Property and Casualty Questions
Because he was watching his GPS instead of watching his driving, Gerry's car rear-ended the vehicle in front of him. It will cost $15,000 to repair that vehicle, and the two injured occupants of that vehicle are each awarded $30,000 in damages. Gerry's auto policy has combined single limits of $50,000. How much will his insurer pay? A. $50,000 B. $15,000 C. $65,000 D. $45,000
A. $50,000- Although total damages total $75,000, the insurer's obligations are capped by the $50,000 limit Gerry chose. Gerry will have to make up the $25,000 difference with his own funds.
Earthquake deductibles for direct property damage are usually expressed as a percentage of the structural value, usually ranging from: A. 5 to 20 percent of the insured value B. 50 to 80 percent of the insured value C. 0 to 5 percent of the insured value D. 25 to 40 percent of the insured value
A. 5 to 20 percent of the insured value
A chandelier falls into the crowd attending the bridal shower at Astrid and Tony's house. The medical payments to others coverage of Astrid and Tony's homeowners policy will pay for whose medical bills? A. Bridget's, the honored guest at the party B. Astrid and Tony's pet dog, Silas C. Elvin's, the electrician who installed the chandelier D. Astrid's
A. Bridget's, the honored guest at the party
Marcus sells homemade jams and jellies from his home in a town that is popular with tourists. Marcus wants the broad protection of a home business insurance coverage (HOBIZ) endorsement. Which factor makes him ineligible for coverage under this endorsement? A. His business involves the sale of food products. B. He has a part-time employee. C. His home is a residence. D. He is the sole owner of this business.
A. His business involves the sale of food products.
The BOP's personal and advertising injury liability coverage does NOT apply to certain offenses committed by: A. Internet service providers B. the insured's employees C. firms in the entertainment business D. religious organizations
A. Internet service providers
The standard mortgage (mortgagee) clause in a property insurance policy covering real property does which of the following? A. It ensures that the mortgage lender is paid if mortgaged property suffers a loss. B. It makes the lender the owner of the property if the borrower does not maintain insurance on the mortgaged property. C. It requires the lender to pay off the mortgage should a loss occur on the mortgaged property. D. It requires the lender to purchase property insurance on the mortgaged property.
A. It ensures that the mortgage lender is paid if mortgaged property suffers a loss.
Kristie opens the remote-controlled gate to the mansion where she lives to allow her friend Marta to enter the grounds. An uninvited vacuum cleaner salesman follows Marta through the open gate. Kristie's watchdogs are trained to attack intruders, and they injure both Marta and the salesman. Which of the following statements is true? A. Kristie has less of an obligation to the uninvited salesman than she has to her invited friend Marta. B. Kristie has equal obligations to any party who enters her premises for any reason. C. Kristie has no obligation to exercise care toward anyone entering her property. D. Kristie has more of an obligation to the unexpected salesman than she has to her expected friend Marta.
A. Kristie has less of an obligation to the uninvited salesman than she has to her invited friend Marta.
Annabelle wants a dwelling policy because her older home does not comply with current building codes. She wants the policy to provide ordinance or law coverage. She should therefore avoid buying: A. a DP 1 policy B. a DP 3 policy C. a DP 2 policy D. an unendorsed DP 2 or DP 3 policy
A. a DP 1 policy
Because Celina had three auto accidents during the past nine months, ABC Insurance Company does not want to provide coverage after the current policy expires. What will ABC send Celina to notify her of its decision? A. a nonrenewal notice B. a cancellation notice C. an expiration notice D. a bill for the next year's premium
A. a nonrenewal notice
Twenty percent of Aubrey's cargo was damaged when the ship transporting it encountered a violent storm in the Bermuda triangle. In terms of ocean marine insurance, what is this partial loss to Aubrey's cargo called? A. a particular average B. a general average C. an adventure D. a salvage
A. a particular average
The valuation provision in the commercial inland marine common conditions form establishes the fact that covered property will be valued at the smallest of three amounts. Which is NOT one of those three amounts? A. acquisition cost plus reasonable physical depreciation B. actual cash value of the property at the time of the lost C. cost of restoring the property to its pre-loss condition D. cost of replacing the property with substantially identical property
A. acquisition cost plus reasonable physical depreciation
Although Todd and his insurer agree that his property claim is covered, they cannot agree on the damaged property's value. What clause in Todd's property insurance policy provides a method of resolving this dispute? A. appraisal B. subrogation C. arbitration D. other insurance
A. appraisal
Matt, a parcel delivery driver, delivers a package to Christa's front porch where he is attacked by Christa's bulldog. In determining the degree of care that Christa owed to Matt, how would the courts probably classify Matt? A. as an invitee B. as a trespasser C. as a solicitor D. as a licensee
A. as an invitee
Under the Farm Property-Barns, Outbuildings, and Other Farm Structures coverage form (Coverage G), which of the following types of farm property is NOT covered? A. below-ground foundations of buildings B. building materials and supplies used in building or repairing farm buildings C. portable buildings D. outbuildings
A. below-ground foundations of buildings
An endorsement in the form of special provisions is used to modify a homeowners policy to reflect: A. current state law B. intent of an insurer to cancel a policy C. premium increases D. changes of address of the insurer or insured
A. current state law
Which of the following causes of a mechanical breakdown of equipment would be covered? A. electrical arcing B. freezing caused by record-breaking frigid weather C. explosion of unconsumed fuel D. flood
A. electrical arcing
In his homeowners insurance application, Dan stated that he had had no previous liability losses. He did not mention a bar fight in which he was held responsible for another patron's injuries. Because Dan concealed this information, the concealment or fraud provision in the policy: A. excludes liability coverage for Dan B. waives the insurer's right to challenge the application C. assumes the inaccurate information in the application is correct D. lets the insurer investigate the information in the application
A. excludes liability coverage for Dan
What type of endorsement must an insurer allow an insured to buy after the insured's claims-made policy has been canceled? A. extended reporting coverage B. personal property replacement cost C. special provisions-Pennsylvania D. business pursuits
A. extended reporting coverage- Insurers must provide a 60-day period, after cancellation or nonrenewal of a claims-made policy becomes effective, during which time the insured may buy an extended reporting coverage endorsement (also called tail coverage).
Alva's ocean marine policy provides coverage against "perils of the seas." Which of the following is NOT a peril of the sea? A. fire B. heavy weather C. stranding D. sinking of the vessel
A. fire
Hannah is a college student who has insured her off-campus apartment and its contents under a dwelling policy. She adds the broad theft coverage endorsement to her policy. This will NOT protect her if: A. her sorority sisters plot to remove the furniture B. her backpack is stolen while she is on campus C. her personal property is stolen from her apartment D. burglars damage a door to get into her house
A. her sorority sisters plot to remove the furniture
Miles is told that his application for auto insurance was rejected based on information in his motor vehicle record (MVR). Which of the following is material underwriting information that might have appeared on Miles' MVR? A. his driving under the influence (DUI) conviction B. the driving records of his wife and children C. how many miles he drives each year D. his low credit score
A. his driving under the influence (DUI) conviction
The two things that an insurance company's loss ratio compares are: A. incurred losses and earned premiums B. profits and expenses C. profits and incurred losses D. paid claims and expenses
A. incurred losses and earned premiums
Ken's house has an exterior layer of brick that covers wooden walls supported by wooden 2-by-4 studs. What type of construction does Ken's house have? A. masonry veneer B. masonry C. frame D. fire resistive
A. masonry veneer
A thunderstorm blows furniture on the balcony of Deborah's apartment against a window, breaking the glass. Deborah takes no action to prevent rain from entering the apartment. She makes a claim under her DP 3 policy for rain damage to her indoor furniture. Which exclusion in her policy will lead the insurer to deny her claim? A. neglect B. intentional loss C. removal D. falling objects
A. neglect
Dora hires Shaun to clean the terra-cotta tiles in her home's foyer. Shaun's work is poor, so Dora sues him to recover the cost of the tiles he ruined. Shaun's businessowners policy will: A. not cover the damage to the ruined tiles B. reimburse Dora's labor costs C. deny coverage for any loss D. cover the cost to replace the ruined tiles and reimburse Dora's labor costs
A. not cover the damage to the ruined tiles- The BOP excludes coverage for property damage to a part of real property on which the insured is performing work if the damage is caused by the work.
The declarations page of Julius's equipment breakdown policy lists a number of coverages, such as property damage, expediting expenses, business income and extra expense, and utility interruption. The word "INCLUDED" is shown next to "property damage," but it does not appear elsewhere in the declarations, nor are there any dollar limits listed on the page. Julius's policy provides coverage for: A. property damage only B. property damage, expediting expenses, business income and extra expense, and utility interruption C. expediting expenses, business income and extra expense, and utility interruption only D. every listed coverage other than property damage
A. property damage only
One purpose of a Fair Plan is to provide for an equitable distribution and placement of: A. risks among insurers B. risks among insureds C. insurance policies (both low and high risk) D. sales referrals
A. risks among insurers
Miguel purchased an accounts receivable floater because he allows many of his bar's regular customers to run a tab that they pay at the end of the month. If the book where he keeps track of these tabs is destroyed, he expects that the insurer will pay for all the following EXCEPT: A. tabs that Miguel inflates to cover unpaid tabs of former customers B. amounts that remain uncollectible because he cannot prove what is owed C. the cost of reestablishing customers' tabs based on other records D. the increased costs of collecting accounts
A. tabs that Miguel inflates to cover unpaid tabs of former customers
A flood swept some of Bridgette's flood-damaged property onto a neighbor's land, and it swept some of a neighbor's flood-damaged property onto Bridgette's land. The debris removal coverage in Bridgette's National Flood Insurance Policy will pay for removing all the following debris EXCEPT: A. the neighbor's property on the neighbor's land B. Bridgette's property on the neighbor's land C. Bridgette's property on Bridgette's land D. the neighbor's property on Bridgette's land
A. the neighbor's property on the neighbor's land
An insurer that decides to cancel a PAP after it has been renewed can do so if: A. the policy was obtained through a material misrepresentation. B. the renewal occurred within the last 60 days. C. the premium payment was received after the due date. D. the insured was cited for a moving violation.
A. the policy was obtained through a material misrepresentation.
Dewey Insurance Company is a nonadmitted insurer that is on a state's white list. From this information, it seems most likely that Dewey: A. writes excess and surplus lines insurance in that state B. is a standard insurer C. is operating illegally if it sells any insurance in that state D. is licensed or registered to do business in that state
A. writes excess and surplus lines insurance in that state
What type of state plan provides access to basic property insurance to individuals who might not be able to obtain coverage because their property is located in high risk areas or there are other high risk problems? A. Equal access plan B. FAIR plan C. Equitable plan D. Guaranteed plan
B. FAIR plan
Jamie rents a two-bedroom apartment in a 12-unit apartment building where she lives with her two-year-old son. She wants to insure the property in their apartment. Which homeowners policy form, if any, is appropriate for her situation? A. HO 6 B. HO 4 C. HO 2 D. None is suitable for Jamie because she does not own a home.
B. HO 4- The Homeowners Policy Contents Broad Form 4 (HO 4) is designed for tenants of houses or apartments.
Ina's home is located in a special flood hazard area (SFHA). What does this mean with respect to the area's tendency to flood? A. It has one flood every 100 years. B. It has a 1 percent chance of being flooded in any given year. C. It will never have more than one flood during any 100-year period. D. It will always have at least one flood during any 100-year period.
B. It has a 1 percent chance of being flooded in any given year.
Cathy's business does not own or lease any autos. When necessary, she and her employees use their own cars on business errands. Why should Cathy's businessowners policy include the hired auto and nonowned auto liability endorsement? A. Nonowned auto coverage in the BOP is an inexpensive way to cover an auto titled in Cathy's name and used for her personal use. B. Nonowned auto coverage will protect the business if an employee has an accident while using a personal car on company business. C. Hired auto coverage will protect the business if an employee has an accident while using a personal car on company business. D. Nonowned auto coverage will protect Cathy's business if she borrows a friend's car or truck for a business purpose.
B. Nonowned auto coverage will protect the business if an employee has an accident while using a personal car on company business.
A deck collapses during a party at an insured's house, and the guests sustain minor injuries. The medical payments to others coverage of the insured's homeowners policy will pay for whose medical bills? A. Isabella's, the insured's two-year-old daughter B. Sanford's, the guest of honor C. Tony's, a restaurant employee who delivers food D. Erin's, an uninvited guest
B. Sanford's, the guest of honor
Corinne purchased her home with a 10 percent down payment and a 90 percent mortgage from Sidney Bank. Why does Sidney Bank have an insurable interest in Corinne's house? A. The mortgage holder (bank) is responsible for paying insurance premiums on a mortgaged house. B. The bank faces the possibility of a loss if Corinne's house is damaged or destroyed. C. Corinne cannot afford to make mortgage payments on her own. D. The mortgage documents Corinne signed make the bank a coinsured.
B. The bank faces the possibility of a loss if Corinne's house is damaged or destroyed.
The definition of actual cash value in Special Provisions-Pennsylvania (HO 01 37) includes all of the following elements EXCEPT: A. It is defined as the dollar amount required to repair or to replace covered property. B. There is no deduction for depreciation and deterioration. C. The dollar amount is the cost of repair or replacement at the time of loss or damage. D. The repair or replacement must be with material of the same kind and quality.
B. There is no deduction for depreciation and deterioration.
Ida's boutique at a shopping mall escapes damage when a portion of the atrium roof caves in. However, her business came to a sudden halt when the debris blocks access to her store. Does Ida's businessowners policy cover the resulting loss of income? A. No, because the BOP includes extra expense coverage but not business income coverage. B. Yes, because the BOP's business income and extra expense coverage applies when a business interruption is caused by damage to any area used to gain access to the insured's premises. C. No, the BOP's business income and extra expense coverage does not apply because Ida's property was not damaged. D. No, because the BOP provides neither business income nor extra expense coverage.
B. Yes, because the BOP's business income and extra expense coverage applies when a business interruption is caused by damage to any area used to gain access to the insured's premises.
Which of the following incidents would be covered by the equipment insurance breakdown policy? A. basement flooding causes a company's heating system to malfunction B. a surge in electricity damages a company's mainframe computer C. a boiler's tubes are pitted with scale and must be replaced. D. worn-out bearings cause a machine to stop functioning
B. a surge in electricity damages a company's mainframe computer
Annette is beginning to sell some of her handmade furniture online. She wants an insurance policy that will cover her interest in any property that she ships during the coming year. Given these facts, what does Annette need? A. an installation floater B. an annual transit policy C. a trip transit policy D. a motor truck cargo policy
B. an annual transit policy
Gavin was seated behind the goal to watch a hockey game when a member of the visiting team hit a puck that sailed over the top of the goal and struck him, breaking his jaw. Gavin sued the team, but the team's lawyer held that Gavin willingly exposed himself to the possibility of injury, a defense that is based on the doctrine of: A. contributory negligence B. assumption of risk C. comparative negligence D. absolute liability
B. assumption of risk
Underwriters of property or casualty insurance policies commonly use all of the following sources of information when deciding to accept or reject a risk EXCEPT: A. loss history data B. genealogical records C. credit report D. motor vehicle record
B. genealogical records
When fire broke out in the ship's forward hold, the crew flooded all cargo in that area to keep the fire from destroying the entire vessel. AC Company's cargo was in a different hold, so it was not damaged. Yet, the company is being asked to pay for some of the cargo that was damaged because that loss is considered to be a(n): A. particular average B. general average C. peril on the sea D. salvage charge
B. general average
In an attempt to reduce her expenses, Mattie sells her car. What must she do to cancel her auto insurance policy? A. forfeit the unearned premium B. notify the insurer in writing of her intent to cancel the policy C. pay a cancellation fee D. nothing, because coverage automatically ended when she sold the car
B. notify the insurer in writing of her intent to cancel the policy
In which of the following communities would the National Flood Insurance Program make flood insurance available? A. only communities in which all residents own flood insurance B. only in communities that participate in the National Flood Insurance Program C. only in communities that have previously suffered a major flood D. only in communities that have been turned down for flood insurance by private insurance companies
B. only in communities that participate in the National Flood Insurance Program
Alex's Diner is insured by an unendorsed businessowners policy. The policy's declarations page specifies limits for the building coverage and for the business personal property coverage. What kind of perils coverage does Alex have? A. named perils coverage on both the building and personal property B. open perils coverage on both the building and personal property C. open perils coverage on the building but named perils coverage on personal property D. named perils coverage on the building but open perils coverage on personal property
B. open perils coverage on both the building and personal property- Unless modified by endorsement, the property section of the ISO BOP provides open perils coverage on the buildings and business personal property.
Public officials in Robyn's community adopt a new building code. Although existing buildings are grandfathered, the new code specifies that any noncomplying building that is more than 50 percent damaged must be demolished and rebuilt to comply with the code. Which endorsement does Robyn need in her commercial property policy to cover this risk? A. builders risk B. ordinance or law C. building materials D. value reporting
B. ordinance or law
The businessowners policy is a package policy that combines coverage for A. property and crime risks. B. property, liability, crime, and inland marine risks. C. property and inland marine risks. D. property and liability risks.
B. property, liability, crime, and inland marine risks.
What is "actual cash value"? A. the cost to repair or replace a damaged building with functionally equivalent materials B. replacement cost minus physical depreciation C. the value stated in the policy's schedule D. replacement cost plus physical depreciation
B. replacement cost minus physical depreciation
Which of the following is a coverage option that is available in a standard equipment breakdown policy? A. corrosion B. spoilage damage C. internal dry rot D. smoke damage
B. spoilage damage
Edwina has a standard HO 3 policy with no added endorsements. Her diamond earrings are stolen and she notifies her insurance agent. However, her insurance covers only a portion of the loss because the policy contains a(n): A. scheduled jewelry exclusion B. sublimit for theft of jewelry C. sublimit for any loss to jewelry D. unscheduled jewelry exclusion
B. sublimit for theft of jewelry- The HO 3 covers jewelry, but theft losses to jewelry are limited by a dollar sublimit.
What is the purpose of the notice to consumers required by the Fair Credit Reporting Act? A. to advise that consumer information in an application may be used as evidence in court B. to advise that the insurer may order a credit report on the applicant that includes personal information C. to give the opportunity to opt out of a credit investigation D. to confirm that an insurer's privacy policy is legal
B. to advise that the insurer may order a credit report on the applicant that includes personal information
Because he doesn't own an airplane, Lanny thinks it silly that his homeowners insurance policy contains several exclusions that apply to aircraft. What is the purpose of these exclusions? A. to remove coverage for uninsurable risks B. to remove coverage not needed by a typical insured C. to eliminate or reduce overlapping coverage D. to reduce the incentive to create losses and provide an incentive to prevent losses
B. to remove coverage not needed by a typical insured
Harding Paint Store mixed a gallon of paint with the custom color Meghan requested. However, the store clerk failed to tighten the lid on the paint can, which came open while Megan was driving home with the can in her car. Under which type of law was Harding required to pay for the expensive damage to Megan's car that resulted from the paint spill? A. criminal law B. tort law C. contract law D. workers compensation law
B. tort law
All of the following causes of loss are commonly listed as excluded perils in open perils property insurance policies, EXCEPT: A. wear and tear B. vandalism C. flood D. war
B. vandalism
All the following are federal laws impacting property and casualty insurance EXCEPT: A. Gramm-Leach Bliley Act B. Fair Credit Reporting Act C. Affordable Care Act D. Terrorism Risk Insurance Act
C. Affordable Care Act
Dairy products in Bette's ice cream shop would be destroyed if her freezers failed for more than a few hours. So Bette added the utility services-direct damage endorsement, scheduling overhead transmission lines, to her businessowners policy. When the shop loses electrical power due to a mechanical breakdown of the utility company's equipment: A. Bette's direct damage and loss of business income will be covered B. Bette's direct damage will be covered, but her loss of business income will not be covered C. Bette's loss will not be covered because mechanical breakdown is not a covered peril D. Bette's loss of business income will be covered, but her direct damage will not be covered
C. Bette's loss will not be covered because mechanical breakdown is not a covered peril
Which of the following loss valuation methods is used with older buildings that have components no longer available or available only at a prohibitively high cost to repair or replace? A. replacement cost B. actual cash value C. functional replacement cost D. market value
C. Functional Replacement Cost
Personal Property Replacement Cost Loss Settlement--Pennsylvania (HO 23 63) is attached to Rhonda's homeowners policy. She knows that her policy covers awnings, but is not sure under what conditions. Which of the following is not true? A. Replacement cost also applies to losses to outdoor antennas, outdoor equipment, carpeting, and household appliances, if covered by the policy. B. The awnings will be covered whether or not attached to a building. C. Her loss will be settled at replacement cost at the time of the loss. D. The awnings will be covered only if they are attached to a building.
C. Her loss will be settled at replacement cost at the time of the loss.
Oscar rents a car for a business trip and strikes a pedestrian. His businessowners policy includes a hired auto and nonowned auto liability endorsement. However, the endorsement's schedule only indicates coverage for hired autos. How will the policy respond to the pedestrian's claim for medical expenses? A. It will cover the claim even without the endorsement. B. It will not cover the claim because it involved a nonowned auto. C. It will cover the claim because the endorsement applies to a hired auto D. It will provide collision coverage on the hired auto but will not cover the claim.
C. It will cover the claim because the endorsement applies to a hired auto
Every dwelling policy must cover which peril? A. freezing B. windstorm C. lightning D. vandalism
C. Lightning- Coverage against fire, lightning, and internal explosion is mandatory under a DP 1 form. The DP 2 and DP 3 forms cover the same perils covered by the DP 1 and more.
Which statement is correct about businessowners policy coverage for loss of income from a business interruption? A. The BOP covers business income and extra expense coverage only when the business suffers critical damage. B. The BOP provides extra expense coverage but not business income coverage. C. The BOP covers business income and extra expense coverage when the business premises are inaccessible. D. The BOP covers neither business income nor extra expense coverage.
C. The BOP covers business income and extra expense coverage when the business premises are inaccessible- The BOP also covers the expenses incurred in making the business accessible again.
XYZ Insurance Company's auto insurance application includes a Fair Credit Reporting Act Notice. What does this notice inform consumers about? A. Any information they provide in the application may be used against them in a court of law. B. They are entitled to opt out of a credit investigation. C. The insurer might order a credit report on the applicant that includes personal information. D. The insurer's privacy policy complies with legal requirements.
C. The insurer might order a credit report on the applicant that includes personal information.
With an open perils policy, which of the following statements correctly describes the burden of proof with respect to covering a loss? A. To cover the loss, the policyholder has the burden of proof to show the loss was caused by a covered peril. B. To cover the loss, the policyholder has the burden of proof to show the loss was not caused by an excluded peril. C. To deny coverage, the insurer has the burden of proof to show the loss was caused by an excluded peril. D. To deny coverage, the insurer has the burden of proof to show the loss was not caused by a covered peril.
C. To deny coverage, the insurer has the burden of proof to show the loss was caused by an excluded peril.
Which of the following items could be covered under a mobile agricultural machinery and equipment coverage form? A. bulk milk tanks B. boilers C. a tractor D. irrigation equipment
C. a tractor
Nola's hardware store is insured by a businessowners policy that covers her building and business personal property. Her liability coverage will NOT cover a claim that arises when: A. a clerk accidentally spills paint on a customer's coat B. Nola detains a suspected shoplifter who turns out to be innocent C. a window display falls and breaks the plate-glass window D. a customer falls in the store and breaks an ankle
C. a window display falls and breaks the plate-glass window
Which business would be eligible for coverage under a businessowners policy? A. motel four stories tall B. construction contractor that works on buildings up to ten stories tall C. apartment building seven stories tall D. office building 20 stories tall
C. apartment building seven stories tall- Apartment buildings are eligible for BOP coverage. Also eligible are construction contractors doing work at heights up to three stories, mercantile risks, motels up to three stories tall, and office buildings up to six stories tall.
Excess and surplus (E&S) lines insurance is any type of coverage that: A. has unused limits that are left over after paying a large loss B. provides coverage once a primary policy's limits have been exhausted C. cannot be placed with an admitted insurer in a certain jurisdiction D. is not essential but is desirable
C. cannot be placed with an admitted insurer in a certain jurisdiction
Frances converts the garage behind her house into an office where she operates a seasonal tax preparation service. She must walk several feet outside to get from her house to the garage. Does Frances's standard, unendorsed homeowners insurance policy cover damage to the office? A. yes, it is covered under Coverage A-Dwelling B. yes, it is covered under Coverage C-Personal Property C. no D. yes, it is covered under Coverage B-Other Structures
C. no- Francis's garage is excluded because she operates a business there.
Whose insurance needs are businessowners policies specifically designed to meet? A. home-based businesses B. businesses that are too large for a commercial package policy C. small to medium-sized businesses with typical exposures D. businesses that are too small for a homeowners policy with a HOBIZ endorsement
C. small to medium-sized businesses with typical exposures
Abdul's inventory values fluctuate depending on the supply and demand of imported goods he distributes. His commercial property policy has a value reporting form that requires him to: A. pay the entire premium when the policy takes effect B. have a seasonable business cycle C. submit periodic reports of the value of insured property D. pay a provisional premium based on values reported during the policy term
C. submit periodic reports of the value of insured property
Lucy owns a variety of valuable items, including expensive jewelry, a collection of fine paintings, several mink garments, and her grandfather's restored DeSoto auto, which she drives on special occasions. A personal articles floater can be used to cover all of the following items EXCEPT: A. the mink garments B. the paintings C. the DeSoto D. the jewelry
C. the DeSoto
Karina owns the four homes listed below. Which one of them is NOT eligible for flood coverage under the NFIP's dwelling form? A. the one-family mountain home where she stays during the summer B. the condominium unit in the Sun Belt where she spends her winters C. the eight-unit apartment building she bought as an investment D. the residential townhouse in the city where her company is headquartered
C. the eight-unit apartment building she bought as an investment
Which of the following perils is NOT covered under any causes of loss form? A. falling objects B. bovine flu C. transport of farm personal property D. drowning of livestock
C. transport of farm personal property
Within the body of an insurance policy, what word or phrase refers specifically to the named insured? A. "the insurer" B. "we" C. "the insured" D. "you"
D. "you"
Earl's businessowners policy has a liability and medical expenses limit of $300,000. Five customers are injured in an explosion. Each is awarded $150,000 in damages. How much will Earl's insurer pay in response to this claim? A. $750,000 B. $150,000 C. $1,500,000 D. $300,000
D. $300,000
What is the maximum amount for which the Pennsylvania Property and Casualty Insurance Guaranty Association can be liable for on a covered claim? A. $250,000 B. $500,000 C. $1 million D. $300,000
D. $300,000- The association's obligation is satisfied by paying the claimant an amount up to $10,000 per policy for a covered claim for the return of unearned premium and up to $300,000 per claimant for all other covered claims.
A provision within a standard fire insurance policy requires an insurer to pay for a loss for which it is liable within how many days after receiving proof of loss? A. 120 days B. 100 days C. 75 days D. 60 days
D. 60 days
Why do most insurance policies covering buildings and their contents exclude earthquake coverage? A. It is difficult to predict when an earthquake will occur. B. Earthquake damage is a form of expected wear and tear. C. Earthquake coverage can only be obtained through the National Earthquake Insurance Program. D. An earthquake may result in catastrophic losses.
D. An earthquake may result in catastrophic losses.
Which statement is true about crop-hail insurance? A. It is provided only by the federal government. B. It must be purchased before the seed begins to germinate. C. It is not sold by insurance agents but is only sold from a governmental office. D. It typically covers only one peril: hail.
D. It typically covers only one peril: hail.
A house is struck by lightning during a thunderstorm, which starts a fire. The house stands in a floodplain and the basement fills with water from the storm. The homeowner files a claim on her homeowners insurance policy, which excludes losses from floods. What is true about her coverage? A. It will partially cover the loss from the fire and the flood. B. It will not cover the loss. C. It will cover only the loss from the fire. D. It will cover the loss.
D. It will cover the loss.
Last year, PDQ Insurance Company had a combined ratio of 105 percent, which means: A. PDQ had an underwriting profit last year B. PDQ's premiums equaled its expenses last year C. PDQ had an investment profit last year D. PDQ had an underwriting loss last year
D. PDQ had an underwriting loss last year
The businessowners policy is designed to cover risks for what size of business? A. Large B. Small C. Medium and large D. Small and medium
D. Small and medium
Osvaldo and his insurer agree to submit their dispute to arbitration, What can they expect from the arbitration? A. The hearing will take place at the insurer's home office. B. A court of law will rule on the outcome. C. They can choose the state law that will govern the outcome. D. The panel will consist of three experts.
D. The panel will consist of three experts.
What is the only section modified in a homeowners policy when Special Provisions-Pennsylvania (HO 01 37) is added or attached to it? A. automatic termination B. cancellation and nonrenewal C. subrogation D. actual cash value
D. actual cash value
Coworkers who live near her residence ride to work in Felicia's car and help pay for her gas and other expenses. An exclusion in Felicia's auto insurance policy says it does not cover a vehicle while it is carrying persons for a fee but then seems to contradict that statement by saying the exclusion does not apply to a share-the-expense carpool. What is this apparent contradiction? A. an ambiguity that works in the insurer's favor B. an ambiguity that works in Felicia's favor C. not applicable to Felicia's carpool D. an exception to an exclusion
D. an exception to an exclusion
What typically provides temporary insurance coverage for a specified time period until an insurance policy is accepted or denied? A. selected endorsement B. security deposit C. rider D. binder
D. binder
The term commercial property and casualty risk insurance does NOT include insurance issued for: A. commercial autos B. business or professional risks C. aviation D. fidelity and surety bonds
D. fidelity and surety bonds
The Farm Property-Barns, Outbuildings and Other Farm Structures Coverage Form (FP 00 14) can cover all the following types of structures, EXCEPT: A. silos B. outdoor antennas and antenna towers C. barns D. field or pasture fences
D. field or pasture fences
Which peril covered under the causes of loss-broad form is also covered under the causes of loss-basic form? A. water damage B. falling objects C. weight of snow, ice, or sleet D. hail
D. hail
The Terrorism Risk Insurance Act (TRIA) requires insurance companies to make coverage for certified acts of terrorism available for all the following lines of insurance EXCEPT: A. commercial property B. commercial liability C. workers compensation D. homeowners
D. homeowners
A retired concert pianist, Socorro earns $100 per week by giving piano lessons in her home to a few students. According to Socorro's homeowners insurance policy, giving piano lessons: A. is not a business because she is not an educational institution B. is not a business because Socorro is retired C. is not a business because she does it only on a part-time basis D. is a business because of the amount she earns
D. is a business because of the amount she earns- Business is broadly defined to include a full-time, part-time, or occasional trade, profession, or occupation as well as other activities a person participates in for money or other compensation of at least $2,000 per year.
A benefit of the extra expense additional coverage in a businessowners policy is that it: A. requires a minor coinsurance payment B. applies when property is damaged by any cause C. applies no matter how long repairs take D. is not subject to the limits of insurance
D. is not subject to the limits of insurance- Extra expense coverage is not subject to the limits of insurance but is provided in addition to those limits.
Celia put her laptop computer in the overhead bin of an airplane, discovered it was missing when she got ready to depart the plane at the end of the flight, and concluded it had to have been stolen. This type of theft is called: A. conversion B. burglary C. robbery D. mysterious disappearance
D. mysterious disappearance
Waldo's 20-year-old truck is damaged in an auto collision. The insurer declares it to be a constructive total loss. Therefore, the insurer will NOT: A. take possession of the damaged vehicle B. pay the owner the vehicle's actual cash value plus tax minus the deductible C. sell the damaged vehicle as salvage D. pay to have the auto repaired
D. pay to have the auto repaired
Jodi's real estate office leases a photocopy machine from an office equipment supplier. Which coverage in Jodi's building and personal property coverage form would apply if the machine is damaged by a covered peril? A. business personal property of the insured B. building property C. legal liability coverage D. personal property of others
D. personal property of others
Cary, an insurance producer, placed on his agency's official web site a statement to the effect that the agency's policyholders were protected by the agency's membership in the Pennsylvania Property and Casualty Insurance Guaranty Association. This statement is: A. an unfair method of competition B. a fraudulent act C. inappropriate disclosure D. prohibited advertising
D. prohibited advertising
When the Brianna collided with the Tania, marine experts determined that the captain of the Brianna was at fault. What provision in the Brianna's ocean marine policy protects the shipowner or operator against the Tania's property damage liability claim? A. Sue and labor clause B. liability insuring clause, also known as a liability insuring agreement C. salvage clause D. running down clause, also known as a collision liability clause
D. running down clause, also known as a collision liability clause
Erin wants to protect her warehouse inventory against damage from extremely hot and cold temperatures resulting from a loss of electrical power. What endorsement should her businessowners policy include? A. utility services-time element B. artificially generated currents C. protective safeguards D. utility services-direct damage
D. utility services-direct damage
