Practice test
Surety bonds
(how is this different from insurance) ________ ________ guarantee specific duties or obligations will be fulfilled; insurance pays for losses. they do not expect to pay for losses, instead they guarantee specific duties or obligations will be fulfilled. These may be issued by private companies
the damage occurred when the concrete fell
A parking garage owner completed major renovations to a parking garage just prior to selling it to another company. three months later, overhead concrete fell onto cars in the second floor level. under the garage coverage policy conditions, which of the following is true? A) the damage occurred then the renovations were done B) the damage occurred when the concrete fell C) the renovation contractor is liable D) the fist owner is responsible for the damage
true
An HO-3 covers losses on an open peril basis. An HO-2 coves losses on a named peril basis. Both forms cover damage to the dwelling caused by ash or dust from a volcanic eruption. (true or false)
surety
An example of a ____ bond would be an insurance company having this that would protect their client should one of their agents would do something inappropriate with funds. ( take premium checks and cash them)
both DP-2 & DP-3
Breakage of glass is included in the DP____ A) DP-1 B) DP-2 C) DP-3 D) both DP-2 & DP-3
true
For eligibility, the PAP will insure as covered autos those vehicles owned by the named insured & not used primarily for a business, other than FARMING. Vehicles leased to the named insured for periods of 6 months or longer also are classified as owned for insurance purposes (true/ false)
15%
In order to quality for supplemental income benefits, an employee must have an impairment rating of at least A) 15% B) 50% C) 75% D) 10%
uninsured motorist coverage
In the PAP, owned trailers being towed by an insured auto are automatically covered for A) comprehensive (other-than-collison) coverage B) collision coverage C) uninsured motorist coverage D) towing coverage
$25,000
The amount of money a business can afford to lose, in the even that it is proven to be negligent, a business only needs to be able to pay $________ A) $20,000 B) $25,000 C) $40,000 D) $50,000
-general -professional
The main difference between general liability & professional liability is in the type of risks they cover. For example, ______ liability covers physical risks, such as bodily injuries & property damage (BI) (PD). _______ liability covers more abstract risks, such as errors & omissions in the services your business provides.
-Principal -Obligee -Guarantor
There are 3 entities within bonds ______: makes a promise/ purchases the bond _______: to whom the promise is made (client) ______: surety binding company/ pays loos to obligee
premises liability
____ liability exposure exists when there is use of the premises. A) completed operations liability exposure B) product liability exposure C) premies liability exposure D) operations liability exposure
rebate
_____ occurs when an insured is offered something of value in order to induce the sale of an insurance product. Both the offer & acceptance of a ____ are ILLEGAL
surety bond fidelity bonds
_____: guarantees the performance of someone else _____: bonds- guarantees honesty and trust (of an employee)
general
______ damages cannot be specifically measured in dollars, such a pain and suffering A) special B) general C) normal D) punitive
Dwelling Policy
______ policy was developed by the ISO (insurance services office) to be used primarily as a property coverage form A) Homeowner policy B) Dwelling policy C) CPP
completed operations
_______ _______ liability refers to liability for work already performed or completed. A) product liability exposure B) completed operations liability exposure C) premises liability exposure D) operations liability exposure
Operations liability
_______ liability exposure relates to activities in addition to use. A) completed operations liability exposure B) product liability exposure C) premises liability exposure D) operations liability exposure
Maximim medical improvement
_______: is the technical term which basically means "as good as you're going to get". Once an injured worker's healing process has slowed and little (or no) improvement is expected, then that employee is said to have reached MMI.
product liability
________ liability exposure is the possibility that the public might be injured by the product A) completed operations liability exposure B) product liability exposure C) premises liability exposure D) operations liability exposure
per occurrence
________ sets the amount for all claims that arise from a single incident at a certain number A) per occurence B) split C) aggregate D) per person
peril
a _____ is the cause of loss insured against in an insurance policy A) physical hazard B) loss C) peril D) pure risk
proximate
a _______ cause is there reasonably foreseeable act or event that results in an injury or damage. Negligence may often be the _____ cause of the damage; without it, the accident would not have happen. This is also called direct liability A) proximate B) consequential
joint underwriting association
a health care provider wants to provide medical professional liability insurance for its employees. unfortunately, the provider has searched unsuccessfully for an insurance carrier that can provide this insurance. which of the following will most likely be able to provide this insurance? A) Fair Plan B) Joint Underwriting Association C) Professional Liability Union Of Insurers D) Texas Insurance Association
$5,000
a premium discount is the term that describes when an insured owes a total standard premium greater than A) $10,000 B) $15,000 C) $1,000 D) $5,000
coverage is provided at additional premium
a startup dealership buys cars at auto auctions in 30 states. it wants to be certain that damage coverage is provided when the cars are driven or transported from the auctions to the dealership in regard to the Business auto physical damage coverage, which is true? A) coverage is provided if dealership employees are in possession of the subject automobile B) coverage is provided at additional premium C) coverage is provided for wholesale amount only D) coverage is not provided under this form
a peril
a tornado that destroys property would be an example of which of the following A) pure risk B) a loss C) a physical hazard D) a peril
the injury or damage must occur within 90 days after the insured's work is completed
all of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT: A) the injury or damage must occur away from the insured premises B) the injury or damage must arise out of the insured's product or work C) the joinery or damage must occur after the insured has released a physical posses of the product to another D) the injury or damage must occur within 90 days after the insured's work is completed
an agent misrepresents policy benefits to convince a policy holder to replace policies
all of the following would be considered rebating except: A) an agent misrepresents policy benefits to convince a policy holder to replace policies B) an agent offers the use of his lake house to a. client as an inducement buy an insurance policy from him C) an agent offers to share his commission with a policyholder D) an agent offers tickets to a baseball game as an inducement to buy insurance
90 days
an agent'ts license will terminate within how many days from the due date of obligatory fees and continuing education (CE) requirements? A) 30 days B) 180 days C) 90 days D) 60 days
$41,700
an auto dealer reported $500,000 worth of automobiles on its lot at the end of may to its insurer. On June 10, it received $200,000 worth of cars. By June 20, the dealership sold $100,000 worth of cars. A hail storm on June 21 caused $50,000 worth of damage to the inventory. W/o considering any deductibles, how much will the insurer pay for damages? (dollar amount rounded to nearest hundred) A) $35,700 B) $40,000 C) $41,700 D) $50,000
$14,000
an insured has $5,000 of medical coverage on a personal auto policy at the time of time of a covered accident. The insured and two passengers are injured. medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage? A) $5,000 minus the policy deductible B) $14,000 C) $15,000 D) $5,000 maximum for the accident
$60
an insured has a personal auto policy with both comprehensive (other-than-collision) and collision coverage. his car is stolen and recovered five days later. if the insured claims transportation expenses of $20 per day, how much will his policy pay? A) $45 B) $60 C) $75 D) $100
60 days
an insurer may cancel a PAP if the policy has been in effect for at least how many days? A) 10 days B) 20 days C) 30 days D) 60 days
embezzlement (criminal act.- or punitive act will not be paid for.)
directors and officers liability insurance defends actions a corporation or its officers & directors alleging wrongful acts. with regard to the coverage provided, wrongful acts include any of the following EXCEPT: A) breach of duty B) embezzlement C) misstatements D) neglect
there is no coverage provided
due to the false pretense clause in the business auto physical damage coverage form, a dealership does not have legal title to the trade- in vehicle, so if someone came in & test drove that vehicle... A) there is full coverage provided B) there is no coverage provided
rebates or premiums
for which of the following actions can an agents license be suspended or revoked? A) rebates of premiums B) misdemeanors C) unintentional violations of state laws D) misstatements on the application
physical damage
if a person is using an auto with the belief that he is entitled to do so, subrogation rights under auto policy would apply to all coverages except: A) uninsured motorist B) no-fault medical payments C) liability D) physical damage
10,000
if the death of an employee results from a compensable injury, the insurance carrier will pay A) up to $2,500 for the cost of burial B) up to $4,000 for the cost of burial C) up to $10,000 for the cost of burial D) nothing
48 hours
in a PAP, in regard to transportation limits, the policy will pay $20 per day after _____ hours, not to exceed 30 days in total A) 24 hours B) 120 hours C) 48 hours D) 72 hours
extended reporting period
in a professional liability policies, they are written on a claims- made for which means that coverage may not be provided for claims arising from acts that occurred prior to the inception of the policy & for claims arising for acts that occur during the coverage period, but where the claim is not made until after the expiration of the policy, will not be covered, unless an _________ is purchased. A) extended reporting period B) occurence reporting period C) none of the above
employers liability
in addition to the common policy conditions, all of the following conditions apply to liability coverage EXCEPT A) bankruptcy B) employers liability C) separation of insured D) legal action against insurer
60 days
insurers must file all rates and forms for Commissioner's approval within how many days? A) 10 days B) 30 days C) 60 days D) 90 days
specific coverage
property insurance that provides $1000,000 coverage for a building and $50,000 coverage for personal property at a single location is called A) described coverage B) specific coverage C) schedule coverage D) blanket coverage
1 years
the BOP liability coverage will pay for necessary medical expenses of others incurred within what maximum period? A) 90 days B) 120 days C) 1 year D) 3 years
Date of occurrence, retroactive, and the date claim is made
the claims form trigger is based on which of the following: A) the date when injury or damage occurs B) the place where the injury or damage occurs C) date of occurrence, retroactive date, and the date the claim is made D) none of the above
contents are covered open peril on HO-5 and named peril on HO-3
the difference in the contents coverage in an HO-3 and an HO-5 is which of the following? A) contents are covered open reptile on HO-3 & named peril on HO-5 B) contents are covered for Replacement cost on HO-5 and ACV on HO-3 C) contents are covered for replacement cost on HO-3 and ACV on HO-5 D) contents are covered open peril on HO-5 and named peril on HO-3
within 45 days (the standard CGL claims- made provision)
the insured with a claims-made commercial general liability (CGL) policy may request in writing claim & occurrence information from the insurer at any time up to 60 days after the policy period ends. The insurer must provide information A) within 60 days B) as soon as practical C) within 45 days D) within 30 days
Commercial Auto Insurance
the main difference between personal & commercial auto insurance is who owns the vehicle. for example, if your business owns a vehicle, it must be covered by ________ auto insurance. In a ______ auto insurance covers accidents that occur while you or your employees are driving a company vehicle.
the date when injury or damage occurs (covers claims made at any time for injuries that occur during the policy period-relates to injury itself aka when did the injury occur)
the occurrence form trigger is based on which of the following? A) the place where the injury or damage occurs B) the amount of the insured's deductible C) the # of claims made during the policy period D) the date when injury or damage occurs
delay an acceptance or rejection decision (for up to 30 days if arson is suspected)
the owner of a small restaurant submits a claim to his insurer after a loss due to fire. The insurers investigation finds police report that shows that a fire may have been of suspicious origin. the insurer can do which of the following? A) disregard the claim B) deny the claim immediately C) delay an acceptance or rejection decision D) reduce the claim amount
Declarations (who/ what/ where/ and how much insurance & premium are all stated in the Dec page)
the part of a property policy that shows the amount of insurance, premium, and policy term is A) insuring clause B) endorsements C) Declarations D) Conditions
Is not time limit
the products & completed operations hazard injuries or damage that occur after the insured has completed its job & left the site, or relinquished control of a product it manufactured or sold. There ______ time limit on the injury or damage A) is no time limit B) is a time limit
the property & casualty insurance guaranty assocation
the purpose of the ________________ association is to pay claims due to insureds when their insurance companies become insolvent. A) The Property & casualty insurance guaranty association B) NAIC Insolvency Fund
30 days
the removal coverage that is included in the broad form DP will cover property temporarily removed from the premises to protect it from damage for how long? A) 5 days B) 15 days C) 30 days D) 60 days
$20 per day; $600 maximum
toms truck services vehicle is stolen. the policy holder may obtain coverage for transportation expenses subject to which of the following limits? A) $15 per day; $450 max B) $25 per day; $450 max C) $20 per day; $600 max D) $15 per day; $300 max
30 days
under BOP section I, if an insurer wants to cancel a policy for any reason except nonpayment of premium, how many days before the effective cancellation date must the insure notify the mortgageholder? A) 10 days B) 15 days C) 20 days D) 30 days
$5,000
under the commercial crime coverage inside the premises- robbery or safe burglary of other property, what is the special per occurrence limit that applies to loss or damage to precious metals, precious & semiprecious stones, pearls, furs, manuscripts, drawings, or records? A) $1,000 B) $5,000 C) $10,000 D) $25,000
PAP
vehicles with fewer than 4 wheels are not eligible for coverage under A) SIR B) PAP
the occurrence form & claims made form
what are the 2 coverage types or "triggers" used to provide liability protection?
$25
what is the maximum allowed value of a gift that an agent can give to an insured without violating the regulation on rebating? A) $10 B) $15 C) $25 D) $100
experience modification factor
what method of premium computation relates an employers losses, payroll, and premiums to the rating bureau's classifications of operations? A) experience modification factor B) workers classification factor C) merit rating plan D) arbitration plan
70%
when an employee reaches the status of "maximum medical improvement", he or she is entitled to impairment income benefits. This is typically equivalent to _____% of the employee's average weekly wage. the employee will receive benefits for a period of time that is consistent with his or her impairment rating.
professional liability insurance
which if the following liability policies is written on a "claims-made" form. A) personal liability B) umbrella liability C) professional liability insurance D) automobile insurance
at least one officer or partner and any other person acting as an agent
which members of a corporation or partnership are required to obtain an individual insurance agent's license in order for the association to be licensed? A) only members who plan on transacting insurance B)officers or partners only C) none of the partners are required to have a license if the partnership is associated with a license insurance agent D) At least one officer or partner and any other person acting as an agent
replacement cost
which method of loss valuation is contrary to the basic concept of indemnity? A) market value B) agreed value C) replacement cost D) functional replacement cost
any of the above
which of the following can qualify for a surplus lines license? A) an individual licensed as a Local Recording Agent in Tx B) an individual licked as a Managing General agent In texas C) a nonresident agent using the license for limited purposes on behalf of a punching group operating in Texas D) all of the above
damage to the dwelling caused by ash or dust from a volcanic eruption
which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners policy? A) damage to the dwelling caused by the insured when moving furniture B) accidental scorching caused when a hot iron is placed upon a built-in counter C) interior damage caused by water seeping under the shingles of the roof D) damage to the dwelling caused by ash or dust from a volcanic eruption
the business must be able to pay up to $50,000 in the event that it is proven to be negligent
which of the following is NOT a licensing requirement for a corporation in the state of Texas? A) the business must be able to pay up to $50,000 in the event that it is proven to be negligent B) the business must demonstrate financial responsibility to provide coverage for an error or omission C) the business must be a Texas Corporation, with its principal place of business in Texas D) at least one officer of the corporation must be individually licensed as an agent
Leakage from fire-extinguishing equipment (the others are specifically excluded in a business owners property coverage)
which of the following is defined as a covered cause of loss in a Businessowners property coverage? A) rain B) smoke from agricultural smudging C) pollution D) leakage from fire-extinguishing equipment
anyone while using, with permission, a covered auto owned by the named insured
which of the following would be considered an insured under a business auto coverage form? A) anyone using a covered auto while working in a business of selling, servicing, repairing, or parking autos if it is not the named insured's business B) a partner of the named insured for any covered auto owned by that person pr a member of his or her household C) anyone while using, with permission, a covered auto owned by the named insured
a pickup or van titled to and used in the named insured's business
with respect to auto insurance, the term owned autos includes all of the following EXCEPT: A) a pickup or van acquired by the named insured during the policy period B) any private passenger auto leased to the named insured for a period off more than 6 months C) a pickup or van titled to and used in the named insured's business D) any private passenger auto titled to the named insured