PRACTICE TEST EXAM

What must an insurer do if unable to affirm or deny a claim within a reasonable time frame?

Notify the claimant of the delay and explain why extra time is needed to come to a decision.

Sam, who has a typical HO-3 policy, is forced to evacuate his home by civil authorities due to rising flood waters in his neighborhood. It takes a month before Sam is allowed to come back to his home. During this time, he has spent $3,000 in hotel expenses, on top of his monthly mortgage payment of $850. When he files a claim, how much will Sam receive under Coverage D - Loss of Use?

$0

Tamara is fully insured by a DP-1 on her $175,000 home. When a portion of Tamara's attached garage burns in a small fire, the adjuster estimates it will take $8,000 to repair the damage. However, based on the age of the structure, the adjuster writes Tamara a check for $5,500. Once repairs are completed, Tamara submits proof and receives how much more from her insurer?

$0

Eloise borrows Uriah's car so she can run to the grocery store to pick up a few things. While out, she rear-ends a minivan, injuring the driver and 3 other passengers. Each of the passengers suffers $45,000 in injuries, and the driver suffers $40,000. Uriah has a liability policy with limits of 50/100/50, while Eloise carries the minimum liability coverage for Alabama. How much will the primary policy pay for this occurrence?

$100,000

Diana is insured under a DP-2 policy with the following coverage limits: Coverage A - $150,000, Coverage B - $15,000, and Coverage C - $25,000. She and her fiancé have planned a destination wedding, but their hotel catches fire shortly after their arrival. Smoke from the fire damages all of their belongings, including Diana's $4,000 wedding dress. Diana's loss totals $5,200. When she files a claim with her insurance company, how much can she expect to receive for this loss under her DP-2 (ignoring any deductible)?

$2,500

What is the penalty for an adjuster who fails to report a change of address within the required time?

$50

An apprentice independent adjuster license in Alabama is good for ____ months.

12

In which of the following cases would Mechanical Breakdown Insurance NOT apply?

A rock strikes and shatters Horace's windshield.

What is the most common type of Time Element Insurance?

Business Interruption Insurance

Robert's tomato crop production was well below the revenue guarantee this year, and Robert files a claim against his Crop-Revenue policy for the low yield. However, the adjuster denies Robert's claim after completing her inspection. What might be a reason for the denial?

Failure to use the required amount of fertilizer

Which of the following is NOT a form of insurance fraud? A. Lighting a candle and leaving it next to your window curtains before leaving for work. B. Increasing your insurance coverage when you think a loss is likely. C. Staging an accident. D. Faking a death.

Increasing your insurance coverage when you think a loss is likely.

Craig is just starting out with his business. He needs an insurance policy to cover his liability against any unknown defects within his products. Of the four types of CGL policies listed below, which offers the best coverage for Craig's business, regardless of when a claim is filed?

Occurrence Policy

If an injured worker is receiving Medical benefits under workers' compensation insurance, but is unhappy with her doctor, what are her options?

She can choose a new doctor from a list of four doctors provided by her employer.

John and Lucy both apply for policies with Acme Insurance at the same time. They are exposed to similar hazards and would present essentially the same amount of risk to Acme Insurance. Acme Insurance offers Lucy a premium policy at excellent rates, but restricts John to a very limited policy with high premiums. Acme Insurance may be guilty of:

Unfair discrimination.

The Insurance Guaranty Association is a mechanism that covers claims in the event of:

an insurer's insolvency.

In a BOP, the purpose of Supplementary Payments in conjunction with liability coverage is to:

cover costs associated with defending and investigating a claim against the insured.

The Severability of Interests condition states that:

coverage applies to each insured separately, as if no other insured existed.

Risk avoidance is a risk management technique that:

eliminates risk.

In the Standard Fire Policy, "intentional losses" and "extreme perils that cause catastrophic damage to a large number of policyholders" would be considered examples of:

exclusions.

When Jeanette shows up to handle a claim on behalf of ABC Insurance, she evaluates the claim and negotiates a settlement. Maintaining her integrity and acting ethically, Jeanette is fulfilling her:

fiduciary duty.

Residual market insurance programs are funded by:

insurers and their policyholders.

Guaranty Associations are funded by:

insurers.

The NCCI (National Council on Compensation Insurance):

is a rating bureau that develops the guidelines for setting workers' compensation premiums that are used by most states.

In dwelling policies, Coverage D pays for:

lost rental income.

In this state, an insurer may not:

make claim payments without indicating under which coverage the payment is being made.

John owes a lot more on his car than it is worth. He figures he would be better off if he burned the car and collected an insurance settlement. He has someone set fire to his garage to destroy the car. John's behavior would be considered a:

moral hazard.

For loss settlement purposes, most homeowners policies:

pay for damages to personal property at actual cash value, and damages to structures at replacement cost.

Once a claimant files a complaint to the court, the claimant will become the:

plaintiff.

The fee paid by the insured in exchange for an insurance policy is called a:

premium.

Six Stars Development Company has just purchased several large properties in Las Vegas. As a result of this large purchase, they are a little short on money and decide to save money by not purchasing insurance on their new properties. Six Stars is practicing:

risk retention.

Six Stars Development Company has just been offered a great deal on a bulk purchase of dishwashers from a new company called Clean Machines. They've never purchased appliances from Clean Machines, so they're hesitant to make such a large purchase. Finally, Clean Machines offers to provide 10-year warranties for each of the dishwashers. This is an example of:

risk transference.

When an insurer issues an insurance policy, the actual item, person, or organization that is being insured is called the:

risk.

The Write Your Own program allows private insurers to:

sell standardized NFIP policies.

Any contributions that policyholders make to their Catastrophe Savings Accounts are not subject to:

state income tax.

The Liberalization Clause in an insurance policy:

states that any change to a policy form that broadens coverage without increasing the premium will automatically apply to existing policies.

Barbara has been negotiating a property claim with a claimant for a few hours now. She has displayed her assessments, gone over the policy, and offered a fair settlement amount within the policy limits. However, the claimant has dismissed it completely without any counter-offer. The most appropriate next step is for Barbara to:

submit her backup offer.

When would a default judgment occur?

When a defendant does not answer a complaint

The first step in the claim process is to:

acknowledge the claim within the required time frame.

What is the standard deductible on an Equipment Breakdown Protection Coverage Form?

$500

Clara plays the harp in an orchestra. Her harp cost $12,000, and she had it for 5 years before it was stolen from her locker at a symphony hall. She recently found out a new harp will cost $15,000. Assuming her harp depreciated at $1,000 a year, how much will an actual cash value policy indemnify Clara?

$10,000 - ACV pays at current market value minus depreciation

How much property damage liability coverage must a driver carry in Alabama?

$25,000

Stan built a porch for his home three years ago at a cost of $10,000. The value of the porch has depreciated by $6,000, and it would cost $12,000 to replace it today. After Stan's porch burnt down during a BBQ today, how much would a Standard Fire Policy indemnify Stan for his porch?

$6,000

If an Alabama insurer wants to cancel a HO policy because the policyholder isn't paying premiums, it needs to give the policyholder ____ days advance notice.

10

The HIPAA was enacted by the US Congress in _________.

1996

The AIUA offers coverage for residential homes up to a maximum of __________ for combined dwelling and contents.

500,000

An adjuster has a duty to provide which of the following to the claimant?

An open line of communication

The state defines an "employee" as:

Any individual who acts in the service of another party under a contract of hire.

John works for ABC Insurance. He is paid on a commission basis and needs to meet certain sales goals in order to draw a reasonable salary. To help in this endeavor, John regularly tells potential clients that XYZ Insurance and Integritas Insurance often fail to pay claims, and that they charge unreasonably high premiums. In speaking falsely of his competition, John has indulged in which unethical practice?

Defamation

This provision in Ocean Marine insurance obligates insurers of various interests to share the cost of losses associated with a captain's decision to voluntarily sacrifice a part of the ship or its cargo.

General Average

Residual market insurance programs are primarily designed to meet the needs of which type of consumer?

High-risk consumers

Under which law is an insurer required to explain its reasons for denying coverage?

IIPPA

Stephanie is in the process of adjusting George's auto claim. Currently, she is interviewing Shana, who witnessed George's accident and stopped to help. In what stage of the claim process is Stephanie currently working?

Investigation

Which of these is NOT typically excluded from coverage in a property insurance policy? A. Off-premises power failure B. Nuclear events C. Civil confiscation D. Lightning

Lightning

When is someone considered a passenger, and thus covered under Passenger Bodily Injury Liability?

Once she begins to board the plane

Which of the following is not one of the employer's duties if injury occurs? A. Cooperate with the insurer in any investigation B. Report the injury within a specific time-frame C. Remain with the injured employee until emergency assistance or a family member arrives D. Responsible and ethical conduct

Remain with the injured employee until emergency assistance or a family member arrives

When Emma's house was burglarized, the thieves stole several pieces from her art collection. Although the pieces were only prints, Emma files a claim stating that they were originals, and therefore worth a good deal more than they really are. What has Emma committed?

Soft fraud

Sally throws a cigarette butt into Neal's dumpster, starting a fire on Neal's property that costs him $10,000. Neal files a claim with his insurer. The insurer pays Neal and then demands $10,000 from Sally to pay for the loss she caused. What gives the insurer the right to collect payment from Sally?

Subrogation

What is a binder?

Temporary coverage for an insurance applicant until the policy is issued

Who sets the critical production dates and assigns commodity market prices for MPCI policies?

The Risk Management Agency

While driving, Ben was struck by another driver, Roxanne. Ben then filed a claim with Roxanne's insurer. In essence, what was Ben doing when he filed this claim?

Submitting a formal request to settle the damages with Roxanne's insurer

Who is responsible for maintaining the claim file during the claim process?

The adjuster

Which of the following automobile components is NOT covered by a Mechanical Breakdown Insurance policy? A. Steering assembly B. Engine C. Tires D. Drive train

Tires

What BOP endorsement would cover a company's lost business income and extra expense due to loss of electrical service?

Utility Time Element

XYZ Insurance is a private insurer that sells flood insurance policies. Which of the following statements is FALSE? A. XYZ Insurance receives expense allowances from the federal government. B. XYZ Insurance is responsible for adjusting all flood claims made by its policyholders. C. XYZ Insurance is responsible for paying claims. D. XYZ Insurance participates in the NFIP Direct Program.

XYZ Insurance participates in the NFIP Direct Program.

In order to set a yield guarantee for Maren's policy, Maren's agent will need a record of the last four years of her crop yields. This record is called:

an Actual Production History.

Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows into Sandra's home, causing extensive damage to the East wall and roof. As a result, Sandra and her family must move into a hotel until the repairs are completed. Sam's car crashing into the house would be considered:

an occurrence.

Phil heads over to visit his friend Josh, who is sick with the flu. While at the house, Josh fails to cover his mouth when he coughs and Phil ends up contacting the flu. Phil files a claim with Josh's insurer for medical expenses and lost income while Phil is out sick from work. The insurer denies the claim because:

disease transmitted from the insured to a third party is excluded.

When a car stops short in front of Mike's car, he manages to hit the brakes in time and avoids a collision. To Mike's surprise, the other driver then throws the car into reverse and backs into Mike's car! The other driver's actions are an example of:

hard fraud.

The National Flood Insurance Program:

provides flood insurance for individuals in communities complying with NFIP standards.

When taking recorded witness statements, the adjuster should:

remain objective.

Josephine has purchased a Business Owners Policy. She insures both the real and personal property at 80% under the policy. Assuming no endorsements apply, the losses will be adjusted on a(n) _______________ basis.

replacement cost

Amy needs more floor space in her antique furniture store, so she buys a storage building 3 miles away. She is worried about keeping the furniture in the storage building safe, so she puts in an alarm system and smoke detectors. By purchasing the alarm system and smoke detectors, Amy is practicing:

risk reduction.

In a Personal Auto Policy, the term "family member" would include:

the named insured's 26-year-old son who lives at home.

Cindy, a drunk driver, accidentally crashes into Nancy's house, causing $22,000 in damage. On top of that, Nancy tries to get the adjuster to add an additional $20,000 for punitive damages to punish Cindy for driving while intoxicated. However, Nancy fails in her attempts at negotiation. This is because:

the adjuster does not have authority to negotiate for punitive damages.

An employee's Average Weekly Wage is:

the average amount the employee earned in the last 52 weeks leading up to her injury.

A Reservation of Rights letter is sent by:

the insurance company.

In a Commercial Crime policy, a "messenger" is defined as:

the insured or relative of the insured, a business partner, or an employee who has care and custody of insured property while outside the premises.

Mark incurred $8,000 damage to his car in an accident. He received $8,000 from his insurance company and $4,000 from the other driver. By receiving a profit from the loss, Mark could be in violation of: A. the principle of profit and loss. B. the principle of financial status. C. the principle of financial restoration. D. the principle of indemnity.

the principle of indemnity.

Adjusters are required to give claimants:

their business address and phone number.

The purpose of the principle of indemnity is:

to prevent an insured from making a profit on a loss.

Jim adjusts auto damage claims. He supplements his paycheck with kickbacks from a local body shop that he recommends to claimants involved in these accidents. In accepting monetary gifts for business referrals, Jim is acting:

unethically.

When a severe flood is imminent, Erica goes out and spends $600 on sandbags, $200 on plastic sheeting and lumber, and $500 on a pump. Then she works for 8 hours, applying the protective measures to her home. After the flood passes, Erica files a claim for these expenses. Assuming the federal minimum wage at that time is $10 per hour, how much will her flood policy indemnify her?

$1,000

Melanie owns a set of 3 antique crystal vases that is worth $2,800, but during her most recent move, one of the vases was broken. Melanie and her insurer have been unable to find a replacement vase to complete the set and bring it back to its original value. Without the broken vase, the remainder of the set is only worth $1,000. What should Melanie receive from the insurer under the Pair and Set provision of her Personal Articles Floater?

$1,800

Kevin has a homeowners policy with replacement cost valuation and a coverage limit of $90,000 for his personal property. Three years ago, Kevin purchased a sofa and loveseat for $1,000 and $500 respectively. Both pieces of furniture depreciate at $100 per year. A house fire damaged many of Kevin's belongings, including the sofa and loveseat, which now cost $1,200 and $700 to purchase today. Ignoring any deductibles, how much will Kevin's insurer give him for the damaged sofa and loveseat?

$1,900

Both Steve and his wife, Arlene, carry DP-2 policies on their $135,000 home. Steve's policy has a limit of $108,000 and Arlene's has a $27,000 limit, and both policies pay on a pro rata basis. After a hailstorm causes $13,000 in damage to their roof, how much of the damage will be covered by Steve's policy (ignoring any deductible)? A. $10,400 B. $13,000 C. $9,630 D. $2,600

$10,400

Acme Construction, Inc. has one contractor and one receptionist. The contractor makes $25/hr, and the receptionist makes $10/hr. The contractor worked exactly 8 hours in 2010, so he made $200. The receptionist worked 10 hours, so she made $100. Therefore, Acme's entire payroll for 2010 was $300. Assume that, for every $100 of payroll, the WC rate for contractors is $50 and the rate for receptionists is $5. How much did Acme owe in WC premiums?

$105

Melanie's $300,000 home suffers $90,000 in damage from a fire. The adjuster finds the home's value since 2008 has depreciated 25%, making the ACV loss $67,500. Although Melanie's policy covers repairs at their replacement cost, she receives $67,500 at the time of loss. Repairs to her home end up totaling $79,500. How much, if any, further indemnification may Melanie receive from the loss?

$12,000

James is walking down the street when Andrea, an uninsured motorist, strikes him with her car. James suffers $12,000 in injuries from the accident. He has personal injury protection of $10,000 from his own automobile insurance policy, which immediately pays him the full amount. By accepting $10,000 from his own insurance company, James has waived the right to sue Andrea for more than _____ for personal injury.

$2,000

Adjuster Alice is trying to determine the final settlement amount for Ted's claim. Ted's house was damaged in a covered loss, and Alice has estimated that it will cost $25,000 to make the necessary repairs. Ted's homeowners policy has a $100,000 limit and a $2,000 deductible. Typically, how much would Adjuster Alice calculate Ted's final settlement amount to be? A. $23,000 B. $100,000 C. $25,000 D. $98,000

$23,000

A processing and servicing company would qualify for a BOP only if they have less than _____ in annual revenues.

$3 million

Watson makes $550 a week as a waiter. When he trips over a customer's briefcase and breaks his leg, he can't wait tables for 9 months. The restaurant decides to pay him $100 per week to roll silverware until his leg heals. How much would Watson's Temporary Partial Disability benefits pay?

$300

Jane has a $150,000 homeowners policy with a 3% percentage deductible. One night, an oven fire destroys her kitchen, causing $50,000 in damage. How much of the damage falls under Jane's responsibility?

$4,500

Loggers, roofers, and coal miners would fall into which of the following categories? A. High-risk employees B. High-maintenance employees C. Low-risk employees D. Low-maintenance employees

A. High-risk employees

Victoria makes $950 per week before she suffers an injury at work and is wheel chair bound for 8 months. During those 8 months, she is transferred to the accounting department and makes $325 per week. How much will Victoria's Temporary Partial disability benefits pay per week until she can get back to her regular job?

$417

Jerry is using an expensive video recorder near the family pool when he slips and falls in, destroying the camera. Jerry bought the camera three years ago for $4,000, and it depreciates at $500 per year. A new, similar camera costs $5,000 today. Assuming the loss is covered, if Jerry had a replacement cost policy, how much would Jerry's insurer indemnify Jerry for the destroyed camera?

$5,000

Noreen is a professional photographer, and she has a Personal Articles Floater that covers her best camera for up to $6,000. While she is working a wedding, the camera gets knocked into a pool and is ruined. Before the accident, her camera was worth $5,000, but a new, comparable one would cost her $7,000. How much will Noreen's PAF pay her for this loss?

$5,000

Grace purchased a recliner from XYZ Furniture. After getting it home, she decided to try out the new chair. While leaning back, the chair breaks and Grace injures her neck. She sues XYZ Furniture and is awarded $300,000. The costs for the legal defense come to $45,000. XYZ Furniture's CGL policy has a Products-Completed Operations Aggregate limit of $750,000, with a per occurrence limit of $250,000. How much will XYZ Furniture have to pay out-of-pocket for this claim?

$50,000

Norris borrows Arnold's truck to pick up some lumber from the hardware store. On the way to the store, Norris collides with a car, injuring the three people inside. The driver suffers $15,000 in injuries, one passenger suffers $25,000, and the other passenger suffers $20,000. Norris has a PAP with liability limits of 50/100/50, and Arnold's policy has liability limits of 25/50/10. How much will the primary policy pay for the injuries?

$50,000

How much of a limit is included for Credit Card Fraud or Forgery, an additional coverage in a homeowners policy?

$500

Mateo makes $950 per week until he suffers an injury at work and loses both his arms at the shoulder. How much will Mateo's Permanent Total Disability benefits pay him per week?

$633

While Andrea was grocery shopping in BB Mart, the large Dairy sign fell off the wall and landed on her. Because of her extensive injuries, Andrea sued BB Mart and was awarded $375,000 in damages. BB Mart's Commercial General Liability policy has a general aggregate limit of $1,000,000 and a per occurrence limit of $300,000. What is BB Mart's general aggregate limit after the claim for Andrea's injuries is paid? A. $375,000 B. $700,000 C. $1,000,000 D. $625,000

$700,000

Sam's Ocean Marine hull policy has a franchise deductible of $50,000. When Sam's ship suffers $75,000 in damage after being overtaken by pirates, how much indemnification can Sam expect to get from his insurer?

$75,000

The cost of renewing an AL adjuster license is ______ if the application is received on or before the expiration date.

$80

Under the Earthquake and Volcanic Eruption endorsement in a commercial property policy, what is the time span within which multiple earthquake or volcanic events are considered a "single occurrence" for coverage purposes?

168 hours (7 days)

What requirements must Wholesalers and Distributors meet in order to be eligible for a BOP?

25% or less of floor space is available to the general public, and less than 25% of gross income may come from retail sales.

According to the commercial property policy, a commercial building is considered vacant if less than ____ of the available square footage is occupied for ____ consecutive days.

31%, 60

Martin works as an accountant for Smith Manufacturing. Smith Manufacturing has tasked Martin with finding an insurance provider to meet the company's needs, so Martin interviews several insurers. At the end of one interview with PRO Insurance, the insurance representative hands Martin an envelope containing $5,000 in cash, on the condition that Smith Manufacturing selects PRO Insurance as its insurance provider. What would we call the $5,000 in cash?

A kickback

A fire burns down Jenny's Hardware, leaving virtually nothing salvageable. Which of the following items would NOT be covered under Coverage B of the Building and Personal Property Coverage Form in her commercial property policy? A. A portable table saw used to cut lumber to a customer's specifications B. Inventory for sale C. Computers purchased by the business D. A paint mixer permanently affixed to the floor

A paint mixer permanently affixed to the floor

During a strong storm, Missy's grain drill was mangled by a tornado, which rendered it useless. Before the damage, the grain drill was worth $25,000, but it would cost $45,000 to buy a new one today. Missy's farm policy has a replacement cost endorsement, and the grain drill is scheduled on a Mobile Agricultural Machinery and Equipment form with a $36,000 limit. Missy replaces her grain drill with one she found on sale for $40,000. How much total indemnification will she receive? A. $36,000 B. $25,000 C. $45,000 D. $40,000

A. $36,000

Frank purchased a $150,000 insurance policy for his home, which is valued at $125,000, with the hopes of making a $25,000 profit in the event his home is destroyed. After Frank burns his house down, he files a claim against his homeowners policy. Assuming that Frank's policy includes an overinsurance provision, how much will his insurer indemnify Frank for his loss?

A. $0

In a garagekeepers policy, PIP coverage is: A. available with an endorsement. B. included unless the insured declines it in writing. C. mandatory. D. not available.

A. available with an endorsement.

Jesse's home is worth $200,000 and he has a homeowners policy with a $160,000 limit. After a covered loss, Jesse is left with a total of $10,000 in damages. Assuming the insurer requires the standard 80% level of insurance for coinsurance purposes, and ignoring any deductibles, how much will Jesse receive in indemnification?

A. $10,000

Sherrie's roof and fence are damaged in a violent windstorm. Sherrie has a typical HO-3 policy with a $150,000 limit for Coverage A - Dwelling. Assuming she has no endorsements, how much coverage does she have available for the damage to her fence?

A. $15,000

Scott lived in a mobile home before it was completely destroyed in a recent flood. The mobile home is large enough to qualify for a special loss settlement under his flood policy, which has a limit of $28,000. Before the flood, the mobile home was worth $15,000, but it would cost $25,700 to buy a new one today. How much indemnification will Scott receive for this loss?

A. $22,500

Jerrod owns two planes and has liability insurance with the following limits: Bodily Injury Excluding Passengers: $250,000/person; $500,000/occurrence Passenger Bodily Injury: $250,000/person; $750,000/occurrence Property Damage: $500,000/occurrence. When Jerrod crashes into a car while landing his plane, he injures the two people in the car and completely wrecks the car. The first person in the car suffers $200,000 in injuries, and the second person suffers $300,000 in injuries. Replacing the car costs $45,000. Without taking deductibles into account, how much will Jerrod have to pay out of his own pocket?

A. $50,000

A fire in Sarah's factory causes her to shut the factory doors for 50 days. To limit her loss of income and keep production going, Sarah spends $125,000 renting equipment and another building. Sarah's commercial property policy doesn't have Business Income Coverage, but it does include Extra Expense Coverage. The limit on her Extra Expense coverage is $100,000 and she has Limits of Loss Payment of 40%/80%/100% during her period of restoration. How much indemnification will Sarah receive for her extra expenses?

A. $80,000

The Standard Fire Policy is also known by a nickname: The "___ " Policy. A. 165 Line B. 1918 C. Original D. Monoline

A. 165 Line

Under the Longshore and Harbor Workers' Compensation Act, how much would the surviving spouse of a deceased worker receive in benefits? A. 50% of the deceased worker's Average Weekly Wage B. 66 2/3% of the deceased worker's Average Weekly Wage C. 16% of the deceased worker's Average Weekly Wage D. 100% of the deceased worker's Average Weekly Wage

A. 50% of the deceased worker's Average Weekly Wage

Which of the following is NOT one of the differences between a BAP and a truckers policy? A. A BAP uses coverage symbols to designate covered autos. B. A BAP typically excludes businesses that transport the property of others. C. Liability coverage in a truckers policy includes coverage for people who hire out or lend their cars to the insured for business purposes. D. A truckers policy includes trailer interchange coverage.

A. A BAP uses coverage symbols to designate covered autos.

What is a reserve, in insurance terms?

A. A pool of collected premiums that the insurer sets aside to pay claims

Deanne filed a claim with her insurer, ABC Insurance, who committed an Unfair Claims Settlement Practice while processing Deanne's claim. Which of the following is this unfair practice? A. After getting a proof of loss from Deanne, ABC Insurance asked her for subsequent verification of the loss. B. After 25 days, ABC Insurance told Deanne that they needed more time to complete their investigation. C. ABC Insurance took 12 days to acknowledge Deanne's claim and send her all the necessary paperwork. D. ABC Insurance gave Deanne a check for the full policy limit and included language releasing the insurer from further liability.

A. After getting a proof of loss from Deanne, ABC Insurance asked her for subsequent verification of the loss.

Kevin plays in a brass band using two rare antique Alexander tubas. Since they are no longer produced, the value of the tubas is difficult to determine. Which type of policy would best indemnify Kevin in the event that his tubas were ever damaged, lost, or stolen? A. Agreed value policy B. Actual cash value policy C. Franchise deductible policy D. Replacement cost policy

A. Agreed value policy

A man wanders onto the runway of a small airport and is injured by a taxiing plane. Which insurance policy would pay for his injuries? A. Airport Liability insurance B. Passenger Bodily Injury Liability insurance C. Hangarkeepers Liability insurance D. Aircraft Hull insurance

A. Airport Liability insurance

Eric works in Alabama for Gemutlich Insurance. His company is licensed to sell insurance in Alabama, but is based out of Munich, Germany. Gemutlich Insurance was formed under German law, but follows all applicable Alabama laws and possesses an Alabama Certificate of Authority. Which type of insurer does Eric work for? A. Alien Insurer B. Domestic Insurer C. Surplus Insurer D. Foreign Insurer

A. Alien Insurer

Which of the following statements regarding scheduled fidelity bonds is FALSE? A. All employees are bonded for the same aggregate amount. B. A limit of liability is defined for each employee or position. C. Employees can be bonded for different amounts. D. They are applicable to only select employees or positions.

A. All employees are bonded for the same aggregate amount.

John moved out of his house and put it up for sale three months ago. While he was waiting for the house to sell, John's plumbing pipes froze and burst in the icy temperatures, which eventually led to water damaging the cabinetry and hardwood floors. Which of the following statements would most likely be TRUE? A. Although John's house was still covered under an HO-3, the damage would not be covered because he didn't shut off the water supply. B. Because John's house was still covered under an HO-3, the damage would be covered. C. Although John's house was still covered under an HO-3, the surface water resulting from the damaged pipes is not a covered peril. D. Freezing is not a covered peril in an HO-3, so this loss would not be covered.

A. Although John's house was still covered under an HO-3, the damage would not be covered because he didn't shut off the water supply.

Which of the following statements is NOT true of endorsements? A. An endorsed policy will always provide more coverage than an unendorsed policy. B. An endorsed policy has been changed from the original version. C. Endorsements may be added to a policy at the time of purchase and at renewal. D. Endorsements may be added to a policy at any time during the policy period.

A. An endorsed policy will always provide more coverage than an unendorsed policy.

In order to adjust claims for the NFIP, adjusters must meet several requirements. Which of the following is NOT one of these requirements? A. Attend an NFIP claims presentation every 3 months B. Be NFIP certified C. Attend an NFIP claims presentation annually D. Have at least 4 consecutive years of full-time property loss adjusting experience

A. Attend an NFIP claims presentation every 3 months

Kyle operates a collision repair garage and has many vehicles in his care, some for extended periods of time. Which type of coverage protects Kyle from any liability claims which may arise if one of the cars is further damaged or destroyed while in his possession? A. Bailee Coverage B. Subrogation C. Bailment D. Non-Owned Vehicle Coverage

A. Bailee Coverage

There are several terms that are often interchangeable with "endorsements." Which of the following is NOT one of these terms? A. Binders B. Attachments C. Addendums D. Riders

A. Binders

Which of the following is NOT one of the requirements that adjusters must meet in order to handle NFIP claims? A. Complete NFIP continuing education every three years B. Have at least four consecutive years of adjusting experience C. Inform claimants that only the NFIP Servicing Agent or WYO company can make a final decision on their claim D. Become NFIP certified

A. Complete NFIP continuing education every three years

When a fire breaks out inside XYZ Printing, it damages the building structure, and two of the printing presses, which were bolted to the floor. What coverage within the BOP policy would cover the printing presses? A. Coverage A B. Coverage B C. None D. Coverage C

A. Coverage A

Which of the following statements about the principle of estoppel is TRUE? A. Estoppel protects the insured party from an insurer who initially approves coverage, but then later denies coverage after the insured pays for repairs. B. Estoppel protects the insurer from the effects of a warranty. C. Estoppel allows an insurer to change the coverage in an insurance policy without the policyholder's consent. D. Estoppel essentially guarantees no increases in the policyholder premiums after a policy term expires.

A. Estoppel protects the insured party from an insurer who initially approves coverage, but then later denies coverage after the insured pays for repairs.

Jane caused an auto accident while driving the company vehicle for work. Unfortunately, the van she ran into was carrying 6 passengers, all of whom were injured in the accident. The total of everyone's injuries comes to $210,000. Jane's company's business auto policy only covers up to $100,000 in bodily injury per accident. Which of the following might help cover the remaining liability caused by Jane's accident? A. Excess liability policy B. Extended liability policy C. Commercial general liability policy D. Business owners policy

A. Excess liability policy

Jane's Bakery has Equipment Breakdown Protection coverage on a large industrial oven used in producing several hundred loaves of bread a day. One day, the oven malfunctions and catches fire, rendering her business inoperable for four days. In order to fill bread orders, Jane must ship her dough to a warehouse where she found another oven to rent while her oven is repaired. Under which coverage would Jane be indemnified for the shipping and oven rental costs? A. Extra Expense Coverage B. Automatic Coverage C. Valued Business Interruption Coverage D. Supplementary Payments Coverage

A. Extra Expense Coverage

Which Farm policy would cover animal waste overflow and chemical spills? A. Farm Pollution Liability B. Farm Waste Management Coverage C. Custom Farming Liability Coverage D. Farm Product Liability

A. Farm Pollution Liability

Which of the following is NOT an adjuster's duty in the claim process? A. Filing a claim B. Investigating a claim C. Evaluating a claim D. Determining coverage on a claim

A. Filing a claim

Which of these statements is true? A. Flood insurance is always backed by the National Flood Insurance Program. B. All flood insurance policies are settled on an RC basis. C. Flood insurance can only be purchased through private commercial insurance companies. D. All flood insurance policies are settled on an ACV basis.

A. Flood insurance is always backed by the National Flood Insurance Program.

In an Aviation policy, which of the following is only covered through an endorsement? A. Hi-jacking B. Explosion C. Theft D. Lightning

A. Hi-jacking

Which of the following insurance packages will indemnify a policyholder for a variety of hospital-related expenses such as nursing care, supplies, and rooming charges? A. Hospitalization Expense insurance B. Accident insurance C. Surgical Expense insurance D. Hospital Indemnity insurance

A. Hospitalization Expense insurance

nder which law is an insurer required to explain its reasons for denying coverage? A. IIPPA B. AAA C. FCRA D. HIPAA

A. IIPPA

The coverage limit in Bob's commercial property policy goes up 2% every time the policy renews. Which optional coverage might Bob have included as part of his insurance package? A. Inflation Guard B. Agreed Value C. Replacement Cost D. Advanced Premium

A. Inflation Guard

Which of the following statements about Crop-Hail insurance is FALSE? A. It is subsidized by the FCIC. B. It is rated on an acreage basis. C. It is generally available from private insurers. D. It covers for damage due to hail, but also fire, lightning, wind, and others.

A. It is subsidized by the FCIC.

Which of the following statements about a moral hazard is FALSE? A. It is the result of an unconscious behavior. B. A moral hazard increases risk. C. It is reckless behavior because of security offered by insurance. D. It is a hazard caused by human behavior.

A. It is the result of an unconscious behavior.

Which statement about the Federal Employers Liability Act is TRUE? A. It protects only interstate railroad workers and their families. B. It protects injured seamen by allowing them to sue for damages and to choose a jury trial. C. It provides federal government insurance for civilian employees. D. It provides benefits in the form of monthly payments and medical coverage to coal miners.

A. It protects only interstate railroad workers and their families.

When the high-pressure feeder malfunctioned at the ACME Paper Mill, the resulting explosion severely damaged the mill and shut down operations for almost two months. Once the repairs are finished, the city inspector comes out to inspect the work and finds that the repaired scrubber needs to be replaced in order to meet current industry safety standards. Which coverage could help ACME with this added expense? A. Law and Ordinance Coverage B. Valuable Papers Business Insurance C. Extra Expenses Coverage D. Pollutant Cleanup and Removal

A. Law and Ordinance Coverage

Which of the following professionals would be most likely to purchase malpractice insurance? A. Lawyer B. Politician C. Author D. Programmer

A. Lawyer

Which of the following would be covered under the peril of "theft" in an homeowners policy? A. Losses caused by attempted theft B. Theft from a building under construction C. Theft by an insured D. Theft from an area of the premises rented out to a non-insured

A. Losses caused by attempted theft

Which of the following statements about MPCI is FALSE? A. MPCI is a form of crop-revenue insurance. B. MPCI is subsidized by the FCIC and regulated by the USDA. C. The government makes insurers make MPCI available to any farmer, but crop-hail insurers can be selective about who they insure. D. Coverage is for a percentage of the actual production history (APH) of the farm.

A. MPCI is a form of crop-revenue insurance.

Angie just got her first adjuster license in Alabama on May 11, 2015. Her birthday is March 10, 1983. When does her license expire?

A. March 31, 2017

When Zach purposefully burned down Matt's restaurant, Matt's insurer paid the claim and then went after Zach for the damages. Matt is furious about what Zach did and wants to sue him as well. Why is it NOT possible for Matt to sue Zach? A. Matt has already received indemnification from his insurer. B. Zach is protected by the Statute of Limitations. C. Zach may not be tried for the same thing twice. D. Matt was not present at the time of the fire.

A. Matt has already received indemnification from his insurer.

Nick's home suffered major damage during a tornado. His contractor says it will cost $85,000 to complete repairs, but the adjuster's estimate gives a total of $63,000. Nick and his insurer have tried to reach an agreement, but have failed to do so. Both parties are now wanting a third party to facilitate their negotiations, but only in an advisory role. Which of the following is the best option in this case? A. Mediation B. Declaratory judgment action C. Arbitration D. Litigation

A. Mediation

Which unfair claims settlement practice involves an adjuster making false statements about policy coverage in order to reduce the settlement? A. Misrepresentation B. Interference C. Defamation D. Coercion

A. Misrepresentation

Which of the following is NOT true of Personal Injury Protection? A. PIP is usually secondary coverage. B. PIP restricts the policyholder's right to recover losses in civil court. C. PIP is primary coverage. D. PIP provides no-fault protection.

A. PIP is usually secondary coverage.

According to the "Definitions" section of a Personal Auto Policy, which of the following is NOT "occupying" her vehicle? A. Rachel leaves her cat in her car, with the windows cracked, while she goes into the drugstore to fill a prescription. B. Trishey is leaning on her car during a lunch break while she eats her lunch. C. Jaminda is sitting on top of her car as she talks to her best friend on the phone. D. Jordan is sitting in her parked car listening to music while she waits for her sister to finish yoga class.

A. Rachel leaves her cat in her car, with the windows cracked, while she goes into the drugstore to fill a prescription.

Which of the following would NOT be covered under the Comprehensive section of a PAP? A. Rollover B. Fire C. Flood D. Theft

A. Rollover

Which of the following is an example of a hazard? A. Sandra's home is in an area of Los Angeles that is often hit by earthquakes. B. Sandra buys a lottery ticket every day. C. Sandra's home is destroyed when a massive earthquake hits. D. Sandra owns an exotic car that is extremely valuable.

A. Sandra's home is in an area of Los Angeles that is often hit by earthquakes.

Veronica owns a pottery business and is insured under a commercial property policy. She was in the process of building an extra structure for the sole purpose of kiln firing her pottery when a massive storm came through and blew down all the scaffolding, which added additional cost to the construction project. Which coverage extension of the Builder's Risk Coverage Form would cover the scaffolding? A. Scaffolding, Construction Forms, and Temporary Structures B. Debris Removal C. Property in Transit D. Preservation of Property

A. Scaffolding, Construction Forms, and Temporary Structures

Which of the following is an example of how some insurers are fighting back against insurance fraud? A. Starting fraud busting units staffed with former detectives and police officers B. Enacting tougher penalties for insurance fraudsters C. Expanding current fraud laws to include all payers D. Imposing stiff fines and prison terms

A. Starting fraud busting units staffed with former detectives and police officers

Which of the following would NOT be covered under Valuable Papers Business Insurance? A. Stock certificates B. Legal documents C. Blueprints D. Manuscripts

A. Stock certificates

Which of the following is NOT a rating factor for a personal auto liability policy? A. The condition of the vehicle B. The location of use C. The driving record D. The driver's age

A. The condition of the vehicle

Law and Ordinance, also known as Code Upgrade Coverage, covers which of the following expenses? A. The cost of repairs or upgrades done to meet new building codes B. The cost of additional upgrades to buildings that have met all building code requirements C. A company's legal expenses if they are shut down due to code violations D. Damage to historical buildings caused during a riot

A. The cost of repairs or upgrades done to meet new building codes

ABC Masonry, Inc. has an aggregate liability policy with limits of 100,000/300,000. One day, an accident at a construction site leads to $150,000 in damage to public property. Assuming the cause of loss is covered under ABC Masonry's liability policy, how will this claim be paid? A. The insurer pays $100,000; the aggregate limit is now $200,000; and ABC Masonry must pay $50,000. B. The insurer pays $150,000 and the aggregate limit is still $300,000. C. The insurer pays $100,000; the aggregate limit is still $300,000; and ABC Masonry must pay $50,000. D. The insurer pays $150,000 and the aggregate limit is now $200,000.

A. The insurer pays $100,000; the aggregate limit is now $200,000; and ABC Masonry must pay $50,000.

Jason's auto policy states that the insurer may cancel coverage if a premium is more than 30 days late. However, Jason is currently more than 30 days late, and has been so five times in the last year, and his insurer has done nothing about it. When Jason gets into an accident and files a claim, which of the following is most likely to happen? A. The insurer will pay the claim because of the implied waiver they have made by not canceling Jason's policy the previous times he was late with his payments. B. The insurer will deny the claim and cancel Jason's policy because he is more than 30 days late with his payment. C. The insurer will deny the claim and cancel Jason's policy because of the implied waiver they have made by not canceling his policy the previous times he was late with his payments. D. The insurer will pay the claim because of the express waiver they have made by not canceling Jason's policy the previous times he was late with his payments.

A. The insurer will pay the claim because of the implied waiver they have made by not canceling Jason's policy the previous times he was late with his payments.

While shopping at Acme, Mark slips and falls on a wet floor, knocking over some shelves, smashing a window, and injuring his knee. The medical costs for Mark's knee surgery total $8,000, and he will live the rest of his life with a limp since his knee may never fully heal. Which of these costs will be most difficult for Acme's insurer and Mark to negotiate? A. The mental anguish associated with never fully recovering B. The cost to replace the window C. The cost to replace the shelves D. The medical bills associated with the surgery

A. The mental anguish associated with never fully recovering

A power surge sparks a small electrical fire in an office building. The electrical fire triggers the automatic sprinkler system. The water from the sprinklers soaks the carpets and shorts-out all the computers, causing thousands of dollars in damage. What is the proximate cause of the loss? A. The power surge B. The automatic sprinkler system C. The electrical fire D. The water from the sprinklers

A. The power surge

Greg plays trombone in his school band during football games. During a rally song in the stands one day, Greg annoys one of the opposing team's fans, who grabs his $400 trombone and hurls it down the bleachers, completely destroying it. Greg's insurance pays him $400 to replace the trombone, but then the opposing team's coach also offers to replace the instrument, at whatever the cost. So Greg orders a new $3,200 trombone and has the opposing team's athletic department absorb the cost. Which principle has Greg violated? A. The principle of indemnity B. The principal of the opposing team C. The principle of consideration D. The principle of legal purpose

A. The principle of indemnity

Which of the following is NOT useful in moving the negotiation process forward toward a successful resolution? A. Using sarcasm in response to the claimant's anger B. Keeping criticisms out of the discussion C. Maintaining professionalism at all times D. Being open to new perspectives

A. Using sarcasm in response to the claimant's anger

Which of these scenarios is NOT an example of indemnification? A. When trying to renew her dog's license, Ellen has to pay a penalty to the city for letting its rabies vaccination lapse. B. Joe-Bob forces his son Ted to pay their neighbor $500 after Ted breaks the neighbor's $500 TV. C. XYZ insurance pays $300 to rent a car for Hugh while Hugh waits for his own car to be repaired. D. Alice's insurer pays to rebuild her house after it burns down.

A. When trying to renew her dog's license, Ellen has to pay a penalty to the city for letting its rabies vaccination lapse.

A farm insurance policy may include all of the following EXCEPT: A. a commercial package policy. B. farm personal property coverage. C. farm liability insurance. D. dwelling coverage.

A. a commercial package policy.

SureTrust Insurance was founded and operates in Texas. In Texas, SureTrust is considered: A. a domestic insurer. B. a state insurer. C. an alien insurer. D. a foreign insurer.

A. a domestic insurer.

An insurance company might consider any of the following a risk, EXCEPT: A. a high crime neighborhood. B. an automobile. C. a home. D. a jewelry collection.

A. a high crime neighborhood.

Each of the following would classify as an insurable risk, except: A. a marriage. B. a rocket. C. a brick patio. D. a barn.

A. a marriage.

Thomas Building is asked by the local youth center to build a gym for the local community. As a condition of their contract, Thomas Building must secure a surety bond. Thomas Building finds ABC Surety Bonding and works out a suretyship for the project. Thomas Building gets Williams Construction Finance to co-sign on the bond, as required by ABC Surety Bonding. William's Construction Finance would be called:

A. an indemnitor.

Driving home after a 14-hour shift, Sam falls asleep at the wheel and plows into Sandra's home, causing extensive damage to the East wall and roof. As a result, Sandra and her family must move into a hotel until the repairs are completed. The cost of staying in a hotel is: A. an indirect loss. B. a direct loss. C. a physical hazard. D. the proximate cause.

A. an indirect loss.

An oral or written statement providing temporary insurance coverage until an insurance policy can be issued is called a: A. binder. B. agreement. C. consideration. D. contract.

A. binder.

Jane has a small business and has a Business Owners Policy. To save money, Jane has insured her business at 60% coinsurance. When a fire erupts inside of the store, destroying most of Jane's merchandise, her insurer: A. covers the structure and contents on an ACV basis. B. denies the claim. C. imposes a coinsurance penalty. D. covers the structure and contents on a replacement value basis.

A. covers the structure and contents on an ACV basis.

All of the following are typical exclusions in an insurance policy, EXCEPT: A. explosion. B. flooding. C. nuclear hazards. D. earthquakes.

A. explosion.

William is wearing an ABC Insurance jacket and has an ABC Insurance sign over his rented office. The walk-in customer could reasonably believe that he has the authority to write an insurance contract because of his: A. implied authority. B. express authority. C. agent authority. D. apparent authority.

A. implied authority.

If a claimant has a history of similar claims, that could mean: A. it is important to investigate for fraud. B. the policy coverage should be increased. C. the policy should be amended. D. it will be necessary to take a safety class.

A. it is important to investigate for fraud.

Medical payments coverage in a Farm policy includes all of the following EXCEPT: A. libel or slander. B. funeral costs. C. hospital benefits. D. dental benefits.

A. libel or slander.

A plane was damaged while being towed by another vehicle. By policy definition, this damage is considered to have occurred while the aircraft was:

A. not in motion.

After an earthquake, Jake's home is still standing, but it is a little shaken. The damage is not extensive, but Jake wants to cash in on the situation, so he takes a sledgehammer to some of his extra belongings and adds them to his claim. Jake has committed: A. property insurance fraud. B. health insurance fraud. C. insurer fraud. D. arson.

A. property insurance fraud.

The factual statements of the insured upon which an insurance policy is based are called: A. representations. B. utmost good faith. C. misrepresentations. D. allegations.

A. representations.

Six Stars Development Company has just been offered a great deal on ten large properties in Las Vegas. The economy in Las Vegas has been declining recently, but the CEO of Six Stars expects it to recover soon. This could be an exceptional opportunity for Six Stars, but it's also pretty risky. Ultimately, the Six Stars executive team decides not to purchase the properties. This is an example of: A. risk avoidance. B. risk retention. C. risk transference. D. risk reduction.

A. risk avoidance.

A staff adjuster is a: A. salaried employee working for only one insurer. B. contractor working for the claimant. C. salaried employee working for a public adjuster. D. contractor working for only one insurer.

A. salaried employee working for only one insurer.

Andrew's friend Mario asked for a ride from Detroit to Cleveland, and Andrew decided to take Mario in his plane. Getting out of the plane, Mario trips and falls into the propeller and ends up losing 3 fingers on his right hand. Mario also signed a form agreeing to release Andrew from further liability in exchange for a sum of money. Which of the following is FALSE? A. After Mario has received his monetary sum to indemnify him for the loss of his fingers, he can sue Andrew because of recurring back pain. B. Andrew can decide whether he would like his friend's injuries to be covered under his base liability policy. C. Andrew has a form of coverage that will make it possible to avoid a lawsuit with his friend Mario. D. Andrew has a form of coverage called Guest Voluntary Settlement.

After Mario has received his monetary sum to indemnify him for the loss of his fingers, he can sue Andrew because of recurring back pain.

Kevin plays in a brass band using two rare antique Alexander tubas. Since they are no longer produced, the value of the tubas is difficult to determine. Which type of policy would best indemnify Kevin in the event that his tubas were ever damaged, lost, or stolen?

Agreed value policy

While Andrea was grocery shopping in BB Mart, the large Dairy sign fell off the wall and landed on her. Because of her extensive injuries, Andrea sued BB Mart and was awarded $375,000 in damages. BB Mart's Commercial General Liability policy has a general aggregate limit of $1,000,000 and a per occurrence limit of $300,000. What is the per occurrence limit after this claim is settled? A. $75,000 B. $300,000 C. $700,000 D. $0

B. $300,000

Resident Alabama insurance adjusters are required to complete ________ hours of continuing education every _____ years. A. 30, 1 B. 24, 2 C. 30, 2 D. 24, 1

B. 24, 2

Which of the following is a hazard? A. Lightning B. A driver's tendency to text while driving C. A skiing accident D. Vandalism

B. A driver's tendency to text while driving

Which of the following best describes a Fraternal Benefit Society? A. A fraternal benefit society is a for-profit provider of insurance. B. A fraternal benefit society is a social organization based around common interests and beliefs. C. A fraternal benefit society uses investors' money to pay claims. D. A fraternal benefit society pays dividends to its stockholders.

B. A fraternal benefit society is a social organization based around common interests and beliefs.

Which of the following incidents would a liability insurance policy cover? A. A man crashes his car into his own fence. B. A man slips inside a grocery store and injures himself. C. A fire damages the back bedroom of your house. D. The company van is stolen from your warehouse.

B. A man slips inside a grocery store and injures himself.

Dr. Jones' current occurrence malpractice policy is in effect from July 1, 2005 through July 1, 2006. Which lawsuit would trigger this malpractice insurance policy? A. A woman sues Dr. Jones on July 17, 2005 for a poor nose job he performed on May 2, 2005. B. A man sues Dr. Jones on July 26, 2009 for a damaging knee surgery performed on March 3, 2006. C. A man sues Dr. Jones on February 26, 2007 for misdiagnosing cancer on December 21, 2006. D. A woman sues Dr. Jones on January 24, 2006 for an eye surgery he performed on July 1st, 2004.

B. A man sues Dr. Jones on July 26, 2009 for a damaging knee surgery performed on March 3, 2006.

Which of the following losses would be excluded from coverage under a Personal Articles Floater? A. Several pieces of jewelry were stolen from a collection that was being transported to an auction house via an armored vehicle. B. A rat slipped inside a golf bag before it was packaged for shipping and chewed several holes in the bag before it arrived at its destination. C. Several pieces of china and crystal purchased online were broken in transit on the way to the buyer. D. A collection of fine art was damaged when the truck carrying the collection collided with another vehicle.

B. A rat slipped inside a golf bag before it was packaged for shipping and chewed several holes in the bag before it arrived at its destination.

Which of the following would be considered an insurable risk? A. The gold stored in Fort Knox That is incorrect. Of the options listed, only a squadron of police cars is an insurable risk. B. A squadron of police cars C. A riverbank D. A high-crime area

B. A squadron of police cars

Adam is shopping for a car in a local automobile dealership. While visiting the showroom, he trips over a rug that has folded over and breaks his arm in the fall. Which of the following is true? A. Adam may file a first party claim with the dealership's insurance company. B. Adam may file a third party claim with the dealership's insurance company. C. The automobile dealership may file a first party claim with its own insurance company. D. The automobile dealership may file a third party claim with its own insurance company.

B. Adam may file a third party claim with the dealership's insurance company.

Which settlement option is most often used when a claimant misses work because of bodily injury, but a settlement has not yet been reached? A. Rehabilitation settlement B. Advance payment settlement C. Open ended release D. Scheduled payment release

B. Advance payment settlement

Allen works as an adjuster for Insurer B. Which of the following is FALSE? A. Allen is an agent of Insurer B. B. Allen is a salaried employee who only sells Insurer B's products. C. Insurer B has given Allen express authority to perform on its behalf. D. Insurer B is bound by Allen's words or decisions that he makes while on the job.

B. Allen is a salaried employee who only sells Insurer B's products.

A fire burns down Jenny's Hardware, leaving virtually nothing salvageable. Which of the following items would NOT be covered under Coverage A of the Building and Personal Property Coverage Form in her commercial property policy? A. The heating and air conditioning system B. An employee's laptop which she uses for work C. The brand new flooring Jenny had installed a month ago D. The lumber storage shed, listed on the dec page

B. An employee's laptop which she uses for work

In which of the following situations would Jason's auto liability insurance be the primary coverage? A. Jason borrows Andy's car and drives it across the border to Georgia, where he crashes into a street sign. B. Andy borrows Jason's car and accidentally crashes into the local post office. C. Andy runs a red light and plows into Jason's car. D. Jason borrows Andy's monster truck and hits a telephone pole, knocking the pole over onto a nearby house.

B. Andy borrows Jason's car and accidentally crashes into the local post office.

Ken is getting his certification to adjust large commercial claims for the NFIP. Which of the following is NOT required of Ken in order to qualify for this certification? A. Submit three recommendations from supervisors or claim management personnel. B. Be able to accurately adjust RCBAP losses of $1,000,000 or more. C. Have five consecutive years of experience in large commercial loss adjusting. D. Be able to accurately adjust large commercial losses of $500,000 or more.

B. Be able to accurately adjust RCBAP losses of $1,000,000 or more.

Bonnie's PAP includes Comprehensive coverage. Which of the following losses could this coverage pay for? A. Bonnie rear-ends another vehicle. B. Bonnie's car catches fire. C. Bonnie rolls her vehicle in a one-car accident. D. Bonnie's car breaks down due to an engine malfunction.

B. Bonnie's car catches fire.

Chuckie broke his ankle while waiting tables at the Grande Luxe hotel. He can no longer work as a waiter, where he was making about $750 per week, but Grande Luxe transferred him to Reservations, where he answers phones and doesn't need to walk around. At Reservations, Chuckie makes $800 per week. Chuckie is hoping that he'll qualify for Temporary Partial Disability benefits under his Workers' Comp insurance. Why will Chuckie not be qualified to receive these benefits? A. Chuckie is not qualified because he was not laid off by Grande Luxe due to his injuries. B. Chuckie is not qualified because he did not suffer any loss of wages. C. Chuckie qualifies for Partial Impairment benefits but not for Temporary Partial Disability benefits. D. Chuckie is not qualified because waiters are specifically excluded from WC benefits.

B. Chuckie is not qualified because he did not suffer any loss of wages.

Robert applies for an auto loan from his local bank. He meets with a loan officer, who goes over Robert's paperwork. The loan officer tells Robert: "I'll give you a loan as long as you insure the car with ABC Insurance." This is an example of: A. Defamation B. Coercion C. Misrepresentation D. Unfair discrimination

B. Coercion

D'Anton spills coffee in his lap while driving, causing him to veer off the road and smash into a telephone pole. Which part of his Auto Insurance Policy will help him pay for the repairs to his car? A. Liability Coverage B. Collision Coverage C. Comprehensive Coverage D. McDowells Coffee Coverage

B. Collision Coverage

In which section of an insurance policy might you find the following statement? "Damage to insured property must be reported within 15 days of the damaging occurrence." A. Declarations Page B. Conditions C. Definitions D. Exclusions

B. Conditions

Sam is a claimant seeking damages from XYZ Insurance. The XYZ adjuster comes to meet with Sam to hear the circumstances of her injury. The adjuster determines that Sam played an active role in her own injuries, and therefore XYZ Insurance will pay her nothing at all for her injuries. What defense is the adjuster using? A. No negligence B. Contributory negligence C. Comparative negligence D. Full negligence

B. Contributory negligence

Honey's Bakery is a local coffee shop run by two sisters. In a rush to leave one afternoon, their new employee forgets to turn off the gas stove. The leaking gas causes an explosion, destroying the kitchen. Which condition in their commercial property policy could help the sisters cover the cost of the damage? A. Non-Owner Condition B. Control of Property C. Legal Action Against the Insurer D. Other Insurance

B. Control of Property

Larry owns a restaurant downtown and employs his cousin Vinny as one of the line cooks. Vinny is a rather careless individual, and one night he leaves the stove on, leaking gas throughout the kitchen. When the ice machine turns on, it sparks a massive explosion. Which condition in Larry's commercial property policy indicates that he may be covered for this loss? A. Other Insurance B. Control of Property C. Legal Action Against the Insurer D. Non-Owner Condition

B. Control of Property

Jones' Auto in Dallas, Texas buys 50 cars from ABC Auto in Tokyo, Japan. They sign a contract whereby Jones' Auto assumes the risk of any damages to the cars until they are delivered. What term of sale have they agreed to?

B. Cost and Freight

In a Farm Insurance policy, which of the following would cover the main dwelling on the insured farm? A. Coverage C B. Coverage A C. Coverage B D. A separate homeowners policy

B. Coverage A

Which of the following situations does NOT involve an insurable risk? A. Melody just bought a gas station and convenience store. B. Dale just bought 30 shares of a hot new startup company online. C. Hank just bought a new outboard motor for his fishing boat. D. Christine just bought her husband an expensive new watch.

B. Dale just bought 30 shares of a hot new startup company online.

In which section of an insurance policy might you find the following statement? "'We, us, and our' refers to ABC Insurance company." A. Exclusions B. Definitions C. Declarations D. Conditions

B. Definitions

What kind of adjuster is only allowed to work on claims relating to a disaster and may be from another state? A. Public adjuster B. Emergency adjuster C. Independent adjuster D. Staff adjuster

B. Emergency adjuster

David just opened his own consulting business, and has taken on several new clients. He's having difficulty managing his schedule on top of all the other responsibilities related to owning his own business, so he hires Tina via contract to work as his full-time office manager for $15 per hour. According to the definitions in David's Commercial General Liability policy, which of the following best describes Tina? A. Leased Worker B. Employee C. Volunteer Worker D. Temporary Worker

B. Employee

Which statement BEST describes a stand alone excess liability policy? A. Excess liability insurance that often covers more risks than the base policy B. Excess liability insurance that "follows" the base policy, but includes its own set of limitations and exclusions C. Excess liability insurance that "follows" the base insurance policy to the letter D. Insurance coverage for damages caused by an excess of any one peril

B. Excess liability insurance that "follows" the base policy, but includes its own set of limitations and exclusions

Martin regularly travels much of the state for work, so his employer has given him a company car. Which endorsement to Martin's PAP would provide him with liability coverage for the company car? A. Non-Owner B. Extended Non-Owner C. Customized Equipment D. Miscellaneous Vehicle

B. Extended Non-Owner

RWW Insurance creates a radio promotion where they advertise that they will insure any car for $200 a year. They don't actually offer such a plan, but they figure they will be able to sell hundreds of policies to people who show up looking for the bargain. What type of unfair insurance trade practice does this behavior exemplify? A. Unfair discrimination B. False information and advertising C. Misrepresentations D. Illegal kickbacks

B. False information and advertising

Which of the following is a feature typically found in a Business Owners Policy? A. Professional Liability coverage B. Inflation Guard for buildings and structures C. Coverage for company-owned vehicles D. Malpractice coverage

B. Inflation Guard for buildings and structures

Which of the following is NOT true about a scheduled payment release? A. It is most often used with Workers' Compensation claims. B. It can't be used with Workers' Compensation claims. C. The insurer agrees to pay all compensatory damages up to the point of settlement. D. It is also called a rehabilitation settlement.

B. It can't be used with Workers' Compensation claims.

Which of the following statements about the Standard Fire Policy is TRUE? A. It still provides the basic foundation for liability insurance policies today. B. It is no longer used in its original format. C. It only provided coverage for fire. D. It provided replacement cost valuation.

B. It is no longer used in its original format.

Which of the following is NOT true of the Company's Options provision in the standard fire policy? A. It mandates that the insurer notify the claimant of its choices within 30 days of receiving required proof of loss. B. It requires the insurer to settle the claim, in whichever manner it chooses, within 30 days of receiving notice of the claim. C. It states that the insurer may choose whether to take all, or part, of the damaged property at the agreed or appraised value. D. It allows the insurer the choice of whether to repair, rebuild, or replace damaged property.

B. It requires the insurer to settle the claim, in whichever manner it chooses, within 30 days of receiving notice of the claim.

Which of the following situations does NOT involve an instance of "pure risk?" A. Loss of a house due to a hurricane B. Loss of money invested in the stock market C. Loss of a company car in an unfortunate accident D. Loss of crops due to an infestation of parasites

B. Loss of money invested in the stock market

Which of the following statements about MPCI insurance is FALSE? A. It is subsidized by the FCIC. B. Its coverage applies per acre, not per "unit." C. Its coverage applies per "unit", not per acre. D. It covers damage to crops due to weather-related perils.

B. Its coverage applies per acre, not per "unit."

Caroline was involved in a car accident in which her husband was killed. Jillian is adjusting the insurance claim. Which of the following is TRUE? A. Jillian should recognize that Caroline's emotional state offers her an advantage in the negotiation process, and she should take advantage of this for the sake of her employer. B. Jillian should wait until Caroline seems emotionally stable before negotiating a settlement. C. As an adjuster who wishes to act with speed and diligence, Jillian should pressure Caroline to accept a settlement as soon as possible. D. Jillian should try to help Caroline by offering her a larger settlement for her damaged car.

B. Jillian should wait until Caroline seems emotionally stable before negotiating a settlement.

Which of the following losses may qualify for coverage under Coverage F - Medical Payments? A. Mike breaks his ankle when he trips and falls down the stairs heading to the basement apartment that he rents from Wilma. B. Kevin accidentally shoots himself in the foot with a nail gun while he is helping Joe build a deck in Joe's backyard. C. Stacy gets a full set of veneers after she chips her tooth on a softball while playing catch over at Kathy's house. D. Wilma breaks her ankle when she trips and falls down her basement stairs.

B. Kevin accidentally shoots himself in the foot with a nail gun while he is helping Joe build a deck in Joe's backyard.

During a routine tooth extraction, Dr. Dentem administers too much laughing gas and causes brain damage to his client. The family sues Dr. Dentem for failing to follow procedure. Which kind of insurance would cover the cost of the lawsuit? A. Errors and Omissions Insurance B. Malpractice Insurance C. Dental Insurance D. Personal Injury Protection Insurance

B. Malpractice Insurance

Cindy and her insurer cannot reach an agreement for her property claim, and have gone back and forth for weeks without coming within $10,000 of each other. At this point, since both believe they are offering a fair settlement, a third party is needed to help facilitate the negotiation. Both parties still want to retain their ability to "walk-away" if they cannot reach an agreement. What is the next best step for Cindy and her insurer? A. Arbitration B. Mediation C. Litigation D. Appraisal

B. Mediation

Stan has a personal auto policy to cover his two vehicles, but he recently purchased a custom built motorcycle as well. Which type of endorsement will Stan need to cover the motorcycle? A. Customized Equipment Endorsement B. Miscellaneous Vehicle Endorsement C. Motorcycle Endorsement D. Two-wheeled Vehicle Endorsement

B. Miscellaneous Vehicle Endorsement

Nick has a comprehensive individual health insurance policy that he purchased through an HMO, and Charity has a PPO plan through her employer. Which of the following statements is TRUE? A. Nick's policy was automatically accepted by his insurer, but Charity had to prove her current health status before being accepted. B. Nick was assigned a primary care physician who must coordinate his health care within a network, but Charity may choose a primary physician outside the network. C. Nick's plan allows him to go to any hospital for emergency services, but Charity is restricted to approved hospitals within the network. D. Nick has a higher level of flexibility in choosing his health care than Charity, but Charity has lower medical costs than Nick.

B. Nick was assigned a primary care physician who must coordinate his health care within a network, but Charity may choose a primary physician outside the network.

Gail's restaurant is doing more business than ever, so Gail decides to add more dining space. Three weeks into the project, a hurricane blows through town, reducing the new construction to rubble. Gail maintains commercial property insurance coverage valued at 70% of her property's replacement cost, although her policy says she must maintain at least 80% to be fully insured. Which coverage on her policy could pay to rebuild her restaurant at replacement cost? A. Increased Construction Costs coverage B. None C. Outdoor Property extension D. Replacement Cost endorsement

B. None

Having a positive attitude can help an adjuster during negotiations. Which of the following aspects of an adjuster's attitude can hinder negotiations? A. Humble and understanding B. Over-confident or arrogant C. Open to new facts D. Willing to listen

B. Over-confident or arrogant

When a flood inundates Paul's property, it causes $190,000 in damage to his home and $18,000 in damage to his detached garage. Paul has a Dwelling Form flood policy with a $200,000 limit. How much coverage should Paul use for his garage if he wants to have enough coverage to repair his home completely? A. Paul should apply 9% to his garage and the remainder to his home. B. Paul should apply 5% to his garage and the remainder to the home. C. Paul's garage is not covered under Coverage A since it is a detached structure. D. Paul MUST apply 10% to the garage if he chooses this option under Coverage A.

B. Paul should apply 5% to his garage and the remainder to the home.

Brian has an accident at work and loses hearing in both of his ears, becoming permanently deaf. What kind of disability benefits will he most likely receive? A. Temporary partial disability benefits B. Permanent partial disability benefits C. Temporary total disability benefits D. Permanent total disability benefits

B. Permanent partial disability benefits

Which of the following activities could be a useful negotiation technique? A. Asking trivial questions in order to distract the claimant B. Reviewing video footage with the claimant that contradicts the claimant's position C. Matching an aggressive tone of voice with the claimant's in order to demonstrate dominance D. Telling a dirty joke in an effort to lighten the mood

B. Reviewing video footage with the claimant that contradicts the claimant's position

Which of the following is NOT a risk management technique? A. Risk reduction B. Risk equality C. Risk avoidance D. Risk retention

B. Risk equality

Which of the following is NOT a characteristic of social insurance programs? A. The benefits of a social insurance program may be prescribed by federal law. B. Social insurance programs are for-profit programs. C. Social insurance programs involve mandatory participation. D. Social insurance programs are designed to meet the needs of the general public as a whole.

B. Social insurance programs are for-profit programs.

The DP-3 is known as the: A. Broad Form. B. Special Form. C. Basic Form. D. Amended Form.

B. Special Form.

All Alabama drivers must prove they are financially responsible in case of an accident that causes injuries or damages another's property. Which of the following is NOT a way for a driver to prove financial responsibility? A. Buying an insurance policy B. Submitting proof of savings account C. Providing a certificate of self insurance D. Becoming bonded

B. Submitting proof of savings account

James is in the consulting business and frequently flies from city to city to meet clients and help them improve their business practices. Most cities have adequate public transit, but sometimes it's easier to rent a car. Which coverage symbol would specifically pertain to rental cars on James' Business Auto Policy? A. Symbol 7 B. Symbol 8 C. Symbol 19 D. Symbol 9

B. Symbol 8

Which of the following would you find in the Conditions section of an insurance policy? A. Causes of loss that are not covered B. The insured's duty after a loss C. Policy limits D. The meaning of certain important words in the contract

B. The insured's duty after a loss

According to the Mortgagee Clause, what is NOT one of the rights of the mortgagee? A. The mortgagee may receive a portion of claim payments. B. The mortgagee may change the coverage amount. C. The mortgagee may be indemnified, even in the event of fraud by the insured. D. The mortgagee will be notified if the insurer intends to cancel the policy.

B. The mortgagee may change the coverage amount.

Which of the following would NOT be covered under a typical Ocean Marine policy? A. The vessel's galley catches fire, and the fire spreads to the sleeping quarters. B. The owner sustains a financial loss when her vessel is confiscated by the government. C. A bolt of lightning strikes the vessel and fries its communication system. D. The vessel is robbed of its cargo by pirates.

B. The owner sustains a financial loss when her vessel is confiscated by the government.

In appraisal, who chooses the umpire? A. The claimant B. The two appraisers C. The insurance company D. The adjuster

B. The two appraisers

Which of the following does not describe one of the implied warranties of Ocean Marine Insurance? A. The vessel must be seaworthy, and have a competent captain and crew. B. The vessel must not travel in stormy or otherwise dangerous weather conditions. C. The route of the voyage must be clearly stated prior to departure, and adhered to throughout the voyage. D. The owner of the cargo must guarantee that the cargo is sound and loaded properly.

B. The vessel must not travel in stormy or otherwise dangerous weather conditions.

Which of the following is NOT a characteristic of insurance contracts? A. Aleatory B. Universal C. Conditional D. Unilateral

B. Universal

Which statement BEST describes the additional coverages available for both commercial and residential policies? A. They are a global type of coverage. B. They add coverage for very specific losses or expenses. C. They are only temporary until the major coverage kicks in. D. They cover only unusual perils.

B. They add coverage for very specific losses or expenses.

Which of the following statements applies to replacement cost valuation? A. Replacement cost valuations take into account the depreciated value of an item. B. Under replacement cost valuation, insurers may safeguard the principle of indemnity by requiring policyholders to replace insured items before making full reparations. C. Replacement cost valuations provide cheaper premiums for the policyholder than an actual cash value insurance policy. D. An actual cash value policy will pay out more than a replacement cost value policy.

B. Under replacement cost valuation, insurers may safeguard the principle of indemnity by requiring policyholders to replace insured items before making full reparations.

Craig must close his business for three months after being injured in an auto accident. When Craig recovers, he returns to his shop where he finds broken glass and notices some of his supplies have been pilfered. Under what condition in his commercial property policy might the insurer deny coverage? A. Medical Payments B. Vacancy C. Control of Property D. Vandalism

B. Vacancy

Jane's shed burns to the ground during a tornado, when the high winds break a wall of the shed, knocking over a lantern inside. What is the proximate cause of the loss? A. Fire B. Wind C. The lantern D. Wall collapse

B. Wind

Phil owns a public pool. One day, Phil has an altercation with a woman visiting the pool. Phil doesn't like the way she looks, so he tells her that she has to leave the premises right away. The woman takes Phil to court for violating her civil rights. This is an example of what type of personal injury covered under Phil's Commercial General Liability policy? A. Malicious Prosecution B. Wrongful Eviction C. Advertising Injury D. Libel and Slander

B. Wrongful Eviction

States that have special legislation that requires workers' compensation coverage to be provided exclusively by the state's workers' comp program are: A. competitive. B. monopolistic. C. elective. D. compulsory.

B. monopolistic.

As an adjuster for KLM Insurance, Chrystal has the important role of fiduciary agent. While acting in this capacity, Chrystal's primary responsibility is to: A. act for, and on the behalf of, those insured through KLM Insurance. B. protect the financial and property interests of KLM Insurance. C. increase profits for KLM Insurance through ethical sales practices. D. investigate the financial health of those insured through KLM Insurance.

B. protect the financial and property interests of KLM Insurance.

Francis has many employees who go out and market his product in the streets on a daily basis. This "go get 'em" approach seems to work well for business, but it does increase the risk of an auto accident. To curb the financial risk of a hospital stay resulting from an accident, Francis adds _____________ to his BAP.

B. a Medical Payments/PIP endorsement

Edward is a member of the Knights of Columbus, a religious group dedicated to voluntary service to the benefit of society. He also recently purchased a $100,000 life insurance policy from the organization. This was possible because the Knights of Columbus is: A. a mutual insurer. B. a fraternal benefit society. C. a risk retention group. D. a reciprocal insurer.

B. a fraternal benefit society.

After her business suffered damage in a fire, Jane filed a claim with Acme Insurance, which dispatched Bob to adjust it, even though he was not allowed to adjust commercial claims. He investigated Jane's losses and submitted his estimate to Acme Insurance, which issued her a settlement check based on that estimate. Bob had _______ because Acme Insurance accepted his estimate and paid Jane's claim. A. expert authority B. apparent authority C. agency authority D. express authority

B. apparent authority

Patricia is a new adjuster whose primary goal is her employer's financial benefit. This goal makes Patricia susceptible to the ethical challenge of: A. emotional or unruly claimants. B. bias for the insurer. C. inducements. D. kickbacks.

B. bias for the insurer.

Dr. Nelson routinely schedules her patients for lab tests that they don't need so she can charge their insurers for more money. Dr. Nelson is: A. operating within the letter of the law, if not its intent. B. committing health insurance fraud. C. committing a tortfeasor. D. committing subrogation.

B. committing health insurance fraud.

A lightning strike causes one of the storage buildings on John's farm to burn to the ground, aided by the fuel tanks he kept in the building. John knows he wasn't supposed to store any fuel in the building, so he keeps that piece of information to himself when he files a claim. John's insurer may deny his claim based on his: A. liberalization. B. concealment. C. hard fraud. D. arson.

B. concealment.

Coverage C - Personal Property of a homeowners policy typically excludes: A. furniture. B. fish. C. dishes. D. blanket coverage of personal property.

B. fish.

Barry lives in Texas, but wants to obtain an independent adjuster license in Alabama. He can get this license without passing the Alabama adjuster licensing exam if:

B. he has passed the Texas exam and received an all-lines adjuster license in Texas.

Clark is filling out an application for an insurance policy. The application asks for his birth date, and Clark writes 1-24-67. His actual birthday is 1-24-63, but he likes to appear younger so he uses a different date. This would be called: A. warranty. B. misrepresentation. C. representation. D. concealment.

B. misrepresentation.

The Employee Retirement Income Security Act (ERISA): A. safeguards medical patient privacy and establishes rules about how patients' personal information should be treated. B. requires that every fiduciary of an employee benefit plan and every person who handles funds or other property of those plans must be bonded. C. regulates how insurance companies collect, use, and share personal information about their policyholders. D. regulates how financial institutions collect, share, and use consumers' personal and financial information.

B. requires that every fiduciary of an employee benefit plan and every person who handles funds or other property of those plans must be bonded.

During a terrible storm, Theresa's home suffers $200,000 in damage. $60,000 of this damage was caused by flooding, which is specifically excluded from Theresa's policy. She attempts to persuade her adjuster to cover at least half of the flood damage, but her efforts are to no avail. This is because: A. her adjuster is an extremely effective negotiator. B. the policy's coverage is non-negotiable. C. Theresa's coinsurance is 80%. D. Theresa should have demanded full payment and talked her way down to half.

B. the policy's coverage is non-negotiable.

Steve has just purchased a wedding ring for his new bride. If something were to happen to the ring, he'd be out a lot of money, so he purchases an insurance policy. He is able to do this because: A. the ring is a sure risk. B. the ring is a pure risk. C. the ring is a speculative risk. D. the ring is a safe risk.

B. the ring is a pure risk.

In a BOP, the General Aggregate Limit is: A. equal to the claims-made limit. B. twice the per occurrence limit. C. twice the claims-made limit. D. twice the Products-Completed Operations Aggregate Limit.

B. twice the per occurrence limit.

In order to qualify for an insurance policy, Lydia's Fine Jewels must agree to have a security guard on the premises 24/7. This is called a: A. representation. B. warranty. C. waiver. D. binder.

B. warranty.

Which of the following does NOT apply to commercial property insurance?

Because of their complexity, commercial policies only offer named-peril coverage.

Bobby is adjusting a complicated auto claim. Which of the following is TRUE? A. Since the policyholder (Jane) and the third-party claimant (Neil) disagree as to who was at fault, Bobby must advise Neil to hire an attorney. B. Because the policyholder (Jane) is 84 years old and seems to have trouble remembering what happened before the accident, Bobby should feel free to contact her 45-year-old caretaker for clarification. C. Bobby needs to obtain permission from Neil, the claimant, before he interviews Jessica, who was riding in the car with Neil and witnessed the accident. D. Since the policyholder (Jane) and the third-party claimant (Neil) disagree as to who was at fault, Bobby must advise Jane to hire an attorney.

Because the policyholder (Jane) is 84 years old and seems to have trouble remembering what happened before the accident, Bobby should feel free to contact her 45-year-old caretaker for clarification.

Amanda is walking her dog in a rural area when a small plane suddenly crashes only 15 feet in front of her. Amanda is not hurt, but she is so distressed that she files an insurance claim for mental anguish. Which aviation coverage would pay this claim? A. Passenger Bodily Injury Liability B. All Risks - Ground and Flight C. Bodily Injury Excluding Passengers D. All Risks - Not in Motion

Bodily Injury Excluding Passengers

Sam suffers $6,000 in injuries when Nicole runs a red light and crashes her uninsured car into Sam's. Sam's own insurance company, ABC Insurance, immediately pays him $5,000 for his injuries. Sam then ponders whether to file a $6,000 lawsuit against Nicole. Why can't Sam sue Nicole for the full amount of his injuries?

By accepting payment from ABC Insurance, Sam forfeited his right to collect this amount from Nichole.

While making a right-hand turn from the right lane, Ben is sideswiped by Roxanne, totaling the car he bought new 12 years ago for $15,000. Roxanne is judged to be at fault. She has an auto policy with limits of 50/100/25 and a $500 deductible on her collision coverage. Assuming Ben's car depreciates at a rate of $1,100 a year, how much will Roxanne have to pay out of pocket when Ben files a claim against her insurer for the damages?

C. $0

A flood inundates Howard's property, causing $100,000 of damage to the dwelling and $25,000 of damage to the detached garage. If Howard has a Dwelling Form flood policy with a $150,000 limit, how much will the policy pay for the damage to Howard's home and detached garage combined? (Ignore deductible amounts.)

C. $115,000

Craig has an HO-3 policy covering his primary residence with a Coverage A limit of $250,000, Coverage B limit of $25,000, and a Coverage C limit of $150,000. Craig also has a cabin on the lake, which was burglarized. The thieves stole much of the cabin's contents, for a total loss of $18,500. Ignoring any deductibles, how much will Craig's HO-3 policy pay for this claim?

C. $15,000

Which of the following statements regarding Commercial Package Policies (CPP) is TRUE? A. A CPP is an example of a monoline policy. B. A CPP requires a separate declarations page for each coverage. C. A CPP is an elective-based policy. D. Workers' compensation insurance is automatically included with a CPP.

C. A CPP is an elective-based policy.

Sue decides to get a valued insurance policy on her antique car. She and her insurance company agree to a value of $85,000. Three years later, the car is destroyed when a tree falls on it in a parking lot. The car depreciates at $2,000 a year, and its replacement cost is $100,000. Ignoring any deductible, how much can Sue expect her insurer to indemnify her? A. $94,000 B. $79,000 C. $85,000 D. $83,000

C. $85,000

A Discovery Form Commercial Crime policy can apply to losses discovered during the policy period, as well as up to how many days after its expiration date?

C. 60

Which of the following is NOT excluded from coverage under a Mechanical Breakdown Insurance policy? A. Breakdown covered by regular auto insurance B. Breakdown due to racing or reckless driving C. Breakdown due to the cracking of an engine block D. Breakdown due to neglect or delay in maintenance

C. Breakdown due to the cracking of an engine block

Which of the following best defines the principle of indemnity? A. In exchange for a premium, the insurer grants peace of mind by reducing the insured's insecurity about the future. B. In order to be legally binding, a contract must have agreement, consideration, competent parties, and legal purpose. C. After a loss, the insured should be restored to his approximate financial condition before the loss. D. Both parties to an insurance contract must contribute something of value.

C. After a loss, the insured should be restored to his approximate financial condition before the loss.

Which of the following statements about Alabama auto insurance is FALSE? A. Alabama requires minimum auto liability limits of 25/50/25. B. Alabama policyholders do not have to buy no-fault insurance. C. Alabama has mandatory no-fault insurance. D. Alabama policyholders may choose to buy UM/UIM coverage.

C. Alabama has mandatory no-fault insurance.

In order to qualify for Alabama's Fortified Home Hurricane _________ Designation, a homeowner must focus mainly on strengthening the roof system and keeping water out of the house. A. Gold B. Platinum C. Bronze D. Silver

C. Bronze

Joan files a lawsuit against Andy because his dog escaped and caused her to fall on an icy sidewalk. Which of the following statements is FALSE? A. Andy must submit an answer to avoid a default judgment. B. Andy's insurer is obliged to defend him in court until it proves that there is no coverage under the policy in question, or until the suit is settled. C. Andy's insurer will send Joan a reservation of rights. D. Andy must notify his insurer that he is being taken to court.

C. Andy's insurer will send Joan a reservation of rights.

Arlene's house suffered structural damage in an earthquake last year, but her policy does not cover earthquake damage, so Arlene never got it fixed. When a tornado rips through her neighborhood, it causes some roof damage totalling $2,000, and Arlene sees an opportunity in the situation. She files a claim for the roof damage, but also claims that the tornado caused the structural damage to her house that was actually caused by the earthquake last year. Which of the following statements is true? A. Arlene has just committed hard fraud. B. Arlene has just created a morale hazard. C. Arlene has just committed soft fraud. D. Arlene has just created a physical hazard.

C. Arlene has just committed soft fraud.

Bill has experienced a loss covered under the Business Income and Extra Expense coverage in his Equipment Breakdown Protection Coverage Form. When does the period of restoration begin? A. 72 hours after the breakdown occurred B. After a length of time in which Bill should have reasonably been able to repair or replace the damaged equipment C. At the time of the breakdown or 24 hours before Bill was notified of the breakdown, whichever is later D. Five days after repair or replacement of covered equipment

C. At the time of the breakdown or 24 hours before Bill was notified of the breakdown, whichever is later

Which of the following may be covered under a Mechanical Breakdown Insurance policy? A. Breakdown due to flooding B. Breakdown on a vehicle with an altered odometer C. Breakdown due to electrical system malfunction D. Breakdown occurring while towing with the vehicle

C. Breakdown due to electrical system malfunction

A short circuit in one of the refrigeration units in the Ice Queen ice cream shop sparked a fire that severely damaged the shop, and it had to shut down for two months while repairs were made. What type of additional coverage would indemnify the Ice Queen for the lost income during these two months? A. Income and Expenses Coverage B. Extra Expenses Coverage C. Business Interruption Coverage D. Commercial Property Damage Coverage

C. Business Interruption Coverage

Sarah is playing with a basketball on the stairs at Bob's house. In doing so, she trips, falls, and breaks her leg. She files a claim against Bob's insurance company for her injuries. The adjuster determines that Sarah was 50% responsible for her own injuries, and therefore should only receive indemnification for 50% of her medical bills. What defense of the claim is the adjuster using? A. Third-party negligence B. Assumption of risk C. Comparative negligence D. Contributory negligence

C. Comparative negligence

A dryer fire scorches the interior of Bill's home, forcing him to move out while repairs are made. In addition to paying for temporary housing, he also loses the rental income he received from his roommate Frank. Which two Dwelling policy coverages could help Bill with the lost rental income AND his additional living expenses? A. Coverage A & Coverage E B. Coverage C & Coverage D C. Coverage D & Coverage E D. Coverage A & Coverage D

C. Coverage D & Coverage E

Which of the following individuals is NOT considered a "custodian" in commercial crime insurance? A. Partner B. Insured C. Customer D. Employee

C. Customer

Workers' compensation insurance is designed to provide employees financial protection against injuries that occur because of, or during the course of, employment related activities. Which of the following would NOT qualify as an "injury" under workers' compensation insurance? A. A lung disease caused by exposure to asbestos at a manufacturing plant B. Eye injuries caused by a toxic gas leak at a chemical plant C. Depression due to job dissatisfaction D. A repetitive motion injury in the wrist of a cashier

C. Depression due to job dissatisfaction

Which of the following may be covered under an Equipment Breakdown Protection Coverage Form? A. Self-propelled equipment B. Dragline, excavation, and construction equipment C. Equipment built to operate under internal pressure or vacuum D. Equipment used solely for therapeutic or surgical purposes

C. Equipment built to operate under internal pressure or vacuum

An insurance adjuster is obliged to inform claimants of their rights under the insurance contract in which of the following situations? A. Claims involving traumatized claimants B. Third-party claims C. Every claim the adjuster handles D. Claims involving elderly claimants

C. Every claim the adjuster handles

Which statement BEST describes Umbrella coverage? A. Excess liability insurance that "follows" the base insurance policy to the letter B. Insurance coverage that doesn't have deductibles C. Excess liability insurance that can also provide additional coverages not provided by the base policy D. Excess liability insurance that "follows" the base policy, but includes its own set of limitations and exclusions

C. Excess liability insurance that can also provide additional coverages not provided by the base policy

Jane owns an aquarium supplies store and purchases a Business Owners Policy to protect her assets. Which of the following protections can Jane expect from her standard BOP with no endorsements? A. Named peril coverage B. Insurance for her company-owned vehicles C. Extra expense coverage D. Malpractice insurance

C. Extra expense coverage

Several cases of listeria have been traced back to Aaron's crop of soybeans that he recently sold at market. What type of coverage will pay for the claims filed by those sickened by Aaron's soybeans? A. Bodily Injury and Property Damage Liability B. Medical Payments C. Farm Product Liability D. Farm Pollution Liability

C. Farm Product Liability

In Alabama, the employers of which of the following employees do not need to purchase Workers' Compensation insurance for them? A. County officers B. Construction workers C. Farm laborers D. Librarians

C. Farm laborers

Which of the following claims may be covered under an Equipment Breakdown Protection Coverage Form? A. A self-propelled machine used to transport heavy objects within the factory experienced a malfunction in its computer program, causing it to run into a wall, which damaged it to the point of needing repair. B. While adjusting a pressurized boiler, an employee accidentally set the calibrations to incorrect levels, which damaged the boiler to the point of needing repair. C. Hazardous material remediation was needed after a mechanical breakdown of the exhaust system's turbine caused ammonia to be released into the factory, contaminating the entire area. D. A severe hail storm damaged a company's air conditioning units.

C. Hazardous material remediation was needed after a mechanical breakdown of the exhaust system's turbine caused ammonia to be released into the factory, contaminating the entire area.

Maria was in the hospital for five days, recovering from a stroke. The bill she received for her hospital stay broke down the charges for room, lab fees, meals, and nursing care. However, her insurer paid a flat daily rate and she was left responsible for paying the remaining charges. What type of insurance does Maria have? A. Surgical Expense insurance B. Hospital Expense insurance C. Hospital Indemnity insurance D. Accident insurance

C. Hospital Indemnity insurance

Which of the following statements does NOT apply to the Standard Fire Policy? A. It is the basis for all homeowners policies. B. It pays actual cash value. C. It automatically covers wind and vandalism. D. It is a named peril policy.

C. It automatically covers wind and vandalism.

Which of the following statements is TRUE of a claim dispute litigated in a state that follows the doctrine of Contributory Negligence? A. The settlement amount will be reduced by the percentage of the plaintiff's negligence. B. The settlement amount will be reduced by the percentage of the defendant's negligence. C. If the plaintiff if found to be at all negligent, she will receive no settlement. D. If the defendant is found to be at all negligent, she will receive no settlement.

C. If the plaintiff if found to be at all negligent, she will receive no settlement.

This agent is self-employed and able to offer insurance products from more than one company at a time. A. Direct Writer B. General Agent C. Independent Sales Agent D. Independent Adjuster

C. Independent Sales Agent

Agnes purchased a home ten years ago in an up-and-coming neighborhood for $75,000. The home's value has since tripled to $225,000! Agnes still has $25,000 left on her mortgage, but has increased her dwelling coverage to $225,000 to keep up with the home's appreciation. When it burns to the ground in a fire, her mortgage company wants to be indemnified $75,000 because the value of the home has tripled. Which policy condition protects against this claim? A. Liberalization Clause B. Recoverable Depreciation C. Insurable Interest D. Severability of Interests

C. Insurable Interest

Which of the following best describes inland marine insurance? A. Insurance designed to protect boats and vessels while operating on inland bodies of water B. Insurance designed to protect privately owned boats and vessels and their permanently-attached equipment C. Insurance designed to protect property being transported on land and property related to transportation D. Insurance designed to protect land around lakes and in coastal areas

C. Insurance designed to protect property being transported on land and property related to transportation

Which of the following is NOT a requirement for a legally binding contract? A. There must be a legal purpose. B. There must be mutual consent. C. It must be a notarized document. D. Both parties must bring something of value.

C. It must be a notarized document.

Which of the following is NOT true of the National Association of Insurance Commissioners? A. It drafts model legislation B. It is a non-profit coalition of state insurance agencies C. It provides support for candidates running for Commissioner D. Most states adopt NAIC regulations

C. It provides support for candidates running for Commissioner

Which of the following statements is true about an insurance policy? A. The insured sets the terms of the policy. B. It is transferable if the property is sold to another party. C. It relies on the utmost good faith of both the insured and the insurer. D. The insured is obligated to the terms of the contract for the entire policy period.

C. It relies on the utmost good faith of both the insured and the insurer.

Which of the following statements about the original Standard Fire Policy is FALSE? A. It was a named peril policy. B. Valuation was usually done on an actual cash value basis. C. It was the first multi-line policy, combining both Physical Damage and Liability coverages. D. The only perils covered under the policy were fire and lightning.

C. It was the first multi-line policy, combining both Physical Damage and Liability coverages.

When record-breaking rainfall causes severe flooding in Janie's home town, Janie's rental property suffers extensive damage. Which of the following is an indirect loss? A. Janie must hire a contractor to reinforce a damaged retaining wall in the backyard of her rental unit. B. Janie's tenant has to replace his sofa that was damaged by the water. C. Janie loses a month of rental income when her tenant must move out while repairs are made to the home. D. Janie must pay to have the wood floors replaced in her rental unit.

C. Janie loses a month of rental income when her tenant must move out while repairs are made to the home.

Which of the following does NOT have an insurable interest in Big Ed's Steak House, a local restaurant? A. ABC Bank, which holds the mortgage on Big Ed's Steak House. B. Ed, who owns 51% of the restaurant. C. Jim, who regularly eats at Big Ed's Steak House because it's his favorite restaurant. D. Ed's partner, Bill, who owns 49% of the restaurant.

C. Jim, who regularly eats at Big Ed's Steak House because it's his favorite restaurant.

On July 14, 2014, Mark suffered injuries when a kitchen appliance he was using broke apart during operation. In Alabama, what is the last date Mark can file a lawsuit for his injuries? A. January 14, 2015 B. July 14, 2017 C. July 14, 2016 D. July 14, 2018

C. July 14, 2016

Which of the following is an example of a moral hazard? A. Kim is jamming out to her music while driving to work and accidentally runs a red light. B. Nancy falls asleep with a lit cigarette in her hand. C. Ken lights a candle, sets it right next to the window draperies and leaves the house to go to work. D. The road that leads to Mike's house is steep and narrow.

C. Ken lights a candle, sets it right next to the window draperies and leaves the house to go to work.

Bob's home was severely damaged by a thunderstorm and he claims it will cost $74,000 to repair. His insurer has investigated the claim, found the repairs could be done for $49,000, and has offered Bob this amount of indemnification. Negotiation between Bob and his insurer seems to be failing. Due to the unpredictability of the result, which of the following options should be avoided by the insurer if possible? A. Appraisal B. Mediation C. Litigation D. Arbitration

C. Litigation

Logan has a small plane that he enjoys flying on the weekends, but he never takes friends or passengers with him. Which of the following is TRUE? A. If Logan never plans to bring a passenger on board, he doesn't need to worry about purchasing any liability insurance. B. Logan is required to purchase Passenger Bodily Injury liability insurance. C. Logan should buy Bodily Injury Excluding Passengers and Property Damage Liability, but he doesn't need to spend the money on Passenger Bodily Injury Liability. D. If Logan does not purchase Passenger Bodily Injury liability, he won't be able to get a single limit liability policy.

C. Logan should buy Bodily Injury Excluding Passengers and Property Damage Liability, but he doesn't need to spend the money on Passenger Bodily Injury Liability.

DEC Construction was hired to completely renovate Randall's department store. DEC Construction is in charge of the project, but hires Mac Electric (an independent contractor) to complete the electrical portion, and requires Mac to have Owners & Contractors Protective Liability coverage for the job. Who is responsible for paying the premiums for this policy? A. Randall's B. DEC Construction C. Mac Electric D. Mac Electric and DEC Construction

C. Mac Electric

Mark is on vacation in Italy when his luggage is stolen, including a $2,000 laptop, a $500 suitcase, and $400 in clothes. Mark has an HO-3 homeowners policy. Excluding any applicable deductible, which of the following statements is TRUE? A. Mark's homeowners policy will not cover any of this loss because he was outside the US. B. Mark's homeowners policy will cover the entire $2,900 loss. C. Mark's homeowners policy will cover $2,400 of this loss. D. Mark's homeowners policy will cover $2,000 of this loss.

C. Mark's homeowners policy will cover $2,400 of this loss.

Grant works at ABC Convenience. One day, a man pulls up in an expensive car and pays cash for his gas with a hundred dollar bill. Grant accepts the bill without checking its validity. When Grant's manager checks the bill later, he discovers it is a fake. Which commercial crime coverage could protect ABC Convenience from financial loss associated with accepting the fake hundred dollar bill? A. Forgery or Alteration B. Inside the Premises: Theft of Money and Securities C. Money Orders and Counterfeit Paper Currency D. Funds Transfer Fraud

C. Money Orders and Counterfeit Paper Currency

Which of the following conditions is frequently included in Mechanical Breakdown Insurance policies? A. Agency authority B. Agreed valuation C. Subrogation D. Third party claims

C. Subrogation

Helen's business is growing rapidly, so she decided to add an annex onto her office and hire another worker. While under construction, a storm blows down most of the annex structure, forcing Helen to restart from scratch. Her commercial policy provides insurance coverage equal to 75% of the property value, despite the fact that her policy requires 80% coverage to be fully insured. Which coverage extension could help Helen rebuild at replacement cost? A. Newly Acquired Property extension - covers all new buildings under construction B. Reasonable Repairs extension - covers all new buildings under construction C. None - Extensions are only available if the policyholder maintains the minimum level of insurance of 80% to value D. Outdoor Property extension - covers all new buildings under construction

C. None - Extensions are only available if the policyholder maintains the minimum level of insurance of 80% to value

Babette crosses the street and is struck by a car, causing her to sustain injuries in the amount of $45,000. The driver has minimum coverage. Which coverage section of Babette's auto policy could help pay for her medical costs? A. Part C: Uninsured Motorist Coverage B. Part D: Comprehensive Coverage C. Part B: Medical Payments D. Part A: Liability

C. Part B: Medical Payments

Shelly has been suffering from chronic headaches for over a year. She is sure that there is something medically wrong, despite what the doctors in her network have told her. So, she decides to visit a doctor that her friend recommended, even though he charges more and is not in Shelly's approved network. Shelly's insurer paid for the cost of the appointment up to the amount she would have reasonably been charged by an in-network physician, and Shelly was responsible for paying the remaining balance. Which type of health insurance plan does Shelly have? A. Point of Service plan B. Health Maintenance Organization C. Preferred Provider Organization D. Major Medical plan

C. Preferred Provider Organization

Which of the following statements regarding primary care physicians is FALSE? A. Major Medical Plan policyholders can choose any primary care physician they'd like. B. A primary care physician must approve all medical procedures for policyholders in a Health Maintenance Organization. C. Preferred Provider Organizations do not allow policyholders to choose a primary care physician. D. Point of Service Plans allow a policyholder to select his own primary care physician.

C. Preferred Provider Organizations do not allow policyholders to choose a primary care physician.

Rachel is filling out an application for a homeowners policy. She is truthfully answering the questions regarding her home's location, size, age, etc. Which of the following is a true statement? A. Rachel is providing binders. B. Rachel is providing factual misrepresentations. C. Rachel is providing representations. D. Rachel is providing warranties.

C. Rachel is providing representations.

Which of the following events would trigger the end to a commercial property Builders Risk Coverage Form? A. The foundation of the building under construction is poured. B. The building is 50% completed. C. The building is accepted by the purchaser. D. One year after the completion of the building.

C. The building is accepted by the purchaser.

Which of the following is not the responsibility of the claimant? A. File a claim in a timely manner B. Believe a loss is covered by an insurance policy C. Seek the assistance of an adjuster D. Prove the loss to the insurer

C. Seek the assistance of an adjuster

In which case would the insured be indemnified by her auto liability coverage? A. She causes property damage to her neighbor. B. She gets into an accident that leaves her car totaled. C. She has to pay a fee to retrieve relevant court documents. D. None; liability coverage never indemnifies the insured.

C. She has to pay a fee to retrieve relevant court documents.

In order for the contents of a home to qualify for flood insurance protection, which of the following conditions must be met? A. At least 25% of the contents must be waterproof. B. The contents must not be covered by any other insurance. C. The contents must be located in a fully enclosed building. D. The contents must be worth less than $5,000.

C. The contents must be located in a fully enclosed building.

According to the "Definitions" section of a Personal Auto Policy, which of the following would NOT qualify as a "family member"? A. The insured's foster child B. The insured's cousin who is living with the insured C. The insured's ex-wife who moved out of the house 4 months ago D. The insured's adopted daughter

C. The insured's ex-wife who moved out of the house 4 months ago

Which of the following statements regarding health insurance is TRUE? A. An HMO is usually the most expensive group insurance provider. B. Major Medical plans tend to be very restrictive regarding the selection of physicians. C. To be covered, members of an HMO must receive treatment for their medical conditions within the established network of healthcare providers. D. As opposed to joining a group insurance plan, purchasing health insurance on an individual basis can save a consumer thousands of dollars a year.

C. To be covered, members of an HMO must receive treatment for their medical conditions within the established network of healthcare providers.

Which item would NOT belong in an adjuster's initial report on a claim? A. The date that the adjuster first contacts the claimant B. A list of all known circumstances surrounding the claim C. A detailed list of the damages being claimed D. The final settlement amount

D. The final settlement amount

Which of the following is similar to a Business Auto Policy, but adds several policy provisions and protections specific to the trucking industry? A. Garagekeepers policy B. Excess Liability insurance C. Truckers policy D. Trip Transit policy

C. Truckers policy

Which of the following BEST describes the insurance provided by residual market insurance programs? A. Low premiums B. Designed to help low-risk consumers C. Usually a "last resort" form of insurance D. Very extensive coverage

C. Usually a "last resort" form of insurance

Which of the following actions by an adjuster would NOT result in disciplinary action by the Commissioner? A. Conducting insurance business incompetently B. Failing to pay money owed to an insurer C. Working for multiple insurers D. Failing to pay child support

C. Working for multiple insurers

Kate has a Personal Auto Policy through XYZ Insurance. In which of the following scenarios would XYZ Insurance NOT be allowed immediately to increase Kate's policy premium? A. Kate gets married and adds her husband to her personal auto policy. B. XYZ Insurance adds Comprehensive coverage to Kate's policy, per her request. C. XYZ Insurance expands coverage for all policies - a change which automatically applies to Kate's policy, as well. D. Kate moves and updates her address with XYZ Insurance.

C. XYZ Insurance expands coverage for all policies - a change which automatically applies to Kate's policy, as well.

Lewis owns a computer store, and he spends many hours a day on the sales floor demonstrating his products to customers. He often gets very animated when showing the electronics and, although he does not intend for anything bad to happen, he doesn't worry too much about handling them carefully, since he knows that his insurance policy will cover any damages. This behavior would be called a:

C. morale hazard.

In regards to Workers' Compensation, which of the following would likely be a "Temporary Partial" disability? A. the loss of an eye B. a full body cast - lasting 6 months C. a broken foot D. a broken back resulting in paralysis

C. a broken foot

During a storm, lightning strikes a tree in Harry's yard and starts a fire that spreads to his shed where he keeps all his equipment for his landscaping business. In addition to the shed, Harry has to purchase all new equipment to stay in business. The cost to replace the equipment would be considered:

C. a direct loss.

A large corporation owns a small hunting cabin in the woods, that it uses for occasional weekend getaways. The corporation can insure the cabin against property damage with a: A. Standard Fire Policy. B. commercial liability policy. C. dwelling policy. D. homeowners policy.

C. dwelling policy.

The Commissioner of Insurance can discipline adjusters who don't follow Alabama insurance law by all of the following except: A. suspension of licenses B. revocation of licenses C. imposing prison sentences D. imposing fines and warnings

C. imposing prison sentences

A plane was damaged while on its takeoff run down the airport runway. By policy definition, this damage is considered to have occurred while the aircraft was:

C. in flight.

When an adjuster has decided to deny a claim, it is necessary to: A. inform the claimant by registered mail. B. inform the claimant in person. C. inform the claimant in writing, with a full explanation. D. inform the claimant in writing.

C. inform the claimant in writing, with a full explanation.

When an insurer in Alabama becomes insolvent or financially troubled: A. it may sell all of its policies to another insurer. B. it may be shut down by the Alabama Commissioner of Insurance. C. it may be placed in receivership with the Department of Insurance. D. it may file bankruptcy with the Alabama Department of Insurance.

C. it may be placed in receivership with the Department of Insurance.

As a staff adjuster, one of Abigail's most important responsibilities is reporting to the principal. This would include all of the following except: A. sending the insurer a report with the final adjusted losses. B. letting the insurer know about any liability or expediency issues with the claim. C. keeping the claimant up-to-date on the progress and status of the claim. D. informing the principal of the investigation results.

C. keeping the claimant up-to-date on the progress and status of the claim.

Jim is an insurance adjuster working a theft claim. As part of his investigation, Jim might want to do all of the following, EXCEPT: A. review any available police reports. B. take statements from all witnesses. C. look for ways to lower the settlement for the claimant. D. thoroughly inspect all damages related to the theft.

C. look for ways to lower the settlement for the claimant.

Workers' compensation insurance can provide compensation for all of the following, EXCEPT: A. lost income. B. death. C. lost vacation time. D. medical expenses.

C. lost vacation time.

Inland Marine insurance protects: A. aircraft, forklifts, and cranes. B. harbour workers. C. property being transported. D. ships.

C. property being transported.

Dwelling policies cover: A. liability only. B. rental properties only. C. property, and liability with an endorsement. D. property only.

C. property, and liability with an endorsement.

An insurance adjuster will do all of the following regarding a claim EXCEPT: A. determine if the claim falls under the coverage of the insurance policy. B. investigate the claim. C. protect the insurer from the claim. D. decide whether the claim has any merit.

C. protect the insurer from the claim.

The Alabama Homeowners Bill of Rights outlines a policyholder's right to: A. cancel a policy and receive a refund of all paid premiums. B. ongoing insurance coverage. C. reject any settlement amount that the insurer offers. D. file a complaint against the Commissioner and receive a written response.

C. reject any settlement amount that the insurer offers.

Jared hopes to purchase a new insurance policy for his car, but he has an extremely poor driving record. The insurance company decides to issue Jared an insurance policy, but charges him a premium much higher than the average driver. The insurance company is practicing: A. risk retention. B. risk avoidance. C. risk reduction. D. risk transference.

C. risk reduction.

By signing a settlement release, the claimant gives up the right to: A. make sure that the insurer follows the terms of their agreement. B. increase her insurance coverage. C. seek any further damages. D. call her insurer.

C. seek any further damages.

An insurance contract is an agreement between two parties where each side promises to be truthful, factual, and honest about their respective positions. Therefore, an insurance contract is said to be a contract of: A. warranties. B. truthfulness. C. utmost good faith. D. promises.

C. utmost good faith.

This type of agent works for only one insurer and is paid on commission.

Captive Agent

As an insurance adjuster, Heather is responsible for updating and maintaining an accurate record of all the information pertinent to an individual's insurance claim, including copies of all written documentation, photos and property sketches, witness statements, and copies of medical bills. What is this record called?

Claim file

After her water heater leaked and damaged her hardwood floors, Clarice filed a claim with her insurer, KLM Insurance, who sent their adjuster, Bob, to inspect the loss. Clarice also hired a public adjuster, Jose, to represent her in her claim. To which principal must Jose report during the claim process?

Clarice

Jay's Chip Factory makes potato chips, and it gets chip bags from Bags, Inc. One day, the bag-making machine at Bags, Inc. broke down, and thus, Jay's Chip Factory couldn't get the bags it needed to bag its potato chips. Jay's Chip Factory had to shut down production temporarily while waiting on Bags, Inc. to fix their machine. Jay's lost business income may be covered under what coverage in its Equipment Breakdown Protection Coverage Form?

Contingent Business Income and Extra Expense

In Ocean Marine insurance, this term of sale states that the seller of goods is responsible for damage to the cargo during shipment:

Cost, Insurance, and Freight (CIF)

Christine's spinach field was partially destroyed by fire that resulted from a lightning strike during a recent storm. She lost 23 of her 150 acres. The adjuster writes her a check for the value of the damaged 23 acres, even though the yield from the rest of the field is doing exceptionally well and may make up for the damaged portion. What type of insurance policy does Christine have?

Crop-Hail

Due to decreased demand, the market price of beets dropped dramatically during the recent growing season. Consequently, Michelle's crop of beets did not make as much money as she was expecting this year, based on her production history and the harvest-time futures price. However, Michelle is insured for this type of situation. What kind of insurance does she have?

Crop-Revenue

Tim's $2,500 boat trailer was stolen from his driveway. Ignoring any deductibles, how much can Tim receive for his stolen trailer when he files a claim against his homeowners policy? A. $2,000 B. $2,500 C. $1,000 D. $1,500

D. $1,500

Adjuster Andy is trying to determine a final settlement amount for Stacy's claim. Stacy's house was destroyed in a fire and it will cost $185,000 to rebuild it. Stacy's homeowners policy has a limit of $178,000 and a $1,800 deductible. Typically, how much would Adjuster Andy calculate Stacy's final settlement amount to be? A. $176,200 B. $183,200 C. $185,000 D. $178,000

D. $178,000

Jeremy owns a business with several machines covered under an Equipment Breakdown Protection Coverage Form with a $500,000 limit. He has three deductibles on his policy: 1) a percentage deductible of 3% per loss, 2) a minimum deductible of $500, and 3) a maximum deductible of $10,000. After experiencing a covered loss of $85,000, how much will Jeremy have to pay out of his own pocket for the loss?

D. $2,550

Kelly took her eyes off the road and ended up smashing into the back of a passenger van. All five passengers were injured, and each one ended up with $25,000 in medical costs. Assuming Kelly has liability coverage with limits of 50/100/50, how much will she have to pay out of pocket? A. $50,000 B. $10,000 C. $15,000 D. $25,000

D. $25,000

Greta's Ski Supply is covered under the Building and Personal Property Coverage Form with limits of $50,000 for business personal property and $100,000 for the building. The policy also has a $500 deductible. When a tornado tears through the vicinity, the store suffered $10,000 in damage to the building and $20,000 in losses to the contents. In addition, Greta has to fork out an extra $1,000 for debris removal. How much will Greta receive from her insurer? A. $19,500 B. $33,500 C. $0 D. $30,500

D. $30,500

States that allow private insurers to offer workers' comp coverage as an alternative to the state workers' comp fund are called:

competitive.

Stephanie owns a house that she rents out for $2,500 a month. A massive kitchen fire forces her tenants to move out while the interior is overhauled. After two months, the repairs are complete, and Stephanie contacts her tenants, only to find that they've found a new place to live. It takes Stephanie another month and a half to find new tenants. Assuming that Stephanie had a $100,000 DP-2 policy, what is the maximum amount she could receive for lost rental income under Coverage D? B. $2,500 C. $7,500 D. $5,000

D. $5,000

The BOP provides loss of income on an "actual loss" sustained basis for up to: A. 6 months. B. 24 months. C. 18 months. D. 12 months.

D. 12 months.

Lucille owns her own woodworking business, building custom items such as dressers, wooden trunks, and mantelpieces. A fire destroys her entire operation and Lucille files a claim with her insurer. Which of the following would be covered under Coverage A of the Building and Personal Property Coverage Form in her commercial property policy? A. Lucille's computer in her office B. A hand-held circular saw C. The three wooden toy chests Lucille has completed for a client D. A bandsaw permanently affixed to the floor

D. A bandsaw permanently affixed to the floor

Which of the following is TRUE concerning a Business Owners Policy? A. A business owners policy is a good option for large multi-national corporations. B. Business owners policies are popular among large corporate vendors. C. Bars and taverns are eligible for business owners policies. D. A business owners policy offers liability protection.

D. A business owners policy offers liability protection.

On January 27, 2004, Ryan was using an exercise bike from NusquamCycle when the chain broke, causing him to fall and bruise his knee. Seven years later, on January 25, 2011, Ryan's knee gave out while jogging. His doctor told him that he'll need surgery and that this deterioration was probably caused by his bruise from the exercise bike. Assuming NusquamCycle is no longer in business, which CGL policy would cover Ryan's claim filed on January 25, 2011? A. Claims-Made policy from Jan 1 2003-Jan 1 2004 with a basic extended tail B. Claims-Made policy from Jan 1 2001-Jan 1 2002 with a supplemental extended tail C. Claims-Made policy from Jan 1 2003-Jan 1 2004 with a supplemental extended tail D. Claims-Made policy from Jan 1 2001-Jan 1 2002 with a basic extended tail

D. A claims-made policy from Jan 31 2009-Jan 31 2011

Which of the following is an insurable risk? A. A suburb B. A partnership C. A mountain range D. A football stadium

D. A football stadium

Which of the following is NOT considered a covered theft in a Commercial Crime policy? A. A customer dashes out of the store with a bag full of goods. B. The delivery man secretly withholds a package of goods for his own use after having them signed for. C. Three employees are discovered siphoning cash from the register at regular intervals. D. A periodic assessment of inventory reveals that 4% of a store's inventory is inexplicably missing.

D. A periodic assessment of inventory reveals that 4% of a store's inventory is inexplicably missing.

Anna's Rare Books in Birmingham needs to ship three F.Scott Fitzgerald first editions to a customer in Mobile. The combined value of the books is over $400,000. What type of Inland Marine insurance policy should Anna's Rare Books buy to cover this shipment? A. A motor truck cargo policy B. A pair and set policy C. An annual transit policy D. A trip transit policy

D. A trip transit policy

Which of the following is most likely a third party claim? A. A man files a homeowners claim when his house is struck by lightning. B. A man files a claim against his health insurer for a surgery to remove his appendix. C. A woman files an insurance claim after she backs her car into a guardrail. D. A woman files an insurance claim when she is injured by an employee at a local bar.

D. A woman files an insurance claim when she is injured by an employee at a local bar.

Which of the following statements regarding actual cash value is FALSE? A. A replacement cost valuation will generally be more than the ACV valuation. B. Actual cash value includes the depreciation on an item. C. The actual cash value generally reflects the market value of an item. D. Actual cash value is always most beneficial to a policyholder.

D. Actual cash value is always most beneficial to a policyholder.

Anton is purchasing homeowner's insurance for his new house. He wants to make sure his policy offers the BEST coverage available. Which policy should Anton choose? A. HO-3 B. HO-2 C. HO-8 D. HO-5

HO-5

Which of the following is NOT eligible for Dwelling coverage? A. A single-family home that is wholly rented out B. A mobile home on a permanent foundation C. A duplex owned by a corporation D. An 8-unit apartment building in which the owner resides

D. An 8-unit apartment building in which the owner resides

Which of the following statements is NOT true of an insurance adjuster? A. An insurance adjuster must always use reasonable judgement for both the insurer and the claimant. B. An insurance adjuster is an agent. C. An insurance adjuster who settles claims on behalf of an insurer has the power to bind that insurer, even if she makes a mistake. D. An insurance adjuster receives her authority to sell products on behalf of the insurer through a written contract.

D. An insurance adjuster receives her authority to sell products on behalf of the insurer through a written contract.

A fiduciary agent must regularly report to the principal. Which of the following is the BEST example of a principal in the context of insurance? A. A policyholder who has filed a first-party claim with his insurance company. B. An adjuster who signs a form on behalf of his employing insurance company. C. A public adjuster who is employed by a claimant to examine her damaged property. D. An insurer that employs an insurance adjuster to investigate damage claims.

D. An insurer that employs an insurance adjuster to investigate damage claims.

Who is NOT eligible for a homeowners policy? A. An owner of a home under construction B. A person who owns and lives in his house C. A tenant who rents a home or apartment D. An owner of a house in which he does not live, but rents to a tenant

D. An owner of a house in which he does not live, but rents to a tenant

Alice is an adjuster and is currently negotiating a settlement with Gale. Which of the following actions that Alice could take would be disrespectful towards Gale, and thus hinder the negotiation process? A. Not interrupting or correcting Gale B. Looking Gale in the eye C. Seeking to understand Gale's perspective D. Assuming to know what Gale wants

D. Assuming to know what Gale wants

Francis owns a small shoe store. Since his business isn't particularly risky, he has a commercial property policy that provides named-peril coverage to his building and personal property, without any additional coverages. Which Causes of Loss form does Francis have attached to his coverage form? A. Special Form B. Universal Form C. Broad Form D. Basic Form

D. Basic Form

Which of the following accurately summarizes the "assumption of risk" rule? A. Before workers' compensation insurance, an injured worker who was found to be at fault to any degree was denied compensation entirely. B. After workers' compensation laws were passed, employers were not held liable if a worker's injuries were in any way caused from the action or negligence of a fellow employee. C. Before workers' compensation insurance, employers were not held liable if a worker's injuries were in any way caused by the negligence of a fellow employee. D. Before workers' compensation insurance, workers had no remedy for the normal risks inherent in their jobs.

D. Before workers' compensation insurance, workers had no remedy for the normal risks inherent in their jobs.

Bobby just purchased an insurance policy for his home from XYZ Insurance. Which of the following would be a reason this policy may not be legally binding? A. Bobby is only 19 years old. B. Bobby paid his first premium when he and his agent agreed on a policy, but he is waiting for the policy documents to be prepared so he can sign them. C. Bobby has an outstanding warrant for selling marijuana. D. Bobby has been diagnosed as mentally incompetent.

D. Bobby has been diagnosed as mentally incompetent.

John, a contractor, just purchased a new backhoe and wants to get an insurance policy to cover it. He's looking for a policy that will provide coverage not only on the job site, but also while transporting it back and forth between sites. What type of inland marine insurance policy would likely fit John's needs?

D. Contractor's Equipment floater

If an adjuster needs to find clarification about what actually constitutes a collision, in which section of an insurance policy would she find that information? A. Declarations B. Conditions C. Exclusions D. Definitions

D. Definitions

Which Business Auto Policy endorsement covers employees while using their personal cars for business purposes? A. Mobile Equipment B. Individual Named Insured C. Drive Other Car D. Employee as Additional Insured

D. Employee as Additional Insured

Cliff receives a letter from the IRS, informing him that he has severely underestimated his Adjusted Gross Income for the past year. Cliff was oblivious to this fact because XYZ Accounting has filed his taxes for him for the past 15 years. Now, Cliff owes $15,000 in back taxes. He sues XYZ Accounting for this mistake. Which of the following would cover the cost of the lawsuit for XYZ Accounting? A. Malpractice Insurance B. Commercial Liability Insurance C. Accounting Insurance D. Errors and Omissions Insurance

D. Errors and Omissions Insurance

Farmer Scott owns a farm and raises goats, producing a lot of manure. Occasionally, after a strong rain, some of the waste washes into a nearby river. Which insurance coverage can protect Scott from any liability caused by the goat waste runoff? A. Farm Product Liability B. Custom Farming Liability C. Farm Livestock-Waste Liability D. Farm Pollution Liability

D. Farm Pollution Liability

Bill is going to switch employers, and therefore switch healthcare providers. Which federal law ensures that he won't be denied coverage when he switches health plans? A. FICA B. IIPPA C. FCRA D. HIPAA

D. HIPAA

Which of the following refers to being restored to the financial condition you were in before a loss? A. Restoration B. Estoppel C. Subrogation D. Indemnification

D. Indemnification

Which of the following is NOT true about Alabama and Fortified properties? A. Fortified rate discount is mandatory for properties in Baldwin and Mobile counties. B. Owners of new and existing homes may be eligible for a Fortified home designation. C. To get Fortified designation, the owner must hire a Fortified Home Hurricane evaluator. D. Insurers must offer Fortified discounts on all properties.

D. Insurers must offer Fortified discounts on all properties.

Which of the following is TRUE about workers' compensation insurance? A. It benefits the employee only. B. It benefits the employer only. C. The employer always benefits more than the employee. D. It benefits both the employee and the employer.

D. It benefits both the employee and the employer.

Why should litigation be considered a last resort option? A. The court will likely side with the claimant. B. It is the last thing to try. C. The court system is backed up. D. It can be costly and unpredictable.

D. It can be costly and unpredictable.

Which of the following is NOT one of the requirements that a "Fast Food Restaurant" business must meet in order to qualify for a BOP? A. The restaurant must maintain appropriate fire extinguishing equipment. B. The restaurant may not seat more than 150 people. C. The restaurant must not exceed 7,500 square feet. D. Liquor must not account for more than 25% of total annual sales.

D. Liquor must not account for more than 25% of total annual sales.

Which of the following BEST describes how covered losses are settled under a typical Equipment Breakdown Protection Coverage Form? A. Losses are normally paid at actual cash value, but an insured may change this with a Replacement Cost endorsement. B. Losses are paid at actual cash value. C. Losses are paid at replacement cost if the replacement or repair occurs within 12 months of the accident. D. Losses are normally paid at replacement cost, but an insured may change this with an Actual Cash Value endorsement.

D. Losses are normally paid at replacement cost, but an insured may change this with an Actual Cash Value endorsement.

Which of the following statements about insurable interest is FALSE? A. Insurable interest reduces the incentive for someone to cause damages intentionally to insured property. B. Purchasing an insurance policy on your home helps protect your insurable interest in a home. C. When a renter leases your house, your insurable interest in the home remains. D. Maintaining property values allows your neighbor to have an insurable interest in your house.

D. Maintaining property values allows your neighbor to have an insurable interest in your house.

Walter works for a shipping company, delivering packages and picking up orders. He lives very close to work and the grocery store is only a few blocks away, so he can live conveniently without owning a car. However, he would like to have some Personal Injury Protection, just in case he ever gets injured in an accident. Which BAP endorsement could his employer use to give him this coverage? A. Uninsured Motorist PIP B. Personal Injury Protection C. Medical Payments D. Named Individuals Broadened PIP

D. Named Individuals Broadened PIP

Which of the following would be considered an Instrumentality of Transportation and Communication? A. Airplane B. Ship C. Truck D. Pipeline

D. Pipeline

Which of the following is NOT considered an "out-of-pocket expense" in health insurance? A. Copayment B. Coinsurance C. Deductible D. Policy premiums

D. Policy premiums

Which of the following is not a function of the Alabama Ombudsman program? A. Help injured or disabled workers B. Help employers with their questions about workers' comp C. Provide benefit review conferences D. Represent injured employees in court

D. Represent injured employees in court

Monica's husband, Sam, likes to buy her expensive jewelry, and she has amassed quite the collection over the years. What endorsement would Monica and Sam need to add to their homeowners policy to fully cover Monica's jewelry collection? A. Inflation Guard B. Special Form C. Personal Property Replacement Cost D. Scheduled Personal Property

D. Scheduled Personal Property

Which financial institution bond is designed for all types of insurance companies? A. Standard Form 15 B. Standard Form 24 C. Standard Form 23 D. Standard Form 25

D. Standard Form 25

Which settlement option is usually reserved for the largest claims? A. No-release settlement B. Advance payment settlement C. Scheduled payment release D. Structured settlement

D. Structured settlement

After a rain storm, Nancy realizes that she left her bedroom windows open the entire time. Now there is extensive water damage to her area rug and furniture, and the laptop that had been sitting on her desk is ruined. Nancy has a Broad Form homeowners policy, so she calls her insurance company and files a claim. What is the likely result of Nancy's claim? A. The insurer will cover all the damaged property. B. The insurer will only cover the area rug. C. The insurer will pay for the furniture and the laptop, but not the area rug. D. The insurer will not cover any of the damage, since Nancy left the windows open.

D. The insurer will not cover any of the damage, since Nancy left the windows open.

Which of the following factors holds the LEAST relevance when an adjuster is evaluating an insurance claim? A. The coinsurance penalty B. The deductible C. The policy limits D. The premium

D. The premium

Adam has a treacherous drive to work every day. Not only does he have to drive down the pothole-strewn access road to the highway, but he also must traverse several icy bridges on the way to work. Why does the insurance company call these hazards "physical hazards"? A. They take a toll on Adam physically, increasing the chance of a loss. B. Adam is indifferent to any losses he may suffer. C. Adam doesn't consciously choose to take this route. D. The roads present a physical condition that increases the chance of a loss.

D. The roads present a physical condition that increases the chance of a loss.

Which statement about Personal Article Floaters is FALSE? A. They pay the least of the following for damaged property: actual cash value; the cost to repair or replace; or the coverage limits. B. Coverage is worldwide. C. They cover property on an open-peril basis. D. They have a $500 deductible.

D. They have a $500 deductible.

After a tornado severely damaged their building, the owners of ABC Online Marketing have to rent another building for a few months while repairs are underway. Which additional coverage would help cover the cost of renting this other building? A. Fixed Cost Insurance B. Additional Covered Property Endorsement C. Electronic Data Processing D. Time Element Insurance

D. Time Element Insurance

Joe filed an auto damage claim with his insurer, XYZ Insurance, who committed several unfair claims settlement practices while handling Joe's claim. Which of the following is NOT one of these unfair practices? A. XYZ Insurance paid Joe's claim, but they didn't specify under which coverage they paid his claim. B. While investigating Joe's claim, XYZ Insurance realized that Joe was over-insured, so they made a change to Joe's initial insurance application to reduce his coverage, without telling Joe about the change. C. After receiving all relevant information, XYZ Insurance took 40 days to get back to Joe with a decision on his claim. D. XYZ Insurance took 11 days to acknowledge Joe's claim and send him all the necessary paperwork.

D. XYZ Insurance took 11 days to acknowledge Joe's claim and send him all the necessary paperwork.

An insurance company may consider each of the following a risk, EXCEPT: A. a ruby necklace. B. a race car. C. a school bus. D. a flood zone.

D. a flood zone.

A dwelling policy would NOT be appropriate for: A. a duplex owned by an individual. B. a single-family home wholly rented out. C. a four-plex owned by a corporation. D. a motorhome owned by an individual.

D. a motorhome owned by an individual.

Inducement can be defined as: A. withholding material information in order to get a claimant to accept a lower settlement amount. B. allowing one's emotions and feelings to dictate one's course of action. C. falsely increasing the settlement figure to increase the adjuster's income. D. an action, item, or promise made to someone to motivate him toward certain desired behaviors.

D. an action, item, or promise made to someone to motivate him toward certain desired behaviors.

An "occurrence" is defined as:

an unexpected event that causes loss.

One day, a customer at Jim's Tire Sales was severely injured when a rack of tires collapsed and fell on her. Later, the customer filed a lawsuit against Jim for $750,000. Jim has a commercial general liability policy, but the limit for this type of loss is only $500,000. Not wanting to use his entire limit on this one claim, Jim tries to use his excess liability policy first, which has a limit of $1,000,000, so he can retain most of the aggregate limit in his base policy. Unfortunately for Jim, this is not possible because: A. all excess liability policies have a 10% per occurrence clause. B. Jim's excess liability policy is a Stand Alone policy. C. excess liability policies cannot follow commercial general liability policies. D. an excess liability policy pays only after the base policy's limit has been exhausted.

D. an excess liability policy pays only after the base policy's limit has been exhausted.

While a claim remains open, an insurer may require the adjuster to submit an interim report: A. every week for the purpose of documenting the adjuster's claim-related expenses. B. every day, which lists the amount of time spent working the claim. C. every 15 days, which explains why the claim is still open and when the adjuster expects to close it. D. at regular set intervals, which lists any new or important information about the claim.

D. at regular set intervals, which lists any new or important information about the claim.

All of the following pieces of information can be found in the Conditions section of an insurance policy, EXCEPT: A. anything the insured must do for coverage to remain in effect. xx B. what the insured must do in the event of a lawsuit. C. the insured's duties after a loss. D. causes of loss that are not covered.

D. causes of loss that are not covered.

A CGL can provide liability insurance coverage for all of the following persons, EXCEPT: A. stockholders. B. sole proprietors. C. volunteers. D. customers.

D. customers.

A captive insurance company: A. provides insurance that is designed to meet the needs of the general public. B. operates through an attorney-in-fact to provide insurance benefits for its members. C. provides insurance for insurers. D. exists solely to provide insurance for its parent company.

D. exists solely to provide insurance for its parent company.

All of the following causes of loss are excluded from coverage in an Equipment Breakdown Protection Coverage Form, EXCEPT: A. combustion explosion. B. hail. C. electrical testing. D. mechanical failure.

D. mechanical failure.

When an insurer buys insurance to reduce its exposure to loss, this is called: A. co-insurance. B. mitigation. C. loss reduction. D. re-insurance.

D. re-insurance.

Tim is the plaintiff in a case involving an auto accident. To recover monies he feels are due him, Tim produces documents to prove he had to pay over $55,000 in medical bills. If the court were to award Tim $55,000, the damages would be classified as: A. imperative damages. B. general damages. C. tort damages. D. special damages.

D. special damages.

In an insurance policy, the summary of what the insurer will do in the event of a covered loss is called: A. the dec page. B. the conditions section. C. the definitions section. D. the insuring agreement.

D. the insuring agreement.

All of the following are true about mediation, except: A. the mediator is a neutral third party. B. either party may walk away. C. settlement is only legally binding if both parties agree to it. D. the mediator's decision is legally binding.

D. the mediator's decision is legally binding.

The purpose of a fidelity bond is to guarantee that: A. the principal will pay all taxes and fees required by law to import/export products over international waters. B. public servants have a thorough background check. C. employers don't need liability coverage. D. the principal will not perform certain acts.

D. the principal will not perform certain acts.

Mark has an ocean marine insurance policy with cargo coverage. The type and value of his cargo varies from one shipment to the next, so rather than having a set value for this coverage, the amount of his settlement is only determined after a covered loss. Mark's cargo coverage is written on a/an ________ basis.

D. unvalued

Jim drops his car off at ABC Garage to have his exhaust system repaired and takes the train to work. When he returns, he finds that his car has been vandalized. Jim has comprehensive coverage, but feels the garage is responsible for the damage since Jim entrusted the car to ABC Garage. Which coverage type under ABC's garagekeepers policy would split the cost of the loss with Jim's own insurer without placing blame on ABC Garage? A. Comprehensive Coverage B. Direct Excess Coverage C. Liability Coverage D. Direct Primary Coverage

Direct Primary Coverage

Dr. Adams is in the middle of a malpractice lawsuit. Her insurer decides it will be more cost effective to simply settle the suit rather than draw the process out over several months. Assuming Dr. Adams holds a Professional Liability Policy, which of the following statements is TRUE in regards to settling the claim? A. Dr. Adams' insurer must seek her consent before settling the claim. B. Dr. Adams must pay all her own legal expenses. C. An umpire must be employed to settle the claim through arbitration. D. The insurer has the right to settle the claim anyway it finds advantageous to its interests.

Dr. Adams' insurer must seek her consent before settling the claim.

Robert is a delivery driver for Acme Surplus. On his last stop of the day, he runs a stop sign and broadsides Daryl's car, causing $14,000 in damage to Daryl's car, as well as $21,000 in damage to his company truck. Which type of coverage would help protect Acme Surplus from these losses? A. Daryl's auto liability insurance B. Personal auto liability insurance C. Personal liability insurance D. Employer liability insurance

Employer liability insurance

Which of the following is NOT considered "covered equipment" under an Equipment Breakdown Protection Coverage Form? A. Equipment that is buried in the ground B. Mechanical equipment that generates energy C. Equipment that operates under internal pressure or vacuum D. Computer equipment

Equipment that is buried in the ground

Randy owns a clothing store. One day, he notices a shady character with a backpack who is hanging around acting nervous. Randy becomes suspicious and approaches the young man. As the boy makes an effort to avoid him, Randy grabs his arm and detains him until the police arrive. Not finding any stolen merchandise, the police let the boy go. Two weeks later Randy is notified that he will be sued for violation of the young man's civil rights. This is an example of what type of personal injury covered under Randy's Commercial General Liability policy?

False Arrest, Detention, or Imprisonment.

Haley takes a bottle of water into a store, pours some of it on the floor when no one is looking, and then pretends to slip and fall. She cries out for help in apparent pain until someone comes to her aid. She then sues the store for her fake injury in an effort to collect an insurance settlement. What has Haley committed?

Hard fraud

Driving home from work one night, Judy is pulled over by a state trooper. When she asks why she was stopped, the trooper informs Judy that her auto insurance has lapsed. This is her first offense. What penalty will Judy face, if any?

Fine of $500 and suspension of her driver's license for six months

In 1945 Congress passed the McCarran-Ferguson Act. What does that act do?

Gives the states the authority to regulate the insurance industry

One morning, Jill arrives to open the bank, only to find the door already unlocked. Upon entering the bank, she sees the vault door has been blown open and a large amount of money has been burned when an explosive charge went off. Which commercial crime insurance coverage might cover the loss?

Inside the Premises: Theft of Money and Securities

After her water heater leaked and damaged her hardwood floors, Clarice filed a claim with her insurer, KLM Insurance, who sent their adjuster, Bob, to inspect the loss. Clarice also hired a public adjuster, Jose, to represent her in her claim. Bob has the responsibility to report to which principal?

KLM Insurance

ABC Roofing has two CGL policies that cover the same losses. Both policies are occurrence forms, thus pay out on a pro rata basis. The first policy is through KLM Insurance and has a limit of $300,000. The second is through XYZ Mutual, with a limit of $600,000. One day, ABC Roofing suffers an occurrence resulting in a $150,000 covered loss. How will this loss be indemnified?

KLM Insurance will pay $50,000; XYZ Mutual will pay $100,000

When discussing farm insurance, which of the following most accurately describes "scheduled property"?

Itemized property

Farmer Jane had an MPCI policy in place when her wheat field was ruined by a hail storm. Jane promptly plowed up the wheat and planted a cover crop. Two days later she filed a claim with her insurer. The claim was denied. What might be the reason for the denial?

Jane did not leave samples of the destroyed crop for the adjuster to examine.

Strong winds have torn a hole in Janet's roof. On top of that, heavy rain is expected in her area in the next few days. Figuring it would simply be too much effort to put a tarp over the hole in her roof, Janet elects to do nothing. The rains come and destroy several of her possessions inside her home. Janet files a claim with her insurer for the losses, but it comes back denied. This is because: B. Storm damage is not covered under a standard homeowner's policy. C. Janet failed to make a reasonable effort to protect the property from further damages. D. Janet's policy has coverage for wind damage, but not flood damage.

Janet failed to make a reasonable effort to protect the property from further damages.

Matthew works for Barry John Coal Company. One day, when all the work trucks are busy, Matthew's boss asks him to use his own truck to deliver a load of coal to a customer. On the way, Matt gets distracted looking at directions and swerves into oncoming traffic, causing a serious accident. Why might Matt's PAP liability insurer deny coverage for the damage Matt caused?

Matt's accident occurred during employment-related activities, so it will be covered by the employer's liability policy.

Stu has a collection of rare comic books. He wants to purchase theft insurance for his collection, separate from his home and other property. What term most accurately describes the type of policy Stu would purchase?

Monoline Policy

Coast-to-Coast Trucking is in the business of transporting fresh produce from farmers to markets all across the U.S. Which type of inland marine policy would best protect Coast-to-Coast Trucking's interest in the produce that it ships? A. Instrumentalities of Transportation and Communication policy B. Trip Transit policy C. Motor Truck Cargo policy D. Mail Coverage Policy

Motor Truck Cargo policy

Which of the following steps would occur LAST in the processing of a claim? A. Negotiate a settlement with the claimant B. Determine the cost of repairs C. Investigate the claim D. Submit the proper paperwork to the claimant after acknowledging the claim

Negotiate a settlement with the claimant

For Keith's 50th birthday, his wife surprises him with a new boat. In order to drive legally with his boat in tow, how much liability insurance does Keith need to purchase for his boat trailer?

None; boat trailers are exempt from mandatory liability insurance

Which of the following is NOT true of Personal Injury Protection? A. PIP is usually secondary coverage. B. PIP restricts the policyholder's right to recover losses in civil court. C. PIP is primary coverage. D. PIP provides no-fault protection.

PIP is primary coverage.

Chloe suffers a head injury at work and becomes mentally incapacitated. Her doctor thinks she will never be able to perform her job or to find any other employment. What kind of disability benefits will Chloe most likely receive?

Permanent total disability benefits

Jim has two policies that cover the same risk, but they respond differently: Policy X is primary and Policy Z is excess. Policy X has a limit of $50,000 and Policy Z has a limit of $25,000. When Jim suffers an insured loss totaling $62,000, how will each policy respond?

Policy X will pay $50,000 and Policy Z will pay $12,000

Which of the following may be covered under a DP-3? A. Earthquake B. Flood C. Water backup from sewers D. Power failure on the premises

Power failure on the premises

Sarah suffers acute back pain. Not satisfied with the specialists in her own network, Sarah elects to see a back specialist outside the network established by her healthcare provider. Her healthcare provider pays the amount that the same appointment would reasonably have cost with an in-network specialist, and Sarah has to pay the additional costs out of her own pocket. Which type of healthcare provider does Sarah belong to?

Preferred Provider Organization

What is the last step in the claim settlement process?

Preparing the final adjustment reports

Margaret lives in Alabama and is trying to obtain her adjuster license, but she has a felony conviction on her record. All of the following are true in Margaret's case, EXCEPT: A. She cannot receive an adjuster license without the written consent of the Commissioner of Insurance. B. She will need to provide fingerprints with her application. C. She can submit a 1033 waiver with her application in lieu of a background check. D. She must file a Criminal History Disclosure Form with the Department of Insurance.

She can submit a 1033 waiver with her application in lieu of a background check.

Which of the following statements best describes a part of the appraisal process? A. The claimant and the insurer each select an appraiser, and those two select an umpire. B. All parties must agree to the final amount in order for it to be binding. C. A neutral third party, called the appraiser, plays an advisory role to help the disputing parties come to a settlement. D. The opposing parties submit their evidence to the appraiser, who makes a final and binding decision.

The claimant and the insurer each select an appraiser, and those two select an umpire.

Greg, an agent for ABC Insurance Brokers, is trying to sell a new policy to Sally. Sally, however, is perfectly happy with her current policy and has no intention of cancelling it. Greg tells Sally that upcoming legislation is set to increase the minimum requirements for insurance, and that her current policy will not be available once the bill passes. He fails to tell her that if her policy is already in effect, this legislation won't affect her insurance. Which unlawful or unfair practice is Greg guilty of?

Twisting

In a dwelling policy, how much will the Fire Department Service Charge coverage pay?

Up to $500 if the fire department charges for responding to a covered peril

Joe decides to go surfing for three months in Hawaii. Before he leaves, he locks up his surfboard shop and rents a storage unit for most of his equipment and merchandise. When Joe returns, he finds that his shop has been broken into and vandalized. Under what policy condition would Joe's insurer likely refuse to make a full payment? A. Liberalization B. Vacancy C. Concealment D. Changes in Policy

Vacancy

Farmer Steve barely escapes a massive tornado, but the storm does completely destroy one of the barns on his property. Luckily, Steve has an insurance policy on his barn with a replacement cost endorsement, and the barn was fully insured. At the time of the loss, the actual cash value of the barn was $65,000, and its replacement cost is currently $85,000. When will Steve receive full indemnification for his losses on the barn?

When he replaces the barn and submits receipts to the insurer

Under which circumstance would it be legal for an insurer to charge one insured more than another insured for the same coverage?

When the insured is statistically more likely to experience a loss

Sally has an HO-3 policy on her $150,000 home in the country. One day, a bear breaks down Sally's back door to get into her kitchen for a snack. When Sally comes home to find the damage, she files a claim with her insurance company. Will the damage to Sally's home be covered, and why or why not?

Yes. The HO-3 is an open-peril policy, without an exclusion for wildlife.

Five years ago, when Rosamund was one year old, she had an expensive procedure done to remove what a doctor said was a cancerous tumor behind her knee. Her parents have recently discovered, upon the return of her condition, that the growth was merely a harmless cyst and not a dangerous tumor. Will the Statute of Limitations allow her parents to file a suit against the doctor?

Yes; suits for Medical Malpractice are allowed until the child's 8th birthday if the occurrence happened when the child was under 4.

James and Eric want to play a prank on Bob for Halloween. They dress up like headless horsemen and throw ignited Jack O'Lanterns at his house. Unfortunately, one of the inflamed pumpkins catches the porch on fire, causing $3,500 in damages. Bob doesn't find this tomfoolery very entertaining and sues both James and Eric for the cost of the repairs. In court, James and Eric would be:

a joint tortfeasor.

With respect to Inland Marine insurance, a "Block" policy (such as a Jewelers Block policy, or a Furriers Block policy) is an example of:

a Commercial Floater.

The "Consent to Settle" clause in the Professional Liability policy is best described as:

a clause that requires the insurance company to get approval from the insured before settling a claim.

Total disability benefits:

are paid to a worker who will never again be able to work in any sort of employment.

John moves his family to Alabama from Wyoming. In order to drive legally in the state, he must:

be able to show proof of financial responsibility.

When Sally applies for an auto policy, her agent issues her a ________ so that she can benefit from insurance protection while he underwrites the policy.

binder

Most of the aspects and activities of the insurance industry are regulated:

by individual states.

Part II of a Workers' Compensation policy is legal liability coverage. Which of the following would NOT be covered under Part Two? A. claims by others for the liabilities to insured's employees. B. claims by employees for on-the-job injuries. C. claims by relatives of injured employees for consequential damages. D. claims by employees for injuries not subject to a workers' compensation law, such as injuries caused by the employer's negligence.

claims by employees for on-the-job injuries.

According to Lonnie's health insurance policy, she is responsible for paying 15% of all of her medical costs. This percentage is Lonnie's:

coinsurance payment.

Thomas Building is asked by the local youth center to build a new recreational building for the local community. As a condition of their contract, Thomas Building must secure a surety bond. Thomas Building finds ABC Surety Bonding and works out a suretyship for the project. As part of the deal, Thomas Building will need to have $200,000 in cash reserves kept by ABC Surety Bonding. This money would be called:

collateral.

When Louise goes online and fills out phony applications with XYZ Auto Insurance in order to print the temporary insurance cards and sell them for a profit on the black market, she is:

committing hard fraud.

The job of the adjuster can best be described as:

comparing claimant's losses to promises made in an insurance policy.

When handling a Business Interruption claim, the adjuster must do all of the following EXCEPT: A. determine what the income of the business would have been if the loss hadn't occurred. B. determine the waiting period that applies to each indirect loss being claimed. C. determine what fixed expenses the business continues to pay even if it is not fully operational. D. determine the indirect loss of profits or revenue resulting from a covered peril.

determine the waiting period that applies to each indirect loss being claimed.

A stand alone excess liability policy:

follows a base policy, but may have different exclusions and limitations.

An insurer that adheres to the laws of a state but is located outside of that state is called a(n) ___________ insurer.

foreign

Ricky was watching a baseball game at XYZ Stadium, when the railing on which he was leaning gave way and he fell two stories. As a result of his fall, Ricky broke his back and is now paralyzed from the waist down. Ricky sued the owners of XYZ Stadium and was awarded $150,000 to cover his medical bills and $2.5 million in __________ because of the permanent nature of his injury.

general damages

UM/UIM coverage excludes:

government vehicles.

Strict liability:

holds a person liable for his actions regardless of how much care he demonstrates

An insurer in Alabama sends a partial payment to a claimant and states that payment is final, even though the policy limit has not been met and no compromise has been reached with the claimant. This act is:

illegal.

XYZ Films is getting ready to shoot a new Western film. As with most film productions, XYZ Films uses a surety bond from ABC Bonds to help protect the distributor's financial investment in the movie. Because of the magnitude of the budget for the film, ABC Bonds has XYZ Films secure a/an _____________ to act as a co-signer.

indemnitor

As Jonathan was driving through an intersection, another driver ran a red light and crashed into the side of Jonathan's car, which caused significant physical damage to both vehicles. Jonathan must now rent a car while his is being repaired. The rental car expense would be considered a/an:

indirect loss.

The Alabama Commissioner of Insurance:

is appointed by the Governor of Alabama.

Joe (the principal) is handling the disbursement of a deceased executive's estate, and he is required to carry a bond guaranteeing such work. The surety company requires one of its accountants to be a second signer on the disbursement checks that Joe writes. In this case, the surety has established:

joint control.

ABC Renovations has negotiated a deal with Tim: if he is involved in settling a claim needing interior or exterior renovations, Tim will steer business towards ABC Renovations. ABC Renovations will pay Tim $50 per referral. In participating in this deal, Tim is accepting:

kickbacks.

Many adjusters prefer arbitration to litigation, because professional arbitrators tend to be more ___________ than civil juries.

knowledgeable

All of the following are covered under Coverage A of a Business Owners Policy, EXCEPT: A. flooring and floor coverings. B. building maintenance equipment, such as fire extinguishers. C. owner's furniture in an apartment that is rented as furnished. D. leased business personal property that must be insured.

leased business personal property that must be insured.

Lucy has insurance on an expensive necklace she likes to wear to work every day. After work, she takes it off and leaves it in her car's cupholder so she can put it back on in the morning on her way to work. Lucy's behavior would be considered a:

morale hazard.

Cindy holds an insurance policy from Sine Nomine Insurance. This is not a publicly traded company, and Cindy can participate in the election of the board, receiving dividends if the company does well. Sine Nomine Insurance could be best described as a:

mutual insurance company.

Jim is out turkey hunting on a private ranch when he hears some movement in the brush. Assuming it's a turkey, Jim raises his shotgun and fires. Unfortunately for Jim, he has not taken a turkey, but has severely injured one of the landowner's calves instead. Jim is responsible for the cost of the calf because he acted with:

negligence.

A "hazard" is defined as:

something that increases the chance of a loss.

In a declaratory judgment action:

the court decides the legal rights of both parties.

The insuring agreement for Part A-Liability in a personal auto policy states that: A. the insurer will pay for "bodily injury" or "property damage" to any "insured" because of an auto accident. B. the insurer will cover the costs to defend the insured in court in subsequent lawsuits related to the same occurrence, even after the policy limit is reached. C. the insurer will cover the costs to defend the insured in court, up to the policy limit. D. the insurer has the right to settle liability cases out of court.

the insurer has the right to settle liability cases out of court.

Veronica owns a pottery business and is insured under a commercial property policy. She was in the process of building an extra structure for the sole purpose of kiln firing her pottery, but after 40 days of waiting for it to be completed, she moved her business to a new location without any intention of moving back. Her Builder's Risk Coverage Form was terminated because:

the property is abandoned.

When Emma is found guilty of arson for burning down her $175,000 home, her insurance policy is voided and she receives no indemnification for the loss. Emma still had $155,000 left on her mortgage at the time of the fire. Under the mortgagee clause, Emma's mortgage lender can recoup:

the total amount left on the loan - $155,000.

In the case of condominiums:

the unit owner and condo association share responsibility for insuring the property.

All of the following are universal exclusions in a Commercial Crime policy, EXCEPT: A. seizure or destruction of property by government authority. B. indirect losses. C. theft of money or securities outside the insured premises in the care of a messenger. D. theft or dishonest acts committed by the insured.

theft of money or securities outside the insured premises in the care of a messenger.