of the customer b. assumption of risk and contributory negligence on the part of the customer c. trespassing on non-entry areas by the customer d. comparative negligence
b. assumption of risk and contributory negligence on the part of the customer
Which of the following Commercial Auto forms would be used to cover a limousine for hire? a. the truckers coverage form b. the motor carrier coverage form c. the business auto form d. the garage form
b. the motor carrier coverage form
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
c. fiduciary liability
An independent adjuster acts on behalf of his or her principal. Which of the following is the principal for an independent adjuster? a. the court b. the claimant c. the insurer d. the insured
c. the insurer
The conditions section of an insurance policy sets forth the: a. duties of the insured and the insurance company b. limits of liability under the policy c. coverages provided by the policy d. exclusions of coverage under the policy
a. duties of the insured and the insurance company
A customer in a restaurant becomes ill after they return home after eating. Which policy would respond to handle the claim? a. general liability policy that is unendorsed b. professional liability policy c. general liability policy with Products coverage specifically added by endorsement d. errors and Omissions
a. general liability policy that is unendorsed
Under the "supplemental extended reporting period" of their claims made CGL policy, the We-Cure-Em Drug Company can rely on all of the following, EXCEPT: a. it will give them up to ten years to report newly made claims which allegedly occurred prior to the policys expiration date b. an additional premium will be charged (up to 200% of the expiring premium) c. it is optional coverage and must be requested by the insured d. it may not be cancelled once the insurer has issued the coverage
a. it will give them up to ten years to report newly made claims which allegedly occurred prior to the policys expiration date
What is the main difference between arbitration and mediation in dealing with coverage disputes in the claims adjusting process? a. mediation is not binding on the parties involved, but with arbitration the decision is final and binding b. mediation involves one objective and neutral third party, but arbitration involves two c. with mediation, the decision is final and binding on the parties involved, but arbitration is not binding d. arbitration is the ADR used next if negotiation does not work, mediation is only used after both negotiation and arbitration fall
a. mediation is not binding on the parties involved, but with arbitration the decision is final and binding
Under the "Money Orders and Counterfeit Money" insuring agreement of a standard Commercial Crime form, all would be covered, EXCEPT: a. taking a forged check from a customer in exchange for merchandise b. receiving counterfeit currency in a sale c. making change on a counterfeit bill d. cashing a forged money order
a. taking a forged check from a customer in exchange for merchandise
Which of the following Dwelling forms may provide replacement cost coverage for the dwelling and other structures? a. the DP-2 and DP-3 b. the DP-1 , DP-2 and DP-3 c. the DP-1 and DP-2 d. the DP_3
a. the DP-2 and DP-3
All of the following are true regarding benefits that must be paid as the result of an accident under workers compensation coverage in South Carolina, EXCEPT: a. the benefit is paid within six months after receiving the death certificate and verification that the death was caused by a covered auto accident or disease b. the benefit is paid within 2 years if death results as the proximate cause of the accident c. the benefit is paid with 6 years of the accident if the employee is still totally disabled d. the benefit may be paid as a lump sum settlement
a. the benefit is paid within six months after receiving the death certificate and verification that the death was caused by a covered auto accident or disease
A typical directors and officers liability policy covers each of the following, EXCEPT: a. the corporation for suits brought against it because of the actions of the officers and directors b. the directors and officers for their personal liability when not reimbursed by a corporation c, the corporation for amounts it reimburses officers and directors in the event of a claim d. the directors and officers for wrongful acts they may commit in the scope of their duties
a. the corporation for suits brought against it because of the actions of the officers and directors
A large tree has fallen into Paul's yard caused by wind. The claims service representative (CSR) advises Paul to call a contractor to remove the tree and send the bill to the insurance company. The bill is $1,200. However, the policy coverage for the debris removal of a tree that has fallen by wind, is only $500 unless the tree hits the house, which was not the case. What should the adjuster do? a. pay only $500 b. pay the $1200 c. pay the $1200, but then explain the policy provisions and ask the insured to reimburse the insurer for the difference d. negotiate
b. pay the $1200
Under which of the following scenarios would damage to a watercraft be covered under a Homeowners policy? a. the insureds covered watercraft is located in an storage facility with three walls surrounding it, and excessive wind enters the facility and causes damage to the boat b. the insureds covered watercraft is located in an enclosed building, but the wind blows off the roof and rain enters the boat and ruins the dashboard. c. the insureds covered watercraft is stored in the insureds garage, the insured leaves the garage door up and a large thunderstorm comes through the area, causing water and wind damaged to the boat d. the insureds covered watercraft was damaged while tied to the insureds dock when large waves bring water into the boat and ruin the dashboard
b. the insureds covered watercraft is located in an enclosed building, but the wind blows off the roof and rain enters the boat and ruins the dashboard.
All of the following are part of the entire contract EXCEPT: a. the insuring agreement of the policy is included in the entire contract b. the entire contract includes all endorsements attached to the policy c. an agreement made between the insured and the agent stated verbally, that the agent will personally service the insureds policy, and it will not be delegated to a staff member is part of the entire contract d. the complete agreement to which the insurer and the insured are held, with no outside stipulations or agreements, are part of the entire contract
c. an agreement made between the insured and the agent stated verbally, that the agent will personally service the insureds policy, and it will not be delegated to a staff member is part of the entire contract
Driver 1 and Driver 2 are in an accident. Driver 2 has the following damages: Property Damage- $1000 Rental Car Expense- $500 Emergency Room Expense- $400 Lost Wages- $300 The extent of the bodily injury will not be known for six months. How should the adjuster on this claim pay damages for Driver 2? a. pay all damages to date, provide a full and final release has been signed by Driver 2 b. pay nothing until total of all damages has been determined c. pay the property damage and rental car expense and settle the bodily injury at a later time d. none of the responses are correct
c. pay the property damage and rental car expense and settle the bodily injury at a later time
Blake has been planning to quit his job as a clerk in a United States Court House and open an antique store. After doing some research and finding that antiques do not sell well, he decides to abandon the plan and stay on at the court house. Blake is practicing: a. risk transference b. risk retention c. risk avoidance d. risk reduction
c. risk avoidance
Mikela is walking from her car, across a dark parking lot, to her apartment one evening after work. Suddenly, a masked man jumps out from between 2 cars and holds a gun to Mikelas head. The man tells Mikela that he will kill her if she does not give him her purse. Mikela has just experience a: a. larceny b. theft c. robbery d. burglary
c. robbery
Insureds have a duty to make a loss notice "promptly" for all of the following reasons, EXCEPT: a. so that witnesses can be interviewed while memories are still fresh b. so that further loss or damage will not occur before the claim is investigated c. so that the insurer can reserve an amount to pay the claim sooner d. so that relevant information regarding the claim is easier to obtain
c. so that the insurer can reserve an amount to pay the claim sooner
An employer having difficulty securing Worker's Compensation coverage in the voluntary market in South Carolina may ask for state assistance through which of the following? a. the South Carolina residual workers compensation plan b. the South Carolina Property and Casualty Guaranty fund c. the National Workers Compensation Reinsurance Pool d. the Excess and Surplus lines market available through alien insurers
c. the National Workers Compensation Reinsurance Pool
Which of the following would be covered under Section II- Liability of the Homeowner policy? a. damage to rented premises occupied by the insured caused by a fire accidentally set by the insured b. intentional acts of the insured c. operating a dirt bike off the insureds premises d. operating a 75-hP boat owned by the insured
a. damage to rented premises occupied by the insured caused by a fire accidentally set by the insured
Symbol 23 is designated on the insureds Garage Coverage form. This indicates that: a. that owned autos other than private passenger autos are covered b. that owned private passenger autos only are covered c. that only specifically described autos are covered d. that nonowned autos used in the garage business are covered
b. that owned private passenger autos only are covered
Under the Business Income from Dependent Properties- Broad Form, to qualify as a "manufacturing location" a. the location must provide components that are essential to the insureds production b. the location must provide at least 85% of the components that are essential to the insureds business production c. the location must be under contract with the insureds business to provide components that are essential to the insureds business production d. the location must provide at least 98% of the components that are essential to the insureds business production
c. the location must be under contract with the insureds business to provide components that are essential to the insureds business production
All of the following are "open peril" exclusions of the HO-3 and HO-5 form, EXCEPT: a. flood b. neglect, deterioration, general wear and tear c. theft d. mold, fungus and wet rot
c. theft
Which of the following is NOT correct regarding an Employee Dishonesty fidelity bond? a. may be written on a "discovery" or "loss sustained" form b. can be written on a "blanket basis" to cover all employees for the same limit c. may be written on a "scheduled basis" to cover employees by name for varying amounts d. can Include E&O coverage for mistakes made by employees
d. can Include E&O coverage for mistakes made by employees
Which of the following coverages does NOT need to be added to a Garage Coverage form by endorsement for coverage to apply? a. uninsured motorists b. personal injury protection c. medical payments coverage d. collision
d. collision
Which of the following is included in the Crime policy's definition of "securities"? a. currency in current use b. money orders held for sale at a shipping store c. deposits into the insureds account at any financial institution d. evidences of debt
d. evidences of debt
