State Laws Quiz

Broad and basic forms both provide coverage on various homeowners policies. Which form, broad or basic, provides the most coverage against losses? a. Broad form b. Basic form c. Both have equal amounts of perils insured against d. It depends on the type of policy

A. Broad Form

Actual cash value is determined by subtracting which value from the replacement cost value of a specific piece of property? a. Depreciation value b. Actual replacement value c. Wear and tear value d. Actual value plus

A. Depreciation Value

The roof of Randy's T-shirt store collapsed following a heavy snowstorm. A lot of Randy's inventory was damaged, but he was able to salvage some merchandise. While his store was being repaired, Randy rented a storage unit in which the store his saved merchandise un the store was ready. This extra expense may be pay by the which coverage party of commercial property insurance? a. Extra expense coverage b. Unforeseen expense coverage c. Business exception coverage d. Business additional income coverage

A. Extra expense coverage

Which type of homeowners policy provides coverage for the dwelling on a broad from? a. HO-2 b. HO-5 c. HO-6 d. HO-8

A. HO-2

Cole's house was destroyed by fire and was considered a total loss. Cole contacted his insurance company to assess the damage and hopefully receive a check to cover his damages. Cole was responsible for giving his insurance company a list of all damaged personal property lost from the fire. He knew his computer was in his car at the time of the fire and was not damaged, but Cole added the computer to the list to have the insurance company pay for a new one. Which hazard is Cole guilty of committing? a. Moral Hazard b. Ethical Hazard c. Morale Hazard d. Physical Hazard

A. Moral Hazard

Yolanda was injured while performing her daily duties at work. Under worker's compensation laws, will Yolanda have to prove her company was at fault for her injuries? a. No, in majority cases, injury claims at work will be paid without proving fault b. Yes, worker's compensation laws always require that fault be proven c. Yes, unless there is a witness, you must always prove fault in an employment setting d. No, unless the employer demands that fault be proven, Yolanda will be compensated for her injuries

A. No, majority cases, injury claims at work will be paid without proving fault

Jen was a renewal underwriter for ABC insurance. Jen was reviewing a claim that just came into ABC for an insured she has serviced for five years. The claim's severity exceeded ABC's guidelines of reserve amounts and Jen was required by this guideline to stop writing this risk. What type of notice is Jen required to send to the insured to advise him that coverage would not be renewed? a. Nonrenewal notice b. Conditional renewal c. Cancellation notice d. Notice of excess loss

A. Nonrenewal notice

Brent owned multiple properties, vehicles, and a couple of commercial locations. To cover all of Brent's exposures, he purchased a couple of different insurance policies. If Brent suffered a loss to one of his properties and more than one of his policies covered his loss, what could the insurance carriers do to determine which policy would pay? a. Proceed with arbitration b. Determine which policy was issued first and that policy would pay c. Determine which policy had the highest limits and that policy would pay d. The loss would be automatically split among the policies

A. Proceed with Arbitration

Andrea has her insurance policy through her local agent. Andrea's friend opened his own insurance agency and promised Andrea lower rates if she switched her policy to his office. When Andrea informed her current agent that she wanted her coverage cancelled, which method of cancellation will he use? a. Short rate method b. Pro rata method c. He would not be allowed to cancel and would have to continue to write her policy d. Mid-term method

A. Short rate method

Howard was watching a TV commercial that advertised, "A household cleaner which could get rid of any type of grease stain." Howard purchased this product to remove a grease stain he had on his garage floor. After many attempts at cleaning using this product, the grease remained. Could Howard file a claim against the cleaning company because its product did not work? a. Yes, because express warranty exists b. Yes, because of negligence on behalf of the cleaning company c. No, because a written warranty does not exist d. No, because one a product leaves the manufacturer, no liability remains with the company that produced the product

A. Yes because express warranty exsists

Which type of coverage, afforded by some insurance policies, will cover all losses unless specifically noted as being an excluded loss? a. Named perils b. All risks c. Excluded perils d. Excluded causes of loss

B. All risks

Replacement cost is a form of loss valuation in which the insured's property is replaced by which method? a. Market value b. Cost to replace property with property of the same or equal value c. Actual cash value d. Salvage value

B. Cost to replace property with property of the same or equal value

Harry was involved in an accident in which a deer ran out in front of him in the road and into the front of Harry's vehicle. Harry's insurance included other-than-collision coverage subject to him paying the first $250 of any loss sustained. Harry's $250 payment requirement is known as which term in insurance? a. First-party payment b. Deductible c. Retention Policy Premium

B. Deductible

Which type of homeowners policy is designed for homeowners who own a house on the town's historic registry? a. HO-2 b. HO-3 c. HO-4 d. HO-8

B. HO-8

Courtney was driving to an interview for a new job. She was running late and saw that the light had just turned red. Courtney proceeded through the red light because she did not want to waste time sitting at the traffic light, and she did not fully check to see if any other cars were around. A car, however, was driving through the intersection after seeing the light turn green, and this car and Courtney's collided. Courtney would be cited as the party at fault due to her being what? a. Speeding b. Negligent c. Not paying attention to the scene around her d. Courtney would not be cited

B. Negligent

When notifying the insurance carrier of a claim, does the insured have to submit the notice on a specific form or document? a. Yes, a form specific to the insurance carrier must be completed b. No, a form, letter, or lawsuit could notify of a claim c. No, a simple call is always fine for reporting a claim d. Yes, anything other than a specific claim reporting form would be denied

B. No, a form, letter, or lawsuit could notify of a claim

Does non-binding arbitration always result in a final "winner"? a. Yes, the "winner" is final in non-binding arbitration b. No, the non-winning party does not have to accept the arbitrator's decision c. Yes, the parties must leave the proceedings with a final winner or find a new arbitrator d. No, the "winner" must still win in a court of law

B. No, the non-winning party does not have to accept the arbitrator's decision

Tiffany has an insurance policy through ABC insurance. Tiffany notified her carrier that she was moving from New Jersey to Florida and would like her policy to reflect this change. ABC was not licensed to write business in Florida and informed Tiffany that it would need to cancel her policy. What method would ABC use to cancel Tiffany's policy and return any unearned premium? a. Short-rate method b. Pro rata method c. It would not be allowed to cancel and would have to continue to write her policy d. Mid-term method

B. Pro rata method

Name on way in which strict liability is different from negligence. a. Under negligence claims, the nature or type of product is the issue b. Under strict liability, the nature or type of product is the issue for the claim c. Under strict liability, the claim is due to the direct actions of the party being sued d. Strict liability and negligence are one and the same

B. Under strict liability, the nature or type of product is the issue for the claim

A commercial property floater is coverage designed for commercial exposures that do not remain at a fixed location. For which type of commercial exposure would you potentially purchase a commercial property floater? a. An office printer b. An auto gifted to an employee as part of her benefits package c. A food cart that travels to a different location each week d. Office fixtures

C. A food cart that travels to a different location each week

Ralph owned a local convenience store that was damaged by a fire. The building suffered extensive damage and took several weeks to repair. Once the building was repaired, it still took Ralph a few days to get his store up and running again. Assuming this loss was covered by insurance, which specific coverage would extend to pay the loss suffered during the couple days after the repairs were complete but the store was still not 100 percent open? a. Commercial property coverage b. Commercial extension coverage c. Business income coverage d. Business extension coverage

C. Business income coverage

A personal articles floater can be a stand-alone policy or an endorsement to a homeowners policy to provide coverage for all the following exposures EXCEPT: a. Fine arts b. Stamps c. Fixtures d. Jewelry

C. Fixtures

Michael was running late for a meeting at his job and did not lock his car door. When he realized it was unlocked, Michael did not want to turn around to go back and lock the vehicle. Michael thought if anything was stolen it was okay because his insurance would cover the loss. Which type of hazard has Michael committed by not going back to lock his car door? a. Moral hazard b. Physical debris removal hazard c. Morale hazard d. Physical hazard

C. Morale Hazard

All of the following are ways in which an insured can interfere with subrogation EXCEPT: a. Interfere with the investigation b. Impair the investigation c. Provide the insurance carrier with complete documentation of the loss d. Withhold vital details about the loss

C. Provide the insurance carrier with compete documentation of the loss

1. The HO-5 type of homeowners policy provides coverage on an all-risks basis for all exposures EXCEPT: a. Personal property b. Dwelling c. Tenant's personal vehicle d. Other structures

C. Tenant's personal vehicle

Under employer's liability coverage, can an employee sue an employer in addition to collecting through a workers' compensation claim? a. Yes, in all cases b. No, in all cases c. Yes, under a dual capacity claim d. Yes, with no restrictions involved

C. Yes, with no restrictions involved

Lindsay suffered a loss to her property after a major storm hit her town. Lindsay wanted her homeowner's insurance to pay for the loss, but her insurance carrier wanted to deny the claim. The insurance carrier was looking to deny on the basis that Lindsay did not do enough to secure her property prior to the storm. If Lindsay and the insurance carrier cannot come to an agreement and wish to not proceed through the court system, what is another means they could use to determine fault? a. Eyewitness b. They must proceed through the court system if an agreement cannot be reached c. Lindsay would win, because if there is a dispute between an insurance carrier and an insured, the insured always wins d. Arbitration

D. Arbitration

Under which type of arbitration is the decision final? a. Non-binding arbitration b. Non-discussion arbitration c. Absolute arbitration d. Binding Arbitration

D. Binding Arbitration

In addition to coverage for the building itself, commercial property coverage also covers all the losses below EXCEPT: a. Loss of income b. Increase in expenses c. Contents d. Commercial property coverage only covers loss to the building

D. Commercial property coverage only covers loss to the building

Under which exception to the exclusive remedy approach are employees required to prove negligence on the party of their employer to receive compensation for an injury at work? a. Employee liability b. No-fault employee laws c. Worker's exemption laws d. Employer's liability

D. Employers liability

Christine was moving to a new town for a job change and decided to rent a townhouse. Which type of homeowners policy should Christine purchase to protect her exposures as a tenant? a. HO-2 b. HO-3 c. HO-8 d. HO-4

D. HO-4

Which type of insurance policy is designed to cover property in motion, regardless of the location? a. Moveable risk policies b. Property in motion policies c. Transportation policies d. Inland marine policies

D. Inland marine policies

Frank was an underwriter in the personal lines department. He received an application for a personal umbrella, which had all the required information, but the application was not signed. According to Frank's department guidelines, he could provide a temporary notice of coverage but could not fully issue the policy until the application was signed by the insured. What is this temporary notice of coverage known as? a. An endorsement b. A pre-policy form c. A short-form policy d. A binder

D. a binder

Can a warranty be valid and enforced if not specifically written out in a contract? a. No, a warrant must be written out in all cases b. Yes, a warranty written out is never a requirement c. Sometimes a warrant only need be expressed or implied d. No, warranties always must be written out, signed contracts by both parties

c. Sometimes a warrant only need be expressed or implied