Readiness Exam
When an automobile liability policy is cancelled for a reason other than nonpayment of premium, the insurer must notify the named insured of which of the following?
Possible eligibility for the Iowa Automobile Insurance Plan
A customer was injured in a supermarket parking lot when a grocery cart rolled into the customer's leg. Coverage for this claim would be provided under
Premises and operations
Which of the following liability exposures is most likely for a small specialty clothing retail boutique?
Premises liability exposure
Valuable papers and records form provides coverage for the reconstruction of all of the following types of records EXCEPT
Prepackaged software
The party of a surety or fidelity bond who promises to fulfill the obligation is the
Principal
Who are the parties to a bond?
Principal, obligee, and guarantor
Who would participate in a Write Your Own (WYO) flood insurance program?
Private insurers that write and service National Flood Insurance policies on a no risk-bearing basis
The other insurance provision that limits the liability of the insurer to a portion of the loss no greater than the amount the insurer bears to all the insurance covering the property called
Pro rata liability
Crunchy Flakes Cereal Company shipped some of its product in faulty containers that caused spoilage. This resulted in some consumers becoming ill. If the company is sued for this event, it would be an example of
Product liability claim
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
Coercion
An insured was involved in an automobile accident for which the insured was at fault. Which of the following coverages would pay for damage to the insured's automobile?
Collision
Which of the following liability policies is usually written on a "claims-made" form?
Professional liability insurance
A sworn written statement that must be furnished by the insurer before any loss under a policy can be paid is called
Proof of loss
Before an insurer will pay any loss under a policy, what is usually required from the insured?
Proof of loss
In order to receive transportation expenses under the personal auto policy following damage to your auto caused by collision, you must have
Collision coverage
In a dwelling policy, which of the following provides coverage for additional living expenses incurred by an owner-occupant in the event a covered peril makes the premises uninhabitable due to a covered loss?
Coverage E
An insured's house is damaged by a fire and in uninhabitable. As a result, the insured has to rent an apartment until repairs are made. A dwelling insurance policy will pay for the expense of renting the apartment. Which type of broad or special form coverage does the insured have?
Coverage E - Additional Living Expense
Other than perils, the difference in the three DP forms is in coverage provided. Which of the following coverage options is covered by the DP-2 and DP-3 but not DP-1?
Coverage E - Additional Living Expense
In dwelling policies, automatic increase in insurance is
Coverage by endorsement
Coverage C in homeowners policy forms offers all of the following EXCEPT
Coverage for loss of use
A professional liability policy will provide coverage for loss in all of the following cases, except, when the insured doctor was shown to be
Criminally negligent
Which of the following is covered under the mail floater of a commercial inland marine policy ONLY if it sent by registered mail?
Currency and unsold checks
The part of the policy that shows the amount of insurance, premium, and policy term is the
Declarations
When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously of that other insurer. The producer could be found guilty of
Defamation
Which of the following terms describes making false statements about the financial condition of any insurer that are not intended to injure any person engaged in the business of insurance?
Defamation
The commercial property declarations page contains which of the following information?
Description of the property insured
Which of the following is not a duty of the Commissioner?
Develop insurance rates
A beauty parlor burns to the ground. What type of loss is this to the owner?
Direct
If a fire erupts in the kitchen and spreads to the upstairs bedroom, resulting in the destruction of furniture, what type of loss has occurred?
Direct
What term includes damage where the insured peril was the proximate cause of loss?
Direct loss
Which of the following special liability coverages will provide protection to managers of a corporation for claims arising from a wrongful act committed by the manager while in an official capacity?
Directors and officers liability
Which of the following will NOT be considered unfair discrimination by insurers?
Discriminating in benefits and coverages based on the insured's habits and lifestyle
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered
Discrimination
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
Dividends from a mutual insurer
Which of the following best describes an insurance company that has been formed under the laws of this state?
Domestic
What is another name for liquor liability insurance?
Dram shop insurance
Which of the following losses would be covered by the Standard Fire Policy?
Fumes from chemicals ignite and explode causing a fire that demolished the building
Which of the following is NOT covered by the condominium unit owners endorsement?
Furniture in the building
What type of compensatory damages will pay for pain and suffering and disfigurement?
General
Under the professional liability loss settlement provision, what must an insurer do before offering to pay a claimant to settle a claim?
Get the insured's consent
Which of the following homeowners forms is designed to provide named peril coverage for personal property to individuals who rent an apartment?
HO-4
An insured condominium unit owner wants to purchase a fire and extended coverage for personal property and liability coverage for himself and his family members. He should purchase
HO-6
The homeowners policy form that covers condominium unit owners is
HO-6
The main difference between an HO-4 and an HO-6 is
HO-6 provides limited dwelling coverage as well as contents coverage
Older homes with replacement costs greater than ACV or market value are insured on
HO-8
Hagar has leased part of his building to a tenant who makes fireworks. How does this affect the commercial fire policy on Hagar's building, if at all?
Hagar's insurer has grounds to cancel the policy regardless the length of time it has been in effect
Which of the following personal auto coverages would pay for the insured's travel expenses and loss of earnings while involved in the settlement process of a covered loss?
Liability coverage
A policy condition that states if a policy is broadened with no additional premium, then the expanded coverage will be automatically applied to all policies of the same type known as
Liberalization clause
Which of the following describes an insurer's responsibility for payment under a policy, as stated in the common policy provisions?
Limits of liability
Which of the following types of property is NOT insurable under the Standard Fire policy form?
Loan documents
Insurance is a contract by which one seeks to protect another form
Loss
The reduction, decrease, or disappearance of value of the person or property insured in a policy by a peril insured against is known as
Loss
Which of the following is the basis for a claim against an insurance policy?
Loss
A house insured under a dwelling policy has been vacant for 70 consecutive days. Which of the following statements is true?
Loss by vandalism and malicious mischief is excluded
Which of the following would be covered under the Utility Services - Time Element endorsement?
Loss of business income arising from loss of utility service caused by an insured peril
Which of the following is TRUE regarding business liability and medical payments coverage?
Loss of electronic date is excluded under a business liability policy
The purpose of the Iowa FAIR Plan is to
Make basic property insurance available to qualified applicants with the least possible expense
The primary purpose of a surety bond is to
Make sure obligations are fulfilled
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?
Making comparisons between different policies
Which of the following best describes the unfair trade practice of defamation?
Making derogatory oral statements about another insurer's financial condition
The insured's house is located one mile from the county's new landfill and across the road from the entrance of a rock quarry. It would cost $150,000 to rebuild the house if something happened to it, but when the insured tried to sell it, the best offer he received what $80,000. The insurance company will insure the house for only $80,000. What method of valuation is sued to insure this property?
Market value
Coverage territory of the businessowners policy (BOP) includes all of the following EXCEPT
Mexico
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of
Misrepresentation
Which of the following is NOT included in the definition of an "auto" under a commercial auto policy?
Mobile equipment
Which of the following will be covered by the contractors equipment floater in an unfiled inland marine insurance?
Mobile equipment during transportation to and from the job site
Erroneous Publishing copied all the material from Angels Inc.'s book. The only changes made by Erroneous were to rename the title and chapters, put a different cover on it, and distribute it as its own. Angels Inc. files a claim against Erroneous and seeks damages. Will a commercial general liability policy cover the claim?
No, because the claim results from copyright infringement and is not in an advertisement
A private passenger auto operated by the named insured that is not titled to the insurer and that is borrowed from an employee or partner is considered a(n)
Nonowned auto
When an insurance policy does not offer a continuation or replacement at its expiration date, it is considered a
Nonrenewal
Which of the following terms means termination of an insurance policy at its expiration date by not offering a policy continuation or replacement?
Nonrenewal
Which of the following statements about the use of automobile after-market parts in vehicle repair is TRUE?
The use of after-market parts is permitted if the parts are at least equal in kind and quality to the original equipment
An insured wants to transfer his auto insurance policy to his wife. What does the insured need to transfer the policy?
The written consent of the insurer
All of the following are perils covered under the broad form dwelling policy EXCEPT
Theft
Coverage for which of the following perils excluded under the Standard Fire Policy may be added by endorsement?
Theft
In commercial crime insurance, what is the term that includes both burglary and robbery?
Theft
Which of the following losses would most likely NOT be covered under Coverage A in the dwelling policy?
Theft of a renter's lawnmower used to service the premises
All of the following are other coverages included in both the broad and special form dwelling policy EXCEPT
Theft of personal property
A specific coverage part is listed on the commercial package policy declarations page, but there is no premium shown. What does that mean?
There is no coverage
What is the limit on an employer's liability for medical expenses as the result of a work-related accident?
There is no limit
While an insured was towing a utility trailer with his auto, the trailer came loose and ran into a store front. What part of the insured's auto policy would pay for the damage to the store?
Property damage liability
Under the Iowa FAIR plan, "basic property insurance" means
Property insurance that covers direct loss to property
In which of the following situations would a common carrier be legally liable for damage to property being transported?
Property is stolen as a result of a driver leaving a vehicle unlocked
The Gramm-Leach-Bliley was passed to
Protect private customer information filed with a financial institution
The insurance company requires that an insured installs a fire alarm and an automatic sprinkler system as a condition for coverage. This is an example of
Protective safeguards endorsement
An insured owns several buildings, each at a different location and insured on a separate policy. What type of coverage does the insured have?
Specific
Property insurance that provides $100,000 coverage for a building and $50,000 coverage for personal property at a single location is called
Specific coverage
In auto insurance, the application of more than one policy limit to the same loss is known as
Stacking
A property insurance policy that is not subject to any coinsurance requirements but has a set amount of insurance scheduled for the property would use what loss valuation method?
Stated amount
When the amount of insurance written in a property policy is not subject to any coinsurance provision and that amount is paid in the event of a covered loss, the coverage is said to be written as
Stated amount
The transfer of an insured's right to seek damages from a negligent party to the insurer is found in which of the following clauses?
Subrogation
When an insurer acquires the insured's rights against a third party for the purposes of receiving indemnification for loss, this is called
Subrogation
Coverage B - Personal and Advertising Injury Liability responds to claims arising from
Suits alleging infringement of a copyright
How are surety bonds different from insurance?
Surety bonds guarantee specific duties or obligations will be fulfilled; insurance pays for losses
A nonadmitted insurer who provides insurance coverages that are not available from an admitted insurer is called
Surplus lines insurer
Which one of the following symbols used in business auto coverage is correctly described?
Symbol 9 - nonowned autos only
Which of the following acts created a federal program that would share the risk of loss from potential terrorist attacks with the insurance industry?
TRIA
Robbery is
Taking of property by use of force, violence, or fear
Burglary is defined as
Taking of property from within the premises leaving visible signed of forced entry
Which of the following is an example of a producer being involved in an unfair trade practice of rebating?
Telling a client that his first premium will be waived if he purchases the insurance policy today
The insured rented a car while her regular vehicle was being repaired after an accident. The rented car is considered a
Temporary substitute
Who is NOT considered an employee in a commercial general liability (CGL) policy?
Temporary worker
An apartment occupant's personal property would be insured under which homeowners form?
Tenant broad form (HO-4)
Who is covered by an HO-4 policy?
Tenants
To be eligible for coverage under the National Flood Insurance Program, an insured must live in which of the following communities?
That has met the minimum floodplain management guidelines
All of the following people would be considered insureds under the liability section of a homeowners policy EXCEPT
The 22-year-old niece of the insured who is visiting
The cancellation provision in a businessowners policy specifies all of the following EXCEPT
The method of transferring the owner's rights
In personal auto polices, the term "you" refers to
The named insured
Which of the following statements is true concerning a bonded contractor who defaults on a construction performance contract?
The obligee may engage another contractor and then seek reimbursement from the surety
In terms of parties to a contract, which of the following does NOT describe a competent party?
The person must have at least completed secondary education
All of the following statements concerning liability coverage are true EXCEPT
The policyholder can sue the insurer whether or not all conditions and provisions of the policy have been met
A nonresident Iowa producer moves to Iowa and becomes an Iowa resident. Which of the following is true?
The producer must surrender his/her producer's license from the other state
Under an HO-2 policy, the insurer will pay no more than the actual cash value of the property damage until
The property repair or replacement is complete
When a direct chain of events resulting from a negligent act causes injury or damage, that act is considered to be
The proximate cause
On a DP-3 Dwelling Property Special Form policy, the coverage provided for personal property is
The same as provided on the DP-2 Broad form
Benefits for injury as the result of an occupational disease are
The same as the benefits work other work-related injuries
A neighbor's tree has fallen into the insured's yard. The insured's homeowners policy will only pay to remove the tree if
The tree is blocking the driveway
For the purpose of insurance, risk is defined as
The uncertainty or chance of loss
All of the following are requirements for enrollment in The Iowa Automobile Insurance Plan EXCEPT
The applicant has had a previous auto liability cancelled
Insurers CANNOT transact insurance in this state without a
Certificate of Authority
Which of the following is covered by auto other-than-collision (comprehensive) coverage?
Electric equipment required for the normal operation of the car
An executive is accused of sexual harassment. What type of coverage would respond?
Employment practices liability
The purpose of purchasing an umbrella liability policy is to provide
Excess insurance over the primary liability policy
To have insurable interest in the person or property covered by a property insurance policy, which of the following potential risks must the policyowner face?
Financial loss
Which valuation method takes into consideration what a willing buyer would pay for an insured property?
Market value
An insurance agent visits a potential client and explains various types of polices. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?
Misrepresentation
Policy limits are the maximum amount an insured may collect, or for which an insured is protected under the terms of the
Policy
If an insurance policy has the additional coverage provision, how does it affect the policy premium?
There is no additional premium
Which method of dealing with risk is applied when insurance is purchased?
Transfer
Two individuals of the same age, health status, and life expectancy apply for individual insurance coverage. When policies are issued by the same insurer, the premium rates are different based on the insured's race. What practice does this describe?
Unfair discrimination
If a person violates the Commissioner's cease and desist order, their license may be revoked, and the person may be subject to a maximum fine of
$10,000
Grant lost a hand in a work-related accident. What is he entitled to receive, if anything, while he is taking rehabilitation classes in addition to disability and medical benefits?
$100 a week for up to 13 weeks
Applications for a producer license must be accompanied by a licensing fee of
$50
Which of the following best describes a rebate?
A producer returning part of her commission to her client, as an inducement to buy
Which of the following would be considered a peril?
Fire
What is the main distinction between a hired auto and a nonowned auto?
Who owns the auto
What is the minimum limit for Uninsured Motorist coverage for bodily injury to one person in the state of Iowa?
$20,000
If a producer knowingly violates an insurance law, the producer may be fined up to what amount per violation?
$5,000
The obligation to compensate injured workers without regard to fault or negligence is known as
Absolute liability
Which of the following would NOT generally be included in the supplementary payments portion of a liability policy?
Damage to property owned by the insured
The Commissioner is appointed to a 4 year term by the
Governor
Which of the following best defines the unfair trade practice of rebating?
Offering an inducement of something of value not specified in the policy
The other states' insurance section of a workers compensation policy provides coverage
Only for those states listed in the policy
Before submitting your application for a resident producer license, you must first
Pass a written examination
If the premiums collected by an insurer participating in the WYO flood program are insufficient to cover losses, which of the following would be true?
The insurer will be reimbursed for the excess costs by the NFIP
All of the following are considerations in determining which state's law applies when a worker is required to travel into another state and is injured while working in the other state EXCEPT
The insurer's chartered location or domicile
Which of the following drivers may be excluded form an automobile policy that renews on January 1?
The named insured has his driver's license suspended for two days the previous November
Workers compensation rating is developed by applying a rating bureau job classification rate to each
$100 of payroll
Coverage for water backup or sump pump overflow is excluded from the Dwelling policy. However, with the purchase of the water backup and sump pump overflow endorsement, coverage for up to $5,000 in loss or damage can be provided for an additional premium. What is the deductible associated with this coverage?
$250
An insured's building has an actual cash value of $200,000, and he has insured the property for $120,000 with an 80% coinsurance clause. A $40,000 loss occurs. How much will the policy pay?
$30,000
In Iowa, what is the minimum limit for Uninsured Motorist coverage for bodily injury to 2 or more people?
$40,000
A commercial property special form covers property in transit up to
$5,000
How long is the policy period for NFIP flood insurance?
1 year
Under businessowners policy Section I, if an insurer wants to nonrenew a policy for nonpayment of premium, how many days before the expiration date must the insurer notify the mortgageholder?
10 days
Within the first 60 days of coverage under a dwelling policy, how much notice is required for the cancellation of a policy?
10 days
If the Commissioner believes an individual is involved in unfair trade practices and delivers to that individual a notice of hearing, the hearing may be no sooner than
10 days after receipt of notice
Other structures are covered for what amount under the Coverage B - Other Structures of a homeowners policy?
10% of Coverage A
What is the coinsurance requirement for a theatrical property floater under an Inland Marine policy?
80%
What type of liability would a person who owns wild animals have?
Absolute
An insurer must be fair in underwriting and must pay all covered losses of any insured. For the faithful execution of these duties, an insurer has the right to
Accept the payment of premiums for all policies currently in force
What is a sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage that is neither expected nor intended called?
Accident
In a personal auto policy, the medical payments coverage is similar to
Accident insurance, because it pays medical expenses regardless of fault
What term best describes the act of withholding material information that would be crucial to an underwriting decision?
Concealment
Which of the following dwelling coverage forms would pay replacement cost for the dwelling?
DP-2 and DP-3
Additional coverages in the liability section of a homeowners policy cover all of the following EXCEPT
Damage to a third-party property for which the insured is legally liable
Which of the following would be covered under a business liability insurance policy?
Damage to a watercraft while on shore at the insured's premises
Other-than-collision would cover financial losses due to
Damage to an insured's care caused by wind or hail
All of the following are optional endorsements that may be added to the standard equipment breakdown coverage form EXCEPT
Debris removal
In Businessowners policies, which of the following additional coverages will require a deductible?
Debris removal
Which of the following is a mandatory part of an insurance policy that varies with each individual policy?
Declarations
In property and casualty insurance, what is the term for the amount of a loss that the insured must cover out of pocket, and the insurer will only pay for the additional amount of the loss above this limit?
Deductible
An insured is applying for a casualty insurance policy. One of the conditions of the policy allows the insurance company to inspect the insured's books at the end of the policy term to make sure sufficient premium has been collected for the exposure she plans to insure. Which condition is part of the insured's policy?
Deposit premium aduit
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?
Discrimination
All of the following are other coverages under the dwelling policy EXCEPT
Earth movement
Another person has alleged that you are responsible for damage to their property. You notify your homeowners insurer. The insurer will
Either pay or defend as it decides
What is the purpose of the coinsurance clause found in property insurance policies?
Encourage the insured to insure the property closer to its full value
Which of the following would modify the original insurance contract by either adding or removing coverage?
Endorsements
Which of the following statements does NOT describe endorsements?
Endorsements may only add coverage to a current policy, not remove
As head of the State Division of Insurance, the Commissioner's main responsibility is to
Enforce insurance laws
The Commissioner is appointed by which of the following authorities?
Governor
A Mobile Homeowners Policy is structured the same as a
Homeowners policy
The policy conditions define
How parties to the contract must act following a loss
When would a misrepresentation on the insurance application be considered fraud?
If it is intentional and material
Under which of the following conditions can broad theft coverage be added to a dwelling policy?
If the insured is owner-occupant of the dwelling
Which of the following is FALSE regarding insurance sales presentations to prospective purchasers?
If there is no producer involved, there are no special disclosures that must be made
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?
Illegal
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?
Illegal under any circumstances
CGL Coverage B (Personal Advertising Injury) will cover
Inadvertent injury to others caused in the course of advertising the insured's product
Restoring an insured financially after a claim is known as
Indemnity
The pro rata liability clause is designed to protect the principle of
Indemnity
Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?
Indemnity
An additional loss that results from a direct loss of property is called a/an
Indirect loss
To purchase insurance, the policyowner must have financial interest in the property being insured. This is known as
Insurable interest
The part of the insurance contract that describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured is called the
Insuring agreement
What part of the insurance contract describes the covered perils and the nature of coverage of the contractual agreement between the insurer and the insured?
Insuring agreement
Which of the following would NOT be covered by HO liability insurance?
Intentional tort
A basic dwelling policy automatically provides coverage against fire, lightning, and
Internal explosion
Which of the following perils is covered under both the basic form and broad form dwelling policies?
Internal explosion
A structure may be eligible for coverage under the National Flood Insurance Program if it meets all of the following requirements EXCEPT
Is entirely over water
Which of the following best describes a misrepresentation?
Issuing sales material with exaggerated statements about policy benefits
Which of the following types of property would be covered in homeowners coverage forms?
Landlord furnishings in an on-premises apartment
For a contract to be enforceable by law, the purpose of the contract must be
Legal and not against public policy
Which of the following contract elements best describes insurance written in support of public policy?
Legal purpose
Under a DP-1 form, Coverage C - Personal Property is
Limited to covering a servant's property while at the insured location
The type of professional liability coverage a medical doctor needs is
Malpractice coverage
Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called
Material misrepresentations
Which of the following is a valid reason for cancelling an auto policy after it has been in force for 60 days?
Material misrepresentations
Under contributory negligence, when an individual is found to have contributed to his or her own loss in any way, another party
May not be held liable
Which of the following is a common exclusion found in Part D: Coverage for Damage to Your Auto of a PAP?
Mechanical breakdown
Which of the following workers compensation benefits are unlimited?
Medical expense
Which of the following coverages is included in an unendorsed homeowners policy?
Medical payments to others
The Physicians and Surgeons Equipment Floater is NOT intended for which of the following?
Medical supplies located in a hospital
An example of an alien insurer doing business in this state is one formed under the laws of
Mexico
As defined in commercial auto policy forms, mobile equipment includes all of the following types of land vehicles EXCEPT
Self-propelled vehicles used for snow removal
An insured was injured at work on June 1. What is the latest date that his employer must be notified of the accident if the insured is to retain his Workers Compensation benefits?
September 1
Which of the following is included under the physical damage coverage of a personal auto policy?
Sound reproduction equipment permanently installed in the covered auto
Wagering on a sporting event is an example of what type of risk?
Speculative
Events in which a person has both the chance of winning or losing are classified as
Speculative risk
Under the commercial property coverage program, the basic causes of loss form insures against loss caused by
Sprinkler leakage
All of the following items may be covered by a personal inland marine insurance policy EXCEPT
Stationary property
In the event of a claim under a commercial general liability policy, the insured has all of the following duties to the insurer EXCEPT
Submitting to a medical exam when requested
The policy provision found in property insurance policies that prevents the insured from collecting twice for the same loss is called
Subrogation
Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?
The Fair Credit Reporting Act
What is the deductible of a commercial liability umbrella policy called?
The SIR
Which situation would NOT be covered by the basic Causes of Loss form under a commercial property policy?
The Surf Club Waterfront Restaurant is damaged when flood waters rise and seep into the restaurant
Which of the following would qualify as a competent party in an insurance contract?
The applicant has a prior felony conviction
All of the following situations would be covered under a professional liability policy EXCEPT
The failure of an attorney to properly defend a client due to his personal dislike of the client
If an applicant submits the initial premium with an application, which action constitutes acceptance?
The underwriter approves the application
An insured is driving her auto and strikes a large pothole, causing a flat tire. Which coverage of the insured's personal auto policy will pay for the repair?
This loss is not covered
All of the following types of property are covered by a standard builders risk form EXCEPT
Tools 50 feet away from the building
Which of the following statements regarding Uninsured/Underinsured Motorists coverage in Iowa is TRUE?
Uninsured Motorists coverage must be offered but an insured may reject it
What is the business auto coverage territory for?
United States, and its territories, Canada, or worldwide for private passenger hired autos
Supplementary payments under the personal auto policy include all of the following EXCEPT
Unlimited cost of bail bonds
An insured opened a locked safe one morning and found $4,000 worth of property missing with no signs of forced entry. How much will the policy covering safe burglary pay?
$0
After a hearing, civil penalties imposed by the Commissioner for each unfair method of competition may NOT exceed
$1,000
What is the maximum dollar amount an insurer will pay for loss to sound equipment permanently installed in a vehicle insured under a business auto policy?
$1,000
An employee was seriously injured at work and had to be hospitalized with total disability. She is expected to fully recover and return to work in one month. If the employee was earning $1,500 a week before the accident, what is her weekly disability benefit?
$1,200
The extension of coverage under the Commercial Fine Arts Floater includes coverage for newly acquired property for a maximum of
$10,000
What is the maximum aggregate civil penalty that may be imposed by the Commissioner for violations of laws of fair trade practices?
$10,000
What is the maximum amount an insurer will pay under the equipment dealers pollution cleanup and removal extension of an inland marine policy?
$10,000 for all expenses incurred during a 12-month period
The pollutant cleanup and removal coverage in the businessowners policy has a limit of
$10,000 in any 12-month period
Super Value Store has a commercial general liability policy written with a general aggregate limit of $300,000 and an occurrence limit of $100,000. A customer injured on the premises was awarded $45,000 for medical expenses and loss of earnings, and $60,000 for pain and suffering. The court costs and attorney fees were $15,000. How much will the CGL policy pay?
$115,000
An insured has $5,000 of medical coverage on a personal auto policy at the time of a covered accident. The insured and two passengers are injured. Medical treatment costs $7,000 for the insured, $4,000 for the first passenger, and $8,000 for the second passenger. How much will the policy pay under medical payments coverage?
$14,000
What is the minimum amount of property damage coverage an insured must have in an automobile liability insurance policy?
$15,000
An insured has $5,000 of medical coverage under a personal auto policy at the time of a covered accident. The insured and 3 passengers are injured. The insured's medical expenses are $8,000. The first passenger's total $4,000; the second passenger's total $6,500; the third passenger's total $1,200. How much will the policy pay under the medical payments coverage?
$15,200
A $100,000 house insured on a policy with an 80% coinsurance requirement has a fire that caused $40,000 of damage; the owner has a policy with $60,000 coverage. How much can the owner collect for his loss?
$30,000
An insured's roof cost $4,000 when installed 5 years ago. It has been damaged by hail and must be replaced. The new roof will cost $6,000 at today's price. If the roof has been depreciating at $200 per year and the insured's policy is written on the actual cash value (ACV), how much will the policy pay toward the insured's new roof?
$5,000
Under additional coverages for homeowners policies, what is the maximum amount that would be paid for fire department service charge?
$500
All of the following are special personal property limits under a homeowners policy EXCEPT
$500 for business personal property on the insured premises
The maximum payable amount for a property claim through the Iowa Insurance Guaranty Association is
$500,000
In Iowa, proof of financial responsibility in auto policies may be evidenced by filing with the department a certificate of deposit for what minimum amount?
$55,000
The businessowners liability coverage form will cover medical expenses incurred and reported within what maximum time period after the accident?
1 year
Johanna purchased a National Flood Insurance policy 10 days after her community entered an emergency program. When would her coverage be effective?
12:01 am the day after the application and premium payment are mailed
How many hours of continuing education must be completed on the subject of ethics each license renewal period?
3 hours
A producer must complete a new set of continuing education hours every
3 years
After moving, licensees must inform the Commissioner of a change of address within
30 days
When producers change the address of their residence or office, the Insurance Department must be notified within
30 days
A producer earns 40 continuing education credit hours during the 3-year license renewal period. How many continuing education credit hours will the producer need to complete during the new 3-year period?
36
How many continuing education credit hours must be completed during each licensing period?
36
Which of the following is correct regarding continuing education requirements for producers in this state?
36 hours including 3 hours of ethics every 3 years
For how long must producers maintain records of completing continuing education?
4 years
How soon prior to the nonrenewal of a commercial property policy must an insurer provide notice to the insured?
45 days
In the event of theft of a covered vehicle, transportation expenses coverage in a personal auto policy will cover the expenses starting how many hours after theft?
48 hours
The Commissioner may examine an insurer as often as deemed necessary, but domestic insurers must be examined at least once every
5 years
How long must a property be vacant for an insurer to suspend or restrict coverage under a Standard Fire Policy?
60 days
If an insurer believes that it has received a fraudulent claim, it must notify the bureau and request an investigation within
60 days
Coverage under the builders risk form will end in all of the following situations EXCEPT
60 days after the construction has ended
The insurer of Melco's Fabrication wants to cancel the Commercial Package Policy it issued on the business because it discovered that it made an error in determining the correct premium. Assuming that the error is not so large as the threaten the solvency of the insurer, how long does the insurer have before it can no longer cancel the policy?
60 days from the policy effective date
Under the dwelling policy form, what is the maximum time limit during which multiple volcanic activities would be considered part of one occurrence?
72 hours
One driver makes a left turn on a red light and is hit by another driver who is speeding through the intersection. The driver who was making an illegal turn is found to be 80% guilty of the accident, while the speeding driver is 20% at fault. According to the principle of comparative negligence that is applied in auto accident claims, how much will the speeding driver be able to collect on the claim?
80%
An insured owns a building that is valued at $400,000. To comply with the 80% coinsurance provision of his insurance policy, how much should he insure the property for?
80% of the property's cost or more
The Employee Theft Crime policy form includes a coverage extension that applies to employees temporarily outside the coverage territory for up to
90 days
A contract for the transport of goods between the shipper and the carrier is called
A bill of lading
Which of the following would be considered an unfair claims settlement practice?
A claims adjuster advises the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered
Which of the following losses would NOT be covered by a homeowners policy?
A coin collection valued at $500 lost in a fire
Which of the following is covered under the Camera and Musical Instruments Dealers floater?
A customer's camera left at a camera shop for repair
Which of the following would NOT be considered an insured under a homeowners policy?
A divorced spouse living in another state
Which of the following risks would be eligible for coverage under a dwelling policy form?
A duplex that is occupied by two families, each of which have a bedroom rented to a boarder
Which of the following would be eligible for Homeowners Coverage F - Medical Payments in the event of injury at the insured's premises?
A full-time maid
Which of the following policies will help an auto dealership cover most of its liability exposures?
A garage liability coverage
In which of the following situations would the jewelers block extension cover a loss?
A jeweler fixes a necklace and sends it by registered mail to the owner. When the necklace arrives, it has been damaged
Which of the following individuals engaged in the business of insurance would NOT be required to be licensed?
A person who secures information for enrolling individual into a group insurance
With respect to auto insurance, the term owned autos includes all of the following EXCEPT
A pickup or van titled to and used in the named insured's business
In which of the following circumstances is an active producer license NOT required?
A retiree receives renewal commission for policies written when he was an active producer
Which of the following individuals would be required to be licensed as an insurance producer?
A salaried employee who advertises and solicits insurance
All of the following are ways to demonstrate compliance with the financial responsibility requirements for auto policies in Iowa EXCEPT
A separate bank account specifically for auto liability
When other insurance is written on the same basis as a commercial property policy, the obligation of the insurer is to cover
A share of the loss
What is a material misrepresentation?
A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
The declarations page of the homeowner's policy provides all of the following information EXCEPT
A statement that earthquake damage is not covered
Homeowners policies consider all of the following insured locations EXCEPT
A strawberry patch owned by the insured
Which of the following best defines the term "accident"?
A sudden, unplanned and unexpected event, not under the control of the insured, resulting in injury or damage neither expected or intended
As it applies to homeowners policies, the term "business" means
A trade, professions, or occupation
Which of the following would be required to obtain a producer's license in this state?
A trustee of an employee trust plan that is compensated indirectly by the company issuing the contract
In a personal auto policy (PAP), a covered auto includes all of the following EXCEPT
A van used in the delivery business
Which of the following would be considered an uninsured vehicle?
A vehicle fleeing a hit-and-run accident
An uninsured motor vehicle includes all of the following EXCEPT
A vehicle owned and operated by a self-insurer
What guarantees that the information explained in the insurance contract is true?
A warranty
Which part of an insurance policy covers claims-related expenses, reasonable expenses incurred by an insured to protect damaged property from further loss, or defense expenses?
Additional coverage
A person who is not named as an insured on the declarations page of a policy but is protected by the policy is known as the
Additional insured
Which of the following would be added for coverage under a property policy by an endorsement?
Additional insured
Which of the following is NOT an acceptable reason for cancelling an auto policy that has been in effect for more than 60 days?
Additional vehicle operators
Which of the following is another term for an authorized insurer?
Admitted
Which of the following is NOT a valid reason for cancelling an auto policy once it has been in force for 60 days?
Age of the operator
Which of these is defined as the maximum limit of coverage available under a liability policy during a policy year, regardless of the number of claims that may be made or the number of accidents that may occur?
Aggregate limit
In which of the following types of property will the policy pay the full value as specified on the policy schedule, regardless of the insured property's appreciation or depreciation?
Agreed value
Which of the following types of valuation works best for property whose value does not fluctuate much?
Agreed value
An insurer who transacts insurance in this state but whose articles of incorporation are registered in Canada is considered what type of insurer?
Alien
When transacting business in this state an insurer formed under the laws of another country is known as a/an
Alien insurer
Which of the following statements is TRUE regarding members of the state's FAIR plan?
All admitted insurers of property insurance must become members
An insured works outside the home. The insured's sister lives with him and cares for his four children. When the insured's home is severely damaged by fire, the family moves into an apartment while repairs are being made. The largest apartment available in the area has two bedrooms, so the insured's sister has to stay in a motel. How much will the HO-3 form pay for these additional living expense?
All of the expenses up to the Coverage D limit
The Iowa Automobile Insurance Cancellation Control Act applies to
All private passenger vehicles and other four-wheeled vehicles with a load capacity less than 1,500 pounds
How much is covered for debris removal under the HO property additional coverages?
All reasonable costs
The insured with a homeowners policy has had damage to his property caused by a volcano. Which of the following is true?
All volcanic eruptions within a 72-hour period will be considered one occurrence
Under the Garment Contractor Floater of an Inland Marine policy, coverage while the property is in transit between the insured and the subcontractor is usually written on which basis?
All-risk
The inspections and surveys condition in a businessowners policy
Allows the insurer the right to inspect the insured's premises
All of the following would be considered rebating EXCEPT
An agent misrepresents policy benefits to convince a policyowner to replace policies
The limited theft endorsement is intended for which type of property?
An apartment building in which the owner does not reside
In insurance, an offer is usually made when
An applicant submits an application to the insurer
Which of the following risks would NOT be eligible for coverage under a homeowners policy?
An applicant who owns and lives on a commercial farm
Which of the following would NOT qualify as a hired auto?
An auto borrowed from an employee
Under a commercial general liability policy, which of the following is NOT considered mobile equipment?
An automobile used as a company car by a real estate company
Which of the following injuries is considered compensable under the Iowa Workers Compensation law?
An employee ignores safety rules and is injured as a result
Workers compensation statutes provide coverage for diseases that occur as a result of working in the employer's working environment. Which of the following is an example of a disease that would NOT be covered by such provisions?
An employee of a medical facility who suffers from a common cold
Which of the following injuries is NOT compensable under the Iowa Workers Compensation law?
An employee was injured at work by a distraught spouse because of a marital dispute
Which of the following employers are subject to the state Workers Compensation law?
An employer of one or more people
Which of these would be covered by the medical payments coverage in a personal auto policy?
An insured slams a hand in the car door while getting in, breaking the hand
What is a foreign insurer?
An insurer with a home office in another state
Which of the following could be covered by an HO policy?
An oriental rug in an on-premises apartment
Which coverage form would provide coverage for all incoming and outgoing shipments?
Annual transit
What is the current status regarding stacking of Uninsured Motorists coverage in Iowa?
Anti-stacking provisions in policies are legal, but a stacking option must be available to the insured
Which of the following describes contributory negligence?
Any degree of negligence by the injured party may bar recovery
Which of the following drivers may be excluded from an auto policy under Iowa laws and regulations?
Any driver convicted of driving under the influence of alcohol or drugs
Which of the following is NOT covered under accounts receivable coverage form?
Any loans required to offset uncollectible amounts
Under Coverage B - Other Structures, a homeowners policy provides coverage for other structures on the residence premises. Which of the following statements is NOT true of this coverage?
Any loss paid under Coverage B reduces the Coverage A limit of liability
Which of the following would be considered an insured under a business auto coverage form?
Anyone while using, with permission, a covered auto owned by the named insured
A policy condition that stipulates how the amount of damaged or lost property will be determined if the insured and the principal do not agree on the value of a property loss is known as
Appraisal
Which of the following clauses establishes the procedure for determining the amount of a loss when the insurer and the insured cannot agree on the value of property or amount of loss?
Appraisal clause
Which of the following stipulates the procedure that insureds and insurers can use when they cannot agree on the value of a loss?
Appraisal clause
A manufacturing company has adopted some new processes in their operations, so their insurer has decided not to renew their Commercial Package Policy. If the CPP policy expires on May 31, when must the insurer send the notice of nonrenewal?
April 15
First aid costs for others injured on the insured's premises
Are paid in addition to the liability limit
When do binders expire?
As soon as the policy is issued
The transfer of a legal right or interest in an insurance policy is called
Assignment
Which of the following describes the transfer of a legal right to interest in an insurance policy?
Assignment
In equipment breakdown coverage, all accidents would be considered a single accident if they occur
At a single location at the same time and from the same cause
Under a businessowners policy, an insured can cancel the policy
At any time by mailing a written notice of cancellation
Insurable interest in a property policy must be proven
At the time of loss
The Iowa Insurance Guaranty Association EXCLUDES claims for which of the following?
Attorney fees
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an
Authorized insurer
The garage coverage form is used to insure
Auto businesses, such as auto dealers, service stations, and auto repair shops
A personal umbrella policy may act as excess over any of the following insurance coverage policies EXCEPT
Auto collision coverage
If an insured has an umbrella liability policy in addition to his personal auto policy, which would be considered the underlying policy?
Auto policy
Which of the following is an example of a protective safeguard in a businessowners policy?
Automatic sprinkler system
According to the common policy conditions for a commercial package policy, if the insured dies, the policy rights and duties
Automatically transfer to a legal representative
Which inland marine form would provide the best protection for a dry cleaning company against loss or damage to their customer's property while in the care, custody, and control of the dry cleaners?
Bailee's customer policy
In return for premium, an insurance company must
Be fair in underwriting and pay covered losses
Which of the following components is NOT part of a policy structure?
Benefits
Which of the following statements regarding coverage for the flood and earthquake perils is true?
Both flood and earthquake are excluded perils in all property policies
Under the HO-4 homeowners policy form, property is insured against
Broad form perils only
Because of the insured's loss history, the insurer has decided not to renew the insured's homeowner's policy that expires on January 1. When must the insurer mail the notice of nonrenewal?
By December 1
Termination of an in-force insurance policy prior to the expiration date shown in the policy is known as
Cancellation
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases an insurance policy from the bank in the amount of the loan. This is an example of
Coercion
The general property policy form is used for other-residential and non-residential structures and their contents such as
Commercial structures, cooperative associations, and apartment buildings
It is suspected that a producer is consistently violating insurance laws. Which of the following entities is responsible for making sure that the producer stops committing these violations?
Commissioner
An individual's construction company leaves mobile equipment and construction machinery on the job site until the project is completed. What would this individual use to insure it?
Contractors equipment floater
To be valid, an insurance policy must have all of the following EXCEPT
Countersignature
The extra expense coverage form provides
Coverage that will permit the insured to continue in business without interruption following a property damage loss
A unique feature in a bailee form is that is covers
Customers' property whether or not the insured has been negligent
Which of the following dwelling policy forms primarily insures on an actual cash value basis?
DP-1
Which of the following examples of losses paid under an HO-3 also would be paid under an HO-2 homeowners polciy?
Damage to the dwelling caused by ash or dust from a volcanic eruption
The part of a policy that clarifies terms in the policy is the
Definitions
Which part of the policy clarifies the terms that are used throughout the policy?
Definitions
Employment practices liability insurance (EPLI) would NOT cover claims arising from
Deliberate law violation
To determine the actual cash value of an insured property, what must be deducted from the current replacement cost?
Depreciated value
What are the two forms of crime insurance?
Discovery and loss sustained
Residential structures, including individual condominium units, and their contents are insured by what part of the National Flood Insurance Program?
Dwelling policy form
An insured has four separate but identical policies written by different insurers to cover her $100,000 building. Each policy is written for $100,000, and each has the pro rata liability other insurance clause. In the event of a total loss to the building, what would each insurer pay?
Each policy will pay $25,000 of the loss
Which of the following terms best describes a trembling or shaking of the earth that is volcanic or seismic in origin?
Earthquake
Which of the following statements would be an example of a product liability claim?
Faulty packaging of a cereal caused spoilage that resulted in someone getting sick
Which federal act provides benefits to injured civilians who are employed by the federal government?
Federal Employees Compensation Act
Events or conditions that increase the chances of an insured loss occurring are referred to as
Hazards
An insured is involved in an auto accident in another state. The state has a financial responsibility law that specifies limits of liability higher than the limits shown in the declarations. What amount will the insured's policy pay?
Higher limits
Which of the following terms describes a vehicle that has been leased or rented?
Hired
A BOP (businessowners policy) is most similar to
Homeowners
Under a personal auto policy, in which of the following locations would a vehicle primarily garaged in California be covered?
In California and any other state
An insured's fire policy was due to renew on January 1. On December 15, the insurance company sent him a notice that it did not intend to renew the policy. The insured's building sustained a fire loss on January 20. What effect did the notice of nonrenewal have on the loss?
It had no effect since he did not receive at least 30 days' notice prior to the expiration date of the policy
All of the following are true regarding deposit premium EXCEPT
It is 50% of the actual premium
Which of the following coverages in dwelling and homeowners policies is for indirect losses?
Loss of use
Which of the following is NOT true concerning the fair rental value coverage provided in a dwelling policy?
Loss or expense caused by the cancellation of a lease is covered
Coverage A - Bodily Injury and Property Damage in the commercial general liability policy will cover
Losses due to the insured's negligence
A business using its own trucks to move its own cargo would insure the cargo using
Motor truck cargo - owners form
What type of property does a personal floaters policy cover?
Moveable personal property, wherever it may be located
Most insurance policies exclude losses by
Mysterious disappearance
An insurance policy form that lists specific covered perils provides
Named peril coverage
Which of the following does the term proximate cause refer to
Negligence that leads to an injury
All of the following statements are FALSE regarding garage physical damage coverage EXCEPT
No coverage is provided for any auto stored for more than 45 days at a location not shown in the declarations
Auto policies are required to provide Uninsured and Underinsured Motorists coverage. Does the insured have to accept this coverage?
No, the named insured may reject coverage in writing
Losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected is the definition of which of the following terms?
Occurrence
A bond is written for a set limit, and the surety will be liable for this amount of the limit. This limit is known as the
Penalty
An insured has a liability policy that sets the amount for all claims that arise from a single incident at $50,000. Which type of liability does this insured's policy have?
Per occurrence
Which of the following limits, shown in the declarations of a policy, applies to medical expenses?
Per person
Which of the following is the cause of loss?
Peril
The causes of loss insured against in an insurance policy are known as
Perils
In reference to insurable interest, which of the following is NOT an element of insurable risk?
Personal
Which of the following is used to define any person, firm, or corporation appointed by an insurer that possesses the authority to transact insurance?
Producer
Under the coverage of which of the following liability policies may an insured require the insurer to defend a claim?
Professional liability
All of the following are considered parts of the policy structure EXCEPT
Provisions
The Federal Fair Credit Reporting Act
Regulates consumer reports
Which of the following would NOT be covered under the directors and officers liability coverage?
Reimbursement for fines and penalties
What type of information would be found in a policy's insuring agreement?
Renewal dates
In a dwelling policy, which of the following other structures would be covered?
Rented to a neighbor for use as a private garage
All of the following are factors in rating workers compensation insurance EXCEPT
Sales
Which of the following would be covered under the Film Coverage Form?
Soundtracks
What entity was created to protect insured's against insurer insolvency?
The Iowa Insurance Guaranty Association
What is the deductible of a personal liability umbrella policy called?
The SIR
An insured's accounts receivable records have been damaged. The loss may be covered with
The accounts receivable coverage form
Due to appreciation, the amount of insurance on a business is less than 80% of its actual cash value on the date of loss. Which of the following is true?
The coinsurance penalty applies
The Commissioner is conducting an examination of a domestic insurance company. Who is responsible for the cost of the examination?
The company being examined
Which of the following statements is true regarding the commercial general liability policy's Coverage C - Medical Payments?
The coverage is considered good will because payments are made without regard to fault
When an umbrella policy is broader than underlying insurance and it pays a loss that is not covered by the underlying policy, it usually only pays
The excess over the self-insured retention
Which of the following best describes negligence?
The failure to use reasonable and prudent care
If Uninsured and Underinsured Motorists coverage is rejected at the issue of the policy, what happens to this coverage upon renewal of the policy?
The rejected coverages will not be on the renewal policy
The business income coverage form covers consequential loss of business income that occurs when a business must suspend operations because of a direct loss. Which of the following terms best describes the nature of this type of coverage?
Time element
Prior to state-directed workers compensation statutes being enacted, employees had
To sue an employer for the "loss" and prove that the employer was at fault
A structure that is not inhabited by anyone and stores no property is considered
Vacant
An insured's 9-year-old son threw a ball, accidentally breaking a neighbor's plate glass window. The insured was found legally liable for the cost of replacing the window. This is an example of
Vicarious liability
Liability imposed on one party as a result of the actions of another person is known as
Vicarious liability
When a parent is required to pay for damages caused by their children, this is an example of
Vicarious liability
When an insured's gardener was spraying weeds in his lawn, he failed to notice that the wind was drifting the spray into the neighbor's yard where he damaged their flower bed. The insured was found to be legally liable for this damage. This is an example of
Vicarious liability
Which of the following is most likely INELIGIBLE for coverage under the businessowners policy?
An auto mechanic shop
In order to get a nonresident license in this state a producer must
Apply and pay a fee to a nonresident state that reciprocates
Loss valuation is best described as the process of
Determining the premium charged and the amount of insurance required on a specific property
An auto insurer may nonrenew an auto policy for which of the following reasons?
Driving while intoxicated
The declarations section in a homeowners policy provides all of the following information EXCEPT
Policy exclusions
What information is found in the conditions part of an insurance policy?
The description of the duties and obligations of the insured
A trucking company has a $1 million umbrella policy in place. The businessowner agrees to maintain a 200/500/100 limit on auto liability, and a personal liability of $400,000. After a car accident, the business is sued. Injuries are awarded to a single injured party in the amount of $300,000. It turned out that the business actually carried only 100/250/50 auto liability limits. What is the total amount the umbrella policy will pay?
$100,000
An insured has an automobile policy with limits of 100/300/50 and a deductible of $1,000. He is involved in an auto accident and crashes into another driver's auto. The other driver suffered 125,000 in injuries and had $25,000 worth of damage to his car. The insured's vehicle has damage in the amount of $1,200. The total payment made under the insured's policy is
$125,200
Business auto coverages apply only to those autos that are identified as covered autos in the declarations by entry of the appropriate numerical symbol. Which symbol affords the broadest coverage?
1
The garage coverage form is written to cover the insurance needs of an insured in the business of selling, repairing, servicing or storing automobiles. Which of the following coverages are not included in a garage policy?
Physical damage on a customer's auto
The commercial general liability Coverage Part A - Bodily injury and Property damage provides coverage for which of the following?
Premises
Which of the following is INCORRECT regarding the Insurance Guaranty Association?
Producers may stress its guarantees to customers in a sales presentation
Auto insurers must offer UM/UIM coverage for at least
20/40
How long is a waiting period for workers compensation loss of earnings benefits?
3 days
An insurer intends to cancel a private passenger automobile policy because the insured misrepresented herself on her application for insurance. How many days' notice must be provided prior to cancellation?
30
If a producer changes his address, the Commissioner must be notified within
30 days
An order is issued by the Commissioner that requires someone stop engaging in an unfair method of competition or an unfair deceptive act or practice is called
A cease and desist order
Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination?
Charging the insured higher premiums based on their race
Insurance producers can only receive commissions for insurance written with
Companies that have appointed them to act as insurance producers
The statutory law defense that reduces injury and awards for damages proportionately when the plaintiff and defendant are both responsible is called
Comparative negligence
Under which legal defense is there an apportionment of damages based upon the degree of fault of each of the plaintiffs and the defendant?
Comparative negligence
Which of the following entities is eligible for a businessowners policy?
Convenience stores
The supplementary payments section of the commercial general liability policy would cover
Court costs assessed against the insured in a suit
A sworn statement must usually be furnished by the insured to an insurer, and must include what information about the occurrence and the amount of indemnity claimed?
Date and description
Which of the following conditions allows the insurer to examine the insured's records at the end of a policy term to make sure an adequate fee is being collected for the exposure?
Deposit Premium Audit
An insured just purchased an auto policy for his new car. He wants to understand what perils are not insured against. Which section of his policy should the insured check?
Exclusions
After a hearing, if the Commissioner finds that a producer is in violation of unfair business practices, his or her initial action will be to
Issue a cease and desist order
Section III of the business auto policy provides physical damage coverage. All of the following are physical damages that may be selected coverages EXCEPT
Limited peril coverage
Guaranteeing future dividends is considered to be an unfair or deceptive act known as
Misrepresentation
An insured has extended coverage on her dwelling that includes coverage for vandalism and malicious mischief. One evening, she is sitting in her living room when she hears a crash and the sound of glass breaking. She runs to the door and discovers a brick has been thrown through her glass door. To inform her insurer of a possible claim, she fills out a form detailing the events leading to the loss. What is the name of the form?
Notice of Claim form
Prior to paying a claimant under a professional liability policy, the insurer must
Obtain consent of the insured
Among the applicants in the same class and life expectancy, which of the following factors can be used to determine premium rates?
Occupation
Which of the following is FALSE concerning liability coverage of a business auto policy?
The company will reimburse the insured for all loss of earnings
The broad theft coverage endorsement on the dwelling form specifies all of the following limitations EXCEPT
$1,000 on silverware
An insured has a standard HO-4 policy with a $30,000 limit of coverage for personal property. While he was traveling, a fire in his hotel destroys clothes and luggage with a replacement value of $10,000 and jewelry with a replacement value of $10,000. Disregarding any deductible, and assuming a depreciation of 20% has occurred in both properties, what amount is the insurer obligated to pay?
$16,000
The insured purchased a $200,000 extra expense policy. If the percentages applying to the limit of insurance are 40%, 80%, and 100%, what would be the maximum payable for a 47-day loss?
$160,000
Which loss listed below would be fully covered by a homeowners policy?
$2,000 silver tea set stolen
Transportation expenses are covered under a personal auto policy for
$20 per day, for a maximum of $600
Tom's Truck Service's vehicle is stolen. The policyholder may obtain coverage for transportation expenses subject to which of the following limits?
$20 per day; $600 maximum
Equipment breakdown coverage is written with a single limit of insurance per accident. What is the sublimit for hazardous substance cleanup or repair or replacement of contaminated property?
$25,000
The regular National Flood Insurance Program would insure an eligible single-family dwelling for up to
$250,000
A grave maker was damaged by vandals. It would cost $3,000 to have the damage repaired. Under these circumstances, how much would a homeowners policy pay?
$3,000
An auto dealer reported $500,000 worth of automobiles on its lot at the end of May to its insurer. On June 10, it received $200,000 worth of cars. By June 20, the dealership sold $100,000 worth of cars. A hail storm on June 21 caused $50,000 worth of damage to the inventory. Without considering any deductibles, how much will the insurer pay for damages? (Dollar amounts are rounded to the nearest hundred.)
$41,700
A premium discount is the term that describes when an insured owes a total standard premium greater than
$5,000
An insured has a special form dwelling policy written for $100,000 on a dwelling. The dwelling's replacement cost is $115,000. Fire causes $75,000 in damage to the dwelling, $15,000 damage to a separate garage, and kills 10 trees valued at $600 each. How much will the policy pay for the trees?
$5,000
What is the maximum benefit a workers compensation policy may pay for burial services?
$5,000
If a liability policy had split limits of 50/100/30, what is the maximum amount that would be payable in the event of injury to a single person?
$50,000
If a producer knowingly violates the Insurance Code, the maximum aggregate penalty CANNOT exceed
$50,000 in a 6-month period
How much coverage is provided under a homeowners policy for theft or unauthorized use of a credit card?
$500
If an insured covered under a Mobile Homeowners Policy moves the mobile home to protect it from a covered peril, the policy will pay up to
$500
An insured hits a deer and crashes his car into a tree. The total damage to the vehicle is $6,000. How will this loss be covered?
$6,000 would be paid under other-than-collision coverage
An insured has a personal auto policy with both comprehensive (other-than-collision) and collision coverage. His car is stolen and recovered five days later. If the insured claims transportation expenses of $20 per day, how much will his policy pay?
$60
Using the pro rata method, if a property is covered by Company A for $20,000 and Company B covers the same property for $40,000, how much will Company A pay on a $24,000 loss?
$8,000
What is the minimum amount of coverage that should be carried on an HO-2 on a home that was purchased four years ago for $75,000, which today has a replacement value of $100,000?
$80,000
The businessowners policy liability coverage will pay for necessary medical expenses of others incurred within what maximum time period?
1 year
Which of the following must an insurer obtain in order to transact insurance within a given state?
Certificate of authority
When a policy is being cancelled due to nonpayment of the premium, the notice of cancellation must be delivered to the insured how many days before the cancellation effective date?
10
If an insurer intends to cancel a commercial umbrella policy, how much notice must be provided to the insured?
10 days
In automobile policies issued in this state, what is the required minimum notice to the insured when a policy is being cancelled for nonpayment of premium?
10 days
The Commissioner has scheduled a hearing for a producer who is implicated in engaging in an unfair method of competition. The notice of hearing must be delivered to the producer NO later than how many days prior to the hearing?
10 days
What is the amount of coverage that would be available for a detached garage under the Coverage B - Other Structures of a homeowners policy?
10% of Coverage A
An insured has an auto policy with limits of 100/300/50. What is the most amount of coverage the insured can buy against Uninsured Motorists?
100/300/50
What is the maximum amount of time that a person can have a temporary producer's permit?
180 days
Under the additional living expenses coverage, if a civil authority prohibits the insured from using the dwelling because of direct damage to a neighboring location from a peril covered in the insured's policy, loss would be covered for up to
2 weeks
Within how many years of a loss may an insured bring a lawsuit against an insurer, according to the dwelling policy?
2 years
Which of the following best describes liberalization clause in a policy?
Changes adopted by the insurer that broaden coverage automatically apply to the policy at no additional premium
To be effective, a notice of intent not to renew a commercial policy must be delivered to the insured at least how many days before the policy expiration date?
20
How soon from the effective date of cancellation of a commercial property policy must an insurer provide notice to an insured?
20 days
What are the required minimum limits of liability for personal auto policies in this state?
20/40/15
What is the waiting period for transportation expenses coverage for a loss other than theft of a covered vehicle?
24 hours
Coverage for medical payments under a personal auto policy applies to expenses following a covered accident that are incurred and services rendered within what maximum time period?
3 years
If a person is suspected of violating insurance laws, what can the Commissioner issue that would order the person to stop violating the violations?
Cease and Desist Order
To be effective, a notice of cancellation of a non-commercial lines policy for reasons other than nonpayment of premium must be delivered how many days before the date of the cancellation?
30
To be effective, a notice of intent not to renew a homeowners policy must be delivered to the insured at least how many days before the policy expiration date?
30
According to the definitions that apply to commercial crime policies, an individual is still considered an employee for how many days after termination
30 days
How long is the waiting period after the application has been accepted before flood coverage goes into effect?
30 days
How long is the waiting period upon purchase of flood coverage through NFIP?
30 days
How soon must an insurer re-underwrite and re-rate an insured policy upon notice of incorrect credit information?
30 days
If an insured is in the process of moving to a new location, his personal property coverage under the dwelling policy will apply on a pro rata basis at both locations for
30 days
The mail coverage form is always written on a reporting form basis; after the end of each reporting period shown in the declarations, reports are due within
30 days
The removal coverage included in the broad form dwelling policy will cover property temporarily removed from the premises to protect it from damage for how long?
30 days
Under the dwelling policy, if an insurer chooses to repair or replace damaged or lost property, it must inform the insured within how many days of receiving proof of loss?
30 days
How long is the Commissioner's term?
4 years
To legally transact insurance in this state, an insurer must obtain which of the following?
Certificate of Authority
If an insurer wants to nonrenew a commercial fire policy, it must send notice of its intent to the insured not less than how many days prior to the expiration date of the policy?
45
How much advance notice must an insurer provide to an insured for the nonrenewal of a commercial property policy?
45 days
Under Coverage C of a homeowners policy, the amount of insurance provided to cover personal property of the insured is
50% of the amount provided as Coverage A
According to the Insured Duties after a Loss provision in homeowners policies, if the insurer requires a signed, sworn proof of loss, the insured must provide within how many days?
60 days
According to the loss payment condition in HO policies, losses must be paid within how many days of the insurer receiving proof of loss?
60 days
Losses caused by vandalism and malicious mischief are excluded under a homeowners policy if the dwelling had been vacant for more than
60 days
How many members make up the governing committee of the Iowa FAIR plan?
7
In business income additional coverage in a businessowners policy (BOP), the waiting period that must occur before the period of restoration is
72 hours
An insured is the owner of a clothing boutique. She has a Floor Plan Merchandise Floater to cover the property that is financed until it is sold. At closing time a month ago, she noticed that 3 very expensive dresses had been stolen. However, she did not file a report to her insurance company until recently. How much will her insurer pay for this loss?
90% of the limit written
Which of the following is eligible for a businessowners policy (BOP)?
A 5-story office building with less than 100,000 square feet in total area
An insured couple owns a pontoon boat. Which situation would NOT be covered by their watercraft endorsement under their homeowners policy?
A friend rents their boat and runs it into a neighbor's dock
In a participation plan, the insured may be eligible for which of the following?
A partial premium refund
A tornado that destroys property would be an example of which of the following?
A peril
Which of the following statements is true regarding the premium computation for workers compensation insurance?
A premium auditor has the right to examine the insured's compensation records at the end of the policy period to determine the actual premium basis
An insured owns and operates a ranch. The insured has several vehicles that are used in the ranching operation and for personal use. Which of the following could NOT be insured under a personal auto policy?
A two-ton grain truck with a 6,500-pound capacity
What are common carriers required to issue every shipper that it transports goods for?
A uniform bill of lading
With respect to the personal auto policy, which of the following vehicles could be classified as a nonowned auto?
A vehicle that is titled to another person, but is being used with permission by an insured
The Iowa FAIR plan is
An independent agency operating under the authority of the state legislature
Which of the following statements about policy cancellation or nonrenewal is TRUE?
Any action by the insured that increases the risk of the insured peril is grounds for cancellation
With respect to the business of insurance, a hazard is
Any condition or exposure that increases the possibility of loss
While an insured's covered auto is in the repair shop following damage caused by a collision, the insured would have coverage for which of the following vehicles under a personal auto policy?
Any vehicle not owned by the insured, but furnished for use while the covered auto is out of normal use because of repair
An installation floater is used to insure
Appliances intended to become a permanent part of the building
If an insured's mother-in-law broke her leg falling down the front steps of the insured's premises. The insured's homeowners medical payments coverage will
Apply to injuries of any guests or visitors
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be
Authorized
Business personal property coverage form covers all of the following EXCEPT
Automobiles held for sale
In a DP-1, if the insured elects to apply Coverage B to a detached garage, Coverage A will
Be reduced by 10%
An employee is injured while visiting the employer's out-of-state site. How will the workers compensation benefits be determined?
Benefits will be provided if the state was listed on the policy information page
An applicant is purchasing a homeowners policy. A producer comes to her home, fills out the paperwork, and tells the applicant that her home will be covered as soon as she signs all of the paperwork, and that she will receive a new policy in the mail in 5 business days. Even though the policy is not issued, the applicant's home is temporarily covered until then. Which of the following makes that possible?
Binder
A policy that insures all property at multiple locations for a single amount is referred to as
Blanket
A single property insurance policy that can provide coverage for multiple classes of property at one location, or one or more classes of property at multiple locations, with one total amount of coverage and no single item assigned a specific amount of coverage is called
Blanket insurance
Which of the following would NOT be covered under the liability section of a personal auto policy?
Bodily injury caused by the insured's negligence while driving a three-wheel all-terrain vehicle
The equipment breakdown coverage form provides coverage for all of the following EXCEPT
Bodily injury liability
The liability coverage of the businessowners policy is written on a
Businessowners liability coverage form
Which of the following is NOT found in a commercial package policy?
Certificate of Authority
An insured is driving her car through a residential area when she loses control and crashes into a neighbor's front porch. The neighbor, who was sitting on the porch, is injured. The insured's liability policy has a limit of $500,000. This amount applies to the total of damages for any bodily injury and property damage resulting from one accident. Which type of limit of liability does the insured have?
Combined single
An insured's limit of liability applies to a total of damages for bodily injury and property damage resulting from one accident, which may be used in any combination of amounts, not to exceed the single limit. What type of limit does this insured have?
Combined single
What are two major sections of commercial crime policies?
Commercial entities and government entities
A professional who wants coverage for all liability exposures should purchase what form of liability insurance?
Commercial general and professional
What two policy components are part of every commercial package policy?
Common policy declarations and common policy conditions
The ABC Corporation has $100,000 of coverage on its building through insurance Company A, and $50,000 of identical coverage on the same building through insurance Company B. Assuming coinsurance is not an issue, when a $24,000 loss occurs and the pro rata method is used, how much will each insurer pay?
Company A will pay $16,000; Company B will pay $8,000
What is the legal defense that can be used in most states in which proportionate damages may be awarded when both the plaintiff and defendant were negligent?
Comparative negligence
Which of the following is a statutory defense?
Comparative negligence
A builder's risk form is most often written as which of the following?
Completed value form
A temporary producer's license may be used for which of the following?
Completing the affairs of an insurance producer
In commercial auto insurance, what type of coverage will pay for loss or damage to a covered auto by any cause other than collision or overturn?
Comprehensive
A bank manager has had several instances of employee dishonesty involving transfer of funds. His risk manager is researching the best coverage for this situation. Which bond rider should he recommend to the bank manager?
Computer systems rider
An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of
Concealment
An insured intentionally did not disclose a material fact on an application for insurance. This would be considered
Concealment
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT
Conditions
Which of the following risks is eligible for coverage under a businessowners policy?
Condominiums
The part of the policy that sets forth the rules of conduct, duties, and obligations of the parties is called the
Condtions
An insured's business is damaged because of a fire, and he is forced to close the business temporarily for repairs. As a result, the insured lost income. What type of loss is this?
Consequential
An insured's home catches fire. As a result, the insured's family must stay in a motel until the home is repaired. The cost of the motel stay would be considered a
Consequential loss
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principals has the insurer violated?
Consideration
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
Consideration
Representations are written or oral statements made by the applicant that are
Considered to be true to the best of the applicant's knowledge
The at-fault driver in an insured's auto crash had the state required minimums for auto liability coverage, but not enough to pay for all the damage done to the insured. The driver is
Considered underinsured
The difference in the contents coverage on an HO-3 and HO-5 is which of the following?
Contents are covered open peril on HO-5, and named peril on HO-3
In the event an insurer fails to provide a notice of nonrenewal, a commercial property policy will
Continue in force for the remainder of the notice period, plus 30 days
Which of the following statements is true concerning the special form dwelling policy?
Coverage A is for all-risk perils, and Coverage C is for the broad form perils
Which of the following dwelling coverages would provide coverage to a garage not attached to the primary insured dwelling?
Coverage B
Which of the following coverages in the dwelling policy would provide protection to contents damaged by fire?
Coverage C
Which of the following would provide coverage for loss of income when an insured rental dwelling is rendered uninhabitable because of a covered loss?
Coverage D
With regards to a homeowners policy, which coverage provides for indirect or consequential losses?
Coverage D
An agreement that is enforceable by law is known as what kind of contract?
Legal
Under the examinations of books and records condition, the insurance company has the right to examine and audit the insured's books and records related to the policy
During the policy period and for up to 3 years after the termination of the policy
Which of the following provisions that the insured protects the damaged property from further damage, cooperates with the insurer in settling the loss, and submits to the insurer signed proof of loss within a specified period of time?
Duties after loss
Directors and officers liability insurance defends actions against a corporation or its officers and directors alleging wrongful acts. With regard to the coverage provided, wrongful acts include any of the following EXCEPT
Embezzlement
In addition to the common policy conditions, all of the following conditions apply to liability coverage EXCEPT
Employers liability
Individuals in the business of selling construction equipment and mobile equipment should insure with a/an
Equipment dealers coverage form
Professional liability coverage protects against legal liability resulting from
Errors and omissions
All of the following are found in the declarations section of a policy EXCEPT the
Exclusions
The section of an insurance policy that details what perils are not insured against and what persons are not insured in known as the
Exclusions
Which of the following is true of dwelling policy coverage?
Exclusions apply to all three policy forms
What method of premium computation related an employer's losses, payroll, and premiums to the rating bureau's classifications of operations?
Experience modification factor
What method of premium computation relates an employer's losses, payroll, and premiums to the rating bureau's classifications of operations?
Experience modification factor
All of the following are excluded in the equipment breakdown basic policy EXCEPT
Explosion of steam boilers
All of the following reasons can justify denial of license for an insurance producer EXCEPT if the producer
Fails to sell enough policies
Which of the following is an example of an unfair claims settlement practice?
Failure to promptly settle a claim when liability has been clearly established
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?
False advertising
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising
Which of the following is covered under a dwelling policy?
Fire caused by an earthquake
Which of the following claims would be included under the dwelling policy?
Fire damage to the insured's rowboat stored in the attached garage
In Businessowners policies, a deductible does NOT apply to which of the following additional coverages?
Fire department service charge
All of the following are exclusions that apply in all three types of Dwelling Policies EXCEPT
Fire or lightning
Which of the following losses would be covered by an unendorsed homeowners policy?
Fire or lightning
What perils are covered under the Standard Fire Policy?
Fire, lightning, and removal
In the split limit coverage in personal auto policies, which limit indicates the maximum amount the policy will pay for bodily injury per person?
First limit
Which of the following would be named on the declarations page of a property or liability policy?
First named insured
The major portion of the premium for an equipment breakdown policy pays
For inspections and examinations
Harold died in an accident at work, leaving behind a wife and an autistic child. For how long will the child's survivor benefits continue under the state's Workers Compensation law?
For the remainder of the child's life
An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?
Foreign
An insurer incorporated under the laws of another state but doing business in this state is considered
Foreign
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?
Foreign
Which of the following criminal activities would be sufficient violation to warrant rejection, revocation, or suspension of an insurance producer's license?
Forgery
The homeowners policy covers collapse caused by all of the following EXCEPT
Foundation cracks
Replacement cost is defined as
Full replacement of property at its current cost, new and without reduction for depreciation
The proof of loss statement must be
In writing
Which of the following was designed to investigate and collect evidence relating to insurance fraud?
Insurance Fraud Bureau
What is surplus lines insurance?
Insurance placed with an unauthorized insurer
All of the following are factors in the determination of actual cash value EXCEPT
Insurance premium paid
Which of the following provisions is usually found in homeowners policies and provides a replacement cost settlement to policyholders who carry adequate insurance?
Insurance to value
Who is responsible for filling out a notice of claim form?
Insured
Persons covered under an insurance policy, whether named or not, are known as the
Insureds
Membership on the FAIR plan's governing committee is selected from
Insurers, insurer associations, and independent agents
All of the following are conditions commonly found in the insurance policy EXCEPT
Insuring agreement
The additional living expense coverage on homeowner policies
Is intended to allow the family to maintain its normal standard of living
The Residential Condominium Building Association Policy (RCBAP) is used for residential condominium building associations to cover the entire building under one policy. Which of the following statements about RCBAP is true?
It does not protect the individual owner from loss to personal property owned exclusively by the unit owner
Which of the following is TRUE regarding TRIA?
It is a temporary federal program for insured terrorism losses
All of the following statements describe the concept of strict liability EXCEPT
It is imposed on defendants engaged in hazardous activities
When is liability coverage included in a homeowners policy?
It is included automatically
Which of the following is NOT true regarding a Certificate of Authority?
It is issued to group insurance participants
In which of the following situations is it legal to limit coverage based on marital status?
It is never legal to limit coverage based on marital status
Which of the following statements concerning the builders risk form is correct?
It may be written on a reporting form for the completed value of the structure
All of the following are true of Coverage B - Other Structures in homeowners policies EXCEPT
It must be added by endorsement to a homeowners policy
Which of the following statements is NOT true regarding a personal umbrella liability policy?
It provides errors and omissions coverage for an agency
How does the mobilehome endorsement affect the other coverage of law or ordinance in a homeonwers policy?
It removes the coverage
How does insurance distribute the financial consequences of individual losses?
It transfers the risk to all persons insured
An insured is at fault in an auto accident out of state. How will the insurer respond?
It will adjust the benefit to the minimum limits for the other state
The insured was mowing the lawn in his yard with a lawnmower borrowed from his brother. The fuel line ruptured, and the lawnmower was destroyed in the fire. How will the insured's homeowners liability policy respond?
It will cover the damage
If an employer in a state with elective workers compensation law chooses not to be subject to those laws, what does the employer lose?
Its common law defenses against liability suits
What type of property would NOT be covered under the dwelling policy special form Coverage A - Dwelling?
Land on which the dwelling is located
Which of the following would NOT be considered causes for flood conditions covered by the National Flood Insurance Program?
Landslides
For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become
Larger
Statistical probabilities of loss for a particular class of insureds is best predicted when the insured group is
Larger
Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Law of large numbers
A couple noticed yesterday that several items of personal property were missing from their home. There has not been any apparent robbery committed, the items are merely missing and have seemingly disappeared mysteriously. The couple will
Not be able to make a claim for the property since it is considered to have mysteriously disappeared
Duties of the insurer found in property policy conditions include all of the following EXCEPT
Notify the insured in the event of financial difficulty
A plant worker for a chemicals manufacturer was recently diagnosed with a rare blood disease. She told her doctor that her job required her to handle industrial waste chemicals. Which of the following types of injuries is covered under the workers compensation policy?
Occupational disease caused or aggravated by a condition of employment
What term includes losses caused by continuous or repeated exposure to conditions resulting in injury to persons or damage to property that is neither intended nor expected?
Occurrence
How is property insured under the equipment breakdown coverage form?
On a replacement cost basis
Workers compensation benefits are provided for an employee injury or death that arises out of the course of normal employment in all of the following situations EXCEPT
On his evening stroll, an employee of an advertising company is injured while watching a competitor's billboard sign being removed from an advertising site
When does compensation begin for loss of earnings benefits under workers' compensation?
On the 4th day of disability after the injury
In the last 72 hours, there were 3 instances of volcanic eruptions that damaged a property covered by a dwelling policy. How many deductibles will the insured have to pay before the policy covers the damage caused by the eruptions?
One
How is the premium paid for the businessowners policy?
One indivisible premium
Which statement best describes agreement as it related to insurance contracts?
One party accepts the exact terms of the other party's offer
When is a hired and nonowned auto liability endorsement available in a businessowners policy (BOP)?
Only if the insured does not have commercial auto coverage
The HO-3 homeowners policy provides
Open peril coverage on the dwelling and broad form coverage on personal property
What type of insurance policy insured against all risks of loss that are not specifically excluded from by the policy?
Open peril policy
Rental Reimbursement is only available if the policy includes which coverage?
Other Than Collision Coverage
What insurance policy provision defines how the policy will respond if there is more than one insurance policy written on the same risk?
Other insurance
Which provision defines how the policy will respond if there is other valid insurance written on the same risk?
Other insurance
Which of the following personal auto coverages would apply for damage caused by a bird hitting the windshield?
Other-than-collision
All of the following are additional coverages under a homeowners policy EXCEPT
Outbuildings
The mobilehome endorsement alters the homeowners policy to cover a mobilehome and other structures on land
Owned or leased by the resident of the mobilehome
Workers compensation will pay under which of the following situations?
Paid without consideration of fault on the part of either the employee or employer
Under a dwelling policy, which of the following clauses applies if an insured has lost one of two matching silver candlesticks?
Pair or set
An insured is injured while driving his own car. Which of the following coverages will pay for the loss?
Part B - Medical Payments
A building insured with commercial property insurance has been vacant for more than 60 consecutive days. Which of the following is NOT true?
Payment for unnamed perils is reduced by 25%
B&B market was sued when an employee detained a person he believed to be a shoplifter, but the person turned out to be the meter reader. Which coverage would apply to this suit?
Personal and advertising injury liability
If an insured bakery is sued because of its marketing states that the products of another bakery may not be safe, which coverage of a commercial general liability policy will defend the suit?
Personal and advertising injury liability
When ABC Appliance's marketing stated that its mowing machine was the only safe mower available for purchase in town, ABC was sued by XYZ Lawn and Garden. ABC's coverage would come from which part of its general liability coverage?
Personal and advertising injury liability
Which of the following floaters will be used to insure personal effects carried or worn by the insured while traveling?
Personal effects floater
All of the following are additional liability coverages automatically provided in a homeowners policy EXCEPT
Personal injury
What type of coverage is Coverage E in homeowners policies?
Personal liability
What does HO personal property coverage NOT cover?
Personal property of roomers not related to the insured
If a person using an auto with the belief that he is entitled to do so, subrogation rights under a personal auto policy would apply to all coverages EXCEPT
Physical damage
Under the personal auto policy, liability for bodily injury resulting from the insured's use of a nonowned automobile is
Provided by the insured's policy on an excess basis
Which of the following would be the insured's duty in the event of a loss according to the duties in event of occurrence, claim, or suit condition?
Providing specific details regarding an occurrence
What type of damages may be awarded by the court to create disincentives that discourage behavior that is deemed highly undesirable by society?
Punitive
A situation in which a person can only lose or have no change represents
Pure risk
The risk of loss may be classified as
Pure risk and speculative risk
All of the following are true regarding rebates EXCEPT
Rebates are allowed if it is in the best interest of the client
An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of
Rebating
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as
Rebating
A producer in another state wants to become a producer in Iowa. The other state gives the same privileges to Iowa producers wanting to be licensed in that state as it does its own producers. Iowa therefore extends the privileges of its producers to the prospective producer of the other state. What is this called?
Reciprocity
Paul is a producer in Kansas and wants to become a producer in Iowa. The Department will waive certain examination requirements, provided that Kansas would waive these same requirements if an Iowa producer sought licensure in Kansas. What term is used to describe this phenomenon?
Reciprocity
After a loss, an insured covered by a business property coverage is NOT required to
Reconstruct for the insurer a timeline of activities leading up to the loss for use in an investigation
All of the following are additional causes of loss in the broad form of a commercial property policy EXCEPT
Replacement cost
Which method of loss valuation is contrary to the basic concept of indemnity?
Replacement cost
Which of the following is used in the formula for calculating the actual cash value of a property?
Replacement cost
In property insurance, actual cash value is defined as which of the following?
Replacement cost at the time of the loss, less depreciation
An applicant for a disability insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to heart problems on their application. Their answer is considered to be a
Representation
In case of a loss, the indemnity provision in insurance policies
Restores an insured person to the same financial state as before the loss
Which of the following is a method of establishing a premium on large commercial accounts?
Retrospective rating
For an additional premium, the extended coverages written on the basic form dwelling policy would cover which of the following?
Riot
Which of the following types of property would be covered under Coverage C - Personal Property in a dwelling policy?
Rowboats
An insurer's right to take possession of property after having paid for the loss is referred to as the right to
Salvage
In a personal umbrella policy, the amount paid by the insured for certain losses not covered under the primary coverage is called
Self-insured retention
The amount of loss the insured is willing to absorb without insurance protection is known as
Self-insured retention
To be considered effective, a notice of cancellation of a non-commercial lines policy must be
Sent to the named insured
Which of the following statements is NOT accurate regarding commissions and referrals?
Service fees are acceptable as long as the policyholder is licensed
It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability?
Sexual orientation
All of the following are considered unfair trade practices in the business of insurance EXCEPT
Sharing commissions
A Certificate of Insurance is a written document that
Shows the types and amounts of insurance issued to the insured
The endorsement that provides coverage for losses arising from sudden collapse of earth arising from underground limestone created by the action of water on rock formations is a/an
Sinkhole collapse endorsement
Payment for medical expenses, loss of wages, funeral expenses, or the cost to repair or replace damaged property are known as what type of compensatory damages?
Special
What are the two types of compensatory damages?
Special and general
What are the types of compensatory damages?
Special and general
Theft coverage under an HO-8 is restricted to
The actual cash value of what was stolen, with limits for certain classes of property
An insurance agency could purchase an errors and omission insurance policy which would provide protection in the event of any of the following events EXCEPT
The agency loses commission income from policies that were not issued by the insurer
Under a dwelling policy, which of the following is NOT a factor in determining a loss?
The amount negotiated by the insured
The amount an insurer will pay under Coverage D (Loss of Use) depends on
The amount of coverage on the dwelling
Replacement cost coverage is provided in both the broad and special form dwelling policies when
The amount of insurance on the dwelling is at least 80% of its replacement cost at the time of loss
A small appliance manufacturer in this state provides products around the globe. A customer in Switzerland is injured using one of its products. If the appliance manufacturer is found liable for the damages, why would its commercial general liability policy cover the customer's claim for bodily injury?
The appliance was manufactured in the United States
Which of the following would NOT be considered a source of insurability information by an insurer?
The applicant's marital status
Which of the following is NOT the consideration in a policy?
The application given to a prospective insured
How much is the premium for the dwelling under construction endorsement under the dwelling policy?
The average amount of insurance during construction
In order for a casualty policy to pay in the event of a burglary, what conditions must be met?
The break-in must be made with felonious intent, and visible signs of forced entry should be present
Which item would NOT be covered under building coverage in a building and personal property policy?
The bulldozer being used as part of a business addition under construction that is parked 500 feet from the building
Which of the following statements is CORRECT regarding business income coverage under the businessowners policy (BOP)?
The business income losses are payable for 12 consecutive months following the occurrence
When a regular bill of lading is issued, who will be responsible for the invoice cost of any damaged property?
The carrier
Peril is most easily defined as
The cause of loss insured against
All of the following statements concerning coinsurance are true EXCEPT
The coinsurance formula will also be applied to total losses
An insured was having a new home built. While digging the footings for the foundation, the contractor struck a solid rock formation and found that was necessary to blast the formation in order to remove the rocks. The force of the blast broke several windows and some chinaware in a neighbor's home several blocks away. Who pays for this damage?
The contractor
The claims-made trigger is based on which of the following?
The date the claim is first made
The occurrence form trigger is based on which of the following?
The date when injury or damage occurs
A passenger in a friend's car is injured while getting into the car. Which of the following statements would apply if both the passenger and the driver had medical payments coverage under a personal auto policy?
The driver's policy would be primary
An employee become disabled when
The employee can no longer perform his or her job or any suitable employment
Which of the following statements is true regarding a mobile equipment endorsement in commercial auto policies?
The endorsement is available for additional premium
The common policy condition is a modular part combined with other parts to create the contract. The common policy condition section provisions that are applicable to all lines of coverage that may be included in the policy. Which of the following provisions would be found in the common policy conditions section of the policy?
The first named insured may cancel the policy at any time by giving written notice to the insurer
A golfer slices a tee shot and the ball goes through the window of a house beside the fairway. The broken glass is paid for by
The golfer's homeowners liability coverage
A homeowner sells his house to a friend. The friend wants to keep the homeowner's current policy in effect. Under the assignment provision, which of the following is most likely?
The homeowner will need to get written consent from the insurer before the policy can be reassigned
When a mortgagee is named in a mortgage clause attached to a fire or other direct damage policy
The loss reimbursement is paid to the mortgagee
All of the following conditions must exist for injury or damage to be included in the products and completed operations hazard of a commercial general liability policy EXCEPT
The injury or damage must occur within 90 days after the insured's work is completed
After a hearing, who issued the written order resolving the factual issued presented in a hearing and stating what remedial action is necessary?
The insurance division
According to the standard workers compensation and employer liability policy form, a state should be listed in Part Three - other states' insurance of the workers compensation and employers liability policy when
The insured expects to extend operations to that state
Losses that result from the freezing of a plumbing system while the dwelling is vacant would be EXCLUDED under a homeowners policy UNLESS
The insured had drained the plumbing system
Which of the following circumstances would be EXCLUDED under medical payments coverage of a personal auto policy?
The insured is injured while driving his motorcycle on his resident premises
The medical payments coverage in a personal auto policy will pay reasonable medical expenses for all of the following EXCEPT
The insured is injured while exiting a friend's mobile home
Under which of the following circumstances would an insurer be allowed to cancel a dwelling policy midterm?
The insured knowingly misstated the age of the property on the policy application
To send important documents to the insured electronically, all of the following requirements must be met EXCEPT
The insured must be made aware that choosing another method may affect the validity of the document
Which of the following is most likely to occur if it is determined by the audit that the deposit premium was too high?
The insured will receive a return premium
Which of the following statements would be correct if an insured failed to maintain the underlying limits as required by a personal umbrella policy?
The insured would be responsible for the amount required as underlying limits in the event of a claim
With respect to commercial auto policies, the Garage Coverage Form provides liability protection for all of the following EXCEPT
The insured's business income losses due to personal injury
In which of the following situations would off-premises coverage in a broad theft endorsement of the insured's dwelling policy apply?
The insured's camera is stolen from his suitcase while he is on vacation
The insured and his girlfriend were sitting in the car when it was struck by a hit-and-run driver. The insured's medical bills from the accident were $10,000 and his girlfriend's bills were $25,000. Assuming that the insured had the minimum amount of Uninsured Motorists coverage on his auto policy, how much would the policy pay for both medical bills?
The insured's policy will pay $10,000 for his bills and $20,000 for his girlfriend's bills
Under a businessowners policy, the inspections and surveys condition specifies all of the following EXCEPT
The insurer does not have the right to inspect the insured's property and operations
If more than one person has an insurable interest in the property covered under a dwelling policy
The insurer will be liable for only the insured's interest in the damaged property
Which of the following best depicts the law of large numbers?
The larger the pool of risks under the study, the more accurate the predictions will be
Under the limits of insurance provision found in the Physical Damage Coverage Form in a Commercial Auto policy, how much will an insurer pay to repair or replace a covered auto?
The lesser of the actual cash value or the cost to repair or replace a covered auto
All of the following are true regarding physical damage coverage EXCEPT
The limit of liability is the greater of the actual cash value of the vehicle at the time of loss or the amount necessary to repair or replace the vehicle
The members of a limited liability company are insureds under a businessowners policy (BOP) if
The limited liability company is designated as the named insured
A dealership loans a car to its customer to use while the dealership is repairing the customer's car. If the dealership has business auto physical damage coverage and a customer's automobile insurance does not cover damages to loaner cars, which of the following is true?
The loaner vehicle is covered by the business auto policy
An insured's diner suffered a fire loss. In addition to the damage caused by the fire, the floor covering had to be replaced because of the water damage. It took 4 weeks for the repairs to be completed. The insured was without income for that period of time. The insured's policy includes both direct and indirect loss coverage. What part of the loss would be paid as indirect loss?
The loss of income for the time the diner was closed
On an application for a Commercial Property Policy, Arthur stated that he had no losses in the past 3 years when, in fact, he had 5 losses. Within what period of time must the insurer notify Arthur of its intent to cancel the policy for misrepresentation?
There is no time limit on cancellation for misrepresentation
Which of the following is true regarding single dwellings that are insured at least 80% of the replacement value?
They are automatically provided with replacement cost coverage
Which of the following is true regarding single dwellings that are insured to at least 80% of the replacement value?
They are automatically provided with replacement cost coverage
When Symbol 7 is provided, which of the following statements is true with regards to a newly acquired auto?
They are covered if they are used to replace previously owned autos with that coverage
All of the following are true statements regarding the supplementary payments of a commercial general liability policy EXCEPT
They pay defense costs even after the aggregate limit has been reached
Which of the following best expresses the purpose of a stated value contract?
To pre-establish the amount of coverage available for property items that are difficult to value
Which of the following IS considered a work-related injury/occupational disease under Workers Compensation law?
Tom works as a painter in an auto body shop. The chemicals from the paint aggravate Tom's asthma to the point that he must be hospitalized for several days
Which common policy condition prohibits the insured from changing the rights or duties as defined under the policy to any other person or entity without the written consent of the insurance company?
Transfer of rights and duties under the policy
An insured covered under a Mobile Homeowners Policy wants to move the location of the covered mobile home. Which of the following must the insured obtain from the insurer?
Transportation/Permission to Move Endorsement
The type of insurance used to cover goods for one specific trip is called
Trip transit
An insured relocated to another state for work. However, she still owns and insures a house in this state, but has had no one living in it for 3 months. She is also storing some furniture and clothes in the house. From an insurance standpoint, the insured's house is considered
Unoccupied
Which of the following terms best describes the home of an insured who goes on vacation for 3 months?
Unoccupied
An insured is a member of the neighborhood association, and has become liable for damage to a third party. Each member of the association has been assessed a portion of the loss equal to $2,000. How much will the Loss Assessment additional coverage of the insured's homeowners liability policy pay?
Up to $1,000
Which of the following best describes the amount of loss assessment coverage included under a homeowners policy liability coverage section?
Up to $1,000 per occurrence
All of the following are supplemental payments included in the liability section of a personal auto policy EXCEPT
Up to $100 for the cost to secure the release of a vehicle from an impoundment lot following a covered accident
Supplementary payments on a CGL provide all of the following EXCEPT
Up to $500 a day for lost earnings and $2,000 for the cost of bail bonds
Frank's Steaks furnishes meat to steakhouses. An accident on the premises causes the building to lose refrigeration for 32 hours. The state inspectors will not allow the meat in refrigerating units be sold for human consumption, and Frank loses $18,500 in disposing of the meat. What coverage under Frank's BOP policy will cover the loss?
Utility service - direct damage
Which of the following endorsements could be added to a businessowners policy to protect against loss of income due to lightning striking an electrical grid making the business unable to operate?
Utility servies time element endorsement
A building is insured, but no one has lived or worked in it for 10 years. The building is completely empty of any furniture or personal belongings. From an insurance standpoint, the building is considered
Vacant
Which of the following would NOT be considered part of the insured location under the liability section of a homeowners policy?
Vacant farmland owned by the insured
Which of the following is NOT settled on an actual cash value basis while covered under the business property coverage form?
Valuable papers and records
All of the following are essential elements of a commercial package policy (CPP) EXCEPT
Valuations and/or settlement provisions
Which of the following is NOT one of the available additional coverages in the builders risk form?
Vandalism
Which of the following would NOT be covered by the dwelling policy if the dwelling is vacant for over 60 days?
Vandalism
Which of the following IS covered under the theatrical property floater of an Inland Marine policy?
Vehicles used on stage
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
Warranty
Both the broad theft and limited theft endorsements on the dwelling program exclude all of the following types of property EXCEPT
Watercraft
When a replacement auto is acquired during the policy period, what coverage will apply to it automatically under a personal auto policy?
Whatever coverage applied to the vehicle being replaced
In forming an insurance contract, when does acceptance usually occur?
When an insurer's underwriter approves coverage
When does a business need to purchase a liquor liability policy?
When it is in the business of manufacturing, distributing, serving, or furnishing alcoholic beverages
When would uninsured motorist coverage apply?
When the other party is legally liable but has no insurance
When is an insurance company NOT required to advise an insured of possible eligibility for the Iowa Automobile Insurance Plan?
When the policy is cancelled due to nonpayment of premium
The Commissioner may examine an insurer's records
Whenever necessary in order to enforce insurance laws and regulations
Which of the following exclusions applies to both personal injury and advertising injury in the businessowners policy?
Willful violation of a penal statute or ordinance committed by the insured
Personal business property out in the open is covered under commercial property policy only while
Within 100 feet of the described premises
Coverage under a Floor Plan Merchandise form is written on a reporting form basis that requires the insured to file reports with the insurer. What is the time frame for those reports?
Within 30 days after the end of each month
A commercial package policy (CPP) allows the insured to select the coverage needed and customize the policy to meet the needs of the insured's business. In a CPP, the business owner may select from all of the following types of coverage EXCEPT
Workers compensation coverage
Which of the following types of insurance would be covered under the Terrorism Risk Insurance Act (TRIA)?
Workers compensation insurance
Which of the following would NOT be covered by medical payments to others in Section II of your HO policy?
You cut your leg while whacking weeds in your backyard with your neighbor's weed whacker
Which of the following would be considered a covered auto on your personal auto policy?
Your farm wagon being towed by your pickup truck