Texas Exam 24
A Texas insurer has notified a claimant that all or part of a claim will be paid. The claim must be paid not later than the ____ business day after the date notice is made. Answer Choices: Select the Correct Answer 10th 15th 5th 7th
5th
With a "full release settlement" of an insurance claim: Answer Choices: Select the Correct Answer The claimant does not have to sign a release. The insurer can make payments over 90 days. The insurer has 60 days to make payment. All damages are paid immediately in one lump sum.
All damages are paid immediately in one lump sum
For which of the following does the deductible apply under the aircraft hull policy? Answer Choices: Select the Correct Answer Collision Theft Lightning Explosion
Collision
Which of the following statements is TRUE regarding Commercial Property coverage? Answer Choices: Select the Correct Answer Commercial property coverage can only as part of a package policy. Commercial property coverage can only be written as a monoline policy. Commercial property coverage can be written as both a monoline policy and as part of a package policy. Commercial property coverage can only be written if a separate liability policy is attached to it.
Commercial property coverage can be written as both a monoline policy and as part of a package policy
In a contract, something of value exchanged between the parties is referred to as: Answer Choices: Select the Correct Answer An offer. The acceptance of an offer. Consideration. The legal basis.
Consideration
Virtually all inland marine named perils forms include coverage for: Answer Choices: Select the Correct Answer Theft. Gradual deterioration. Fire and lightening. Dampness and extremes of temperature.
Fire and lightening
This Ocean Marine insurance coverage protects the vessel owner in the event that cargo shipping costs are not paid. Answer Choices: Select the Correct Answer Freight Insurance Hull Coverage Cargo coverage Protection and Indemnity
Freight Insurance
All of the following are excluded under the Commercial Building and Personal Property form, EXCEPT: Answer Choices: Select the Correct Answer Furniture and fixtures. Petty cash and IOUs. A watch dog. The insured's panel truck.
Furniture and fixtures
Public Official bonds are meant to: Answer Choices: Select the Correct Answer Guarantee faithful performance of the elected or appointed public official. Guarantee financial obligations. Assure the employees are faithful in their jobs. None of the responses are correct.
Guarantee faithful performance of the elected or appointed public officia
A ship has negligently collided with another ship and caused severe damage. What coverage would apply to cover this claim? Answer Choices: Select the Correct Answer Hull insurance with the "running down clause". Protection and Indemnity. Inchmaree clause. Towage clause.
Hull insurance with the "running down clause"
Under a standardized Personal Automobile policy, the definition of a "covered auto" for Part A - Liability includes: I. Private passenger autos the named insured acquires during the policy period. II. Trailers owned by the named insured. III. Autos or trailers not owned by the named insured that are being used as a temporary substitute. IV. Farm wagons or implements. Answer Choices: Select the Correct Answer I, II, III, and IV I, II, and III only I and III only I and II only
I, II, III, and IV
Which of the following may be included in the Commercial Package Policy? I. Commercial Auto. II. Commercial Inland Marine. III. Equipment Breakdown coverage. IV. Aviation. Answer Choices: Select the Correct Answer I, II, and III only. I and II only. II and III only. I, II, III, and IV.
I, II, and III only
All of the following statements are TRUE regarding Part D - Other Than Collision coverage, EXCEPT: Answer Choices: Select the Correct Answer Covers damage to the insured vehicle from fire. Covers damage to the insured vehicle from vandalism. It is "property" coverage. It covers property damage the insured causes to others.
It covers property damage the insured causes to others
Any policy limits expressed on a standard NCCI workers' compensation policy, relate to: Answer Choices: Select the Correct Answer Additional expenses. Part One: Workers' Compensation. Part Two: Employer's Liability. Part Three: Other States insurance.
Part Two: Employer's Liability
A contractor in need of a bid bond to obtain a contract is an example of a(n): Answer Choices: Select the Correct Answer Principal. Obligee. Surety. Fiduciary.
Principal
The claims negotiation process begins for a claims adjuster when: Answer Choices: Select the Correct Answer When the adjuster and the claimant agree to submit to mediation. When the claimant rejects the first settlement offer. When the adjuster has formulated the first settlement offer. The claim is assigned to the adjuster.
The claim is assigned to the adjuster..
Aircraft medical payments can be amended by endorsement to include injury to: Answer Choices: Select the Correct Answer The crew. The general public. The officers of a corporation. Non occupants.
The crew
All of the following are characteristics of an insurable risk, EXCEPT: Answer Choices: Select the Correct Answer The law of large numbers should apply. The insurer should be able to calculate the chance of loss. The loss must be catastrophic in nature. The loss must be definite and definable.
The loss must be catastrophic in nature
What is the main purpose of government regulation of the insurance industry? Answer Choices: Select the Correct Answer To provide a better understanding to the general public of the importance of insurance. To keep insurance losses from falling to the government for payment. To help insurance companies make a profit. To protect the insurance consuming public.
To protect the insurance consuming public.
All of the following are covered under the Equipment Breakdown coverage form, EXCEPT: Answer Choices: Select the Correct Answer The breakdown of any structure or materials supporting the equipment. A structure. Business personal property. Personal property of others.
he breakdown of any structure or materials supporting the equipment
Part One of the standard workers' compensation policy covers all of the following, EXCEPT: Answer Choices: Select the Correct Answer Bodily injury by accident. Bodily injury by disease. Bodily injury that results in death. Bodily injury caused by the negligence of the insured employer.
Bodily injury caused by the negligence of the insured employer
A home is insured under an HO-3 policy. One of the "other structures" on the same property is used by the insured for his business. The building burns in a fire. It would: Answer Choices: Select the Correct Answer Be covered because it falls under Coverage B. Not be covered because the HO-3 policy does not list a business in "other structures". Be covered because it is on the insured premises and is a structure. Not be covered because buildings used for business purposes are excluded.
Not be covered because buildings used for business purposes are excluded
If a Condominium Association policy and a Condominium Unit-Owners policy are in force on the same property, how would the claim be handled? Answer Choices: Select the Correct Answer Each policy will pay its pro-rata share of the loss. The Condominium Association policy is primary. The Condominium Unit-Owners Policy is primary. Each policy will pay using the contribution by equal shares method.
The Condominium Association policy is primary
What is the minimum limit for Coverage L of the Personal Liability Supplement that can be attached to a Dwelling Property policy? Answer Choices: Select the Correct Answer $100,000 $1,000 There is no limit. $10,000
$100,000
The additional coverage on the Building and Personal Property coverage of a Commercial Property policy for electronic data provides _________ for the cost of replacing and restoring electronic data that has been destroyed or corrupted by a covered cause of loss. Answer Choices: Select the Correct Answer $2,000 per policy period. $2,000 per occurrence. $2,500 in the aggregate. $2,500 per policy period.
$2,500 in the aggregate
Zach's factory was damaged by a fire and shuts down for 90 days for repairs. In order to keep his business going, Zach spends $150,000 renting another building, along with some machinery and other supplies. Had he not taken these measures, Zach's total loss of business income would have been $300,000; but by renting a building and equipment, he manages to reduce that loss by $80,000. Zach's Commercial Property policy includes Business Income coverage with Extra Expense. How much will his insurer indemnify him?
$370,000 The form pays the 150,000 for the extra expenses he incurred to keep going after the loss and the $220,000 actual loss of business income for a total of $370,000.
Which of the following statements describes an action that the adjuster cannot take after a claimant has hired an attorney to represent him/her in handing a claim? Answer Choices: Select the Correct Answer Negotiate with the attorney. Write the draft for payment of the claim directly to the claimant. Contact the claimant without the consent of the attorney. Have an attorney prepare releases.
Contact the claimant without the consent of the attorney
Which of the following "additional coverages" of the Building and Personal Property Coverage form is paid without the application of the policy deductible? Answer Choices: Select the Correct Answer Electronic Data. Increased Cost of Construction. Debris Removal. Fire Department Service Charge.
Fire Department Service Charge
A policy provision that prescribes a method for resolving a disputed claim regarding the value of property or the amount of a property loss is known as: Answer Choices: Select the Correct Answer The arbitration clause. The appraisal clause. The valued policy clause. The mediation clause.
The appraisal clause
Jerry is fishing from his 22-foot boat on Lake Norman when he is caught in a sudden hail storm. His boat suffers extensive hail damage. When he files a claim against his Homeowners policy, the most likely reason his claim is denied because: Answer Choices: Select the Correct Answer A Homeowners policy will only cover watercraft smaller than 20 feet. The boat was not fully enclosed inside a building during the hail storm. Boats cannot be covered by a Homeowners policy. The boat was not scheduled on the Declarations page of the Homeowners policy.
The boat was not fully enclosed inside a building during the hail storm
Which of the following best defines an "insured"? Answer Choices: Select the Correct Answer Transfer of the risk of financial loss from one party to another. A legally binding contract in which the insurance company agrees to pay for specified losses in exchange for premiums. A company, group, or government agency offering financial protection. An individual or entity that pays premiums in exchange for financial protection.
An individual or entity that pays premiums in exchange for financial protection
The Main Street Gazette is interested in protecting against the additional costs of continuing to print the newspaper, at a temporary location in the event its building was destroyed. Which of the following coverages should the Main Street Gazette purchase for this purpose? Answer Choices: Select the Correct Answer Extra expense coverage. Open perils coverage. Loss of rents coverage. Contingent gross earnings coverage.
Extra expense coverage
Any corporation organized with a representative form of government solely for the mutual benefit of its members is a: Answer Choices: Select the Correct Answer Fraternal benefit society. Mutual company. Stock company. Tax exempt organization.
Fraternal benefit society
Each of the following is considered to be an "implied warranty" in an Ocean Marine insurance policy, EXCEPT: Answer Choices: Select the Correct Answer General Average. Seaworthiness. Condition of Cargo. Legality of the Voyage.
General Average
Which of the following statements is TRUE regarding the DP-3 special form? Answer Choices: Select the Correct Answer It provides open peril coverage on the structure and named peril coverage on the personal property. It provides named peril coverage on both the structure and the personal property. It provides named peril coverage on the structure and open peril coverage on the personal property. It provides open peril coverage on both the structure and contents.
It provides open peril coverage on the structure and named peril coverage on the personal property.
The insured is operating his boat on a fresh water lake and runs over a water skier. What coverage would apply to this claim under the boatowners policy? Answer Choices: Select the Correct Answer The claim is not covered The hull insurance Liability coverage Medical payments
Liability coverage
Alternative dispute resolutions (ADRs) are procedures to help settle disputes using all of the following, EXCEPT: Answer Choices: Select the Correct Answer Mediation. Arbitration. Litigation. Negotiation.
Litigation
Which of the following is NOT covered by the Extra Expense coverage of the standardized Commercial Property insurance policy? Answer Choices: Select the Correct Answer Rent payments at a temporary location. Moving expenses. Overtime pay required to make repairs. Loss of income.
Loss of income Extra Expense Coverage is a form of Business Interruption Coverage. It covers all reasonable extra expenses incurred by the insured in order to continue as nearly as practical the normal operation of a business that has been damaged by an insured peril. It does not cover the loss of income a business may suffer. Other forms like the "loss of income" forms would cover the loss of income.
The selling of insurance products through the use of captive agents, independent agents, or insurance company employees in a call center are examples of: Answer Choices: Select the Correct Answer Unfair trade practices. Fair trade practices in insurance. Monopolizing markets. Marketing distribution systems.
Marketing distribution systems
Willie's Widgets is eligible to receive an experience rating to bring down their workers' compensation premium rates. Willie's is granted this eligibility on May 1st, 2018. Which of the following best defines the "experience period" the NCCI will use to calculate Willie's experience rating? Answer Choices: Select the Correct Answer January 1st, 2014 to January 1st 2018. May 1st, 2014 to May 1st, 2018. May 1st, 2013 to May 1st, 2017. May 1st, 2013 to May 1st, 2016.
May 1st, 2013 to May 1st, 2017
A Homeowners policy is a personal package policy. All of the following are advantages of a personal package policy, EXCEPT: Answer Choices: Select the Correct Answer Package policies allow for lower deductibles. Fewer gaps in coverage exist with package policies. Insureds enjoy lower premiums with package policies. Package policies simplify the billing process for insurance companies.
Package policies allow for lower deductibles..
Which of the following is NOT a claim settlement option in a property loss? Answer Choices: Select the Correct Answer Replace the property with like kind and quality. Replace the property with new. Repair the property. Pay market value only.
Pay market value only
Under Part A of a Personal Automobile policy, "supplementary payments" refer to which of the following? Answer Choices: Select the Correct Answer Payment of defense and other expenses by the insurance company beyond the limits of liability. Payments made by the insured for damages exceeding his policy limits. Payments received by the insured directly from the person or persons who caused a loss. Payments made by the insurance company for the insured's own medical expenses, to supplement any other medical insurance.
Payment of defense and other expenses by the insurance company beyond the limits of liability
Which of the following statements is true regarding a stock insurance company? Answer Choices: Select the Correct Answer Stock companies are owned by their policyholders. Stock companies pay a portion of their earnings to their policyholders as dividends. Stock companies pay a portion of their earnings to their stockholders as dividends. Stock companies permit their policyholders to elect their Board of Directors.
Stock companies pay a portion of their earnings to their stockholders as dividends
An insured is covered under an HO-3 form. If the insured hits his own house and also damages the garage and the attached fence with his vehicle, which of the damages would be covered? Answer Choices: Select the Correct Answer The damage to the house and garage only. The damage to the fence only. None of the damages would be covered because the insured's vehicle caused the damage. The damage to the house, garage and the fence would all be covered.
The damage to the house, garage and the fence would all be covered
For coverage to apply under a workers' compensation policy, the injury must be compensable, which means: Answer Choices: Select the Correct Answer It must have been caused by the employer's lack of reasonable care in the workplace. The illness or injury must have been the result of an accident arising out of the worker's employment. It must have been caused by the employer's breach of a common law duty. The illness or injury must have been the result of an accident arising out of and in the course of the worker's employment.
The illness or injury must have been the result of an accident arising out of and in the course of the worker's employment. is correct.
If an insured is covered under an HO-2 policy, damage caused by wind to his/her personal property would be covered if: Answer Choices: Select the Correct Answer The wind created an opening in the structure, blowing the personal property outside, where it incurred damage. The wind created an opening in the structure, allowing the wind to damage the personal property inside. The insured accidentally left the upstairs windows open during a thunderstorm, allowing the wind to blow into the structure, causing damage to the personal property. The insured's TV antenna falls on the roof, creating an opening that allowed wind to cause damage to the personal property inside.
The wind created an opening in the structure, allowing the wind to damage the personal property inside
A FAIR Plan is created in a state: Answer Choices: Select the Correct Answer To provide coverage for those people who need government subsidies to pay their insurance premiums. To provide property insurance to those persons whose property is located in an area with environmental hazards that are within the insureds control. To provide coverage in the standard insurance market for insureds who are considered to be "high risk". To provide coverage in the residual insurance market of any state that was created to provide insurance to insureds who are "high risk" and cannot obtain insurance in the usual markets.
To provide coverage in the residual insurance market of any state that was created to provide insurance to insureds who are "high risk" and cannot obtain insurance in the usual markets
What is the limit that is paid for water damage under an Equipment Breakdown policy?
$25k
Which of the following would be eligible for coverage under a Businessowners policy? Answer Choices: Select the Correct Answer A family pub A funeral home An auto repair shop A credit union
A funeral home
Commercial Inland coverages can be written as a stand alone policy and not included in the Commercial Package Policy (CPP), this would be called: Answer Choices: Select the Correct Answer A monoline policy A BOP An endorsement An individual policy
A monoline policy
Part D of the Personal Auto policy provides coverage for all of the following, EXCEPT: Answer Choices: Select the Correct Answer All direct losses to the insured's covered auto. Coverage for the types of damage that are not excluded. Direct and accidental losses to a non-owned automobile being used by the insured. Auto glass breakage caused by a collision.
All direct losses to the insured's covered auto.
Difference in Conditions insurance is written to provide: Answer Choices: Select the Correct Answer Coverage for the gaps in coverage left by other property insurance forms. Open peril coverage only. Flood coverage only. Earthquake coverage only.
Coverage for the gaps in coverage left by other property insurance forms
A weather report would be considered what type of evidence? Answer Choices: Select the Correct Answer Documentary Demonstrative Interrogatory Material
Documentary
The "removal coverage" of the Standard Fire policy is: Answer Choices: Select the Correct Answer Will only cover the removal expense for five days under all circumstances. Is extremely broad and will cover the removal expense for five days and beyond if an extension is arranged with the insurance company. Is very restrictive and covers property for removal for only 3 days. Will cover the insured for the removal of property to protect it from the peril of flood.
Is extremely broad and will cover the removal expense for five days and beyond if an extension is arranged with the insurance company
The Businessowners policy provides some additional coverages if they are listed on the declarations page and an additional premium is paid. All of the following are included in these additional coverages, EXCEPT: Answer Choices: Select the Correct Answer Exterior glass. Outdoor fixtures. Money and securities. Burglary and robbery.
Outdoor fixtures
Which "conditions" form in a complete Commercial Property policy specifies how a disagreement on the value of damaged property is handled? Answer Choices: Select the Correct Answer The Building and Personal Property Conditions form. The Commercial Property Conditions form. The Common Conditions form. The Additional Conditions form.
The Building and Personal Property Conditions form.
Faulty wiring causes a fire that destroys an insured's home. In insurance terms, the faulty wiring is called a: Answer Choices: Select the Correct Answer Risk Hazard Peril Danger
Hazard
The insured owns an expensive rare painting. He has it appraised by an art dealer and has it insured for $50,000 under a personal articles floater. There is a market decline for this item. It is destroyed in a fire at his office. The company offers him $40,000, the current market value. How will the loss be handled? Answer Choices: Select the Correct Answer The item is not covered because it was away from the insured's residence at the time of the loss. The insurance company will cover the item for the full $50,000 amount. The insurance company is correct in offering fair market value at the time of the loss. The insurance company will ask for a reevaluation of the item based on records and documentation of the price paid, the current market value and the appraised value.
The insurance company will cover the item for the full $50,000 amount There is an exception in the loss settlement clause for fine arts. Usually, unless indicated, the agreed amount clause does not apply to other scheduled property and losses are settled on an ACV basis. For fine arts the agreed amount clause does apply and the insured is entitled to $50,000 for the loss.
In the insurance industry, which of the following terms refers to continuous or repeated exposure to conditions that may result in bodily injury or property damage neither expected nor intended? Answer Choices: Select the Correct Answer An occurrence. An accident. An event. A condition.
An occurrence
The insured owns a 20-foot fishing boat with a 50-horsepower motor. Which of the following policies would be best suited to cover the loss of the boat while its on a lake? Answer Choices: Select the Correct Answer The Homeowners policy. A Personal Articles floater. A Boatowners/Watercraft policy. The Yacht policy.
A Boatowners/Watercraft policy
Which of the following is a statement that is guaranteed to be the truth throughout the duration of the policy? Answer Choices: Select the Correct Answer A representation. A warranty. A waiver. A condition.
A warranty
How can the "property causes of loss" be changed under a BOP policy, from risks of "direct physical loss" to "named perils" coverage? Answer Choices: Select the Correct Answer State the named perils on the Declarations page of the policy. Attach the "named perils" form endorsement to the BOP policy. The property "causes of loss" cannot be changed under a BOP policy. Change the policy to a different ISO Businessowners Coverage form.
Attach the "named perils" form endorsement to the BOP policy
All of the following statements regarding the Commercial Package Policy are correct, EXCEPT: Answer Choices: Select the Correct Answer Commercial Package Policies can include Ocean Marine and Aviation Insurance coverage. Almost all commercial risks are eligible for coverage under the Commercial Package Policy. The insured can choose a variety of eligible commercial coverages to tailor the package to specific business insurance needs. A complete Commercial Package Policy (CPP) includes a common policy Declarations page, a common policy Conditions sections, and two or more coverage parts.
Commercial Package Policies can include Ocean Marine and Aviation Insurance coverage
The insured's business is covered under a jewelers block policy. The owner's wife decides to wear an expensive piece of jewelry to a party that is for sale by the business. In case of a loss, what will the insurer do? Answer Choices: Select the Correct Answer Deny the claim because of an exclusion Pay the claim Pay 50% of the claim Require evidence that she was modeling the jewelry
Deny the claim because of an exclusion
On the way to Europe, heavy seas place a cargo ship in danger of sinking. The crew decides that if they dispose of the heavy equipment they are hauling the ship won't sink. They toss overboard 10 tractors owned by John Deere. The cartons of cotton balls owned by Eli Cotton are safe as is the whipped marshmallow cream being shipped for Kraft Foods. When they get to Europe, Eli and Kraft are asked to share in the loss that John Deere sustained. This is an example of: Answer Choices: Select the Correct Answer Demurrage Sue and Labor Clause Free of Particular Average Clause General Average Clause
General Average Clause
What is a definition of a surety bond? Answer Choices: Select the Correct Answer Guarantees the Performance of a Duty Covers an Individual Employee's Dishonest Acts A Form of Court Bond Covers Public Officials
Guarantees the Performance of a Duty
All of the following statements are TRUE regarding the cancellation clause of the New York Standard Fire policy, EXCEPT: The insured may cancel the policy at any time without prior notice to the insurer. If the insurer cancels the policy, they must provide the insured with five days' advance written notice. If the insured cancels the policy, there is no financial penalty assessed on the unearned premium. If the insured cancels the policy, the unearned premium is returned on a short-rate basis, meaning a small financial penalty is assessed against the insured.
If the insured cancels the policy, there is no financial penalty assessed on the unearned premium.
