Texas Practice Exam #6
Joseph Jones purchased a new car stereo system from Dailey's Auto Enhancements. Daily's permanently installed the stereo system in Joseph's car in an area of the dashboard not typically used by the automobile manufacturer for such installations. One week after installation, Joseph's car was broken into and the stereo was stolen. Under Part D of the personal auto form, what would be the limit of coverage? a. $1,000 b. $1,200 c. $2,000 d. Because the stereo was not permanently installed in the location used by the auto manufacturer, the loss would not be covered.
a. $1,000
Don has business inventory covered by a Commercial Property Value Reporting form. The maximum limit of coverage is $100,000. Don failed to file a report when it was due. The last reported value was $60,000 but the actual value has increased to $80,000. How much coverage is in effect until the next report is filed? a. $60,000 b. $80,000 c. $100,000 d. Coverage is suspended until the next report is filed.
a. $60,000
An insured owns a set of six drawing pens designed and used by Benjamin Franklin. Each pen is worth $1,000 alone, but the set is worth $12,000. One pen is destroyed by a covered peril. Under the pair or set clause the insurance company will pay a maximum of which of the following amounts? a. $7,000 b. $1,000 c. $12,000 d. $2,000
a. $7,000
A Texas insurer is liable for a claim but is in violation of Texas regulations as to the timely payment of the claim. Texas requires that the insurer must pay, in addition to the settlement amount, interest on the amount of the claim at the rate of _____% per year. a. 18 b. 15 c. 20 d. 17
a. 18
Under the dwelling forms, personal property moved to a new principal residence will be automatically covered at the new location (subject to policy expiration) for a period of: a. 30 days. b. 10 days. c. 20 days. d. 60 days.
a. 30 days.
If an employee is eligible to receive impairment income benefits, what is payment based on? a. 70% of the employee's average weekly wage b. 50% of the state average weekly wage c. 66.66% of the employee's average weekly wage d. 70% of the state average weekly wage
a. 70% of the employee's average weekly wage
Which of the following businesses would be eligible for a Businessowners policy? a. A dental office. b. A contractors business that provides insulation services. c. A savings and loan. d. A small wig manufacturing business.
a. A dental office.
Which of the following is NOT considered a covered auto under the personal auto policy? a. A large truck used in a business on a full time basis. b. A temporary substitute vehicle when the insured's vehicle needs to be repaired. c. A vehicle leased for six months or more. d. A newly acquired vehicle.
a. A large truck used in a business on a full time basis.
Which of the following could be considered a "covered auto" under a standard ISO Personal Auto policy? a. A newly acquired car reported to the insurer. b. An owned vehicle not listed on the declarations page. c. A non-owned vehicle available for regular use. d. A vehicle used in speed contests.
a. A newly acquired car reported to the insurer.
A deductible that is commonly used in aircraft physical damage insurance is usually: a. A percentage of the value b. A flat deductible c. A disappearing deductible d. A franchise deductible
a. A percentage of the value
Under the terms of the HO-3 form, a residence employee includes all of the following, EXCEPT: a. A person who routinely delivers groceries to the insured dwelling b. A nanny who cares for the insured's children c. A person who trims the insured's lawn every two weeks d. A live-in cook who also works part-time outside the insured's home
a. A person who routinely delivers groceries to the insured dwelling
The information provided by the insured in a proof of loss form is considered: a. A representation. b. A warranty. c. An assignment. d. An agreement.
a. A representation.
What type of coverage would a heating and cooling contractor need when work has been done on a newly renovated building but not yet accepted by the owner? a. An Installation Floater b. A Builder's Risk Policy c. A Bailee Form of Coverage d. A Transportation Floater
a. An Installation Floater
An insurance policy is issued as a policy having two unequal parts, the liability assumed by the insurer and the premium paid by the insured. Therefore, an insurance policy is referred to as: a. An aleatory contract. b. A conditional contract. c. A contract of adhesion. d. A contract of estoppel.
a. An aleatory contract.
When an insurer takes no action upon realizing material changes in a contract, this is called: a. An implied waiver. b. A misrepresentation. c. A warranty. d. A guarantee.
a. An implied waiver.
An insurance broker is a person who represents: a. An insured or prospective insured. b. An insurance company. c. More than one insurance company. d. Both the insured and the insurer.
a. An insured or prospective insured.
The coinsurance clause in commercial property policies encourages the insured to carry insurance: a. At the full value, or at least 80% to value of the property. b. At 70% of the full value of the property. c. At 60% of the full value of the property. d. At one-half the full value of the property.
a. At the full value, or at least 80% to value of the property.
Brittany is a licensed adjuster in Texas. She failed to renew her license at the specified time, and now her license has been expired for 60 days. Which of the following best describes the next step Brittany should take? a. Brittany can still apply to renew her license, subject to an automatic fine. b. Brittany will be required to apply to the Department for a new license. c. Brittany will be required to take the state licensing exam again. d. Brittany will need to do nothing because Texas Adjuster licenses are perpetual and her renewal will come through within 90 days of her license expiration date.
a. Brittany can still apply to renew her license, subject to an automatic fine.
Which of the following perils is not covered under the Commercial Property Basic Cause of Loss form: a. Collapse (other than sinkhole collapse). b. Sprinkler leakage c. Explosion d. Sinkhole collapse
a. Collapse (other than sinkhole collapse).
Under a personal auto policy, what is Coverage D? a. Coverage for Damage to Your Auto b. Property Damage c. Bodily Injury d. Medical Payments
a. Coverage for Damage to Your Auto
What does the Leasehold Interest Endorsement provide? a. Covers a building tenant, when a favorable lease is cancelled because of loss or damage. b. Covers the landlord for their loss of rents under a lease when the structure is destroyed by an insured peril. c. Guarantees the continuation of a favorable lease to the tenant when premises are damaged by an insured peril. d. Provides moving and relocation expenses of a tenant when the lease is cancelled because of damage to the building caused by an insured peril.
a. Covers a building tenant, when a favorable lease is cancelled because of loss or damage.
The most comprehensive coverage provided by the Dwelling Property insurance program is found on the: a. DP-3. b. DP-1. c. DP-2. d. DP-4.
a. DP-3.
Which of the following events, arising out of the use of a covered auto, is covered under the personal auto policy? a. Damage to a private garage rented by the insured. b. Intentional acts of an insured. c. Damage to insured's property in the vehicle. d. Damage to property of others in the vehicle.
a. Damage to a private garage rented by the insured.
Ocean marine protection and indemnity (P&I) coverage usually insures the ship owner against liability for all of the following EXCEPT: a. Damage to or loss of another ship caused by a negligent collision. b. Injuries to seamen c. Cargo lost or damaged through negligence. d. Damage to piers.
a. Damage to or loss of another ship caused by a negligent collision.
An inland marine coverage which covers the insured's merchandise held for sale, such property that is sold but not delivered, customers property in the care and custody of the insured, and property being transported to or from the insured, is a: a. Dealers form b. Commercial articles floater. c. Floor plan merchandise coverage form. d. Bailee's customers policy.
a. Dealers form
Under a self-insured workers compensation plan, what coverage should be purchased to cover a claim that is more than the insured's self-insured limits? a. Excess coverage b. Catastrophic coverage c. Umbrella coverage d. A surety bond
a. Excess coverage
Which of the following terms can be defined as a policy provision that omits certain risks from coverage? a. Exclusions b. Conditions c. Insuring Agreement d. Declarations
a. Exclusions
Under an Equipment Breakdown policy, all of the following are supplementary payments, EXCEPT: a. Expediting expenses. b. Defense costs. c. Interest on judgment. d. Premiums on appeal bonds.
a. Expediting expenses.
A payment bond is what type of instrument? a. Financial Guarantee Bond b. Performance Bond c. Bid Bond d. Fidelity Bond
a. Financial Guarantee Bond
An intentional act designed to deceive and induce another party to part with something of value is known as: a. Fraud b. Risk c. Hazard d. Subrogation
a. Fraud
How do the eligibility requirements of a Homeowners policy and a Dwelling policy differ? a. Homeowners policies require that the named insured reside at the described premises while Dwelling policies do not. b. Homeowners policies are only for actual home owners while Dwelling policies can be written only for tenants. c. Homeowners and Dwelling policies have the same eligibility requirements. d. Dwelling policies can be written on duplexes while Homeowners policies are only for single-family dwellings.
a. Homeowners policies require that the named insured reside at the described premises while Dwelling policies do not.
Under an ocean marine policy, damage to the ship would be covered under what marine coverage? a. Hull Insurance b. Protection and Indemnity c. Particular average d. General average
a. Hull Insurance
The attempt to restore an insured to the his or her previous financial condition before the loss occurred is BEST described as: a. Indemnification. b. Subrogation. c. Coinsurance. d. Self-insurance.
a. Indemnification.
Compensation payable for the delaying a vessel carrying freight: a. Is called demurrage. b. Not payable under an ocean marine contract c. Not subject to any deductible to negotiation. d. Limit is predetermined prior to the voyage.
a. Is called demurrage.
All of the following are considered unfair claims practices, EXCEPT: a. Knowingly representing the pertinent facts or policy provisions relating to coverages at issue b. Requesting a claimant to sign a release that extends beyond the subject matter that gave rise to the claim payment c. Issuing checks or drafts in partial settlement of a loss or claim under a specified coverage which contain language releasing an insurer or its insured from its total liability d. Denying a claim for failure to exhibit the property without proof of demand and unfounded refusal by a claimant to do so
a. Knowingly representing the pertinent facts or policy provisions relating to coverages at issue
Which of the following is true regarding admitted aircraft liability? a. Negligence is not a factor. b. Must prove legal liability. c. Based on a board review. d. Based on a limited threshold of damage.
a. Negligence is not a factor.
If Smith Construction Company does not properly secure a job site, the public could be injured. This is an example of: a. Negligence. b. Negligible injury. c. Negotiable injury. d. Intentional injury.
a. Negligence.
The failure to act as a reasonably prudent person would under the same circumstances is known as: a. Negligence. b. Liability. c. Hazardous behavior. d. Perilous behavior.
a. Negligence.
When an insured is liable for causing intentional "bodily injury", under what circumstances, if any, will an umbrella liability policy cover such a loss? a. Only when the injury is "bodily injury", and the insured inflicted this injury on another person while exercising reasonable force to protect persons or property b. When the injury is personal injury, bodily injury or property damage, and the insured used reasonable force to protect persons or property c. Always, as long as the policy terms are met d. Never, because the injury was intentional
a. Only when the injury is "bodily injury", and the insured inflicted this injury on another person while exercising reasonable force to protect persons or property
What does an insurer do when the insured has possibly waived his or her rights in a liability claim? a. Send a "reservation of rights" letter. b. Deny the claim. c. Pay only a portion of the proven liability claim. d. Insist the insured obtain his or her own legal counsel.
a. Send a "reservation of rights" letter.
Which of the following may cancel a Commercial Package Policy? a. The first named insured b. Any named insured c. The agent of record d. None of the responses listed are correct
a. The first named insured
Which of the following should be insured by an HO-6? a. The owners of condominiums and townhouses b. A tenant who rents an apartment in a high-rise building c. The owner of a ranch-style house d. A person who wishes to schedule their valuable jewelry separately on a policy
a. The owners of condominiums and townhouses
Surety bonds deal with which of the following? a. The performance by another party of an obligation or undertaking. b. On-premises Employee Dishonesty. c. The theft of a third party's goods by an employee. d. Loss as a result of an inventory shortage.
a. The performance by another party of an obligation or undertaking.
Which inland marine form covers single shipments of property? a. Trip Transit Policy b. Motor Cargo Policy c. Annual Transit Policy d. Bailee Form
a. Trip Transit Policy
Vehicles which may be insured by a personal auto policy are described in the eligibility rules. Each of the following statements is true about vehicles eligible for personal auto policy (PAP) coverage, EXCEPT: a. Vehicles with fewer than four wheels are eligible. b. Vans used for business are not eligible. c. Vehicles owned by an individual or married couple may be insured. d. Private passenger autos and pickup trucks may be insured.
a. Vehicles with fewer than four wheels are eligible.
Which of the following is covered under the Commercial Property broad cause of loss form, but is not covered by the basic cause of loss form? a. Weight of ice and snow b. Vandalism c. Riot d. Sinkhole collapse
a. Weight of ice and snow
When would the personal auto policy respond to a loss with a three wheeler? a. When used in an emergency situation. b. Never c. On the insured's premises. d. Off road use.
a. When used in an emergency situation.
Texas insurers must acknowledge receipt of a claim within: a. 10 days. b. 15 days. c. 30 days. d. 20 days.
b. 15 days.
Businessowners policies provide "Preservation of Property" coverage when property is removed from the premises to protect it from a covered cause of loss. The coverage will apply at other locations for up to: a. 60 days b. 30 days c. 10 days d. 20 days
b. 30 days
The insured carries a BOP policy with a sprinkler system. If the system becomes inoperative the insured must advise the insurance company of the problem within ______ if the system cannot be restored. a. 60 hours b. 48 hours c. 30 hours d. 75 hours
b. 48 hours
Which of the following time periods is ordinary payroll coverage limited to in case of a business income loss under the BOP? a. 30 days b. 60 days c. 90 days d. 180 days
b. 60 days
Three of the situations below describe circumstances in which an individual is usually not an insured by a commercial umbrella liability policy. Which situation describes circumstances in which an individual IS an insured? a. An employee of the insured injured another employee while driving the insured's forklift. b. A deceased insured's brother has temporary legal custody of the insured's business property. c. Personal property belonging to a partner in the insured business is damaged. d. A stockholder in the insured corporation was driving her own auto and was involved in an accident on the way to a stockholder's meeting.
b. A deceased insured's brother has temporary legal custody of the insured's business property.
Which of the following would be eligible for coverage under a Businessowners policy? a. A family pub b. A funeral home c. An auto repair shop d. A credit union
b. A funeral home
What type of liability is imposed by law without regard to fault on those participating in certain activities or owning certain things that are considered especially hazardous? a. Vicarious b. Absolute c. Comparative d. Res ipsa loquitor
b. Absolute
Under the 1943 New York Standard Fire Policy, what would cause the insurer to suspend coverage? a. A loss from an insured peril. b. An increase in hazard. c. A different tenant moves into an apartment building. d. The insured has added an addition to the building.
b. An increase in hazard.
Sarah is shopping at a grocery store and wants to purchase a bottle of juice. The aisle is marked off with a rope awaiting the clerk to clean up a previously broken bottle and spill on the floor. Sarah moves the rope to get the item and slips and falls on the floor, cutting her face on the scattered glass. Which of the following would be the defense that the insurance company would most likely use in this situation? a. Breach of duty on the part of the customer. b. Assumption of risk and contributory negligence on the part of the customer. c. Trespassing on non-entry areas by the customer. d. Comparative negligence.
b. Assumption of risk and contributory negligence on the part of the customer.
Elizabeth injured her back on the job in Texas. She has been receiving income benefits for 90 weeks but has not reached MMI. Elizabeth will be declared as reaching MMI at week 104, even though her treating doctor now recommends spinal surgery. Elizabeth knows that if she has spinal surgery now (at 90 weeks), she will need income benefits that extend beyond the 104th week. Elizabeth plans to apply to the Commissioner for an extension of the 104-week time limit. The Commissioner is required to make a ruling on Elizabeth's application by: a. Six months prior to the 104-week expiration date. b. By the 92nd week that income benefits have been received. c. Within 12 weeks following the 104-week expiration date. d. By the 100th week that income benefits have been received.
b. By the 92nd week that income benefits have been received.
Evergreen Lawn Care has two lawn maintenance crews on separate job sites. Coverage for the lawn maintenance equipment on the way to the site, while at the site and in transit back to the shop can be covered by which of the following forms? a. Commercial Articles Coverage Form b. Contractors Equipment Floater c. Floor Plan Coverage Form d. Jewelers Block Coverage Form
b. Contractors Equipment Floater
Businessowners policies provide several coverages without additional premium charge. Which of the following would require an additional premium charge? a. Pollution Cleanup and Removal b. Earthquake Coverage c. Business Income d. Seasonal Increase in Contents Coverage
b. Earthquake Coverage
The insured has purchased a new building and has yet to advise the agent of the acquisition. The building is covered on a limited basis because of the "newly acquired building coverage" clause. This coverage is found in the ________ section of the commercial property form. a. Additional coverage b. Extensions of coverage c. Other insurance clause d. Supplementary payments clause
b. Extensions of coverage
A church has had the woodwork in the building refinished and new stain and varnish has been applied. The workers placed the rags and brushes that were used to apply the varnish in a small closet and closed the door, creating the possibility of spontaneous combustion. Which of the following terms best describes this condition? a. Catastrophe. b. Hazard. c. Risk. d. Peril.
b. Hazard.
Which of the following would be excluded under Coverage E - Personal Liability of the Homeowners forms? I. Business activities II. Use of aircraft III. Personal activities in Paris, France IV. Use of licensed motor vehicles a. I and II only b. II, III, and IV only c. I, II, and IV only d. I, II, III and IV
b. II, III, and IV only
All of the following would be covered under Part B - Medical Payments of the personal auto form, EXCEPT: a. Injuries sustained by the insured's mother when a tree falls on the automobile while she is sitting inside the automobile while it is parked in the driveway. b. Injuries sustained by an elderly man riding in the insured vehicle after having paid the insured to take him to the grocery store. c. Injuries sustained by the insured when using his father's pickup truck to pick up furniture he recently purchased. d. Injuries sustained by a neighbor who carpools with the insured and who, while getting into the insured's car, slips, falls, and injures her knee.
b. Injuries sustained by an elderly man riding in the insured vehicle after having paid the insured to take him to the grocery store.
A Texas adjuster may be subjected to a criminal penalty for all of the following, EXCEPT: a. Acting as an adjuster without a license. b. Not paying court mandated child support. c. Adjusting a claim for workers' compensation when holding a Property & Casualty adjuster license. d. Adjusting a Homeowners claim when holding only a Workers' Compensation adjuster license.
b. Not paying court mandated child support.
If an insured fails to report a claim in a timely fashion, the adjuster will immediately: a. Deny the claim. b. Send the insured a reservation of rights letter. c. Cease the claims investigation. d. Seek the advice of the company's attorney.
b. Send the insured a reservation of rights letter.
If a Condo Association policy and a Condominium Unit Owners Policy are in force on the same property, how would the claim be handled? a. Each policy will pay a pro-rated share of the loss b. The Condo Association policy is primary c. The Condominium Unit Owners Policy is primary d. Both would exclude coverage
b. The Condo Association policy is primary
Linda has received an inquiry from the Texas Commissioner. She realizes that she is required by law to respond to the inquiry, however her response contains information that is confidential and privileged. Which of the following is true of Linda's response to the Commissioner's inquiry? a. The information must be provided to the Commissioner and when Linda sends her response in writing, the information is no longer considered privileged or confidential. b. The information will remain confidential and privileged until it is introduced as evidence in an administrative hearing or in a court of law. c. The portion of Linda's response that is privileged and confidential will be redacted after the Commissioner reviews her response. d. Linda is prohibited by law from including privileged or confidential information in her response.
b. The information will remain confidential and privileged until it is introduced as evidence in an administrative hearing or in a court of law.
An employee who was injured on the job in Texas would be considered "intoxicated" at the time of the injury in all of the following circumstances, EXCEPT: a. The injured workers was under the influence of alcohol. b. The injured worker was under the influence of a drug that was taken in accordance with a prescription written by a physician. c. The injured worker had been abusing glue or aerosol paint. d. The injured worker was under the influence of a controlled substance that was not a prescription.
b. The injured worker was under the influence of a drug that was taken in accordance with a prescription written by a physician.
A non-waiver is issued by which party? a. The claimant b. The insurer c. The court d. The commissioner
b. The insurer
Proceeds from a commercial property insurance policy can be assigned by: a. No one because assignment is forbidden by the policy b. The policyholder c. The mortgagee d. The loss payee
b. The policyholder
In the newest edition of the Commercial Property form, which of the following is now considered part of the building? a. Signs permanently attached b. Vegetated Roofs c. Outdoor Property d. Detached signs
b. Vegetated Roofs
On the HO-2 policy, damage caused by wind to personal property would be covered if: a. Caused by a concurrent causation b. Wind blew a hole in the structure allowing the wind to damage the contents c. Always d. Never
b. Wind blew a hole in the structure allowing the wind to damage the contents
Which of the following amounts would be paid on a covered auto suffering a total loss? The retail value is $1,250 and the average trade in value is $1,000. a. $1,000 plus applicable taxes b. $1,500 plus applicable taxes c. $1,250 plus applicable taxes d. $2,995 plus applicable taxes
c. $1,250 plus applicable taxes
The maximum payable for damage or loss to signs attached to the building covered under a BOP issued to the tenant of a building is: a. $2500 b. The building limit because the sign is attached to the building. c. $1000 d. $5000
c. $1000
What is a "proof of loss"? a. A full release of all claims. b. A statement made by the insurer as to the coverage that may apply on a claim. c. A formal statement made by the insured to the insurance company regarding a loss. d. Special requirements made to the insured by the insurance company in case of a claim.
c. A formal statement made by the insured to the insurance company regarding a loss.
Which of the following people is committing "hard fraud"? a. After a wind storm rips a few shingles off his roof, Stan climbs up and rips off several more before filing a claim. b. Dan's doctor keeps him in the hospital for an extra day in order to charge Dan's insurer a little more. c. Ally wants her insurer to buy her a new truck, so she pushes her current truck off a cliff and files an auto accident claim. d. After her purse is stolen, Paige files a claim and states that her $1,000 watch was in her purse when it was stolen, even though it really wasn't.
c. Ally wants her insurer to buy her a new truck, so she pushes her current truck off a cliff and files an auto accident claim. Ally intentionally pushing her truck off a cliff in order to file an auto claim and get a new vehicle is an example of "hard fraud" because it was a fraudulent activity from start to finish and it took planning. The other choices are all legitimate claims that have been exaggerated or enhanced to increase payment, which is the definition of "soft fraud".
A claims dispute where a disinterested third party who has decision making authority has been asked to intervene is known as: a. Mediation b. Resolution c. Arbitration d. Settlement
c. Arbitration
The insured has several locations and desires to insure his contents coverage. His agent advises him to complete a statement of values form and issues a policy with one limit to cover all locations. This is an example of: a. Specific coverage. b. Reporting form coverage. c. Blanket coverage. d. Location basis.
c. Blanket coverage.
What should be the central goal of the claims adjuster? a. Follow the rules dictated by the principal b. Not violate state insurance laws c. Comply with the provisions of the insurance contract to obtain a full release settlement of the claim. d. Maximize profit for the insurance company
c. Comply with the provisions of the insurance contract to obtain a full release settlement of the claim.
All of the following are a "cause of loss" form, EXCEPT: a. Basic b. Broad c. Comprehensive d. Special
c. Comprehensive
Which of the following is not considered to be an unfair claims settlement practice? a. Attempting to settle a claim on the basis of an application which was altered without the knowledge of the insured b. Making a claims payment and omitting the coverage under which payment is being made c. Denying a claim that is not covered by the policy. d. Stating to claimants that it always appeals arbitration awards for the purpose of compelling them to accept lower settlements
c. Denying a claim that is not covered by the policy.
Which of the following is NOT a method of determining causation of injuries under a Workers Compensation claim? a. Determining if the injury or illness arose in the course of the employment. b. Determining if the injury or illness arose out of the employment. c. Determining the proximate cause of the injury or illness. d. Determining if the injured workers was performing duties that he or she was authorized to perform.
c. Determining the proximate cause of the injury or illness.
John's Texas adjuster license has been expired for 16 months. Which of the following describes the procedure John will need to follow to reinstate his license? a. John will need to take any continuing education courses necessary to meet the requirements and submit a license renewal application with a fine of $150. b. John can apply to the Commissioner for a waiver of continuing education and submit a license renewal application. c. John will need to take the state licensing exam again and submit an application for a new license. d. John must take the state licensing exam again, and if he passes it, his license will be automatically renewed after the test score is submitted to the Department.
c. John will need to take the state licensing exam again and submit an application for a new license.
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? a. The claim is not covered b. The hull insurance c. Liability coverage d. Medical payments
c. Liability coverage
Mr. Vickers was in a hurry to catch a plane. He parks his car in the parking garage at the airport and leaves the keys in the ignition. When he returns he finds that his car has been stolen. Later the car was discovered with severe collision damage. The airport carries Garagekeeper's Legal Liability coverage and Mr. Vickers carries Liability and Comprehensive coverage on his auto. What coverage would apply? a. No coverage because there were no signs of forcible entry into the vehicle. b. Mr. Vickers' Collision coverage. c. Mr. Vickers' Comprehensive coverage (Other Than Collision). d. The airport coverage.
c. Mr. Vickers' Comprehensive coverage (Other Than Collision).
A covered loss has damaged the property belonging to the owner. Property belonging to a customer is also damaged. The customer brings suit against the insured for this damage. The insurer may do which of the following? a. Pay the defense costs incurred in the suit against the insured b. Negotiate the settlement of the property of others directly with the owners of that property c. Negotiate the settlement of the property of others directly with the owners of that property and pay the defense costs incurred in the suit against the insured d. Only pay the expense cost and not negotiate a settlement
c. Negotiate the settlement of the property of others directly with the owners of that property and pay the defense costs incurred in the suit against the insured
According to the definitions section of the homeowner policy, "one family dwelling, other structures or grounds" also means the: a. Insured premises b. Dwelling c. Residence premises d. Other structures
c. Residence premises
All of the following are additional property coverages under the homeowners program, EXCEPT: a. Debris removal. b. Reasonable repairs. c. Special damages. d. Loss assessment.
c. Special damages.
Ellie's Engineering Inc. has several warehouses and it is necessary for employees to transport different items between the warehouses, depending on what products are being manufactured at any given time. One day Bill, Karen, and Josh were required to load several containers of an explosive chemical onto a truck to transport it across town to another warehouse. Karen knew that the chemical must be handled carefully to prevent it from exploding, but she did not refuse to move the containers nor did she indicate to Bill and Josh that the chemical was dangerous. After loading the containers, Josh is moving the truck out of the loading zone and negligently backs it into a brick wall, injuring all three workers. Bill died from the injuries several days after the accident. Which of the following statements most accurately describes the common-law defense(s) that Ellie's Engineering might use to defend themselves against a lawsuit filed by Karen? a. The contributory negligence doctrine only. b. The assumption of risk, contributory negligence, and fellow worker doctrine. c. The assumption of risk and the fellow worker doctrine only. d. The assumption of risk only.
c. The assumption of risk and the fellow worker doctrine only.
A "full release settlement" when properly prepared, should include: a. The name of the attorney of record. b. The name of the insurance company. c. The names of the releasee and releasor. d. The name of the adjuster resolving the claim.
c. The names of the releasee and releasor.
An insured's boat is struck by another boat. He and his family are injured. His boat sinks because of the damage. An investigation determines that the party that caused the accident is not insured. If the insured carries a watercraft policy, what coverages would apply? a. Liability coverage b. Medical payments c. Uninsured boater's coverage and hull insurance d. Uninsured boater's coverage
c. Uninsured boater's coverage and hull insurance
Under the medical payments coverage included in an aviation policy, when are the passengers covered? a. Before entering the aircraft b. Once they have departed the aircraft c. While entering, exiting and while on the aircraft d. Only while in flight
c. While entering, exiting and while on the aircraft
Which of the following would not be covered under the personal effects form? a. Tickets b. Money c. Passports d. All of the responses listed are correct.
d. All of the responses listed are correct.
Under the Commercial Property form, the $1,000 additional coverage for Fire Department Service Charge is the maximum payable per loss to each premise: a. regardless of the number of fire departments responding. b. regardless of the number or types of services performed. c. Neither response is correct. d. Both responses are correct.
d. Both responses are correct.
Contractor Joe has borrowed funds from a bank in order to finance a construction project. A surety bond which guarantees the lender that the contractor will use the borrowed funds to finish the contract free and clear of liens is known as a: a. Bid bond. b. Performance bond. c. Labor and materials bond. d. Completion bond.
d. Completion bond.
Angie has suffered an automobile physical damage loss. All of the following are the insured's duties after a loss under Angie's personal automobile policy, EXCEPT: a. Take reasonable steps after the loss to protect the property from further damage. b. Promptly notify the police if the vehicle is stolen. c. Allow the insurer to inspect and appraise the damaged property. d. Facilitate the repairs to the vehicle and submit the invoice to the insurer.
d. Facilitate the repairs to the vehicle and submit the invoice to the insurer.
Which of the following is TRUE of the Equipment Breakdown Protection Coverage Form? a. It includes a maximum of $25,000 of liability coverage. b. It has a standard deductible of $1,000 that applies to each occurrence or breakdown. c. If damage is also covered by another policy, the Equipment Breakdown Protection Coverage form is primary and the other policy is secondary. d. It normally pays replacement cost, unless endorsed to pay actual cash value.
d. It normally pays replacement cost, unless endorsed to pay actual cash value.
Which of the following conditions is not found in the commercial inland marine conditions form? a. Appraisal b. Pair, Set or Parts c. No Benefit to Bailee d. Maintenance of Security Systems
d. Maintenance of Security Systems
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, what coverage would apply? a. The house and garage only b. The fence only c. Nothing because the insured's vehicle caused the damage d. The house, garage and the fence
d. The house, garage and the fence
Which of the following is NOT excluded under Section II - Liability of the Businessowners policy? a. Aircraft, auto or watercraft bodily injury b. Professional services bodily injury c. Pollution property damage d. Valet services bodily injury
d. Valet services bodily injury
