Practice Test 9

Under the additional coverages of the standardized Businessowners policy, how much is the limit for "Pollutant Clean Up and Removal" if caused by a covered loss? a. $10,000 in any 12 month period b. An additional $25,000 if the policy limits are exhausted when paying for the actual loss c. 25% of the loss as long as it does not exhaust the policy limits d. $10,000 during the entire policy period

a. $10,000 in any 12 month period

What symbol is used for a hired auto in a commercial auto policy? a. 8 b. 2 c. 5 d. 4

a. 8

Which of the following fidelity bonds guarantees both the honestly and faithful performance of the principal? a. Coverage form O b. Standard form #25 c. Standard form #23 d. Standard form #24

a. Coverage form O

Which of the following is covered under the broad from farm owners policy that is not covered under the basic form farmowners policy? a. accidental shooting of livestock b. flood damage to structures c. collision d. earthquake

a. accidental shooting of livestock

An insured who is covered under a Commercial Property policy with the Building and Personal Property Coverage form attached, suffers a loss to business personal property. The insurance company has claim, but now the property has been recovered. All of the following statements are TRUE regarding how this situation should be handled according to the form, EXCEPT: a. the insured must incur any expenses to recover the property b. if the insured recovers the property, they must promptly notify the insurer c. the insured has the right to keep the recovered property and return the claim payment d. the insurer can request to keep the recovered property because the claim was already paid

a. the insured must incur any expenses to recover the property

What does the term comparative negligence refer to? a. the percentage of fault is shared by each driver in an accident in which both contribute to causing the accident b. the one who is most negligent receives no payment when the claim is settled c. the one who the least negligent receives no payment when the claim is settled d. if both parties have contributed to causing the accident, neither party receives any payment when the claim is settled

a. the percentage of fault is shared by each driver in an accident in which both contribute to causing the accident

The National Flood Insurance Program will pay which of the following amounts to assist with moving of property to safety when there is imminent flood danger? a. $500 b. $1000 c. $1500 d. $2000

b. $1000

The process of bringing a contract dispute before an objective third party for resolution is known as: a. litigation b. mediation c. arbitration d. assignment

c. arbitration

The Terrorism Risk Insurance Act and all of its extensions and reauthorizations is actually an agreement: a. between the states and federal government b. between the insurance companies and the states c. between the federal government and insurance companies d. between the federal government and foreign government

c. between the federal government and insurance companies

The perils most frequently covered by a Difference in Conditions policy are: a. flood and volcanic eruption b. earthquake and volcanic eruption c. earthquake and flood d. collapse and flood

c. earthquake and flood

A method of settling claim reserves based on the claims circumstances and the claim representatives experience in handling similar claims is known as: a. the expert system method b. the formula method c. the roundtable method d. the individual case method

d. the individual case method

Most aircraft physical damage (hull) policies are settled on a: a. replacement cost basis b. market value basis c. insured value basis d. actual cash value basis

c. insured value basis

Joe enters into a contract with Martha to set fire to her house so she can collect on her insurance policy. Martha will pay Joe a portion of the insurance proceeds for his trouble. Which of the following parts of a valid contract is missing in this situation? a. competent parties b. consideration c. offer and acceptance d. legal purpose

d. legal purpose

Which of the following professional liability policies would cover a dishonest, fraudulent or criminal act of the manager of a LLC? a. fiduciary liability b. malpractice liability c. errors and omissions d. none of the policies cover these acts

d. none of the policies cover these acts

Courtney carries two Dwelling policies with a total limit of $20,000 on her home. One policy is with Company A with a limit of $12,000, and the other policy is with Company B in the amount of $8,000. In case of a $10,000 covered loss, which of the following is true regarding the payment of the claim? a. Company A will pay $6,000 and Company B will pay $4,000 b. Company B will pay $8,000 c. Each company will pay 50% of the loss d. Company A will pay $6,000 and Company B will pay $2,000

a. Company A will pay $6,000 and Company B will pay $4,000

Any person who is a party to a disputed auto property damage claim may: a. request the court to appraise the claim b. request the court to arbitrate the claim c. demand the court to issue a declaratory judgment d. their only recourse is to sue the other party

b. request the court to arbitrate the claim

All of the following statements regarding eligibility o 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

b. the facility cannot exceed more than 500 individual self-storage units

Residential condominiums in the emergency program of the NFIP are covered by which of the following forms? a. the dwelling form b. the general property form c. the condominium emergency form d. the residential condominium building association policy form

b. the general property form

The standardized Dwelling forms consider all eruptions of a volcano within a _______ period to be a single occurrence a. 24 hour b. 36 hour c. 48 hour d. 72 hour

d. 72 hour

Which of the following would be covered under Coverage A of a Farm insurance policy? a. a structure attached to the dwelling b. a structure detached from the dwelling c. dwelling personal property d. livestock

a. a structure attached to the dwelling

If an employee has been injured on the job they may be entitled to rehabilitation benefits which are normally limited to ______ weeks a. 26 b. 52 c. 36 d. 27

b. 52

Which of the following Crime form insuring agreements pays defense costs for the insured? a. Inside the Premises b. Forgery or Alteration c. Employee Theft d. Outside the Premises

b. Forgery or Alteration

All of the following statements are TRUE regarding the extended period to discover loss condition of a Crime policy, EXCEPT: a. the extended period is no later than 60 days following policy cancellation for losses that do not involve an employee benefit plan b. the extended period is terminated immediately upon the effective date of any other Crime insurance obtained by the insured c. the extended period is not later than 1 year following policy cancellation for losses that involve an employee benefit plan d. the extended period is terminated 30 days following the cancellation of the policy whether or not the insured has obtained other coverage

d. the extended period is terminated 30 days following the cancellation of the policy whether or not the insured has obtained other coverage

Public Official bonds: a. Guarantee faithful performance of the elected or appointed public official b. Guarantee financial obligations c. assure the employees are faithful in their jobs d. none of the responses are correct

a. Guarantee faithful performance of the elected or appointed public official

Horatio is a business owner who is part of a business owners group that are buying old commercial buildings in their small city and refurbishing them. Horatio has bought a beautiful historical building made mostly of wood. He installs a sprinkler system right away to prevent a fire. What risk management strategy is Horatio using? a. Risk reduction b. assumption of risk c. risk avoidance d. sharing the risk

a. Risk reduction

Jerry Jones has suffered a property loss to his home. The adjuster, Anthony, has stated that the loss is covered when it actually is not. Jerry is relying on the statement made by Anthony. Therefore the insurer may be ______ from denying the claim a. estopped b. defended c. exonerated d. waived

a. estopped

Which of the following is NOT a claim settlement option for liability claims? a. excessive amounts claimed b. lost wages claimed c. loss of use d. disfigurement

a. excessive amounts claimed

The "occurrence" form of a CGL policy provides coverage for bodily injury and property damage that: a. occurs during the policy period regardless of when the claim is made b. occurs during the policy period as long as the claim is made during the policy period c is claimed during the policy period with no regard to when the bodily injury or property damage occurred d. occurs after the policy period and the claim is made after the policy period

a. occurs during the policy period regardless of when the claim is made

When the Personal Liability Supplement is purchased as a monoline policy all of the following are required conditions, EXCEPT: a. assignment b. liberalization c. death d. bankruptcy

d. bankruptcy

Estoppel is best exemplified by which of the following? a. an insurer is prohibited from denying a claim because its appointed producer advised the insured the claim covered b. an insurance producer is prohibited from selling insurance with unauthorized insurers c. an Insurer is prohibited from appointing persons without a valid producers license d. an insured is prohibited from suing its insurer if the policy was cancelled for non-payment of premium

a. an insurer is prohibited from denying a claim because its appointed producer advised the insured the claim covered

Part F of the standard Personal Automobile policy states that the policy can be terminated within the first 60 days for any reason other than non-payment of premium if: a. at least 20 days notice is provided to the insured b. at least 30 days notice is provided to the insured c. at least 10 days notice is provided to the insured d. another type of policy option is provided by the insurer

a. at least 20 days notice is provided to the insured

Which of the following offers the broadest physical damage coverage under a Commercial Auto policy? a. comprehensive b. specified cause of loss c. named perils d. broad named perils

a. comprehensive

John's employer, located in South Carolina, temporarily transfers him to work on a job in another state. He is injured on the job while in the other state. All of the following would be true in this circumstance, EXCEPT a. he can file for maximum benefits and collect in each state b. he is authorized to file under the laws of the state where he is hired c. he can file a claim in the state where he was injured d. he can file in the state where his employer is located

a. he can file for maximum benefits and collect in each state

Under the CGL policy, each of the following statements are true about the general aggregate limit, EXCEPT: a. it only applies to all losses included within the products and completed operations hazard b. all losses under the premises and operations subline are subject to the limit c. it is an annual limit that is reinstated at the beginning of each new policy year d. once the aggregate has been exhausted, the insurer has not further obligations for additional claims

a. it only applies to all losses included within the products and completed operations hazard

Which of the following is true about "open peril" coverage? a. it provides coverage for all perils, unless that peril is specifically excluded b. it provides coverage for scheduled risks c. it provides coverage for named perils d. it does not exclude any perils from coverage

a. it provides coverage for all perils, unless that peril is specifically excluded

Which of the following is one of the duties of the insured as specified in a Commercial Inland Marine policy? a. submit to an examination under oath if the insurer requests it b. accept responsibility for the loss immediately c. leave damaged property and undamaged property together because moving the property could compromise the claims investigation d. notify law enforcement immediately at the time of the loss, regardless of whether or not the loss involved criminal activity

a. submit to an examination under oath if the insurer requests it

Under the standardized Homeowners form, how much "additional coverage" is provided under Section II- Liability for loss of earnings by the insured to assist the insurer in the investigation or defense of a claim? a. $200 /day b. $250 /day c. $300 /day d. $175 /day

b. $250 /day

Anywhere Computer Care provides computer and network administration services as well as backup services for its customers. Anywhere Computer Care needs which of the following as part of its insurance coverages to cover this exposure? a. Commercial General Liability b. Cyber Liability c. Commercial Property Insurance d. Commercial Umbrella

b. Cyber Liability

All of the following perils are covered for collapse under the Commercial Property additional coverage, EXCEPT: a. a building that abruptly caves in and becomes unusable b. a building that is in danger of collapsing c. use of defective construction materials that causes a collapse while the construction is in progress d. hidden insect or vermin damage

b. a building that is in danger of collapsing

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 in the named insureds home, where she also holds occasional painting 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 in the named insureds home, where she also holds occasional painting classes

All of the following would be covered under the Products Liability coverage of the CGL policy, EXCEPT: a. faulty product made in the US causes injury to a user in England b. the cost to recall defective products c. A resident of Spain brings suit in the US against a manufacturer for a faulty product that caused them injury d. A faulty product made in the US that causes harm to a resident of Hawaii

b. the cost to recall defective products

A fire in Josh's factory causes him to shut the doors for 45 days. While repairs take place, Josh spends $190,000 renting another building and equipment, to keep production going. Even though Josh's Commercial Property policy doesn't cover his lost business income, he does have Extra Expense Coverage with a $200,000 limit and limits of Loss Payment set at 40%/80%/100%. How much indemnification can Josh recover from his insurer in this case? a. $80,000 b. $152,000 c. $160,000 d. $190,000

c. $160,000 (80% x 200,000= 160)

Mark owns a small 1 bedroom house that he covers under a DP-1. He has the house insured under Coverage A for $40,000. Mark also rents the house to tenants and his yearly rental income is $10,800. The house is severely damaged in a storm, and is uninhabitable by the tenant for 4 months. How much will Mark's DP-1 policy pay him for fair rental value? a. 900.00 each month for the four months that the dwelling was uninhabitable b. $2,668 in a lump sum at the end of four months c. $667.00 each month for the four months that the dwelling was uninhabitable d. $3600 in a lump sum

c. $667.00 each month for the four months that the dwelling was uninhabitable. (20% of 40,000= 8,000. 1/12th of 8,000 is 667. per month)

Coverages A, B, C, and D of Section I of a Homeowners policy are (in order): a. Personal Property, Loss of Use, Dwelling, Other Structures b. Dwelling, Personal Property, Other Structures, Loss of Use c. Dwelling, Other Structures, Personal Property, Loss of Use d. Personal Property, Dwelling, Other Structures, Loss of Use

c. Dwelling, Other Structures, Personal Property, Loss of Use

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 b. I, II, III, and IV c. I and II d. II and III

c. I and II

What is the purpose of tort law? a. to apply criminal penalties to those who commit a tort that causes bodily injury b. to require the tortfeasor to carry insurance that will cover any injuries they may inadvertently cause that may result in a lawsuit c. it provides a tort victim with a civil remedy to pursue a claim for compensation in the courts d. to provide a victim with a way to pursue a claim for damages in a court of law when a contract is breached

c. it provides a tort victim with a civil remedy to pursue a claim for compensation in the courts

Part 1 of the NCCI standard workers compensation policy specifies the: a. the schedule showing that dollar limit of the policy coverage b. amount of coverage that federal programs will pay c. statutory provisions of the policy d. the schedule showing the dollar amount paid for exemplary damages

c. statutory provisions of the policy

Which of the following is NOT a reason to purchase a Dwelling policy instead of a Homeowners policy? a. the limits of liability under a Dwelling policy are lower than under a Homeowners policy, permitting the insured to purchase coverage for a low value dwelling b. the dwelling policy does not require the dwelling to be owner occupied and the homeowners policy does required the covered dwelling to be owner occupied c. the dwelling policy provides higher limits of liability than the homeowners policy d. dwellings that may not meet the Homeowners policy's strict underwriting requirements can be insured under a Dwelling policy

c. the dwelling policy provides higher limits of liability than the homeowners policy

Which of the following statements regarding uncontrolled Commercial Inland Marine forms is NOT true? a. the coverage provided by the form is set by the individual insurance company writing the contract b. the rates changed for the coverage are determined by the insurance companies underwriters c. the forms can be used as part of a commercial package policy d. the forms are usually written to create a stand alone policy

c. the forms can be used as part of a commercial package policy

Which of the following coverages doe 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

The optional coverage for "employee dishonesty" under a standard BOP provides a "discovery period" for the insured to discover the dishonest act and have coverage still apply. Which of the following statements best describes the "discovery period" for this optional coverage? a. the "discovery period" is three years from the end of the policy period b. the "discovery period" is one year from the date the dishonest act took place c. the "discovery period" is two years from the date the dishonest act took place d. the "discovery period" is one year from the end of the policy period

d. the "discovery period" is one year from the end of the policy period

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 states 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

d. the adjuster has drafted the legally binding settlement papers on a claim

All of the following would be covered under the Business Auto Policy, EXCEPT: a. a business partner using his own vehicle running a personal errand b. an employee using an employers vehicle with permission c. a business partner using her company vehicle while on company business d. a company executive using her company vehicle on company business

a. a business partner using his own vehicle running a personal errand

An insured has purchased Coverage A and Coverage B of a standard BOP and the limit of insurance shown in the Declarations is 80% of the replacement cost value, how will losses be settled? a. both Coverage A and Coverage B will be settled on a replacement cost basis b. Coverage A is settled on a replacement cost basis while Coverage B is settled on an actual cash value basis c. both Coverage A and Coverage B will be settled on an actual cash value basis d. Coverage A is settled on an actual cash value basis while Coverage B is settled on replacement cost basis

a. both Coverage A and Coverage B will be settled on a replacement cost basis

All of the following are duties of the insured after a loss, EXCEPT: a. promptly hiring a public adjuster to assist in presenting the claim to the insurance company b. promptly reporting the loss to the insurer c. cooperating with the insurer in the investigation of the claim by providing the information requested by the adjuster d. submitting to an examination under oat (EUO) if requested by the insurer

a. promptly hiring a public adjuster to assist in presenting the claim to the insurance company

The insured carries a workers compensation policy that includes Part Two- Employers Liability coverage. Which of the following is not covered by Part Two? a. statutory benefits set by state law b. suits brought by injured employees in case of employers gross negligence c. suits brought by spouses or dependent of injured workers d. legal defense costs

a. statutory benefits set by state law