Practice test
insurance is an appropriate device to:
A)eliminate hazards B)transfer risk C)avoid liability D)prevent losses -B
An unendorsed liability insurance policy provided coverage for:
A) Criminal actions B) unintentional torts C) intentional torts D) moral obligations -B
Under the homeowners HO-2 policy, all of the following are covered EXCEPT:
A) Dwelling B) contents C) personal liability D) farm outbuildings -D
All of the following are true about the limit of insurance in an unendorsed property insurance policy EXCPET:
A) It can be increased by attaching endorsement B) the insured can expect additional limits automatically upon purchasing a second property C) the insurer will normally not pay more than the stated limit D) there are special limits of insurance on some types of property - B
The employers liability insurance coverage which accompanies a workers compensation policy covers:
A) Punitive damages B) damages arising out of discrimination of hiring C) damages under the doctrine od dual capacity D) expenses of medical treatments for occupational diseases -C
Under a homeowners policy, the insured location includes all of the following EXCEPT:
A) a cemetery plot B) a secondary location used by the insured for a business C) vacant land of which the insured plans to build a house D) a motel room in which the insured is residing temporarily -B
The homeowners policy covers:
A) a detached garage used for a bicycle repair shop B) lumber on the insured premises to be used to build a porch onto the dwelling C) summer home owned by the insured but NOT listed in the declarations D) lawnmowers used off premises in the insured's landscaping business -B
which one of the following is eligible property of a dwelling policy?
A) a four - family dwelling B) a six - family dwelling C) a single family dwelling with the third floor rented to five boarders D) a two- family dwelling with the ground floor rented for a beauty parlor - A
who would be covered under the medical payments section of the commercial general liability policy, if injured on the insured's premises?
A) a tenant of the named insured B) the names insured C) a customer of the named insured D) an individual hired by the name insured -C
The coverage A limit for a dwelling under construction is the:
A) actual cash value on the date of completion B) actual cash value at specified periods during construction C) average value during the period of construction D) replacement cost on the date of completion -A
which is an exclusion under part two of the workers compensation and employers liability policy?
A) care and loss of service B) consequential injury to a spouse of the insured worker C) actions brought against the insured in a capacity D)injury occurring to an employee who is permanently assigned to work outside of the state -D
Damages reduced in proportion of the amount of negligence that the injured party contributed to the injury is called:
A) comparative negligence B) contributory negligence C) absolute negligence D) general negligence - A
A store employee discovers a large shortage while taking product inventory. Under an endorsed business owners policy, the loss:
A) could be covered by an off-premises endorsement B) is covered if the store takes reasonable security precautions C) is covered under the additional coverage's section of the policy D) is excluded under the limitations section of the policy -D
A basic form dwelling policy provides:
A) coverage on a named peril basis B) liability coverage for damage caused by the insured C) additional living expenses D) recovery on a replacement cost basis -A
All of the following are included in the liability section of the businessowners policy EXCEPT:
A) declarations B) common policy conditions C) applicable endorsements D) causes of loss forms - D
The policy period of a property policy is based on:
A) eastern time B) standard time C) pacific time D) Atlantic time -B
if policy A states that it will pay after payment by other applicable policies, policy A is:
A) excess B) primary C) pro rata D) reinsurance - A
The business auto coverage form covers losses from all of the following under the comprehensive coverage EXCEPT:
A) fire B) vandalism C) theft D) freezing - D
The risk of financial loss that an individual faces illustrates the principle of:
A) indemnity B) limit of recovery C) Subrogation D) insurable interest -D
Under the other structures coverage of the board from dwelling policy, all of the following are true EXCEPT:
A) it provides a 10% extension of coverage B) it provides coverage for a tool shed C) it does not provide additional amount of insurance D)it covers a private garage rented for storage of a car - C
A driver of a vehicle failed to stop for a red light and hit a light pole but did not hit a nearby vehicle. Which element if negligence is missing for legal action to be taken by the driver of the nearby vehicle?
A) legal duty B) failure to meet the standard care C) proximate cause D) actual damage -D
A licensed producer or agent may receive commission compensation for all of the following services EXCEPT:
A) negotiation of any insurance contract B) procurement of any insurance contract C) acting as a consultant to provide insurance advice D) adjustment of claims arising from insurance contracts -C
when an insurer unknowingly accepts two large cash payments from an illegal drug dealer to insure the drug operation and its employees, there is generally:
A) no contract B) a quasi- contract C) a contract of adhesion D) an enforceable contract -D
To recover for a loss under the standard fire policy, when must an insurable interest exist?
A) only at the inception of the policy B) at the time of the loss C) for at least six months before the loss D) an insurable interest need not exist - B
An insurance contract drafted by the company and offered to the prospective insured for acceptance or rejection without negotiation is called a:
A) personal contract B) unilateral contract C) contract of subrogation D) contract of adhesion -D
A flood insurance policy covers which of the following?
A) power tools stored in an attached garage B) furniture in a basement family room C) patio furniture on an open deck D) recreational vehicles parked in the driveway -A
medical payments to others under the homeowners policy will cover an accident that injures a:
A) residence employee during the course of employment B) child living at home C) trespasser D) dependent child at college -A
In the cause of loss-- basic form of the commercial property policy, the explosion coverage includes damage from:
A) rupture of a pressure relief device B) sonic boom of an aircraft C) bursting of a building due to water expansion of its contents D) airborne volcanic blast - B
The national flood insurance program is an example of a form of insurance regulated by the:
A) state government B) federal government C) property insurance carriers D) state corporation commission - B
Under the farm policy, losses which qualify on a replacement cost basis is limited to the actual cash value until:
A) the final loss report is submitted to the insurance company B) a loss statement has been signed by the insured C) the total damages exceed 80% of the limit of insurance D) the actual repairs or replacement are completed -D
if an insured with a dwelling policy has other coverage, which is true?
A) the proceeds are divided between the mortgagee and mortgagor according to their interest in the property B) the proceeds are divided among all those who have an insurable interest at the time of loss C) losses are payable in the same proportion that this insurance bears to the total amount of fire insurance D) the amount of premium earned is prorated to the length of time the policy has been in force - C
which of the following is usually true about commercial umbrella liability policies?
A) they limit protection to no more than $1,000,000 in coverage B) they ate endorsements to general liability policies C) they are considered primary policies D)They are NOT standardized within the industry -D
The business owners policy covers loss of income:
A) up to 10% of the policy limits B) up to 25% of the policy limits C) within 12 months following direct physical loss D) within 3 months following direct physical loss -C
an insurer typically will grant producers or agent the authority to:
A) waive policy exclusions B) reject insurance risks C) modify policy conditions D) select applicants - D
Theft is the taking of another's property:
A) while threatening bodily harm B) While inflicting injury upon the owner C) after forcible entry into the premises D) without the owner's consent -D
Changing conditions for an insurance policy currently in force requires:
A)Authorization by a court B) a mutual agreement of producer or agent and insurer C) an endorsement or rider attached to the policy D) a notarized authorization by the department if insurance -C
Monetary Damages awarded to an injured party must be based on all the following elements EXCEPT:
A)Damages as the proximate result B)negligence C) available insurance D) a legal duty owned -C
A social organization which is licensed to issue insurance ONLY to its members is an example of which type of insurer?
A)Fraternal B)mutual C)reciprocal D) stock -A
Which of the following is NOT used in determining the amount an insured can receive under the personal property replacement coverage endorsement to a homeowners policy?
A)Full cost of repair at the time of loss B)Depreciated market value C)the coverage C amount D) Special limits stated in the policy -Depreciated market value
All of the following may be covered by basic builders risk insurance EXCEPT:
A)an occupied building B)foundation of a building under construction C) a building under construction D) building materials not yet part of the building -A
Under a homeonwners policy, the definition of an insured includes which of the following?
A)an uncle who resides with the insured B) a guest of the insured C) a relative of the insured, visiting for the day D) the insured's neighbor who comes to borrow an appliance -A
all of the following are common law defenses for negligent liability EXCEPT:
A)contributory negligence B)intervening cause C)strict liability D) assumption of risk - C
under a businessowners coverage form, if an insured violates a policy condition, the insurer may:
A)deny coverage for loss at the involved locations B)discontinue coverage without notice at all insured locations C) provide coverage at the involved location, subject to an additional premium D) provide coverage at the involved location for 10days and then cancel the policy -A
Endorsements to change the terms of a business owners policy must approved by the:
A)insured B)insurer C) Producer or agent D) claim adjuster -B
under the commercial package policy (PPP), the commercial inland marine declarations form contains information about which one of the following:
A)loss payment B)conditions C)policy period D)other insurance -C
actual cash value is generally accepted to mean:
A)original purchases of the property B)market value at the time of the loss C) cost to replace at the time of the loss, plus depreciation D) cost to replace at the time of the loss, less depreciation -D
Which one of the following is a major section of a liability insurance policy?
A)property covered B) perils C) loss payment D) conditions -D
a group-owned insurer whose primary activity consists of assuming and spreading the liability risks of its member is the definition of
A)reinsurer B)risk retention group C)insurance purchasing group D) pure off-shore captive -B
which of the following is covered under the liability coverage of the business auto coverage form?
A)workers compensation B) expected injury C) pollution D)Explosion -D
The liability section of the garage coverage form includes all of the following EXCEPT:
a)Premises and operations liability B)Products and completed operations liability C)Automobile liability D) Contractual liability -D