4-5 MASTER

Réussis tes devoirs et examens dès maintenant avec Quizwiz!

what property loss exposures do vessel owners face that can be covered by hull insurance

face the possibility that their vessels could be damaged or destroyed by fire, war, breakage of machinery, the action of wind and waves, the striking of rocks or other vessels, and the shifting of cargo

distinguish between the characteristics of filed classes of inland marine and those of non filed classes

filed classes of inland marine are characterized by a large number of potential insureds and reasonably homogeneous loss exposures. Nonfiled classes are characterized by a relatively small number of potential insureds, diverse loss exposures, or both

Crime Form: Loss Sustained Form

form that covers losses actually sustained during the policy period and discovered

Crime Form: Discovery Form

form that covers losses discovered during the policy period even though they may have occurred before the policy period

partial loss that must, according to maritime law, be shared by all parties to a voyage

general average

Rates for the traditionally nonfiled classes of inland marine insurance..

have become standardized to an extent for policies that are widely written

insurance that covers physical damage to vessels, including their machinery and fuel but not their cargo typically include earthquake coverage for the possibility that a vessel might be damaged by earthquake while docked

hull insurance

what types of claims may be covered by protection and indemnity insurance

-damage to bridges, piers, wharves, and other structures along waterways -injury to passengers, crew, and other persons on the insured vessel -injury to persons on other vessels -damage to cargo of others aboard the insured vessel

Which one of the following ocean marine insurance policies or clauses covers an insured shipowner's liability for injuries to the passengers on board a ship into which the insured ship collided?

Protection and indemnity (P&I) insurance

Which one of the following ocean marine policies or clauses covers an insured shipowner's liability for damage to a docking pier struck by the insured vessel?

Protection and indemnity (P&I) insurance

Which one of the following ocean marine insurance policies or clauses covers the insured shipowner's liability for injuries to crew members of the insured ship in the event it collides with another vessel?

Protection and indemnity (P&I) policy

identify the types of property covered under the employee theft insuring agreement in the commercial crime coverage form

money, securities, and all other tangible property that has intrinsic value

policy that covers a trucker's liability for damage to cargo of others being transported by the trucker

motor truck cargo liability policy

statement of the types of property that may be insured on inland marine and ocean marine insurance forms

nationwide marine definition

Entities eligible for financial institution bonds are

not eligible for the ISO commercial crime forms

describe the coverage territory of many annual transit policies

only includes the continental US, Alaska, and Canada, including airborne shipments between these places

what property does an inland marine builders risk policy typically cover other than the building under construction

other than the building under construction, an inland marine builders risk policy typically covers temporary structures at the building site and building materials while on the insured location, in transit, or in storage at another location

what is the purpose of the rental reimbursement coverage that is often added by endorsement to contractors equipment floaters

rental reimbursement coverage, often added by endorsement to contractors equipment floaters, pays the cost of renting substitute equipment when covered property has been put out of service by a covered cause of loss

describe the definition of occurrence that applies to forgery or alteration

requires that the act or acts must be committed by a person acting alone or in collusion with others and must involve one or more instruments

a risk financing technique by which losses are retained by generating funds within the organization to pay for the losses

retention

Under the valuation-settlement condition of a crime policy, how is the value of a covered loss generally determined for this - securities

securities are valued as of the close of business on the day the loss is discovered

Under the valuation-settlement condition of a crime policy, how is the value of a covered loss generally determined for this - property other than money and securities that is lost or damaged

when other property is lost or damaged, the insurer has the option of paying the replacement cost of the property, repairing the property, or replacing it

In the ISO Commercial Crime Coverage Form, the insuring agreement that provides employee theft coverage covers money, securities, and other property. Which one of the following would be considered covered "other property" under this insuring agreement?

Company supplies

34) Business income losses can be measured in terms of net income. Toy Company recently experienced $70,000 in expenses and $100,000 in revenue. What is Toy Company's net income?

$30,000

Robert, a single father of two, owns a painting business. While driving his insured van on the job, Robert is involved in a serious accident and spends several days in the hospital. Robert incurs the following expenses. $ 4,000 Lost wages $ 6,000 Payment for a nanny to watch his two children $ 5,000 Cost to replace the painting equipment he was hauling $ 30,000 Medical bills Assuming Robert has adequate limits and a typical personal injury protection (PIP) endorsement to his Business Auto Coverage Form, how much of the above will be paid by Robert's auto insurer?

$40,000

A company has employee theft coverage with a $100,000 limit and a $1,000 deductible. Which one of these is the amount that the insurer would pay if one employee stole $7,000 of covered property?

$6,000 The insurer would pay $6,000 if one employee stole $7,000 of covered property.

81) Sam's Dry Cleaners (SDC) is insured under a Business Income (and Extra Expense) Coverage Form with a $1 million Business Income Limit of insurance for the dry cleaners location, subject to option (2) Business Income Other Than "Rental Value". None of the optional coverages of the Business Income (and Extra Expense) are in effect and no endorsements apply to SDC's Business Income (and Extra Expense) Coverage Form. The one year policy period shown in the declarations began on July 1, 2011. On October 1, 2011, SDC suffered a direct physical loss to its building and contents due to a fire. The resulting loss of business income that SDC sustained was $800,000 including a $5,000 loss for the first seventy-two hours following the physical loss. After the period of restoration ended and SDC resumed operations at the insured premises, the dry cleaners continued to sustain loss of business income loss for ninety days due to customers using other dry cleaners in the neighborhood. The first period of thirty days after reopening was $15,000, second period os thirty days was $10,000 and the third period of thirty days was $5,000. How much of SDC's business income loss would be covered under the Business Income (and Extra Expense) Coverage Form?

$810,000

Nonfiled classes of inland marine insurance

-contractors equipment -builders risk -transit -motor truck cargo liability -difference in conditions -electronic data processing equipment -instrumentalities of transportation and communication

what causes of loss are typically covered in a hull insurance policy

-perils of the seas -fire, lightening, and earthquake -battery -all other like perils if the policy includes the additional perils clause, it also covers several other perils including electrical breakdown, bursting of boilers, breakage of shafts, latent defects, and negligence of the crew

what are the reasons for buying a difference in conditions policy

-to provide coverage for buying a difference in conditions policy -to provide excess limits over flood and earthquake coverages included in basic policies -to cover loss exposures not covered in basic policies, such as property in transit or loss of business income resulting from theft or transit losses -to cover property overseas locations

Which one of the following ocean marine policies or clauses covers an insured shipowner's liability for damage to a docking pier struck by the insured vessel?

. Protection and indemnity (P&I) insurance

briefly describe the 2 parts of the termination as to any employee condition in the commercial crime form

1. automatically terminates employee theft coverage with respect to any employee who has committed a dishonest act as soon as the act is known to the insured or any partner, officer, or director not in collusion with the employee 2. gives the insurer the right to cancel coverage with respect to any employee by providing 30 days advance notice to the insured

In negligence, judges and juries must weigh presumptions, facts, and the common law in order to determine the correct outcome to a particular case. Which one of the following best describes how a court will usually deal with a case when the facts are undisputed and point to only one presumption? Choose one answer. A. The court must decide whether, as a matter of law, negligence occurred. B. The court must make findings of fact to determine whether negligence occurred. C. When the facts are undisputed, the court will always dismiss the case. D. When the facts point to only one presumption, the court must make findings of law to determine which party committed negligence per se.

13.11 A

13) Smith is Manager of ABC Department Store. Jones, ABC's Security Director, visited Smith to ask some questions. During questioning, Smith admitted that he stole $10,000 in merchandise. He was disciplined, but not fired. The loss was not reported to the insurer. Six weeks later, Smith was observed on a surveillance camera stealing over $50,000 in jewelry from ABC. ABC immediately reported the loss to its crime insurer. Which ISO crime coverage condition may prevent ABC from collecting for this loss? A) termination as to any employee B) discovery form C) loss sustained form D) loss sustained under prior insurance

13) The transfer of all ownership rights in a life insurance policy can be accomplished through a(n) A) absolute assignment. B) irrevocable beneficiary designation. C) incontestable clause. D) participating-policy provision.

6) Which of the following statements about the eligibility requirements for insuring mobile homes by endorsing a homeowners policy is (are) true? I. The mobile home must be designed for year-round living. II. The mobile home must be located in a fenced area with security guards. A) I only B) II only C) both I and II D) neither I nor II

27) All of the following are considered to be instrumentalities of transportation and communication for purposes of inland marine insurance EXCEPT A) trains. B) tunnels. C) transmission lines. D) television towers.

7) Which of the following losses would be covered under a Commercial General Liability Policy that has no endorsements? I. The named insured rented a building and an employee of the named insured negligently started a fire at the rented building. II. The cost to recall defective products A) I only B) II only C) both I and II D) neither I nor II

The medical payments coverage in the Personal Auto Policy (PAP) applies to Choose one answer. A. Any person occupying a covered auto. B. Any insured who is also covered by workers compensation for the same accident. C. Anyone injured in an accident involving an insured. D. Anyone occupying a car not owned by any insured but driven by an insured.

A C. Incorrect. Medical payments coverage applies regardless of fault to the named insured and defined family members, plus any other person while occupying a covered vehicle. Injuries occurring during employment are excluded from medical payments coverage if workers compensation benefits are required or available.

Equipment floaters

A category of inland marine policies covering various types of equipment, wherever it may be located for the policy period

Which one of the following statements is correct with respect to the Building and Personal Property (BPP) Coverage Form? Choose one answer. A. The BPP lists several types of classes of property that do not qualify as covered property. B. The BPP must be written to provide coverage for all of the following: buildings, business personal property, and personal property of others. C. The BPP provides coverage against both direct and indirect loss or damage caused by a covered cause of loss. D. The BPP covers business personal property and property of others up to a specified percentage of the building coverage limit.

A Correct. The BPP lists several types of classes of property that do not qualify as covered property. C, Not Sure. But it is wrong.

The Commercial General Liability (CGL) policy provides that the insurer may, at its discretion, settle any claim or suit. In contrast, professional liability and management liability policies typically have what is referred to as a "hammer clause." This clause is invoked when the insured does not agree to a proposed settlement. The hammer clause has the effect of doing which one of the following? Choose one answer. A. Compelling the insured to agree to the settlement proposed by the insurer B. Forcing the insurer to make a subsequent settlement offer within 60 days of the initial offer C. Mandating settlement within 180 days of triggering the hammer clause D. Requiring the insured to submit the claim to arbitration procedures

A Page 12.11 C Incorrect. In professional liability policies, the hammer clause compels the insured to agree to the settlement proposed by the insurer.

What ocean marine insurance policy or clause covers the damage to an insured's ship if the insured ship collides with an object in the harbor?

Hull insurance policy

Accumulation clause

A clause in open cargo policies that double the policy limit when, for reasons beyond the control of the assured, shipments accumulate at some point in transit

What ocean marine insurance policy or clause covers the damage to an insured's ship if the insured ship collides with an object in the harbor?

Hull insurance policy

37) The type of cyber insurance policy that is best for an organization that handles a lot of money and is worried about a hacker diverting funds from its accounts is

A cyber crime policy.

Block policy

A dealers policy particularly one written for a jeweler or a furrier

61) Ace Builders is considering purchasing a large tract of land where a local fuel oil company had its storage facility for more than 100 years. Ace knows that because of the long-time operation at the site, some environmental clean-up will be necessary. However, the amount of clean-up and its cost are unknown and cannot precisely be estimated. What is a specific policy that Ace should consider purchasing to address clean-up costs in excess of what it might estimate?

A remediation stop-loss policy.

38) The Terroris Risk Insurance Act (TRIA) requires that insurers include a "cap" endorsement on each policy that contains terrorism coverage. What three items of information must be included on a "cap" endorsement?

A description of certified acts of terrorism; the insurers responsibility ends when terrorism payments reach the cap; and the policyholders's coverage may be reduced by the Secretary of the Treasury's calculation of the pro-rata share of losses below the cap.

Bill of lading

A document acknowledging receipt of goods from the shipper, given by the carrier, which includes the terms of the contract of carriage for the goods.

What ocean marine insurance policy or clause, if any, covers damage to the insured vessel caused by serious misconduct by the members of the crew contrary to the owner's interest?

Hull insurance policy

53) Which of the following statements about variable universal life insurance is (are) true? I Variable universal life insurance has fixed premium payments. II. Variable universal life insurance allows the policyowner to decide where the premiums are invested. A) I only B) II only C) both I and II D) neither I nor II

The Inflation Guard endorsement gradually and automatically increases limits throughout the policy period in homeowners policies for Coverage(s) Choose one answer. A. A only. B. A and B only. C. A, B, and C only. D. A, B, C, and D.

D. C Incorrect. The endorsement provides an automatic increase in the amount of each of the Section I—Property coverages.

A business wishes to cap large insurance claims of a given business unit when evaluating the annual results of that unit. This would be an example of which one of the following accounting frameworks? Choose one answer. A. Generally accepted accounting principles B. Regulatory/supervisory accounting C. Tax accounting D. Management accounting

D. Page 1.8 book 1

Which one of the following statements is correct with respect to contractors equipment floaters?

A large contractor may obtain blanket coverage applying to all equipment, whether owned, rented, or borrowed by the contractor.

54) For commercial auto insurance, a truck, tractor, or trailer is non-zone rated if it is

A light truck operating over any distance.

Additional case reserves are most common for which one of the following types of claims? Choose one answer. A. Claims for reserve liabilities. B. Claims for positive reserve amounts. C. Claims for salvage recoveries. D. Claims under assumed reinsurance contracts

D. Page 1.45

Agreed value method

A method of valuing property in which the insurer and the insured agree at the time the policy is written on the maximum amount that will be paid in the event of a total loss

31) All of the following statements about ordinary life insurance are true EXCEPT A) Premiums are level throughout the policy period. B) The face amount of the policy is paid if the insured lives to age 65. C) There is a build-up of cash value that can be borrowed by the policyholder. D) It offers the policyholder the flexibility to meet a wide variety of financial objectives.

1) Which of the following statements about the ownership of a life insurance policy is (are) true? I. Under the ownership clause, the policyowner and beneficiary equally share all contractual rights in the policy while the insured is living. II. The policyowner can designate a new owner by filing an appropriate form with the insurance company. A) I only B) II only C) both I and II D) neither I nor II

32) In a surety arrangement, the party who benefits from the bond if the bonded party fails to perform is the A) principal. B) obligee. C) fidelity. D) surety.

Act of God

A natural and unavoiable catastrophe that interrupts the expected course of events

10) An armed robber pulled a gun on a teller at the Fourth National Bank. He made off with over $10,000 in cash. Which insuring agreement in a financial institution bond is designed to cover such losses? A) Insuring Agreement A-Fidelity B) Insuring Agreement B-On Premises C) Insuring Agreement C-In Transit D) Insuring Agreement D-Forgery or Alteration

Floater

A policy designed to cover property that floats or moves from location to location

Bailee's customers policy

A policy that covers damage to customers goods while in the possession of the insured, regardless of whether the insured is legally liabile for the damage

Contractors equipment floater

A policy that covers mobile equipment or tools while located anywhere in the coverage territory

11) Which of the following statements about the capital retention approach for determining life insurance needs is (are) true? I. It assumes that life insurance proceeds will be liquidated to provide income to survivors. II. It requires the preparation of a personal balance sheet. A) I only B) II only C) both I and II D) neither I nor II

Inherent vice

A quality of or condition within a particular type of property that tends to make the property destroy itself...example eggs going bad if shipped without refrigeration

Judgment rating is used to rate

One-of-a-kind risks.

11) Which of the following statements is (are) true concerning the value reporting form? I. Failure to report accurately suspends coverage. II. If the insured underreports the property values at a location, and a loss occurs at that location, recovery is limited to the proportion that the last value reported bears to the value that should have been reported. A) I only B) II only C) both I and II D) neither I nor II

51) Which one of the following is a form of excess liability coverage?

A self-contained policy

12) Reasons why an insured might add a scheduled personal property endorsement to a homeowners policy include which of the following? I. To lower the premium by limiting the perils covered II. To obtain higher limits for certain personal property A) I only B) II only C) both I and II D) neither I nor II

12) Which of the following types of forms is used to insure fluctuations in business personal property? A) accounts receivable coverage form B) a value reporting form C) difference in conditions insurance D) inland marine marine insurance

The Nationwide Marine Definition was no longer needed following the enactment of legislation in the 1950s that

Permitted a single insurer to offer fire, casualty, and marine coverages.

32) Which of the following statements about a typical accidental death benefit rider is (are) true? I. Death must occur within 14 days of the covered accident. II. The accidental death must occur prior to some specified age. A) I only B) II only C) both I and II D) neither I nor II

32) Which of the following statements is true concerning the ISO employment-related practices liability form? A) coverage is provided without a co-payment provision B) legal defense costs are included as part of the policy limit C) wrongful termination is excluded from coverage D) liability to employees is excluded from coverage

15) Jack, owner of Jack's Bar and Grill, was robbed while attempting to deposit receipts at the bank's night depository. Jack had purchased an ISO commercial crime coverage form. This loss would be covered under which insuring agreement? A) Inside the Premises-Theft of Money and Securities B) Outside the Premises C) Money Orders and Counterfeit Currency D) Inside the Premises-Robbery or Safe Burglary of Other Property

28) Al's Electric Service is an electric contracting company in Metro City. The owner of the company, Al Richards, posted a bond guaranteeing that all work performed by his company will comply with local building codes. This bond is an example of a A) fiduciary bond. B) license and permit bond. C) contract bond. D) judicial bond.

29) A firm wishing to insure a single shipment of merchandise sent by a common carrier would purchase a(n) A) annual transit policy. B) trip transit policy. C) bailee's liability policy. D) equipment floater.

Charter

A travel contract in which transportation is temporarily hired for a specific trip

48) Which of the following statements is (are) true concerning the automatic premium loan provision? I. Unlike other policy loans, interest is not charged on automatic premium loans. II. The basic purpose of an automatic premium loan is to prevent a life insurance policy from lapsing. A) I only B) II only C) both I and II D) neither I nor II

34) The cost-of-living rider typically bases increases in the policy face value on changes in the A) gross national product. B) interest rate for short-term U.S. government securities. C) consumer price index. D) national wage level.

Owner's goods on owner's truck policy

A type of motor truck cargo policy that covers any type of organization (not just a trucking company) for damage to its own cargo while being transported on its own trucks

For which one of the following must coverage be added by endorsement to the filed inland marine Physicians and Surgeons Equipment Coverage Form?

Personal effects of the insured or others while on premises

Strikes, riots and civil commotion (SR&CC) warranty

A warranty that excludes loss caused by strikes, labor disturbances, riots, vandalism, sabotage or malicious acts

Free of capture and seizure (FC&S) warranty

A warranty that excludes loss caused by war, piracy, virtually any lawful or unlawful taking of a vessel, a nuclear weapon, a mine or a torpedo

Marta insured her home with an HO-3—Special Form (HO-3) that includes a Personal Property Replacement Cost Loss Settlement endorsement. Her large screen television fell off the wall and was damaged beyond repair. She had paid $2,000 for it. At the time of loss it had an actual cash value of $800 and a replacement cost of $1,500. Because she found that she had little time to watch television, she decided not to replace the TV. How much did her insurer pay on the claim? Choose one answer. A. $0 B. $800 C. $1,500 D. $2,000

A, C Incorrect. The insurer will pay $0 since falling off the wall is not a covered peril.

Under the bank deposit approach to deposit accounting Choose one answer. A. The initial deposit grows with interest credited at an interest rate whose calculation is determined in advance and declines with withdrawals. B. The deposit value will change with the amortization of interest and with a change in projected future losses. C. The deposit value and discount rate are subject to change whenever the projected cash flows since inception are changed. D. The ending deposit for a reporting period is dependent on the particular pattern of cash flows that led to the beginning balance.

A. Page 1.59

covers losses (including uncollectable accounts) resulting from destruction of the insured's records of accounts receivables. The insurer pays the amount of accounts receivable the insured is unable to collect because of the destruction of records. The form also covers the cost to reconstruct accounts receivable records, interest on loans made necessary by an inability to collect accounts receivable, and increased collection cots resulting from loss of records

Accounts Receivable Coverage Form

Which one of these is not an element of the Commercial Crime Coverage Form's definition of occurrence?

An act committed by only one person

Which one of the following would be covered under the filed inland marine Valuable Papers and Records Coverage Form?

An architect's blueprints and plans

Which one of the following would be covered under the filed inland marine Valuable Papers and Records Coverage Form?

An architect's blueprints and plans

74) Which one of the following would be covered under the filed inland marine Valuable Papers and Records Coverage Form?

An architect's blueprings and plans

3) A customer was injured when a furnace exploded following its faulty installation by a heating and cooling business. For the heating and cooling business, this is an example of A) contingent liability. B) completed operations liability. C) products liability. D) contractual liability.

3) All of the following are perils covered under Dwelling Property 2 (broad form) EXCEPT A) weight of ice, snow, or sleet. B) flood. C) sudden and accidental damage from an artificially generated electrical current. D) freezing of a plumbing or heating system.

Regarding coverage under the ISO Commercial Crime Coverage Form, which one of the following statements about custodians or messengers is true?

An employee taking the day's receipts to the bank is an example of a messenger, but not a custodian.

BMC 32 - Endorsement for Motor Common Carrier Policies of Insurance for Cargo Liability

An endorsement that insurers must attach to motor truck cargo liability policies of interstate carriers stating that the insurer will pay cargo claims for which the insured is liable, up to the limits required by the US Dept of Transportation, even if such claims are not covered under the policy

FPA/AC (free of particular average/American conditions) warranty

An exceptive warranty that excludes particular average unless the loss is actually caused by the stranding, sinking, or burning of the vessel, or its collision with another vessel

3) All of the following information is needed to calculate a person's human life value EXCEPT A) the person's average annual earnings over his or her productive lifetime. B) the person's estimated annual Social Security benefits after retirement. C) the person's cost of self-maintenance. D) the number of years from the person's present age to the expected retirement age.

30) Which of the following statements about the businessowners policy is (are) true? I. It is designed to meet the insurance needs of large manufacturing firms. II. It is a package policy designed to meet the basic property and liability needs of an insured in a single contract. A) I only B) II only C) both I and II D) neither I nor II

17) Sarah is using the needs approach to determine how much life insurance to buy. Her cash needs are $30,000, her income needs are $140,000,and special needs are $100,000. Sarah has the following assets: $20,000 in bank accounts, $30,000 in retirement plans, and $40,000 in investment accounts. Sarah owns no individual life insurance. She is covered by a $50,000 group life insurance policy through her employer. Based on this information, how much additional life insurance should Sarah purchase? A) $80,000 B) $130,000 C) $150,000 D) $160,000

Which one of the following best describes a reason why insureds purchase the filed inland marine Accounts Receivable Coverage Form?

An insured can use the inland marine form to obtain a higher coverage limit than the insurer is willing to include in a package policy.

19) Which of the following statements about dividend options is (are) true? I. The interest on dividends left to accumulate with the insurer is not considered to be taxable income. II. Paid-up additions are additional units of whole life insurance. A) I only B) II only C) both I and II D) neither I nor II

60) Federal workers compensation statutes apply to which one of the following workers?

An interstat railroad worker.

8) What is the effect of the optional agreed value provision in the building and personal property coverage form? A) It provides replacement cost coverage. B) It increases insured values along with inflation. C) It suspends the coinsurance clause. D) It reduces the deductible to $50.

An ocean marine insurance policy that covers all goods shipped or received by the insured during the policy's term, that is comparable to an inland marine annual trip transit policy but without a set policy expiration date, is referred to as

An open cargo policy.

A bank discovered that electronic data had been tampered with and filed a claim under the bank's ISO Commercial Crime Coverage Form for the resulting damage to the data. It was suspected that a disgruntled employee had tampered with the computer files and created a virus. Which one of the following statements describes whether this loss would be covered?

An unendorsed form would not cover this loss. The bank would only be covered if it had a Destruction of Electronic Data or Computer Programs endorsement.

5) Which of the following coverages are provided by an unendorsed ISO Dwelling Program form? I. Theft of personal property II. Named-perils coverage for personal property A) I only B) II only C) both I and II D) neither I nor II

41) Which one of the following statements is correct with respect to the Concealment, Misrepresentation, or Fraud condition of the Commercial Property Conditions Form?

Any misrepresentation, even if it is immaterial, voids coverage.

The Recoveries condition of the ISO Commercial Crime Coverage Form specifies how

Any subrogation or salvage recoveries will be divided between the insurer and the insured.

10) The condition of the Building and Person Property Coverage Form (BPP) that establishes a method for the insurer and the insured to resolve disputes about the insured property's value or amount of loss is referred to as the

Appraisal condition.

50) Which of the following statements is/are true regarding exclusions in life insurance contracts? I. Life insurance policies are remarkably restrictive, including numerous exclusions. II. A life insurer may exclude death attributable to certain activities or hobbies disclosed on the application. A) I only B) II only C) both I and II D) neither I nor II

10) Which of the following is (are) covered under a claims-made policy? I. Claims arising out of occurrences which take place during the policy period, regardless of when the claim is made II. Claims first reported during the policy period, provided the event occurred after any retroactive date stated in the policy A) I only B) II only C) both I and II D) neither I nor II

13) All of the following statements about the boatowners package policy are true EXCEPT A) Physical damage coverage for the boat is usually written to cover all losses except those losses specifically excluded. B) Liability coverage is provided for bodily injury only. C) Some policies provide optional uninsured boaters coverage. D) Medical payments coverage for water-skiers is available under the policy.

Anne and Joe have a home with a $300,000 replacement cost and an HO-3—Special Form (HO-3) with a Coverage A limit of $150,000. Lightning strikes the central air conditioning unit and destroys it beyond repair. The unit has a replacement cost of $5,000, is five years old, and has a useful life of 10 years. Ignoring any deductible that might apply, how much will the insurer pay to replace the air conditioning unit? Choose one answer. A. $2,500 B. $3,125 C. $4,125 D. $5,000

B. Page 6.27 The insured will received the *greater* of ACV or the limit/(80%*Repl Value) * Replacement cost A. Incorrect. The insurer will pay $3,125. $150,000 ÷ (80% × $300,000) × $5,000 = $3,125.

Which one of the following is an example of the exclusion for Indirect Loss in the ISO Commercial Crime Coverage Form?

Business income loss

Many insurers have developed their own company-specific preprinted forms, especially for coverages in which the insurer specializes, or for a. Niche market exposures. b. Catastrophic loss exposures. c. High-volume lines of insurance. d. Infrequently used coverage needs.

Joe and Kitty Clements have a Personal Auto Policy (PAP). Their granddaughter, Katherine, lives with them. Does Katherine qualify as a "family member"? Choose one answer. A. No, Katherine is not a ward or foster child. B. No, Katherine has not been adopted by the Clements. C. Yes, as long as Katherine is a resident of the household. D. Yes, as long as Katherine is an operator of a vehicle owned by the household.

C. A family member is a person related to the named insured by blood, marriage or adoption who *resides in the named insured's household*

Which one of the following statements is correct with respect to the Newly Acquired or Constructed Property extension of coverage of the Building and Personal Property Coverage Form (BPP)? Choose one answer. A. It provides automatic coverage for a new building being constructed by or for the insured anywhere within the coverage territory. B. It specifically excludes coverage for a newly acquired or constructed building at any location if that building will be used as a warehouse. C. It covers newly acquired buildings, provided the purpose of the newly acquired building is similar to the use of the building described in the declarations. D. This extension applies to buildings only and does not provide any coverage for business personal property.

C. Page 8.14. and/or *warehouse* D Incorrect. Business personal property is also covered under certain circumstances.

Contract carriers

Carriers that furnish transportation services to shippers with whom they have contracts

Which one of the following statements is correct with respect to the liability coverage available under businessowners policies (BOPs)?

Certain liability coverage options are not part of most BOP programs because the insureds that need them generally do not qualify for BOPs.

Sue and labor clause

Clause that covers the cost of reasonable measures that the insured is required to take to protect property from damage at the time of loss

Warehouse to warehouse coverage

Clauses in open cargo policies that covers the insured cargo during the ordinary course of transit (including land transit) from the time the cargo leaves the point of shipment until it is delivered to its final destination

7) An environmental insurance policy that covers the loss exposures of a contractor performing environmental remediation services on contaminated sites is a(n)

Contractors pollution liability policy

13) Which one of the following statements is correct with respect to Coverage G-Barns, Outbuildings and Other Farm Structures of the ISO farm program?

Coverage G is used to insure all types of farm buildings and structures other than the dwelling and private garages.

Which one of the following statements is correct regarding sources of recovery under insurance policies? Choose one answer. A. An insured cannot simultaneously hold two policies of the same type with two different insurers. B. If an insured's loss is covered under two similar policies, the policy that was issued first must pay the loss. C. Policy provisions generally exclude coverage for items covered under a policy with another insurer. D. In situations involving a loss covered by two similar policies with different insurers, the insurers usually share the loss.

D. is correct. C. Incorrect. In situations involving a loss covered by two similar policies with different insurers, the insurers usually share the loss. Page 3.32

17) Which one of the following statements is true regarding the Property Damage insuring agreement of the ISO Equipment Breakdown Form?

Debris removal is covered as part of the property damage limit.

Which one of these sections of the Commercial Crime Coverage Form contains the limit of insurance?

Declarations

The Delicious Restaurant suffered a covered money loss under its ISO Commercial Crime Coverage Form. The form had a limit of $10,000. The value of the loss was $14,500. The insurer paid the policy limit. After paying the $10,000 policy limit, the insurer recovered $11,000 of the stolen money. Ignoring any deductibles that might apply, what dollar amount of covered property, if any, would go to Delicious Restaurant and to the insurer?

Delicious would receive $4,500 and the insurer $6,500

77) Which one of the following statements is correct with respect to the Building and Personal Property coverage Form (BPP)?

Due to coverage extensions, it is possible for the total payment for one loss to exceed the policy limit.

16) An insurer that writes Commercial General Liability (CGL) coverage develops a rate for which one of the following?

Each business classification the insurer is willing to write.

Which one of the following statements is true about judgment rating in ocean marine insurance?

Each insurer writing ocean marine insurance develops its own ocean marine rates, guided by the judgment of its underwriters

Which one of the following statements is true about judgment rating in ocean marine insurance?

Each insurer writing ocean marine insurance develops its own ocean marine rates, guided by the judgment of its underwriters.

Which one of the following property coverages is often included or available as an option in a businessowners policy (BOP)?

Employee dishonesty

Policies for the crime loss exposure for financial institutions are called "bonds" because

Employee dishonesty, a key coverage, was traditionally called a "fidelity bond."

56) In the business income coverage form, the period of restoration

Ends when the property is or should have been restored.

covers the stock in trade of dealers that sell agricultural or construction equipment. The form also covers similar property of others in the insured's care, custody, or control

Equipment Dealers Coverage Form

A buyer has newly purchased goods shipped on an ocean freighter bound for the United States from Europe. To assure there is no liability for the goods until they are delivered to a warehouse in the United States, which one of the terms of sale should this buyer use?

Ex Point of Origin

25) Which one of the following statements is correct with respect to the business personal property coverage provided by the Building and Personal Property Coverage Form (BPP)?

Except for limited off-premises coverage, coverage for business personal property appli8es only when the property is in or on the described building or in the open (or in a vehicle) within 100 feet of the premises.

covers exposed motion picture film and magnetic tapes or videotapes, including related soundtracks or sound records. The amount of insurance reflects the cost of re-shooting the film if it is lost or damaged

Film Coverage Form

which one of the following is a policy that covers the crime loss exposures of financial institutions such as banks, savings and loan institutions, and insurance companies?

Financial Institution Bond

The Commercial General Liability (CGL) Coverage B—Personal and Advertising Injury Liability provides coverage for which one of the following?

False arrest

James is in the process of forming his own brokerage company which will include several employees. James will be best protected by purchasing what to cover the crime loss exposures of his company?

Financial institution bond

Which one of the following filed inland marine policies covers merchandise that is being held for sale and can be used to cover the dealer's interest and/or a lender's interest?

Floor Plan Coverage Form

covers merchandise that is being held for sale and financed through a floor plan. This coverage form may be issued to insure the dealer's interest in the merchandise, the lender's interest in it, or both.

Floor Plan Coverage Form

Signs coverage form

Form that covers neon, fluorescent, automatic or mechanical signs

15) Three exclusions apply only to the Computer Fraud insuring agreement. These include credit card transactions, inventory shortages and

Funds transfer fraud.

The exclusion for loss due to Acts Committed by You, Your Partners or Your Members in the ISO Commercial Crime Coverage Form would be considered a(n)

General exclusion applying to all crime insuring agreements.

Which one of the following is the endorsement to an ISO Commercial Crime Coverage Form that would cover a hotel owner for its legal liability for property of persons to whom it rents rooms?

Guests' Property

36) Which one of the following statements is correct with regard to the Building and Personal Property Coverage Form (BPP)?

If an insured extends replacement cost to the personal peroperty of others, the amount of a loss is calculated as the replacement cost of that property, even if that amount exceeds the applicable limit of insurance.

80) Which one of the following is correct with respect to how the covered causes of loss affect commercial property insurance premiums?

If the policy provides Broad Form coverage, an additional rate is added to the Basic Form rates for the cost of covering the additional perils of the Broad Form.

Assured

In ocean marine policies, the party named as the insured

14) Which one of the following statements is correct with respect to the Causes of Loss-Basic Form?

It excludes loss caused by earth movement, other than by sinkhole collapse.

Under which one of the following provisions of the Building and Personal Property Coverage Form (BPP) is the maximum payment $10,000 or five percent of the building limit, whichever is less?

Increased Cost of Construction additional coverage

Parcel post policy

Inland Marine policy that provides broad coverage on parcel post shipments

insurance that covers many different classes of property that typically involve an element of transportation

Inland marine insurance

Which one of the following statements is correct with respect to the Causes of Loss-Basic Form?

It excludes loss caused by earth movement, other than by sinkhole collapse.

Valuable papers and records insurance

Insurance that covers direct physical loss to valuable papers and records, such as architects blueprints and plans

Accounts receivable insurance

Insurance that covers the sums the insured is unable to collect when records of accounts receivable are destroyed by a covered cause of loss

40) In many cases, the law of a particular nation requires that coverage for properties in that nation be purchased from which one of the following?

Insurers licensed to engage in the insurance business in that nation

Which one of the following is true regarding the ISO Commercial Crime Coverage Form Joint Insured condition?

It appoints the first named insured as an agent for all insureds.

35) Which one of the following best describes the other states insurance provided in Part Three of the Workers Compensation and Employers Liability Insurance Policy?

It automatically extends workers compensation and employers liability coverage to the insured's operations in any state listed in Item 3.C of the Information Page.

Which one of the following statements is correct with respect to the Inside the Premises—Robbery or Safe Burglary of Other Property coverage of an ISO Commercial Crime Form?

It covers damage to the insured's premises resulting from a covered cause of loss.

57) Which one of the following statements is correct with respect to the Newly Acquired or Constructed Property extension of coverage of the Building and Personal Property Coverage Form (BPP)?

It covers newly acquired buildings, provided the purpose of the newly acquired building is similar to the use of the building described in the declarations.

The Computer Store (TCS) brought a claim under the Employee Theft insuring agreement of its ISO Commercial Crime Coverage Form. TCS's claim is based on an inventory shortage. To overcome the inventory shortages policy exclusion, TCS must demonstrate that the

Loss can be established wholly apart from inventory computations.

written for banks, trust companies, insurance companies, investment brokers, and other financial institutions that frequently ship securities and other valuable items through a government postal service. The form covers the insured against loss of securities and other negotiable instruments while in transit by first-class mail, certified mail, express mail, or registered mail.

Mail Coverage Form

1) Clarence entered into a contract bond that guarantees his insulation work will be free from defects in materials and workmanship for a specified period of five years after completion of the work. The type of bond used by Clarence is a

Maintenance bond.

75) Martha drives her auto, which is insured under a Business Auto Coverage Form, outside the state in which it is licensed. The other state requires a $25,000 bodily injury limit for underinsured motorists coverage. Martha's policy does not provide underinsured motorists coverage but does provide a $15,000 liability limit for uninsured motorists coverage. How would Martha's Business Auto Coverage Form respond to a $30,000 underinsured motorists bodilyinjury claim in the other state?

Martha's policy would provided the $25,000 bodily injury limit required by the other state for underinsured motorists coverage.

78) The inspections and surveys condition, a common policy condition attached to the ISO Commercial Package Policy, makes it clear that the insurer has the right to inspect the insured premises and

May recommend changes.

An exclusion contained in the Causes of Loss—Basic Form eliminates coverage for damage caused by which one of the following?

Mechanical breakdown, including rupture or bursting caused by centrifugal force

72) Which one of the following must an insurer pay on behalf of the insured according to Part One of the Workers Compensation and Employers Liability Insurance Policy?

Medical payments for a claimant who was exposed to a disease during the policy period but filed a claim two years after retiring?

50) Nathan's Furniture Store delivers a sofa to a customer. While placing the sofa in the living room, the delivery person breaks the customer's coffee table. The delivery person admits that the accident was his fault and the customer requests that a claim be submitted for damage to his personal property. Would the claim be covered under Coverage G-Personal and Advertising Injury Liability of the Commercial General Liability Coverage Form (CGL)?

No, because Coverage B does not respond to liability claims for property damage.

In applying for business auto insurance, the insured mistakenly lists the age of one of its drivers as 28 instead of 22. Would coverage be void if that driver is involved in an accident?

No, because the misrepresentation was not intentional.

ABC, Inc., is a large, national retailer that sells a variety of consumer goods. ABC carries a Commercial Package Policy that includes Insurance Service Office's Commercial Crime Coverage Form (Loss Sustained) with the following insuring agreements: Employee Theft; Forgery or Alteration; Inside the Premises—Theft of Money and Securities; and Inside the Premises—Robbery or Safe Burglary of Other Property. The limit of insurance for each one of these insuring agreements is $100,000 and the deductible per occurrence for each one of these insuring agreements is $1,000. The policy year is 20X1.During 20X1, two employees, Beth and Jim, in collusion, stole money and merchandise from ABC. Beth and Jim stole money on May 1, 20X1 and August 13, 20X1. They also stole merchandise on January 15, 20X1 and September 29, 20X1. The amount of the money loss totaled $15,000 while the amount of the merchandise loss totaled $110,000.With respect to applying the limit of insurance applicable to the employee theft loss, how many occurrences were involved in this loss?

One

45) Except for policies covering airlines, aircraft policies cover which one of the following?

Only the plane or planes specifically described in the policy

Various interests are insured in the ISO Commercial Crime Coverage Form. Which one of the following statements describes what happens if, during the policy period, the insured adds any premises or employees, other than by consolidation, merger, or acquisition?

Policy coverage will be extended automatically.

The filed classes of inland marine business are those for which the

Policy forms and/or rates must be filed with the state insurance department.

Commercial auto liability premium tables list premiums for private passenger autos by rating territory and by

Policy limit.

Installation floater

Policy that covers a contractors interest in building supplies or fixtures that the contractor has been hired to install

Trip transit policy

Policy that covers a particular shipment of goods specified in the policy

Motor truck cargo liability policy

Policy that covers a trucker's liability form damage to cargo of others being transported by the trucker

Joe Motors, which services automobiles, wants to maintain the goodwill of its customers. This is best accomplished by

Purchasing garagekeepers insurance.

One Common Policy Condition in the Commercial Package Policy (CPP) is the examination of books and records. The intent of this policy condition is to

Reserve the right of an insurer to inspect and audit the insured's books and records.

83) Baker Companys salesperson negligently injures a pedestrian while driving a Baker Company vehicle on a sales call. Under which one of the following legal doctrines could the pedestrian hold Baker Company responsible for injury caused by the negligence of its employee?

Respondeat superior

In 1933, the National Association of Insurance Commissioners adopted a Nationwide Marine Definition to

Restrict the underwriting powers of marine insurers to specified types of property.

Which one of the following statements is true regarding the Inside the Premises—Robbery or Safe Burglary of Other Property insuring agreement of the Commercial Crime Coverage Form?

Safe burglary means the unlawful taking of a locked safe or vault from inside the premises.

Which one of these would not be subject to a special limit of $5,000 per occurrence under the Inside the Premises—Robbery or Safe Burglary of Other Property coverage under the Commercial Crime Coverage Form?

Securities

28) The Separation of Insureds condition states that the insurance provided by the policy applies in which one of the following ways?

Separately to each person insured.

Ocean marine hull insurance policies usually cover on a specified perils basis rather than an "all-risks" basis. One of the specified causes of loss is "barratry." Which one of the following best describes the meaning of the term "barratry"?

Serious misconduct by the vessel's master or crew that is contrary to the owner's interest, such as a fraudulent or criminal act that causes damage to the vessel

A retail store, owner of various commercial trucks, wants to send a small shipment of goods to their warehouse 40 miles away. They want to keep this process as uncomplicated as possible. Which one of the following methods of shipping would you suggest for the retailer?

Ship the goods on their own truck to the warehouse.

The most widely used financial institution bond is

Standard Form No. 24

A filed jewelers block coverage form is designed to meet the needs of

Small retail jewelers

A filed jewelers block coverage form is designed to meet the needs of

Small retail jewelers.

Under the conditions of ISO Commercial Crime Coverage Form, which one of the following is a duty of the insured after discovering a loss or a situation that might result in a loss?

Submit a detailed, sworn proof of loss within 120 days.

Rating methods for the filed ISO commercial inland marine forms are based on procedures established by which one of the following?

The ISO Commercial Lines Manual (CLM)

What best describes how forms and rates for filed classes of inland marine insurance are filed?

The Insurance Services Office (ISO) and the American Association of Insurance Services (AAIS) file forms and rates for many of these classes on behalf of their member companies.

Joan has a business auto policy. Which one of the following losses would be covered as auto physical damage?

The cost to repair vehicle damage that results from hitting a deer

26) Paris Cuisine, a fine-dining restaurant, rents space in a commercial building, which is insured by its owner. Paris Cuisine spends $50,000 on wallpaper, floor coverings, windows, and other improvements that would remain in the building if Paris Cuisine were to move out. Paris Cuisine's interest in these improvements is insured under which one of the following?

The business personal property section of Paris Cuisine's BPP

Nonfiled classes (uncontrolled classes)

The classes of inland marine business for which neither policy forms not rates must be filed with the state insurance department

Filed classes (controlled classes)

The classes of inland marine business for which policy forms and/or rates must be filed with the state insurance department

A carrier that is prevented by an accident from delivering the cargo aboard its ship may face an exposure called loss of freight, which is

The compensation the carrier receives for transporting cargo

A carrier that is prevented by an accident from delivering the cargo aboard its ship may face an exposure called loss of freight, which is

The compensation the carrier receives for transporting cargo.

identify the type of non filed inland marine insurance policy that would provide coverage for each of the following: - Ian owns a dry cleaning business and wants to cover customers' goods without regard to his legal liability

The dry cleaning business would be covered by a bailees' customers policy

Which one of the following types of commercial property would most likely be insured using a "nonfiled" class of inland marine business?

The equipment used by a contractor

Which one of the following types of commercial property would most likely be insured using a "nonfiled" class of inland marine business?

The equipment used by a contractor

64) Justin has a Commercial Package Policy (CPP) that has a Building and Personal Property coverage Form (BPP) with a Causes of Loss-Broad Form covering his building with a $750,000 limit. A tropical storm struck Justin's building and the strong winds tore most of the shingles from the building's roof and shattered multiple windows on the 5th floor of the building. The rain from the storm caused water to enter Justin's building throught the foundation, which caused significant damage to the first and second floors. Justin had equipment stored in closets on the first and second floors which were rendered inoperable due to the water damage. The total amount of damages was $40,000 for the windows and shingles; $110,000 for water damage to the first and second floors; $9,000 for the equipment on the second floor; and $7,000 for the equipment on the first floor. How much will Justin's insurer pay for damage to the first and second floors, including the equipment?

The losses are not covered.

8) The Causes of Loss-Special Form provides coverage for which one of the following scenarios?

The melting of ice, sleet, or snow on the building or structure.

Open cargo policy

The ocean marine counterpart of annual transit insurance that covers all waterborne shipments and often international air shipments in which the insured has an insurable interest

Bailor

The owner of the personal property in a bailment

Bailee

The party temporarily possessing the personal property in a bailment.

Shipper

The person or organization shipping goods, often the seller of the goods

Consignee

The person or organization that receives property being transported by a carrier

9) Which one of the following is the coinsurance basis under a Business Income Coverage Form (BIC)?

The projected net income and all operating expenses except for certain deductible items.

Which one of the following best describes the property covered by the filed inland marine Equipment Dealers Coverage Form?

The stock in trade of dealers that sell agricultural or construction equipment and customers' equipment in the insured's care, custody, or control

52) International Toys (IT) manufactures toys in South Carolina and sells them to stores around the world. A customer in Europe is injured when one of the toys malfunctions and severs the customer's hand. The customer files suit in the United States. If IT is found liable, does its Commercial General Liability (CGL) Form cover the customer's claim?

Yes, because the toys were manufactured in the United States.

27) Generally, more than one causes of loss form is used in a commercial property coverage part for which one of the following reasons?

The underwriter is reluctant to provide the broader coverages for certain types of property.

covers stage scenery, costumes, and other personal property used in theatrical productions. It covers similar property of others in the insureds care as well as property owned by the insured. The insured must have used or intend to use the property in a production stated in the declarations

Theatrical Property Coverage Form

A dispute between a buyer and seller over the ownership of goods in transit can be resolved by the

by the terms of sale.

When an ocean marine policy is judgment rated, the judgment used is that of the

Underwriter.

An employer that decides to purchase specific excess insurance to cover catastrophic workers compensation losses must pay losses that are which one of the following?

Up to the retention for one occurrence.

3) Many of the provisions in professional liability policies resemble those found in commercial general liability policies. However, some of the provisions differ in key ways such as the

Use of a claims made trigger.

covers printed or otherwise recorded items such as an architect's blueprints and plans, as well as the cost of necessary research to reconstruct the records.

Valuable Papers and Records Coverage Form

47) What cause of loss is included as "terrorism" under workers compensation that is not included under any other line of insurance?

War.

Homeowner Stan is told by an arborist that a dead tree is going to fall on his house and must be removed. Knowing his insurer would indemnify him for the damge to the house, Stan chose to do nothing. Which one of the following statements regarding Stan's decision is accurate? a. If the tree damages Stan's property, it will not be a fortuitous loss. b. Stan is guilty of adverse selection since he is aware of the hazard. c. Stan is defrauding his insurer. d. The insurer may deny coverage based on Stan's material misrepresentation of the potential hazard.

a is correct d is wrong

how does a voyage cargo policy differ from an open cargo policy

a voyage policy covers cargo for a single trip specified in the policy. An open cargo policy covers all goods shipped or received by the insured during the policy's terms

What excludes coverage for an exposure that should be addressed by loss control measures?

account or arithmetical errors or omissions exclusion

5) If the Replacement Cost optional coverage of the Building and Personal Property Coverage Form (BPP) is selected, tenants' improvements and betterments

areValued at replacement cost if the tenant actually repairs or replaces them, at its own cost, as soon as reasonably possible after the loss.

identify the type of non filed inland marine insurance policy that would provide coverage for each of the following: - Smith Warehouse needs legal liability coverage for the property of others being stored with Smith

as the insured bailee, Smith Warehouse can obtain legal liability coverage for property of others through a warehouse operator's legal liability policy

Charlotte, Chloe, and Jessica have concurrent ownership in a restaurant, each owning one third. Their combined interests equal the value of the restaurant. If one of them should die, her share would pass to her heirs. This type of ownership is referred to as a. Joint tenancy. b. Tenancy in common. c. Tenancy by partnership. d. Tenancy by entirety.

b. d is wrong

although financial institution bonds are insurance policies, why are they called "bonds"?

because one of the key coverages that they provide is employee dishonesty insurance which is traditional called a "fidelity" bond"

policy that covers a building in the course of construction, including building materials and supplies while on or away from the building site

builders risk policy

An example of the exclusion for indirect loss in the ISO commercial crime coverage form is..

business income loss

23) Which of the following statements is (are) true with respect to the differences between insurance and surety bonds? I. Insurance is a two-party contract II. Insurers usually do not have the right to recover a loss payment from an insured, while a surety does have the legal right to recoup a loss payment. A) I only B) II only C) both I and II D) neither I nor II

insurance that covers loss of or damage to property shipped primarily by water or, if in foreign trade, by air

cargo insurance

how does the collision liability clause affect the coverage provided by a hull policy

collision liability coverage is a separate amount of insurance covering the insured's liability for collision damage to other vessels and their cargoes. Liability for bodily injury from the collision is not covered. Defense costs are covered in addition to the limit of collision liability insurance

Which one of the following insuring agreements of the ISO equipment breakdown protection coverage form covers business income and extra expense loss due to equipment breakdown occurring at a location, shown in the declarations, that the insured doesn't own or operate

contingent business income and extra expense

a policy that covers mobile equipment or tools while located anywhere in the coverage territory

contractors equipment floater

A general exclusion of the ISO commercial crime coverage form that applies to acts of employees. However, an exception is made for

coverage provided by the employee theft insuring agreement

what coverage is provided by the filed jewelry block coverage form

covers damage to the insured's stock of jewelry, precious and semiprecious stones, watches, precious metals, and similar merchandise, along with other stock used in a retail jeweler's business, including similar property of others in the insured's care, custody, or control

describe the coverage that is provided under the computer and funds transfer fraud insuring agreement

covers loss resulting directly from fraudulent entry of electronic data or computer program into, or change of electronic data or computer program within, a computer system owned, leased, or operated by the named insured. The second part of the insuring agreement covers loss resulting directly from a fraudulent instruction directing a financial institution to debit the named insured's transfer account and transfer, pay, or deliver money or securities from that account

What exclusion applies only to the employee theft insuring agreement

inventory shortages

Many businesses need equipment breakdown insurance because..

it covers loss due to the accidental breakdown of almost any type of equipment that operates under pressure or that controls, transmits, or uses mechanical or electrical power.

explain inland marine underwriters' use of judgment rating

judgment rating is used by underwriters to rate one of a kind risks. Judgment risks requires a thorough knowledge of the class of business for which coverage is being written. An inland marine underwriter might have to draw on expertise in any of several specialized fields- fine arts, heavy equipment, construction, or communications- to determine an adequate rate for the unique risks that are eligible for coverage

insurance that, in the US, includes both ocean and inland marine coverage and, in the rest of the world, is limited to insurance for vessels and cargo

marine insurance

In the early 1900s, the inventories of jewelry stores, property while in the course of inland transit, tourists' baggage, and even bridges were typical inland properties insured by which one of the following types of insurer?

marine insurers

identify the types of losses that are paid under the commercial crime coverage form's forgery or alteration insuring agreement

pays losses of the insured or its representatives resulting from forgery or alteration of checks and similar instruments; it does not pay losses resulting from the insured's knowing acceptance of instruments that has been forged or altered by others

insurance that covers shipowners against various liability claims due to operating the insured vessel

protection and indemnity insurance (P&I)

One of the specified causes of loss in a ocean marine hull insurance policy is "barratry" What does that mean?

serious misconduct by the vessel's master or crew that is contrary to the owner's interest, such as a fraudulent or criminal act that caused damage to the vessel

under the conditions of the ISO commercial crime coverage form, what is a duty of the insured after discovering a loss or a situation that might result in a loss?

submit a detailed, sworn proof of loss within 120 days

Rating methods for the filed ISO commercial inland marine forms are based on procedures established by who?

the ISO commercial lines manual

what gaps in the commercial property causes of loss forms is filled by equipment breakdown insurance

the commercial property causes of loss forms exclude electrical breakdown, mechanical breakdown, and steam boiler explosion. Equipment breakdown insurance fills these gaps by covering physical damage to covered equipment and other property of the insured that results from the accidental breakdown of covered equipment

What is the primary reason that loss prevention is a key goal for both the equipment breakdown insurer and the insured?

the potentially catastrophic effects of equipment breakdown

identify the type of non filed inland marine insurance policy that would provide coverage for each of the following: - a computer services company owns several computers that it uses to develop software packages for local businesses

the computer service company would be covered by an electronic data processing equipment floater

identify the type of non filed inland marine insurance policy that would provide coverage for each of the following: - a construction company owns several pieces of mobile equipment that remain at a construction site until the construction project is completed

the construction company's owned mobile equipment at a construction site would be covered by a contractors equipment floater

identify a filed inland marine coverage for that would be appropriate for each of the follow: - a medical doctor who treats homebound patients needs a policy to cover he contents of her medical bag

the contents of the doctor's medical bad would be covered by the physicians and surgeons equipment coverage form

what types of equipment malfunctions that cause direct physical damage to covered equipment are included in the form definition of "breakdown"

the form definition of "breakdown" includes malfunctions such as failure of pressure or vacuum equipment; mechanical failure, including rupturing or bursting caused by centrifugal force, and electrical failure, including arcing

Many states and municipalities require that boilers and other pressure vessels be inspected by a qualified inspector. Who is usually licensed to perform these inspections, which are often referred to as "jurisdictional inspections"?

the inspectors working for equipment breakdown insurers

identify a filed inland marine coverage for that would be appropriate for each of the follow: - a professional photographer needs coverage for his cameras and other equipment

the professional photographers cameras and equipment would be covered by the commercial articles coverage form

identify a filed inland marine coverage for that would be appropriate for each of the follow: - a store owner wants to insure his business records because he is concerned that damage to these records will make him unable to collect outstanding debts

the store owner's business record would be covered by the accounts receivable coverage form

explain how each of these clauses affect the coverage provided in a cargo policy - sue and labor clause

the sue and labor clause covers the cost of reasonable measures that the insured is required to take to protect property from damage at the time of a loss

why do businesses need the coverage provided under the signs coverage form

used by many businesses because commercial property forms severely limit coverage for signs

30) The owners of Uncle Reggie's Steakhouse are insured under a Building and Personal Property Coverage Form (BPP) that covers their building and business personal property for $350,000 and $100,000 respectively. The policy has a $2,500 deductible. A fire results in $350,000 worth of damage to the building and a $70,000 loss of business personal property. In what amounts should the policy provide coverage for this loss?

$$347,500 Building and $70,000 Property

23) An insured keeps his truck in a garage. A deer gets trapped in the garage and, in an attempt to escape, climbs on top of the truck, breaking the windshield and causing several dents in the hood. The insured's business auto policy provides physical damage coverage for specified causes of loss with a $100 deductible and collision with a $250 deductible. It will cost the insured $750 to replace the broken windshield and $1200 to repair the dents. How much, if anything, will the business auto insurer pay for this loss?

ABC, Inc., is a large, national retailer that sells a variety of consumer goods. ABC carries a Commercial Package Policy that includes Insurance Services Office's Commercial Crime Coverage Form (Loss Sustained) with the following insuring agreements: Employee Theft; Forgery or Alteration; Inside the Premises—Theft of Money and Securities; and Inside the Premises—Robbery or Safe Burglary of Other Property. The limit of insurance for each one of these insuring agreements is $100,000 and the deductible per occurrence for each one of these insuring agreements is $1,000. The policy year is 20X1.During 20X1, ABC performed an inventory calculation and determined that the actual physical inventory on hand was $102,000 less than what the company's records indicated. ABC could not establish that it had sustained a loss without the inventory calculation. How much of this loss will be covered by the Employee Theft insuring agreement of the Commercial Crime Coverage part?

$0 The Employee Theft insuring agreement does not provide coverage for inventory shortages when the insured can only establish a loss by means of an inventory calculation. If the insured can establish it has sustained a loss by means other than an inventory calculation, the Commercial Crime Coverage form allows the insured to offer inventory records and actual physical count of inventory in support of the amount of loss claimed.

ABC, Inc., is a large, national retailer that sells a variety of consumer goods. ABC carries a Commercial Package Policy that includes Insurance Services Office's Commercial Crime Coverage Form (Loss Sustained) with the following insuring agreements: Employee Theft; Forgery or Alteration; Inside the Premises—Theft of Money and Securities; and Inside the Premises—Robbery or Safe Burglary of Other Property. The limit of insurance for each one of these insuring agreements is $100,000 and the deductible per occurrence for each one of these insuring agreements is $1,000. The policy year is 20X1.During 20x1, ABC performed an inventory calculation and determined that the actual physical inventory on hand was $105,000 less than what the company's records indicated. ABC was able to prove that the loss was a result of employee theft and it was covered under the Employee Theft insuring agreement of ABC's Commercial Crime Coverage Form. How much will the insurer pay for this loss?

$100,000 The loss amounts to $105,000 which exceeds the $100,000 limit of insurance for employee theft. The insurer will pay the amount of the loss in excess of the deductible up to the limit of insurance ($105,000 -$1,000 = $104,000). The limit of insurance in this case is $100,000 (The deductible comes off the amount of loss, not the limit).

ABC, Inc., is a large, national retailer that sells a variety of consumer goods. ABC carries a Commercial Package Policy that includes Insurance Services Office's Commercial Crime Coverage Form (Loss Sustained) with the following insuring agreements: Employee Theft; Forgery or Alteration; Inside the Premises—Theft of Money and Securities; and Inside the Premises—Robbery or Safe Burglary of Other Property. The limit of insurance for each one of these insuring agreements is $100,000 and the deductible per occurrence for each one of these insuring agreements is $1,000. The policy year is 20X1.During 20X1, two employees, Beth and Jim, in collusion, stole money and merchandise from ABC. Beth and Jim stole money on May 1, 20X1 and August 13, 20X1. They also stole merchandise on January 15, 20X1 and September 29, 20X1. The amount of the money loss totaled $15,000 while the amount of the merchandise loss totaled $110,000.With respect to applying the limit of insurance applicable to the employee theft loss, how much will the insurer pay for the employee theft loss?

$100,000 The total amount of the employee theft loss is $124,000 ($110,000 merchandise + $15,000 money less $1,000 deductible). The limit of insurance is $100,000 which is the most the insurer will pay. The $1,000 deductible comes off the amount of the loss, not the limit.

58) The insured is a sole proprietor who owns a business auto insured by a Business Auto Coverage Form with a personal injury protection (PIP) endorsement. While driving the car, she was in an accident in which the following losses were incurred: - $2,000 housekeeper for one month - $3,000 physical therapy and rehabilitation - $4,000 damage to the covered auto - $10,000 hospital bills - $20,000 pain and suffering Assuming adequate limits and that no other insurance policies apply, how much can she recover pursuant to the PIP endorsement?

$15,000

6) Smith Electricians has a Commercial General Liability (CGL) Coverage Form with the following limits: - $500,000 general aggregate - $500,000 products-completed operations aggregate - $250,000 personal and advertising injury - $250,000 each occurrence - $100,000 damage to premises rented to you - $10,000 medical expense While installing new wiring at a building under construction, Smith Electricians accidentally starts a fire that causes $400,000 damage to the building, but not to the wiring it was installing. How much will Smith's CGL insurer pay?

$250,000

11) A provision included in a claims-made commercial general liability policy provides coverage for claims filed after the policy has expired. This provision is called a(n) A) extended reporting period provision. B) agreed amount endorsement. C) retroactive date provision. D) per-occurrence limit clause.

11) Which of the following statements about the assignment of a life insurance policy is true? A) The insurer must be notified of any assignment or the death proceeds will be paid to the named beneficiary. B) Under an absolute assignment, the only right transferred to a new owner is the right to change the beneficiary designation. C) As long as a collateral assignment exists, a creditor will receive the entire death benefit even if the loan has been repaid. D) Assignment may be made only with the permission of the insurer and the beneficiary.

14) An employee of Nelson Manufacturing was injured by a defective machine Nelson purchased from Clark Corporation. The employee's tort action against Clark was successful. Clark, in turn, sued Nelson, alleging that Nelson failed to provide proper operating instructions to the employee. This claim (Clark vs. Nelson) is covered under Part Two of Nelson's worker compensation and employer liability policy. Such claims are called A) third-party over cases. B) absolute liability cases. C) joint and several liability cases. D) mass tort cases.

21) A bond that guarantees that the person responsible for the property of another will faithfully exercise his or her duties is called a A) fiduciary bond. B) performance bond. C) court bond. D) contract bond.

31) Jerry built a home in a flood plain. He did not purchase flood insurance. Recently, a noted meteorologist predicted torrential rains for the area for the next 7 days. Jerry attempted to purchase flood insurance through the National Flood Insurance Program. Which flood insurance provision is likely to block Jerry's efforts to obtain coverage for protection against the predicted torrential rain? A) waiting period B) definition of covered flood C) deductible D) insurance limit

34) David Florrell started a public accounting firm. David is concerned that accountants on his staff may give incorrect accounting advice, and the accounting firm may be sued. What type of liability insurance should David purchase to protect against such claims? A) errors and omissions insurance B) directors and officers liability insurance C) general liability insurance D) employers liability insurance

39) The exterior walls, the roof, and the plumbing, heating and air conditioning systems of a residential condominium can be insured through the purchase of which of the following forms? I. Condominium association coverage form II. Condominium commercial unit-owners coverage form A) I only B) II only C) both I and II D) neither I nor II

42) Tim purchased a 10-payment whole life insurance policy 15 years ago. Tim would like to donate this paid-up policy to a charity. Under which policy provision can Tim transfer all ownership rights in the policy to the charity? A) absolute assignment B) extended term nonforfeiture option C) reinstatement D) collateral assignment

6) Which of the following statements about the needs approach for estimating the amount of life insurance to purchase is (are) true? I. It involves an analysis of various family needs which must be met if a family breadwinner dies. II. Its use is appropriate only if a person currently has no life insurance protection. A) I only B) II only C) both I and II D) neither I nor II

9) A contingent beneficiary in a life insurance policy has the right to A) receive the policy proceeds if the primary beneficiary dies before the insured. B) share the policy proceeds with the primary beneficiary. C) change the beneficiary designation under specified circumstances. D) exercise policy rights if the insured is incapacitated.

9) The head teller of a bank embezzled $50,000 from the bank. Which insuring agreement in a financial institution bond is designed to cover such losses? A) Insuring Agreement A-Fidelity B) Insuring Agreement B-On Premises C) Insuring Agreement C-In Transit D) Insuring Agreement D-Forgery or Alteration

1) In the ISO Commercial Crime Coverage form, theft is defined as the A) unlawful taking of property to the deprivation of the insured. B) unlawful taking of property from the care and custody of a person by someone who has caused or threatens to cause bodily harm or who has committed an unlawful act witnessed by that person. C) unlawful taking of money or securities through the alteration of a negotiable instrument. D) unlawful taking of property from inside the premises by someone who unlawfully enters or leaves the premises as evidenced by marks of forcible entry or exit.

1) The phrase "general liability" is used to refer to the legal liability of a business arising from all of the following EXCEPT A) employees injured on the job. B) defective products. C) liability assumed by contract. D) completed operations.

1) Which of the following is included in the common declarations page of a commercial package policy? I. A description of the insured property. II. A listing of the causes-of-loss that are covered by the policy. A) I only B) the policy period. C) the premium paid. D) the policy cancellation provisions.

10) Which of the following statements about the change of plan provision in a life insurance contract is (are) true? I. A change to a lower premium policy results in a refund of the difference in the cash values of the two policies. II. A change to a higher premium policy requires evidence of insurability. A) I only B) II only C) both I and II D) neither I nor II

12) When the capital retention approach is used to determine how much life insurance to purchase, all of the following are subtracted from total assets to calculate the capital available to produce income EXCEPT A) investments in stocks and bonds. B) non-income producing capital such as autos and the value of the home. C) the amount of money needed to payoff the mortgage. D) auto loans and credit card debt.

12) Which of the following statements about assignments of life insurance policies is (are) true? I. Under a collateral assignment, the policyowner assigns a life insurance policy to secure a loan. II. Under an absolute assignment, only limited ownership rights in a policy are transferred. A) I only B) II only C) both I and II D) neither I nor II

12) Which of the following statements about workers compensation insurance is (are) true? I. Under the workers compensation part of the policy, the insurer agrees to pay the benefits required by the workers compensation law of any state listed in the policy declarations. II. The employers liability part of the policy provides workers compensation benefits when employees are working in states other than those listed in the policy declarations. A) I only B) II only C) both I and II D) neither I nor II

14) All of the following statements about yacht insurance are true EXCEPT A) Property damage coverage includes damage from insects, weathering, and wear and tear. B) Liability coverage includes the cost of raising, removing, or destroying a sunken or wrecked yacht. C) Coverage can be added for maritime workers covered by the United States Longshoremen and Harbor Workers Compensation Act. D) Medical payments coverage pays for medical expenses because of accidental bodily injury.

15) Which of the following statements about the extra expense coverage form is (are) true? I. It provides coverage for the increased cost that must be paid to continue operations during a period of restoration. II. It provides coverage for lost business income if a key customer or key supplier experiences a loss. A) I only B) II only C) both I and II D) neither I nor II

17) The purpose of adding garagekeepers legal liability coverage to the Garage Coverage Form is to A) eliminate the care, custody, and control exclusion under the policy. B) eliminate the contractual liability exclusion under the policy. C) add workers compensation coverage for persons working in the garage business. D) add comprehensive and collision coverage for vehicles held for sale.

17) Which of the following forms is used to insure buildings that are under construction? A) builders risk coverage form B) floor plan coverage form C) new construction coverage form D) labor and materials coverage form

18) Which of the following statements about federal flood insurance is true? A) It is available even if property has been previously flooded. B) It is unavailable in high-risk flood areas. C) It is available only for residences, not for businesses. D) Waiting periods are not used in the federal flood insurance program.

19) All of the following statements about business income insurance are true EXCEPT A) Business income is defined as total sales that would have been made if the loss had not occurred. B) Payroll is considered a continuing normal operating expense. C) Business income insurance does not cover the physical damage caused by a peril which created the interruption in business. D) The business income coverage form can be purchased with a coinsurance requirement.

19) Bill is attempting to determine how much life insurance to purchase. He has two dependent children and his wife does not work outside of the home. An advisor suggested that Bill should consider Social Security benefits when doing his life insurance planning. One concern in this regard is the period after Social Security benefits to a widow terminate until they resume again. This period is called the A) blackout period. B) dependency period. C) emergency period. D) readjustment period.

19) The basic purpose of FAIR plans is to provide A) property insurance to persons who cannot obtain it in normal markets. B) automobile insurance to persons who cannot obtain it in normal markets. C) health insurance to persons who cannot afford it in normal markets. D) workers compensation insurance to employers who do business in several states.

19) Tracy is a trust officer at a bank. One of her responsibilities is to manage funds that have been set aside for the benefit of minor children. What type of bond guarantees that Tracy will faithfully execute her required duties in this capacity? A) fiduciary bond B) public official bond C) court bond D) performance bond

19) Which of the following statements is (are) true concerning the self-insured retention (SIR) under a commercial umbrella liability policy? I. The SIR applies to claims covered by the umbrella policy but not by any underlying insurance. II. The SIR only applies to those claims for which the underlying policy has paid first, and the umbrella policy is paying on an excess basis. A) I only B) II only C) Both I and II D) Neither I nor II

21) A dividend option that allows the policyowner to purchase 1-year term insurance is referred to as the A) fifth dividend option. B) policy loan dividend option. C) paid-up additions dividend option. D) family protection dividend option.

21) Reimbursement for spoilage of frozen food caused by failure of a refrigeration unit at a frozen foods processor can be covered under A) equipment breakdown insurance. B) extra expense insurance. C) builders risk insurance. D) inland marine insurance.

22) Appliance World sells small appliances. The store purchased an ISO crime coverage policy. Last night, someone used a crowbar to pry open a locked door, leaving marks of forced entry. The thief took a number of appliances. The loss that Appliance World suffered would be called A) burglary. B) shoplifting. C) larceny. D) robbery.

23) What happens to the premiums for yearly renewable term insurance as an insured gets older? A) They increase at an increasing rate. B) They increase at a decreasing rate. C) They decrease at a constant rate. D) They remain level.

24) All of the following statements about the interest settlement option are true EXCEPT A) The minimum guaranteed interest rate is usually equal to the prime rate. B) The interest can be paid monthly, quarterly, semiannually, or annually. C) The beneficiary may be allowed to withdraw part or all of the proceeds. D) The beneficiary may be allowed to change to another settlement option.

29) HRC Company purchased an unendorsed ISO Commercial General Liability (CGL) policy. All of the following claims would be covered under the CGL policy EXCEPT A) workers compensation liability. B) property damage liability. C) personal and advertising injury liability. D) bodily injury liability.

30) Carolyn is considering the purchase of a large (60-foot) boat. She called her insurance agent to see if she needs a separate policy for the boat. The agent said that a special category of insurance policies was designed to insure large watercrafts. These policies are called A) yacht insurance policies. B) flood insurance policies. C) floater policies. D) Dwelling Property 3 (special form) policies.

30) State X hired Build-Right Construction to build a bridge. State X required that construction be completed within 2 years after the contract was signed. Les Johnson is the president of Build-Right. State X required that Build-Right's promise to perform be guaranteed by a third party. Build-Right purchased a performance bond from Rock Solid Indemnity. The bond requires Rock Solid to be responsible if Build-Right does not have the project completed on time. In this scenario, which party is the obligee? A) State X B) Build-Right Construction C) Les Johnson D) Rock Solid Indemnity

30) Which of the following statements about life insurance cash values is (are) true? I. Cash values are a result of the level premium method of purchasing life insurance. II. The cash value of a policy must always exceed the policy's legal reserve. A) I only B) II only C) both I and II D) neither I nor II

33) Which of the following statements about endowment insurance policies is (are) true? I. The face amount is paid if the insured dies during the policy period or at the end of the policy period if the insured is still alive. II. The use of endowment insurance has increased in recent years because of its favorable tax treatment. A) I only B) II only C) both I and II D) neither I nor II

34) Insurer A began to provide crime insurance coverage for JKL Company three months ago. Insurer B provided coverage up until the time Insurer A's coverage became effective. Forty-five days after the effective date of Insurer A's coverage, a loss was discovered that occurred while Insurer B was providing coverage. The loss would have been covered under Insurer A's policy had it been in effect the previous period. Which policy provision in the current Insurer A policy would make Insurer A responsible for this loss? A) loss sustained during prior insurance not issued by us B) termination as to any employee C) extended reporting period D) loss sustained form

35) Which of the following statements about accelerated death benefits riders is (are) true? I. Under a terminal illness rider, after a partial payment is made to the insured, there is a reduction in the face amount of insurance, cash value, and premiums. II. Benefits under a long-term care rider are for home health care only. A) I only B) II only C) both I and II D) neither I nor II

36) Inter-Ocean Transfer owns 12 large cargo ships which transport goods. Inter-Ocean Transfer can obtain physical damage insurance on these vessels by purchasing A) hull insurance. B) cargo insurance. C) protection and indemnity insurance. D) freight insurance.

37) All of the following are ISO personal umbrella liability policy exclusions EXCEPT A) liability arising out of uncompensated board service for a nonprofit organization. B) liability arising out of expected or intentional injury. C) liability arising out of business operations. D) liability arising out of operation of watercraft not covered by an underlying policy.

37) All of the following statements describe the flexibility available to the owner of a universal life insurance policy EXCEPT A) Policy loans are permitted on an interest-free basis. B) The frequency of premium payments can be varied. C) The death benefit can be increased with evidence of insurability. D) Premium payments can be any amount provided there is sufficient cash value to keep the policy in force.

37) Which of the following statements concerning directors and officers liability insurance (D&O) is true? I. D&O policies usually cover the personal liability of directors and officers. II. D&O policies exclude coverage for claims brought by employees and by stockholders. A) I only B) II only C) both I and II D) neither I nor II

39) All of the following statements about current assumption whole life insurance are true EXCEPT A) It is a form of participating whole life insurance that pays annual dividends. B) An accumulation account is credited with an interest rate based on present market conditions and company experience. C) Under the low-premium version, the premium is subject to change after an initial guaranteed period. D) Under the high-premium version, the premium may vanish after a period of time.

39) Bruce lied about his health history when he purchased a life insurance policy. He died 3 years after the policy was issued. Which life insurance policy provision will require the life insurer to pay the beneficiary even though Bruce lied on the application? A) incontestable clause B) entire contract clause C) ownership clause D) change-of-plan provision

4) Which of the following statements about the building and personal property coverage form is (are) true? I. A limited amount of coverage is provided for pollutant cleanup and removal at the described premises if the release or discharge of the pollutant results from a covered cause of loss. II. Fire department service charges are specifically excluded because they are a normal cost of doing business. A) I only B) II only C) both I and II D) neither I nor II

40) Which of the following statements about an indeterminate-premium whole life insurance policy is (are) true? I. It permits the insurer to adjust premiums based on anticipated future experience. II. It allows policyholder dividends to be used to lower premiums. A) I only B) II only C) both I and II D) neither I nor II

51) Dave purchased a life insurance policy. The policy is nonparticipating and the cash values are based on the insurer's present mortality, investment, and expense experience. After 2 years, the insurer will recalculate the premium based on the mortality, investment, and expense experience at that time. Dave purchased A) current assumption whole life. B) variable life insurance. C) universal life insurance. D) variable universal life insurance.

54) Which statement is true concerning the economic problem of premature death in the United States? I. The economic impact of premature death of the breadwinner varies for different types of families. II. Increased life expectancy has increased the economic problem of premature death over time. A) I only B) II only C) both I and II D) neither I nor II

9) In addition to the named insured, all of the following are insureds under the Commercial General Liability Policy EXCEPT A) suppliers of products to the named insured's business. B) the insured's employees while acting within the scope of their employment. C) the manager of the insured's real estate. D) partners of the named insured.

The insuring agreement often contains policy provisions regarding the a. Covered causes of loss. b. Conditions of coverage. c. Covered policy period. d. Duties of the insurer and insured.

An endorsement that covers the fluctuating values of business personal property by providing differing amounts of insurance for certain time periods during the policy period is referred to as a(n) Choose one answer. A. Peak Season Limit of Insurance endorsement. B. Value Reporting Form. C. Fluctuating Personal Property Valuation endorsement. D. Adjustable Limit of Insurance endorsement.

A B Incorrect. A Peak Season Limit of Insurance endorsement covers the fluctuating values of business personal property by providing differing amounts of insurance for certain time periods during the policy period.

Harry has a Personal Auto Policy (PAP) with liability limits of 100/$300/$50 and medical payments limits of $5,000 insuring his SUV. Harry also has other than collision and collision coverages with deductibles of $250 and $500, respectively. The local taxicab drivers are on strike and Harry decides to capitalize on the situation by transporting persons in his SUV for a fee. While transporting a businessman, Harry loses control of his SUV and hits a parked car. The damages are as follows: •Harry's medical costs $2,000 •The businessman's medical costs $1,000 •Damage to the parked car $14,000 •Damage to Harry's car $12,000 How much, if any, will Harry's PAP insurer pay for damages under Part A—Liability Coverage? Choose one answer. A. $0 B. $14,000 C. $17,000 D. $29,000

A B Incorrect. Harry's PAP insurer will pay $0 since this loss is excluded under the public or livery conveyance exclusion. Don't understand. SUV is Private Passenger Auto.. It is public conveyance because Harry charge a fee.

The most accurate definition of a rate is Choose one answer. A. The price per exposure unit for insurance coverage. B. An estimate of the expected value of future costs of an insurance coverage. C. The total of all actual costs of a risk transfer. D. A charge for insurance which is not inadequate, excessive, and unfairly discriminatory.

A B Incorrect. The most accurate definition of a rate is the price per exposure unit for insurance coverage.

Inchmaree clause

A clause that adds coverage to an ocean marine cargo policy for loss resulting from bursting of boilers, breakage of shafts, latent defects in the vessel, or faults or errors in the navigation or management of the vessel

Which one of the following is correct with respect to the Transfer of Rights of Recovery Against Others to Us condition of the Commercial Property Conditions Form? Choose one answer. A. Waiver of recovery against any other party may be given by the insured, provided the waiver is made in writing before the loss occurs. B. Waiver of recovery against any other party may be given by the insured before or after the loss, provided the waiver is made in writing. C. Any waiver given by the insured, either before or after the loss, impairs the insured's right to collect from the insurer for the loss. D. The insured is prohibited from waiving recovery against any other party.

A B Incorrect. Waiver of recovery against any other party may be given by the insured, provided the waiver is made in writing before the loss occurs.

People who do not regularly own an auto or who occasionally drive another person's vehicle or a rental vehicle can secure coverage for the loss exposures arising out of their use of nonowned auto by purchasing a Personal Auto Policy (PAP) with the Choose one answer. A. Named Non-Owner Coverage endorsement. B. Extended Non-Owned Coverage—Vehicles Furnished or Available for Regular Use endorsement. C. Miscellaneous Type Vehicle endorsement. D. Auto Loan/Lease Coverage endorsement.

A B. Incorrect. People who do not regularly own an auto or who occasionally drive another person's vehicle or a rental vehicle can secure coverage for the loss exposures arising out of their use of nonowned auto by purchasing a Personal Auto Policy (PAP) with the named Non-Owner Coverage endorsement.

Amy used the valet parking services at her local mall. Her car was damaged while in the custody of the valet service. Amy had a Personal Auto Policy (PAP) which provided physical damage coverage for the cause of loss. The No Benefit to Bailee provision in the policy Choose one answer. A. Preserves the right of Amy's insurer to recover from the valet service any amount it pays to Amy if the valet service was negligent. B. Provides that Amy's insurance is excess over the valet service's insurance. C. Allows the insurer to withhold payment to Amy until it is determined who was negligent. D. Allows Amy's insurer to pay only its proportionate share of the loss once negligence has been established.

A B. Incorrect. The No Benefit to Bailee provision in the policy preserves the right of Amy's insurer to recover from the valet service any amount it pays to Amy if the valet service was negligent.

The human resources vice president of LZ Corporation (LZ) informed Barbara, a new employee, that she must wait sixty days to enroll in the company health insurance plan. The advice was incorrect, and Barbara was unable to obtain employer-sponsored health insurance until the next open enrollment period nine months later. Barbara sues LZ for the extra cost to purchase private health insurance for the nine-month period. Which one of the following types of insurance would cover LZ for this claim? Choose one answer. A. Employee benefits liability B. Employers liability C. Employment practices liability D. Employee indemnification liability

A C Incorrect. LZ needs employee benefits liability insurance.

Which one of the following describes a difference between battery and assault? Choose one answer. A. Physical contact is required for battery but it is not required for assault. B. Fear of bodily harm is required for battery but not assault. C. The person needs to be conscious with battery but not with assault. D. Battery is an intentional tort and assault is not.

A C Incorrect. Physical contact is required for battery but it is not required for assault.

Which one of the following statements is true regarding "aircraft liability" coverage under the HO-3—Special Form (HO-3)? Choose one answer. A. The homeowners policy excludes all aircraft liability. B. Model airplanes that do not carry people or cargo are considered to be "aircraft" in the HO-3 policy. C. Hobby aircraft that do not carry people or cargo are considered to be "aircraft" in the HO-3 policy. D. If the insured flies her radio-controlled model airplane through a neighbor's picture window, the resulting liability claim would not be covered.

A D Incorrect. The homeowners policy excludes all aircraft liability. Model airplanes or hobby aircraft that do not carry people or cargo are excluded in the policy's aircraft definition, however, and therefore are covered.

An uninsured motor vehicle under the Personal Auto Policy (PAP) can mean a land motor vehicle or trailer of any type that meets any of the following criteria, EXCEPT: Choose one answer. A. It is insured by an insurer incorporated in a state that is different from the state where the accident occurred. B. No bodily injury insurance or bond applies to it at the time of an accident. C. It is a hit-and-run vehicle whose operator cannot be identified and it hits the named insured's covered auto. D. A bodily injury liability policy applies to it at the time of an accident but the insurance company becomes insolvent.

A D. Incorrect. All of the answer choices contain appropriate criteria, except that the state where its carrier is incorporated is not a criterion.

One of the effects of the Personal Injury Coverage endorsement on an HO-3—Special Form (HO-3) is to Choose one answer. A. Add the definition of personal injury. B. Add definitions for bodily injury and property damage. C. Add liability coverage for medical payments. D. Add liability coverage for bodily injury.

A D Incorrect. The endorsement expands the liability coverage by adding the definition of personal injury and then adding coverage for personal injury.

ISO and NCCI have developed endorsements to help insurers comply with the provisions of the Terrorism Risk Insurance Act (TRIA). Which one of the following statements about workers compensation endorsements created to implement TRIA is most accurate? Choose one answer. A. Unlike the disclosure endorsements developed by ISO for other lines of business, the NCCI disclosure endorsement includes acts of war among the losses that would be covered by workers compensation insurance under TRIA. B. Although workers compensation is one of the lines covered by TRIA, the catastrophic nature of workers compensation losses are such that insurers are allowed to exclude or limit workers compensation insurance coverage for terrorist acts as long as they disclose that in a policy endorsement. C. The purpose of the workers compensation self-insurance awareness certification endorsement developed by the NCCI is to allow policyholders to voluntarily self-insure the first $100,000 of covered workers compensation claims under TRIA for a reduced premium. D. Because workers compensation is a mandatory coverage governed by the individual state laws, the TRIA coverage for workers compensation insurance differs by state, so the NCCI disclosure endorsement is used to identify the applicable limits on a state-by-state basis.

A 12.36 C Incorrect. Unlike the disclosure endorsements developed by ISO for other lines of business, the NCCI disclosure endorsement includes acts of war among the losses that would be covered by workers compensation insurance under TRIA.

Delay clause

A clause that excludes coverage for loss caused by delay, such as loss of market spoilage and business interruption

The each occurrence limit in the Commercial General Liability (CGL) Coverage Form is the most the insurer will pay for the sum of which one of the following arising out of a single occurrence? Choose one answer. A. Bodily injury and property damage liability under Coverage A and medical expenses under Coverage C B. Personal and advertising injury and damage to premises rented to you C. Bodily injury and property damage liability under Coverage A and personal and advertising injury D. Products-completed operations liability and medical expenses under Coverage C

A Correct. The limit applies only to Coverages A and C.

Under which one of the following types of insurance policies are the insurer's payments for defense costs and supplemental payments typically applied to reduce the policy limits? Choose one answer. A. Pollution liability B. Commercial auto C. Homeowners D. CGL

A Correct. Under D&O, pollution liability and other specialty insurance policies, the insurer's payments for defense costs and supplemental payments are typically applied to reduce the policy limits. For common policies: HO, PA and CA, Business owners and CGL, defense cost do not reduce the policy limits. But once the limit payout for a claim, the duty to defend and pay ends.

Which one of the following statements is correct with respect to the Valuation condition of the Building and Personal Property Coverage Form (BPP)? a. Subject to certain exceptions, insured property is valued at its actual cash value (ACV). b. The valuation condition cannot be modified. c. Stock sold but not delivered is valued at replacement cost. d. Improvements and betterments that are not replaced are covered for up to $2,500.

A Page 9.6 Improvement and betterments are part of your BPP (contents) Personal Property of Others is limited to 2500, but not your BPP.

Omega Holdings owns a building with an actual cash value of $200,000. The property is insured under a Building and Personal Property Coverage Form (BPP) with a building limit of $140,000, an 80 percent coinsurance clause, and a $1,000 deductible. The policy includes a Causes of Loss—Broad Form covering the building. The building suffers $80,000 in fire damage. Which one of the following amounts will Omega's insurer pay? Choose one answer. A. $69,000 B. $70,000 C. $79,000 D. $80,000

A is correct. Forgot about the deductible B Incorrect. The $80,000 loss is multiplied by the limit ($140,000) and divided by the amount the building should have been insured for ($200,000 X 80%), all minus the $1,000 deductible.

Pattern and die floater

A policy that covers the insured's patterns and dies while located at the premise of others and also while in transit to and from those premises

Processing floater

A policy that covers the insureds goods while being worked on a subcontractor's or processors premises and while in transit to and from those premises

Dealers policy

A policy that covers the inventory and other property or any of the types of dealers that qualify for inland marine coverage such as jewelers equipment dealers, fine arts dealers and furriers.

70) Which one of the following statements is true regarding the basis of premium for workers compensation insurance?

A premium auditor may examine the insured's records at the end of the policy period to determine the actual payroll.

Invoice value

A valuation basis that values covered property at its invoice value including freight

Brenda wrote a poem that she sent to her sister who sold the poem to a recording company. Learning of the sale, Brenda became upset. If Brenda has an insurable interest in the poem she wrote as a type of "property," the legal basis of her insurable interest arises out of Choose one answer. A. Ownership interest in property. B. Contractual obligations. C. Factual expectancy. D. Representation of another party.

A. C. Incorrect. Ownership interest in property.

Insurers charge an initial deposit premium on a policy when Choose one answer. A. The policy is formally agreed to before all contract details have been finalized. B. The policy is not subject to adjustment. C. An estimate of the ultimate premium is readily available. D. The policy is endorsed mid-term.

Management accounting frameworks are usually based on modified versions of generally accepted accounting principles and Choose one answer. A. Regulatory accounting rules. B. Tax accounting rules. C. Statutory accounting rules. D. Going-concern accounting rules

A. C is Incorrect. Management accounting frameworks are usually based on modified versions of generally accepted accounting principles and regulatory accounting rules.

To meet the needs of firms with foreign loss exposures, some insurers offer a variety of specialized coverages, including all of the following, EXCEPT: Choose one answer. A. Foreign pollution liability B. Foreign property and business income C. Foreign crime D. Foreign supplemental and excess auto

A. D Incorrect. To meet the needs of firms with foreign loss exposures, some insurers offer a variety of specialized coverages, including all that are listed, EXCEPT foreign pollution liability.

Under which one of the following provisions of the Building and Personal Property Coverage Form (BPP) is the maximum payment $10,000 or five percent of the building limit, whichever is less? Choose one answer. A. Increased Cost of Construction additional coverage B. Debris Removal additional coverage C. Outdoor Property coverage extension D. Pollutant Cleanup and Removal additional coverage

A. D. Incorrect. The maximum payment under the Increased Cost of Construction additional coverage is $10,000 or five percent of the building limit, whichever is less.

With respect to a vehicle used as a temporary substitute for the insured's covered auto, medical payments coverage under a Personal Auto Policy (PAP) Choose one answer. A. Is excess over other collectible auto insurance that pays medical expenses. B. Is primary for medical and funeral expenses. C. Is shared on a pro rata basis. D. Are specifically excluded from coverage.

A. B. Incorrect. With respect to a nonowned vehicle or a vehicle while used as a temporary substitute for the insured's covered auto, medical payments coverage under a PAP is excess over any other collectible auto insurance that pays medical or funeral expenses.

Len purchased a lawn roller and once he put it together and filled it with water he learned that the water leaked out during use. The gasket was not a proper fit and the store or manufacturer would not refund his purchase price or attempt to resolve the issue. Len's best basis for a lawsuit is which one of the following? Choose one answer. A. Implied warranty of merchantability B. Negligence C. Failure to warn D. False advertising

A. B Incorrect. Implied warranty of merchantability is a better basis for a products liability lawsuit than is negligence, failure to warn or false advertising.

Neil owns a 50-acre farm with a creek running through it. Neil decided to dam the creek to irrigate from it which resulted in downstream wells drying up. When a neighbor sued Neil the court found that Neil had committed a wrongful reckless act with a motive to harm showing a disregard for social obligation. Neil's actions are best described as Choose one answer. A. Outrageous conduct. B. Gross and wanton negligence. C. Fraudulent actions. D. Material misrepresentations.

A. B Incorrect. Neil did not misrepresent his action or attempt to deceive or defraud anyone. This is not an act of negligence but it is outrageous conduct on Neil's part.

Which one of the following is an exclusion unique to the Causes of Loss—Special Form? Choose one answer. A. Smog B. War C. Rupture or bursting of water pipes D. Mudslide or mudflow

A. B Incorrect. Smog is specifically excluded from the Causes of Loss—Special Form.

Sally insures her house with an unendorsed HO-3—Special Form (HO-3) with a Coverage A—Dwelling limit of $275,000, which is the replacement cost of the house. A fire destroys the house including a collection of blueprints belonging to Sally's employer, valued at $10,000. Sally was storing the blueprints at her home while her office was changing locations. Assuming no deductible applies, how much, if any, will Sally's HO-3 insurer pay to replace the blueprints? Choose one answer. A. $0 B. $1,500 C. $2,500 D. $10,000

A. B. Incorrect. Sally's insurer will pay nothing since business data are excluded.

Which one of the following best describes what is included in a loss payment under the Auto Loan/Lease Coverage endorsement to the Personal Auto Policy (PAP)? Choose one answer. A. The balance of the loan or lease amount for the vehicle B. Penalties imposed under a lease C. Balances transferred from previous loans or leases D. Overdue lease or loan payments

A. C Incorrect. The balance of the loan or lease amount for the vehicle.

Collision coverage under the Personal Auto Policy (PAP) Choose one answer. A. Applies to damage to a parked insured vehicle resulting from a passenger in another parked vehicle opening its door. B. Applies only to damage to a vehicle for which the owner of the vehicle is responsible. C. Applies to damage to a vehicle resulting from explosion or earthquake. D. Is less expensive than other than collision (OTC) coverage.

A. C. Incorrect. Collision coverage under the Personal Auto Policy (PAP) applies to damage to a parked insured vehicle resulting from a passenger in another parked vehicle opening its door.

In terms of general categories, remedies can be either equitable or Choose one answer. A. Legal. B. Commercial. C. Prospective. D. Supervisory.

A. C. Incorrect. Remedies can be either legal or equitable.

Which one of the following are examples of trade libel? Choose one answer. A. False statements denying the plaintiff's title to the property B. False statements regarding the plaintiff's advertising reputation C. False statements concerning the product's reputation D. False statements concerning the quantity of the plaintiff's packaging

A. CIncorrect. An example of trade libel or product disparagement includes false statements denying the plaintiff's title to property.

Fancy Dress Shop is a small specialty clothing boutique for women. Liability claims against Fancy Dress Shop would most likely arise from its Choose one answer. A. Premises and operations exposure. B. Workers compensation exposure. C. Advertising exposure. D. Products and completed operations exposure.

A. D Incorrect. Liability for Fancy Dress Shop would most likely arise from its premises and operations exposure.

Which one of the following statements is correct with regard to Loss Payment of the Building and Personal Property Coverage Form (BPP)? Choose one answer. A. The condition states that regardless of the value of the loss, the insurer will pay no more than the insured's financial interest in the covered property. B. Insurers preferred settlement option is to repair, rebuild, or replace the damaged property with other property of like kind and quality because it keeps loss settlement costs down. C. The Loss Payment condition states that the insurer will pay the cost of repairing or replacing the damaged property, including any increased cost attributable to enforcement of ordinances or laws regulating the construction, use, or repair of the property. D. The insurer has 90 days after receiving a satisfactory proof of loss to notify the insured of its intent to either pay a claim or deny payment.

A. D Incorrect. The time period is 30 days. Page 9.5

A disability income policy has a rider that increases the monthly benefit amount by 4 percent for each of the first five years the policy is in force, if benefits have not yet begun. This is an example of which one of the following types of riders? Choose one answer. A. Automatic increase B. Future increase option C. Guaranteed insurability D. Cost of living adjustment

A. D Incorrect. This is an example of an automatic increase rider. A cost of living adjustment rider increase benefit payments that are already being made.

Anthony, Bob, and Mary got into a violent argument and accidentally destroyed Anthony's valuable vase, worth $10,000. Anthony was 20 percent at fault, Bob was 10 percent at fault, and Mary was 70 percent at fault. They are not in a combined fault state. In a lawsuit where Anthony is the plaintiff and Bob and Mary are defendants, which one of the following statements is true? Choose one answer. A. Under the 49 percent rule, Mary would have to pay $8,000. B. Under the 50 percent rule, Bob and Mary would have to pay $4,000 each. C. Under the 50 percent rule, Bob and Mary would have to pay $10,000 total. D. Under the 49 percent rule, Mary would have to pay $7,000.

A. D Incorrect. Under the 49 percent rule, Mary would have to pay $8,000.

Jackie had been having trouble paying her bills and decided to get a second job as a taxi driver. She was involved in a collision with a van and her fare-paying passenger was injured. Jackie's car was insured with a Personal Auto Policy (PAP) that included medical payments coverage. Jackie's passenger Choose one answer. A. Will not receive medical payments under the PAP because of the Public or Livery Conveyance exclusion. B. Will receive medical payments under the PAP under the Public or Livery Conveyance coverage provision. C. Will not receive medical payments under the PAP because of the PAP's Omnibus clause. D. Will receive medical payments under the PAP as an innocent participant.

A. D's reason is incorrect. However, this is contradict to the case study example in the book. When the driver is driving her own car as Taxi, the passanger should be cover because the exclusions does not apply to private passenger auto.

Which one of the following best describes an accounting issue that arises for reinsurers from bordereaux? Choose one answer. A. Bordereaux frequently lack detail. B. Bordereaux are frequently not provided. C. Bordereaux are frequently inaccurate. D. Bordereaux frequently require input from multiple insurers.

A. D. Incorrect. Bordereaux frequently lack detail.

Customer Mary gave dry cleaner Ike her fur coat so he could remove a large stain. Ike could not eliminate the stain so he asked restoration specialist Peter to attempt to remove it. The bailor in this scenario is Choose one answer. A. Mary. B. Ike. C. Peter. D. Both Ike and Peter.

A. D. Incorrect. Mary. Bailor is the owner of the personal property in a bailment. Bailee is the party temporarily possessing the personal property in a bailment. But hotelier doesn't possess the personal property, so it is called exposure to legal liability.

One of the main factors used in developing a base premium for a homeowners policy is Choose one answer. A. The public protection class. B. The effect of endorsements on the premium. C. A change in the deductible from $500. D. The construction date.

A. Deductible changes is for base premium adjustment, not to determine base premium C. Incorrect. One of the main factors used in developing a base premium for a homeowners policy is the public protection class.

Which one of the following would be considered supplementary payments under liability insurance policies? Choose one answer. A. Cost of surety bonds B. Defense costs C. Claimant's compensable damages D. Judgments against the insured

A. Three types of supplementary payments: 1. cost of surety bonds 2. court costs taxed against the insured 3. interest on judgments C. Incorrect. Cost of surety bonds

38) Which of the following statements is (are) true with regard to an unendorsed ISO Dwelling Form? I. Each form provides $100,000 in personal liability coverage. II. The Dwelling 3 form provides broader property coverage than the Dwelling 1 form. A) I only B) II only C) both I and II D) neither I nor II

Which one of the following statements is true regarding the agreed value method of property valuation used in some property insurance policies? Choose one answer. A. If a total loss occurs, the insurer will pay the agreed value specified in the policy. B. The agreed value method is useful in establishing precise values because it uses a specific formula. C. The agreed value method stipulates what the agreed value has to be relative to the true value of the property. D. The agreed value method in property insurance policies illustrates the principle of indemnity

A. Correct. If a total loss occurs, the insurer will pay the agreed value specified in the policy. The agreed value method is not a specific formula; used when difficult to calculate a precise value; and does not stipulate what the agreed value has to be relative to the true value of the property.

Which one of the following statements is correct with respect to Property Not Covered under the Building and Personal Property Coverage Form (BPP) Choose one answer. A. Only contraband or property in the course of illegal transportation or trade is totally uninsurable by endorsement or in other policies. B. ISO manual rules prohibit removing the exclusion of many of the items specified under Property Not Covered. C. By endorsement, insurance can be made available for any of the items listed in the Property Not Covered section. D. Almost all of the items listed in the Property Not Covered section are considered to be uninsurable.

A. Correct. Only contraband or property in the course of illegal transportation or trade is totally uninsurable by endorsement or in other policies.

While Wanda was mowing her lawn the lawn mower made a popping noise and suddenly exploded. Engine parts flew through the air and struck Wanda's grandfather in the eye. As a result of losing his vision, Wanda's grandfather, Homer, sued the lawnmower manufacturer. Homer's best approach in the lawsuit is to assert Choose one answer. A. Strict liability as a nonuser. B. Intentional negligence in the manufacture of the lawnmower. C. Imputed negligence using the foreseeability rule. D. Breach of warranty by the manufacturer.

A. Defect is strict liability. D Incorrect. Strict liability as a nonuser.

Which one of the following situations illustrates a professional liability loss exposure? Choose one answer. A. An insurance producer fails to properly advise a client on his or her insurance needs. B. An attorney serves on the board of a not-for-profit organization. C. A physician fails to maintain adequate lighting in the office parking lot. D. A foreman fails to install safety nets in a building under construction.

A. Page D Incorrect. A professional liability loss exposure arises when an insurance producer fails to properly advise a client on his or her insurance needs.

Which one of these widely accepted tort reform measures is intended to speed up the resolution of cases? Choose one answer. A. Pretrial screening panels B. Caps on damages C. Joint-and-several liability D. Statute of limitations

A. Page 14.30 D Incorrect. Pretrial screening panels are intended to speed up the resolution of cases.

Josh owns an auto service center. A customer dropped off a car for repair one morning and Josh agreed to drive the customer to the customer's office. Josh used his personal car insured by a Personal Auto Policy (PAP) to do this. While driving the customer to work, Josh got into an auto accident with another car in which the customer and the other driver were injured. Would Josh's PAP apply to this loss? Choose one answer. A. Yes, under an exception to the garage business use exclusion. B. No, because the garage business use exclusion would apply. C. No, because the event does not qualify as an accident under the insuring agreement. D. Yes, under an exception to the other business use exclusion.

A. Page 4.19 B. Incorrect. Yes, under an exception to the garage business use exclusion. The exclusion does not apply to the insured's covered auto when it is being driven by the named insured; a family member; or any other partner, agent, or employee of the named insured or a family member.

Defense costs coverage is included under Section II—Liability Coverages in the HO-3—Special Form (HO-3). This coverage Choose one answer. A. Is supplemental to the liability limit. B. Is included in the personal liability limit. C. Is excluded if the suit against the insured is groundless. D. Has a liability limit separate from the personal liability limit.

A. Page 7.4 B Incorrect. This Coverage is supplemental to the liability limit. (The insurer provides the defense costs in addition to any coverage for damages.)

Which one of the following statements is correct with respect to the Preservation of Property additional coverage of the Building and Personal Property Coverage Form (BPP)? Choose one answer. A. It protects against "any direct physical loss or damage" and is not limited to either the covered causes of loss or locations stipulated in the coverage form. B. The protection provided under this additional coverage is over and above the limits of insurance stated in the declarations. C. It does not provide protection while the property is in transit to the new location. D. It extends the policy to protect covered property for up to 180 days at the new location.

A. Page 8.13 B Incorrect. It is subject to the limits of insurance specified in the declarations.

Under the Building and Personal Property Coverage Form (BPP), which one of the following extensions covers loss only by fire, lightning, explosion, riot or civil commotion, and aircraft? Choose one answer. A. Outdoor Property B. Newly Acquired or Constructed Property C. Personal Effects and Property of Others D. Property Off-Premises ID: 5829384 | Points: 1

A. Page 8.16 B Incorrect. The Outdoor Property extension covers only loss by fire, lightning, explosion, riot or civil commotion, and aircraft.

Which one of the following statements is correct with respect to the Value Reporting Form? Choose one answer. A. It requires the insured to periodically report property values to the insurer. B. It provides insurance for the insured's average expected values. C. If the insured does not report values accurately and on time, the insurer has no obligation to pay any loss that occurs. D. It is used to insure fluctuating values of both buildings and business personal property.

A. Page 9.20 D Incorrect. It is used only for business personal property (contents).

however, he would like "open perils" (all-risks) coverage on the dwelling. William should purchase a A) Homeowners 3 Policy. B) Dwelling Property 1 Form. C) Dwelling Property 2 Form. D) Dwelling Property 3 Form.

Dane has an unendorsed HO-3—Special Form (HO-3) to insure his single-family home. He started a small Internet business. Dane publicizes stamp and coin dealers and their inventories over the Internet and keeps the web site inventories and values current for his customers. As a storm passed over, lightning struck Dane's house. Dane's computer was damaged, destroying half the records of his customers' inventories. He estimates that it will cost $2,000 to reestablish his inventory records. Disregarding any deductible that may apply, what amount, if any, will Dane's insurer pay for these losses? Choose one answer. A. $0 B. $500 C. $1,000 D. $2,000

A. Page: 6.15. Properties not covered: Business Data. D. Incorrect. Dane's insurer would pay nothing.

With insurance-to-value provisions under homeowners (HO) and businessowners (BOP) policies, the amount payable by the insurer will never be less than the Choose one answer. A. Actual cash value (ACV) of the damaged property, subject to policy limits. B. Repair cost of damaged property, subject to policy limits. C. Policy limits less the deductible. D. Replacement cost of the damaged property, subject to policy limits.

A: 3.13 B. Incorrect. With insurance-to-value provisions under homeowners (HO) and businessowners (BOP) policies, the amount payable by the insurer will never be less than the actual cash value (ACV) of the damaged property, subject to policy limits.

68) The cost to replace property with new property of like kind and quality less depreciation is referred as the

Actual cash value.

If an insured fast food franchise cannot list all of its locations on the commercial property declarations page, which one of the following options would be most appropriate?

Add supplemental declarations on a separate page.

Common carriers

Airlines railroads or trucking companies that furnish transportation to any member of the public seeking their offered services

38) Which of the following statements about a variable universal life insurance policy is (are) true? I. There is a minimum guaranteed interest rate for the cash value. II. The policyowner has a variety of investment options for the investment of premiums. A) I only B) II only C) both I and II D) neither I nor II

15) Julian, age 45, would like to determine how much life insurance to purchase using the human life value approach. He assumes his average annual earnings over the next 20 years will be $40,000. Of this amount, $20,000 is available annually for the support of his family. Julian will generate this income for 20 more years and he believes that 5 percent is the appropriate interest (discount) rate. The present value of one dollar payable for 20 years at a discount rate of 5 percent is $12.46. What is Julian's human life value? A) $184,600 B) $249,200 C) $360,800 D) $400,000

18) Which of the following statements about the condominium commercial-unit owners coverage form is (are) true? I. It provides coverage for the unit owner's proportionate financial interest in the condominium building. II. It provides coverage for the business personal property of the unit owner. A) I only B) II only C) both I and II D) neither I nor II

22) All of the following are nonforfeiture options found in cash value life insurance policies EXCEPT A) cash value. B) reduction of premiums. C) reduced paid-up insurance. D) extended term insurance.

29) State X hired Build-Right Construction to build a bridge. State X required that construction be completed within 2 years after the contract was signed. Les Johnson is the president of Build-Right. State X required that Build-Right's promise to perform be guaranteed by a third party. Build-Right purchased a performance bond from Rock Solid Indemnity. The bond requires Rock Solid to be responsible if Build-Right does not have the project completed on time. In this scenario, which party is the principal? A) State X B) Build-Right Construction C) Les Johnson D) Rock Solid Indemnity

38) Cal purchased a whole life policy 6 years ago. The policy requires annual premium payments. Cal forgot to pay the premium that was due 2 weeks ago. He wonders if his life insurance is still in force. Which life insurance policy provision is designed to keep the policy in force for a short time even if the premium payment is late? A) waiting period B) grace period C) guaranteed purchase option D) reinstatement clause

41) A whole life insurance policy in which premiums are reduced for an initial period (e.g. 3 years) and are higher thereafter is an example of a A) level-term policy. B) modified life policy. C) limited-payment whole life policy. D) variable life policy.

45) Which of the following statements about industrial life insurance (also called home service life insurance) policies is true? A) Most policies have a face value exceeding $100,000. B) Most industrial life insurance policies are cash value coverage. C) Industrial life insurance is group term insurance coverage marketed to employers. D) This popular product accounts for over 40 percent of the life insurance sold today.

46) Malcolm would like to purchase life insurance. He is concerned that he might need additional life insurance in the future and that he might be uninsurable at that time. What provision can Malcolm add to his life insurance policy that will permit him to purchase additional life insurance at specified times in the future without providing evidence of insurability? A) double indemnity rider B) guaranteed purchase option C) waiver-of-premium provision D) accelerated death benefits rider

2) In the ISO Commercial Crime Coverage form, robbery is defined as the A) unlawful taking of property to the deprivation of the insured. B) unlawful taking of property from the case and custody of a person by someone who has caused or threatens to cause bodily harm or who has committed an unlawful act witnessed by that person. C) unlawful taking of money or securities through the alteration of a negotiable instrument. D) unlawful taking of property from inside the premises by someone who unlawfully enters or leaves the premises as evidenced by marks of forcible entry or exit.

2) Liability arising out of work performed by independent contractors is referred to as A) contractual liability. B) contingent liability. C) care, custody, and control liability. D) customer's liability.

2) Perils insured under Dwelling Property 1 (basic form) include which of the following? I. Earthquake II. Smoke A) I only B) II only C) both I and II D) neither I nor II

2) Which of the following items is (are) contained in the common policy conditions page of the commercial package policy? I. The policy period. II. A provision describing the insurer's right to audit the insured's books and records. A) I only B) II only C) both I and II D) neither I nor II

20) When using the needs approach, several "special needs" should be considered. One special need is money to cover unexpected events, such as major car repairs, dental bills, or home repairs. Money set aside for this purpose is called a(n) A) estate clearance fund. B) emergency fund. C) readjustment period fund. D) mortgage redemption fund.

20) Which of the following statements about the typical commercial umbrella policy is (are) true? I. The policy is designed to cover only those loss exposures specifically excluded by the underlying insurance contracts. II. The policy is excess over the required underlying coverages. A) I only B) II only C) both I and II D) neither I nor II

20) Which of the following statements concerning FAIR plans is (are) true? I. All property is eligible for coverage regardless of physical condition. II. Losses and expenses are shared by insurers who participate in a plan. A) I only B) II only C) both I and II D) neither I nor II

21) Jan purchased a boat owners package policy. While using his boat, he negligently hit a pier. A person standing on the pier fell and was severely injured. Which of the boat owners package policy coverages will respond to a lawsuit filed as a result of this negligent act? A) physical damage coverage B) liability coverage C) medical expense coverage D) uninsured boaters coverage

23) Which of the following statements describes a Difference in Conditions (DIC) Policy? A) It is a type of commercial umbrella liability policy. B) It is an all-risk policy that covers perils not insured by basic property insurance contracts. C) It is designed to cover indirect losses for which the insured has direct damage coverage. D) It is used to settle disputes when an insured has more than one insurance policy with differing policy provisions.

24) All of the following statements about a surety are true EXCEPT A) A surety theoretically expects no losses to occur. B) The principal is the party who agrees to answer for the debt, default, or obligation of another party. C) The surety has the legal right to recover a loss payment from the defaulting principal. D) There are three parties to a surety bond: the principal, the surety, and the obligee.

24) The personal umbrella policy covers personal injury. All of the following are considered personal injury EXCEPT A) invasion of privacy. B) property damage. C) defamation of character. D) slander.

24) Which of the following statements about ocean marine insurance coverages is (are) true? I. Hull insurance limits coverage to the breakdown of a ship's machinery and equipment. II. Protection and indemnity insurance provides liability insurance to the ship owner for bodily injury and property damage to third parties. A) I only B) II only C) both I and II D) neither I nor II

25) All of the following are implied warranties in ocean marine insurance EXCEPT A) seaworthiness. B) clear title. C) no deviation from planned course. D) legal purpose.

26) A cashier at Food World Supermarket accepted a phony $100 bill. Which ISO commercial crime coverage is designed to cover such a loss? A) Forgery or Alteration B) Money Orders and Counterfeit Paper Currency C) Inside the Premises-Theft of Money and Securities D) Inside the Premises-Robbery or Safe Burglary of Other Property

26) Which of the following statements about a decreasing term insurance policy is true? A) The face amount of the policy decreases during the policy period, and the premium increases. B) The face amount of the policy decreases during the policy period, but the premium remains level. C) The premium decreases during the policy period, but the face amount remains constant. D) Both the premium and the face amount of the policy decrease gradually over the policy period.

26) Which of the following statements about ocean marine insurance is true? A) The coverage is narrow and excludes perils of the sea. B) Hull insurance includes collision liability covering the ship's owner if the ship collides with another ship. C) Protection and indemnity (P&I) insurance covers the shipper of goods for cargo losses. D) A particular average loss is a loss incurred only if a ship is totally lost or destroyed.

27) Executives of a Fortune 500 firm blocked an acquisition attempt by a larger company. When the stockholders learned they could have made large profits had the acquisition not been blocked, they filed a lawsuit against the executives of the firm. What type of liability insurance protects the executives of the organization against such suits? A) dram shop liability insurance B) directors and officers liability insurance C) employers liability insurance D) employment related practices liability insurance

27) The purchase of term insurance is justified by which of the following circumstances? I. The insured wants to save money through the policy for a specific need. II. The insured has a temporary need for life insurance protection. A) I only B) II only C) both I and II D) neither I nor II

28) ABC Company purchased an ISO Commercial General Liability Policy. The agent who sold ABC the coverage noted that the coverage trigger in this policy was different from the trigger in the previous policy. The new policy covers only those claims which are first reported during the policy period, provided the event occurred after a retroactive date. This type of policy is known as A) extended reporting coverage. B) claims-made coverage. C) accident only coverage. D) occurrence coverage.

29) Martin would like to insure valuable personal property limited in coverage by his homeowners policy. Martin has two options. He can purchase the coverage through a separate personal articles floater policy or he can add an endorsement to his homeowners policy. The endorsement is called the A) extended coverage endorsement. B) scheduled personal property endorsement. C) personal injury endorsement. D) replacement cost endorsement.

33) Frank purchased a building in a run-down area of a city. When Frank was unable to obtain property insurance in the voluntary insurance market, an agent suggested that he contact a state pool created in the 1960s that makes property insurance available in riot-prone areas. The state pool the agent referred to is called a(n) A) unsatisfied judgment fund. B) FAIR plan. C) guaranty fund plan. D) assigned risk plan.

36) The practice of buying the life insurance policy of a terminally ill insured at a discount is referred to as a A) collateral assignment. B) viatical settlement. C) catastrophic illness conversion. D) grace period transaction.

36) Which of the following statements about universal life insurance is (are) true? I. The interest rate credited to the cash value at the time the policy is issued remains fixed for the life of the policy. II. A monthly deduction is made from the policy's cash value for the cost of insurance protection. A) I only B) II only C) both I and II D) neither I nor II

36) Which of the following statements is (are) true with respect to the treatment of legal defense costs under the ISO Commercial General Liability policy? I. Legal defense costs usually are counted against the policy limit. II. Once the insurer has paid out the applicable limit of liability, the insurer's duty to defend ends. A) I only B) II only C) both I and II D) neither I nor II

37) Al was named the beneficiary in his mother's life insurance policy. His mother died during the contestable period. The insurer denied payment, citing a material misrepresentation on the application. Al believes the insurer should pay the claim because the misrepresentation occurred on the application, and the application is not part of the formal agreement between the insurer and the policyholder. Which provision protects the insurer by making the application part of the formal agreement between the parties to the contract? A) incontestable clause B) entire contract clause C) ownership clause D) reinstatement clause

37) An Inter-Ocean Transfer cargo ship was forced to jettison some cargo in heavy seas. The various interests in the voyage at the time the property was jettisoned were: Value of Ship=$2.0 Million, Value of Lumber and Wood Chips=$1.0 Million, Value of Iron Ore=$2.0 Million. If $400,000 worth of iron ore was jettisoned, for how much of this amount would Inter-Ocean Transfer be responsible under general average? A) nothing B) $160,000 C) $200,000 D) $400,000

4) Amy purchased a life insurance policy with the intent of committing suicide to pay all the debts that were burdening her family. If she commits suicide 9 months after the policy is purchased, and the insurer is able to prove that her death was a suicide, how much will be paid by the insurance company? A) nothing, because the policy is void B) the premiums paid for the policy C) the policy's cash value D) the face value of the policy

4) To calculate a human life value, it is necessary to deduct certain costs from a person's average annual earnings. These costs include A) funeral costs. B) income taxes. C) investment income. D) pension benefits after retirement.

4) Which of the following statements is (are) true with regard to the ISO commercial crime coverage forms? I. The discovery version only covers losses which occur during the policy period. II. The loss-sustained version covers losses which occur during the policy period and the loss is discovered during the policy period or within one year after the policy expires. A) I only B) II only C) both I and II D) neither I nor II

40) A navigation error caused a cargo ship to run aground on a reef. The ship, valued at $1.5 million, was carrying $1.5 million in grain and $1.5 in electronic devices. The ship sustained $150,000 in physical damage. If this loss is a "particular average" loss, how will the loss be settled? A) the owners of each of the three interests are responsible for $50,000 B) the owner of the ship is responsible for the entire $150,000 loss C) the two cargo owners are each responsible for $75,000 of the loss D) the owner of the ship is responsible for the first $100,000 of the loss, and the two cargo owners are each responsible for $25,000 of the loss

41) Becky is considering the purchase of a whole life policy on her own life. She is concerned that if she becomes disabled, paying premiums will become a burden. Which provision can Becky attach to her life insurance policy to address this concern? A) guaranteed purchase option B) waiver-of-premium provision C) accidental death benefit rider D) accelerated death benefits rider

43) Which of the following statements about second-to-die life insurance is (are) true? I. The insurance is a form of endowment coverage. II. The premium is lower than the combined cost of purchasing a life insurance policy on each insured. A) I only B) II only C) both I and II D) neither I nor II

44) Lionel purchased a $200,000 ordinary life insurance policy when he was 25 years old and had significant life insurance needs. Now Lionel is 50. His mortgage is almost paid-off and his children have left home and are financially independent. Lionel no longer wants to pay premiums, but he would like to have some permanent life insurance in force. Which nonforfeiture option could Lionel employ to meet these objectives? A) cash value B) reduced paid-up insurance C) paid-up additions D) extended term insurance

46) Michael wants to make sure that life insurance proceeds are available to pay his outstanding mortgage balance if he dies. He purchased a type of life insurance in which the amount of coverage gradually declines, just as his outstanding mortgage balance gradually declines. This type of life insurance is called A) modified life insurance. B) decreasing term insurance. C) re-entry term insurance. D) current assumption whole life.

55) Which of the following statements is true regarding the results of studies by LIMRA and New York Life Insurance Company on the adequacy of life insurance owned by households in the United States? I. The average household is adequately insured against the risk of premature death. II. The average household is significantly underinsured against the risk of premature death. A) I only B) II only C) both I and II D) neither I nor II

6) Which of the following statements about the provisions of the building and personal property coverage form is (are) true? I. A separate deductible must be satisfied for each building damaged in the same occurrence. II. Under the replacement cost option, there is no deduction for depreciation. A) I only B) II only C) both I and II D) neither I nor II

7) Bert purchased a life insurance policy 4 years ago. He inadvertently stated that he was 1 year younger than his actual age. If Bert dies today, how much will the insurance company pay? A) nothing B) less than the policy face value C) the policy face value D) more than the policy face value

8) What is the length of the readjustment period which is considered when the needs approach is used to determine the amount of life insurance to own? A) 3 to 6 months B) 1 to 2 years C) until the youngest child reaches age 18 D) until the surviving spouse reaches age 65

9) Under the needs approach, when is the dependency period of a surviving spouse assumed to end? A) 1 or 2 years after the breadwinner's death B) when the youngest child reaches age 18 C) when the surviving spouse reaches age 65 D) when the surviving spouse dies

Josh has just built a large kennel in his backyard for his pet dogs. The kennel includes a heated shed and access to a large fenced area. Josh wants to make sure he has adequate insurance limits under his homeowners policy so that he can replace the kennel if it is damaged. Which one of the coverage limits should Josh check on his homeowners policy to determine whether his coverage on the kennel is adequate? a. Coverage A—Dwelling b. Coverage B—Other Structures c. Coverage C—Personal Property d. Coverage D—Loss of Use

Which one of the following best describes the purpose of rule hierarchies within accounting frameworks? Choose one answer. A. To determine which accounting framework should be used B. To resolve conflicts among rules that preparers of financial statements may encounter when applying those rules C. To resolve differences between the United States and the European Union D. To resolve differences between the accounting rules that apply to private versus publicly traded companies

When a defendant is liable under the dangerous instrumentality doctrine, which one of the following acts is the act that creates the liability? Choose one answer. A. The negligent act is the failure to exercise reasonable control and supervision over the dangerous instrumentality. B. The negligent act is the act of negligently permitting a child to obtain or use a dangerous instrumentality that harms a third party. C. The negligent act is the negligent use of the dangerous instrumentality by a third party, vicariously applied to the defendant. D. The negligent act is the use, control, and operation of any dangerous instrumentality by the defendant.

B A. Incorrect. The negligent act is the act of negligently permitting a child to obtain or use a dangerous instrumentality that harms a third party.

A product manufactured by a company has been making people ill and a number of the victims have filed a class-action lawsuit. Which one of the following sets of elements would the trial court consider to certify this as a class action suit? Choose one answer. A. Amount of damages, adequacy of representation, commonality, typicality B. Commonality, numerosity, adequacy of representation, typicality C. Adequacy of representation, numerosity, commonality, amount of damages D. Numerosity, commonality, typicality, amount of damages

B C Incorrect. Commonality, numerosity, adequacy of representation, typicality

Manufacturer Tyler was in the welding business. He was having financial problems and began to save money by "enhancing" the solder with an inferior product as well as thinning the welds. These practices led to defective welds resulting in bodily injury. In a negligence case against Tyler, a plaintiff must prove that Tyler Choose one answer. A. Intended harm. B. Failed to use reasonable care. C. Failed to warn of dangerous conditions. D. Materially misrepresented his product.

B C Incorrect. It is unlikely that Tyler intended any harm. Failure to warn of dangerous conditions is not the primary issue in a negligence lawsuit.

Which one of the following common policy conditions permits the insurer to verify property and business income values necessary for premium rating purposes? Choose one answer. A. Inspections and surveys B. Examination of books and records C. Changes condition D. Premiums

B D Incorrect. It is examination of book and records.

ISO has developed standard endorsements to help insurers comply with the provisions of the Terrorism Risk Insurance Act (TRIA). When a policyholder accepts certified acts of terrorism coverage, the ISOCommercial Lines Manual requires the insurer to attach a cap endorsement for the applicable coverages. The purpose of the cap endorsement is to Choose one answer. A. Limit the amount of additional premium that the insurer can assess in the event that it pays losses for a certified act of terrorism as defined under federal law. B. Identify the $100 billion cap on annual aggregate insured losses that can be paid by the federal government and to outline the limitations of the insurer's obligations under the law. C. Set the deductible on the policyholder's separate coverages that may be limited by the federal terrorism insurance program. D. Establish the portion of premium that the insurer is attributing to terrorism coverage and to identify the coverages to which those premiums apply.

B D Incorrect. The cap endorsement identifies the $100 billion cap on annual aggregate insured losses paid by the federal government and to outlines the limitations of the insurer's obligations under the law.

The Personal Auto Policy (PAP) provides physical damage coverage for a covered auto that is damaged when the car's driver loses control and overturns the car on a sharp curve. This coverage is called Choose one answer. A. Comprehensive coverage. B. Collision coverage. C. Other than collision coverage. D. Falling object coverage.

B overturn = upset = 侧翻 C Incorrect. Collision coverage includes the upset of a covered auto.

Which one of the following best describes "double indemnity" regarding a life insurance policy? Choose one answer. A. If two policies are issued on the same life, only one policy must pay in the event of death. B. The death benefit doubles if death is the result of an accident. C. Death as the result of suicide will pay no more than half the face value. D. The death benefit is doubled if death occurs in the first two years.

B Correct. "Double indemnity" refers to the accidental death benefit policy provision that doubles the face amount of insurance if the insured dies as a result of an accident.

After using the DICE method to determine whether the claim is covered, the insurer must determine the Choose one answer. A. Cause of loss. B. Amount payable. C. Conditions of coverage. D. Exclusions.

B Correct. After using the DICE method to determine whether the claim is covered, the insurer must determine the amount payable.

The HO-3—Special Form (HO-3) excludes coverage for liability assumed under contract or agreement. However, exceptions apply, provided the loss exposures do not involve coverage excluded elsewhere in the policy. Which one of the following describes an exception? Choose one answer. A. Agreements intending to injure a third party B. Written contracts relating to the ownership of an insured location C. Liability assumed after an accident occurs D. First-party liability

B Correct. Written contracts relating to the ownership, maintenance, or use of an insured location are exceptions to this exclusion.

Under an HO-3—Special Form (HO-3) policy, an insured who is moving from one principal residence to another will have Choose one answer. A. Half the limit of Coverage C available at each location for 30 days. B. The full limit of Coverage C available at both locations for 30 days. C. The full limit of Coverage C available at both locations for one year. D. No Coverage C limit available until the move is complete.

B Page 6.13 A. Incorrect. Under an HO-3 policy, an insured who is moving from one principal residence to another will have the full limit of *Coverage C* available at both locations for 30 days.

Which one of the following is a specific characteristic of relevant accounting information? Choose one answer. A. It is consistent. B. It is timely. C. It is comparable. D. It is widely disseminated

B is correct. C. Incorrect. A specific characteristic of relevant accounting information is that it is timely.

The effect of premium billing on the balance sheet or income statement is dependent upon when the premium is received. If the billed premium is received before the effective date of the policy Choose one answer. A. An asset account, called "premiums receivable" is established until the effective date. B. The amount of the premium is treated as a deposit liability until the effective date. C. The unearned premium is equivalent to the amount of the full premium at the time of payment. D. The written premium is equivalent to the amount of the full premium at the time of payment.

B is correct. Page 1.25 and the second single-policy example on page 1.27 Unsure. I selected C.

An insured has a Personal Auto Policy (PAP) that includes uninsured motorist (UM) coverage for his own car. The insured is injured while riding on a private tour bus that is hit by an at-fault uninsured motorist. Which one of the following statements is true? Choose one answer. A. The insured is not entitled to UM coverage because of the public or livery conveyance exclusion. B. The insured is entitled to UM coverage under his or her PAP. C. The insured is entitled to UM coverage from the bus company's policy but not from his own PAP. D. The insured is entitled to UM coverage under his PAP under the share-the-expense car pool exception.

B. A. Incorrect. Because the public or livery conveyance exclusion applies only to "your covered auto," the insured and family members would be covered for UM while occupying a public or livery conveyance that is not "your covered auto."

Which one of the following best describes the likely life insurance needs of a family with two working spouses and dependent children? Choose one answer. A. Life insurance on the spouse with the higher income B. Life insurance on both spouses C. Life insurance on both spouses and the children D. Life insurance on both spouses and school-age children

B. C Incorrect. Life insurance on both spouses

An income statement is structured to calculate an organization's Choose one answer. A. Assets as of a specific date. B. Profitability. C. Net worth. D. Sources and uses of funds.

B. C. Incorrect. This is the function of *Balance Sheet*. An income statement is structured to calculate an organization's profitability.

A plaintiff suing for trespass onto real property would have standing to sue only in the jurisdiction in which real property is located. This cause of action is known as Choose one answer. A. Procedural. B. Local. C. Transitory. D. Jurisdictional.

B. D Incorrect. This is known as a local cause of action, that is, one that can only be brought where the subject matter of the controversy is located.

Agent Amanda's client had a general liability claim denied because the insurance application misrepresented the true exposure the insurer was being asked to cover. Amanda's client filed suit against her since it was she who delivered the application to the insurer. Amanda's defense was that the information in the application was supplied by the client and she had no reason to doubt it. Amanda's defense is an example of a failure of the plaintiff to prove which one of the following elements in tort liability? Choose one answer. A. The existence of a legal duty B. A breach of a legal duty C. Proximate causation D. Actual injury or damage

B. A Incorrect. Amanda's defense is an example of a failure of the plaintiff to prove a breach of a legal duty.

Bob visits the town square on New Year's Eve for a celebration. While there, a scuffle occurs causing the crowd to surge forward. Bob is accidentally knocked down by Jim and suffers an injury to his arm. Soon after, a police officer who is responding to the initial incident runs into and knocks Bob down, causing an injury to his knee. Does Bob have grounds for bringing action against Jim and the police officer for battery? Choose one answer. A. No, because Jim can assert the defense of consent and the police officer can assert the defense of physical discipline. B. No, because the contacts by both Jim and the police officer were accidental and not intended to be hostile or offensive. C. Yes, because both Jim and the police officer did not exercise reasonable care in preventing injury to others by their actions. D. Yes, because the bodily contact by both Jim and the police officer was more than "incidental" and resulted in actual bodily harm.

B. A Incorrect. No, because the contacts by both Jim and the police officer were accidental and not intended to be hostile or offensive.

Which one of the following is a defense of the right to privacy? Choose one answer. A. Plaintiff has never published the information B. The publication would not offend an individual of ordinary sensibility C. Plaintiff did not consent to publication D. Matters were disclosed in private

B. A Incorrect. The publication would not offend an individual of ordinary sensibility and the plaintiff has suffered no damages and no actionable invasion of privacy.

Anne and Dave insure their house with an unendorsed HO-3—Special Form (HO-3) with a Coverage A—Dwelling limit of $300,000, which is the replacement cost of the house. A thief breaks into the house while Anne and Dave are on vacation and steals the following items: Jewelry $5,000 Sterling silver $4,700 Ignoring any deductible that may apply, how much will Anne and Dave's insurer pay for the loss of the items? Choose one answer. A. $3,000 B. $4,000 C. $5,000 D. $9,700

B. A. Incorrect. The insurer will pay $1,500 for the jewelry and $2,500 for the sterling silver.

An owner of a car insured with a Personal Auto Policy (PAP) for which an insured selected and paid a premium for medical payments coverage Choose one answer. A. Would be eligible for medical payments under the PAP if injured while occupying a motorcycle on a public highway. B. Would not be eligible for medical payments under the PAP if injured while occupying a motorcycle on a public highway. C. Would be eligible for medical payments under the PAP if injured while occupying a motorcycle on the insured's own property. D. Would not be eligible for medical payments under the PAP if injured while driving a motorcycle but would be eligible for such coverage while riding as a passenger on a motorcycle.

B. C Incorrect. A medical payments coverage exclusion applies if the insured is injured while occupying a motorized vehicle with *fewer than four wheels.*

Which one of the following is an action causing harm that would most likely result in the application of the res ipsa loquitur doctrine? Choose one answer. A. A drunk driver runs his car into a pedestrian. B. A roll of tar paper falls off a building at night and hits someone. C. An arson fire burns a warehouse to the ground. D. A tornado destroys a barn

B. C Incorrect. A roll of tar paper falls off a building at night and hits someone.

The Separation of Insureds condition states that the insurance provided by the policy applies in which one of the following ways? Choose one answer. A. As a separate limits to separate insureds B. Separately to each person insured C. To all limits of coverage to all persons insured under the policy D. According to the order set forth in the policy declaration for each insured

B. C Incorrect. The Separation of Insureds condition states that the insurance provided by the policy applies separately to each insured person.

While driving the family car, nineteen-year-old Susan hit a pedestrian, causing severe injuries to the pedestrian. The uninsured pedestrian sued Susan's parents for damages. The liability concept or doctrine that most applies to this situation is which one of the following? Choose one answer. A. Absolute liability B. The family purpose doctrine C. Tortfeasor's capacity D. Alternative liability

B. C Incorrect. The family purpose doctrine involves the use of a family car. Under this doctrine, a parent who keeps an automobile for the family's use is liable for the torts a family member commits while using the automobile.

Which one of the following is a major type of commercial speech that might be defamatory? Choose one answer. A. Direct product comparison B. Comparative advertising C. Commercial speech defamation D. Product differentiation

B. C Incorrect. The major types of commercial speech that might be defamatory are comparative advertising and product disparagement.

Kevin recently purchased a long-term disability income policy. The policy states that he can renew the coverage until age 65 as long as he is gainfully employed. However, the insurer reserves the right to raise the premium at renewal. This policy is considered Choose one answer. A. Optionally renewable. B. Guaranteed renewable. C. Conditionally renewable. D. Noncancelable.

B. C. Incorrect. A policy that the insurer agrees to renew, but for which the premium can be raised is an example of a guaranteed renewable policy.

Reform proponents seek to eliminate which one of these court measures because it can have the effect of reducing potential liability of a defendant by reducing the amount of damages the defendant owes? Choose one answer. A. Joint-and-several liability B. Collateral-source rule C. Statutes of limitations D. Structured settlements

B. D Incorrect. A rule of evidence, the collateral-source rule, bars the introduction of evidence that a plaintiff has other sources of recovery; thus, the defendant remains responsible for all damages, even those covered by insurance.

If law enforcement officials seize an insured's personal computer to search for files that might be related to a crime, the insured under an HO-3—Special Form (HO-3) may be unsuccessful in claiming a theft loss on the computer due to the Choose one answer. A. Intentional Loss exclusion. B. Governmental Action exclusion. C. Ordinance or Law exclusion. D. Personal Computer exclusion.

B. C Incorrect. Under an HO-3 policy the insured may be unsuccessful in claiming a theft loss on the computer due to the Governmental Action exclusion. Ordinance or Law exclusion eliminates law that reduces that value of the property ordinance or law exclusion An exclusion found in most standard property coverage forms that clarifies that there is no coverage for loss or damage that occurs as a direct result of the enforcement of any law or ordinance regarding construction, use, or repair of property. Nor does it cover any property that has to be torn down as required by ordinance or law, after a fire or other physical damage loss, even if that damage is a result of an otherwise covered cause of loss.

Jack and Susan own and manage a hotel. They are concerned about their responsibility for the property of their guests and whether they have an insurable interest in that property and thus could buy insurance to cover their responsibility. Most courts would hold that they do have an insurable interest in the guests' property based on which one of the following legal bases? Choose one answer. A. Factual expectancy. B. Exposure to legal liability. C. Contractual obligations. D. Representation of another party.

B. C. Incorrect. Exposure to legal liability. Examples of exposure to legal liability: 1. hotelier -> guest's property 2. tenant -> premises 3. contractor -> building under construction Contractual obligations involve the creditor and debtor. The contract may regard people (unsecured creditor, who do not have an insurable interest) or people (interest in the debt's remaining balance).

Benjamin was a property owner, and Katie was his tenant. Every winter, the water from Benjamin's gutters and downspouts emptied onto his porch and froze solid, creating a dangerous sheet of ice that made his porch essentially useless. Benjamin rigged his gutters and downspouts to trickle the water down the side of his property, toward a road. The water froze, and created a nearly invisible sheet of ice on the road. Benjamin has created a Choose one answer. A. Hidden danger, and he has a duty to warn of the hazard, but Katie has no duty. B. Nuisance, and he can be liable for discharging water on the road, but Katie is not. C. Natural condition, and neither he nor Katie are liable for the flow of natural waters onto roads. D. Negligent artificial condition, but only Katie is liable, as the possessor of the land.

B. 13.22 under artificial conditions. A Incorrect. Benjamin has created a nuisance, and he can be liable for discharging water on the road, but Katie is not.

Another term for trade libel is Choose one answer. A. Product comparison. B. Product disparagement. C. Comparative advertising. D. Advertising defamation.

B. 13.30 D . Incorrect. Product disparagement or trade libel are intentionally false or misleading statements about the quality of the plaintiff's product resulting in financial damage to the plaintiff.

In property insurance, the determination of underinsurance (not insuring to value) is made Choose one answer. A. At the time of application. B. At the time of loss. C. At post loss by the underwriter. D. When the risk is assessed by the underwriter.

B. 3.14 C. Incorrect. In property insurance, the determination of underinsurance (not insuring to value) is made at the time of loss.

Which one of the following best describes a package modification factor? Choose one answer. A. The price per exposure unit for insurance coverage B. A factor that is applied to the regular policy premiums for certain coverage parts of a CPP, resulting in premium discounts for those coverage parts C. Any condition or situation that presents a possibility of loss, regardless of whether loss actually occurs D. A factor that is applied to the regular policy premiums for certain coverage parts of a CPP, to account for territorial differences

B. A factor that is applied to the regular policy premiums for certain coverage parts of a CPP, resulting in premium discounts for those coverage parts

The Named Non-Owner Coverage endorsement of the Personal Auto Policy (PAP) automatically covers Choose one answer. A. All persons who drive the vehicle specified in the endorsement. B. Only a person who is named in the endorsement. C. Only a person who is named in the endorsement and the named insured's spouse. D. The named insured and all resident family members.

B. Both the Named and Extended cover only the named person D. Incorrect. The Named Non-Owner Coverage endorsement of the Personal Auto Policy (PAP) automatically covers only a person who is named in the endorsement.

Jerry who lives in a rural area has experienced several animal-related losses to his home. Which one of the following losses would be covered under Jerry's HO-3—Special Form (HO-3)? Choose one answer. A. A bird built a nest in the wall, causing damage to the drywall. B. A deer ran through Jerry's glass door and destroyed the door and other property. C. Jerry's cat brought in a squirrel that got away and later chewed electrical wiring, causing damage to Jerry's home. D. Jerry's dog chewed the leg of his coffee table, destroying the piece of furniture.

B. Correct. A deer ran through Jerry's glass door and destroyed the door and other property. Damages caused by pets/birds/rodents/incents/vermin are excluded.

Smith Construction Company is covered under an unendorsed Commercial General Liability (CGL) Coverage Form. While working at a job site, Smith ruptured a natural gas line causing a small fire to a neighboring retail store. The following claims have been made against Smith due to this occurrence. Fire damage to the neighboring store Pain and suffering claimed by the store owner Loss of income by the store owner until repairs are made to the store Fire damage to the backhoe owned by Smith Which one of the following statements is correct? Choose one answer. A. Fire damage is not covered by the CGL policy. B. The backhoe is property owned and is excluded. C. Pain and suffering does not meet the definition of bodily injury. D. Loss of income is not loss of tangible property.

B. Correct. The backhoe is property owned and is excluded.

Which one of the following homeowners policy additional coverages is NOT subject to a deductible? Choose one answer. A. Landlord's furnishings B. Fire department service charge C. Debris removal D. Loss assessment

B. Correct. The fire department service charge additional coverage is not subject to a deductible. They are crazy. But I have to get it perfect.

A typical factor to be considered in determining the amount and terms of a structured settlement or judgment is Choose one answer. A. The defendant's life expectancy. B. The cost of dependent's needs. C. The disproportioately large amount of taxes on such arrangements. D. The waiver of the right to collect punitive damages.

B. Don't mix up plaintiff and dependent AIncorrect. The cost of dependent's needs is a factor.

In a jewelry purchase, buyer Connie told her sister Jennifer to purchase three dozen gemstone bracelets. Jennifer bought braclets and necklaces from George who was a well-known silversmith. George, counting on the income, purchased silver from Tom but when Connie refused to pay for the necklaces and returned them, George could not pay Tom. In this situation, the agent is Choose one answer. A. Connie. B. Jennifer. C. George. D. Tom.

B. In the agency relationship, agent is the party that is authorized by the principal to act on the principal's behalf. C. Incorrect. Jennifer.

A windstorm causes a tree on the insured's premises to fall, breaking the electrical lines that enter the house. The loss of electrical power causes the food in the freezer to thaw and spoil. This loss is Choose one answer. A. Covered because damage resulting from loss of electrical power is covered. B. Covered because it was caused by a covered peril on the residence premises. C. Not covered because damage resulting from loss of electrical power is excluded. D. Not covered because food is not considered personal property.

B. Insured peril that occurs on the premises. A. Incorrect. This loss is covered because it was caused by a covered peril on the residence premises.

The reserve representing the estimated deficiency in the aggregate of case reserves for known claims are known as Choose one answer. A. Case reserves. B. Bulk reserves. C. Loss reserve accounts. D. Salvage reserves.

B. Page 1.45

Which one of the following best describes an aggregate loss cover reinsurance contract? Choose one answer. A. An aggregate loss cover reinsurance contract is typically prospective reinsurance. B. An aggregate loss cover reinsurance contract is often used as a part of insurer acquisitions. C. An aggregate loss cover reinsurance contract is typically retrospective reinsurance. D. An aggregate loss cover reinsurance contract allows a reinsurer to protect itself from adverse loss experience.

B. Page 1.56 *Retrospective aggregate loss covers have been used in numerous acquisitions of insurers, whereby the buyer of the insurer will want some protection against the acquired book of loss reserves developing adversely* C Incorrect. An aggregate loss cover reinsurance contract is often used as a part of insurer acquisitions.

Which one of the following statements is true if the named insured is an individual under the Commercial General Liability (CGL) Coverage Form? Choose one answer. A. His or her spouse is also an insured only when specifically listed on the declarations page. B. Coverage applies only to claims arising from the conduct of a business owned solely by the named insured. C. Both the named insured and spouse are covered for their non-business activities. D. Coverage is provided for any business owned by the insured's spouse.

B. Page 11.3 A Incorrect. The spouse meets the definition of an insured and therefore does not need to be listed on the declarations page.

Luis Munoz's corporation is insured under a Commercial General Liability (CGL) Coverage Form. On March 1, Luis acquired an additional organization but did not notify his insurer. On April 15, the acquired organization suffered a liability loss. Will Luis' CGL cover the liability loss of the newly acquired organization? Choose one answer. A. Yes, because newly acquired organizations, including partnerships and limited liability corporations, are automatically covered under the CGL as long as the insured notifies the insurer of the additional exposure within 120 days. B. Yes, because the newly acquired organization qualifies as a named insured and is covered for 90 days after its acquisition. C. No, because Luis did not notify his insurer of the acquisition. D. No, because Luis did not add the newly acquired organization as a named insured within 30 days of its acquisition.

B. Page 11.5 D Incorrect. There is coverage because newly acquired entities are covered for 90 days without notice to the insurer.

Which one of the following inland marine forms is designed to cover photographic equipment and musical instruments used commercially by photographers, motion picture producers, professional musicians, and others?

Commercial Articles Coverage Form

Contractor Jerry provides a bid bond guaranteeing he will enter into a construction contract if his bid is accepted by business owner Sue. If Jerry's bid is accepted, but he fails to enter into a construction contract, the issuer of the bid bond would pay Sue which one of the following? Choose one answer. A. The full amount of Jerry's bid B. The difference between the amount of Jerry's bid and the next lowest bid accepted plus additional expenses incurred due to Jerry's default C. The bond's "penalty" amount D. Nothing, since Jerry did not enter into a construction contract

B. Page 12.38 A Incorrect. If Jerry fails to fulfill his obligation, the surety will pay Sue the difference between the amount of Jerry's bid and the next lowest bid accepted plus additional expenses incurred due to Jerry's default.

William owned a hotel, a bar, and a convenience store, all located within the same strip mall. He had a policy to turn away any prospective customer with brown hair. Adam came to William looking for lodging, but Adam had brown hair, so William refused. Adam then went to the convenience store, but the worker there, who was employed by William, also refused to serve him. Adam finally ended up at the bar, and the bartender disagreed with William's discriminatory policies, so he served Adam a few drinks. Adam became unruly, and the bartender threw him out. He walked back to the hotel, and William saw that Adam was intoxicated, so he had Adam removed from the property. How many common law causes of action does Adam have against William, for the refusal to furnish services at public places? Choose one answer. A. None B. One C. Two D. Four

B. Page 13.24. Hotel operators had to furnish lodgings to anyone who could pay for them... unless intoxication. C Incorrect. Adam has one common law cause of action against William, refusing lodging.

In addition to the tort intentional infliction of emotional distress, plaintiffs can also allege an unintentional act which causes mental anguish and physical injury known as Choose one answer. A. Unintentional infliction of emotional distress. B. Negligent infliction of emotional distress. C. Deliberate infliction of emotional distress. D. Intentional mental anguish act.

B. Page 13.28 A Incorrect. In addition to the tort intentional infliction of emotional distress, plaintiffs can also allege an intentional act which causes mental anguish and physical injury known as negligent infliction of emotional distress.

Which one of the following statements is correct? Choose one answer. A. A party who is injured or whose property is damaged by a negligent third party has a right to recover only if the wrongdoer has liability insurance. B. Subrogation provisions in policy wordings prevent insureds from collecting from both negligent third parties and their own insurer. C. If a negligent third party causes injury and the injured party accepts settlement from his or her own insurer, the negligent party's responsibility to pay damages is eliminated. D. Insureds who are injured by negligent third parties cannot recover from their own insurer under their own policy.

B. Page 3.30 C. Incorrect. Subrogation provisions in policy wordings prevent insureds from collecting from both negligent third parties and their own insurer.

Insurance policy regulation starts with legislative bodies. Which one of the following is one of the four areas of legislative policy regulation? Choose one answer. A. Market conduct B. Readability standards C. Rate regulation D. Rebate enforcement

B. Product regulation = policy regulation D Incorrect. Readability standards is one of the four areas of legislative policy regulation.

covers photographic equipment and musical instruments used commercially by photographers, motion picture producers, professional musicians, and others.

Commercial Articles Coverage Form

A named insured owns two cars, one covered by a Personal Auto Policy (PAP) and one with no insurance at all. Which one of the following is a correct statement regarding the medical payments coverage provided by the PAP if the insured is injured in a collision while driving the uninsured auto? Choose one answer. A. The PAP will provide medical payments coverage for medical care for the injuries under the insuring agreement. B. The exclusion of other vehicles owned by the insured or available for insured's regular use applies. C. The PAP will provide medical payments coverage for medical care for the injuries because the insured was driving a vehicle other than a covered auto. D. The exclusion of vehicles owned by or available for family member's regular use applies.

B. Page 4.31 A Incorrect. The exclusion of other vehicles owned by the insured or available for insured's regular use applies. The exclusion of vehicles owned by or available for family member's regular use does not apply to the named insured and spouse.

The Claim Expenses additional coverage under Section II of a homeowners policy covers Choose one answer. A. Premiums on bonds exceeding the personal liability limit. B. The insured's reasonable expenses at the insurer's request. C. Medical payments incurred by others. D. The insured's personal liability.

B. Page 7.7 Claim Expense: 1. Expense we incur 2. Premiums on bonds, however, not exceeding the policy's E limit 3. Reasonable expense as B. Parking, meal mileage 4. Postjudgement interest. A Incorrect. It covers reasonable expenses at the insurer's request. (These expenses may include loss of earnings up to $250 a day.) It does not cover the premium on bonds exceeding the personal liability limit. Personal liability and medical payments coverages are not additional coverages, but rather, Coverage E and Coverage F, respectively.

"Merchandise held in storage or for sale, raw materials and in-process or finished goods, including supplies used in their packing or shipping" is the Building and Personal Property Coverage Form's (BPP) definition for which one of the following? Choose one answer. A. Business personal property B. Stock C. Contents D. Inventory ID: 5829373 | Points: 1

B. Page 8.9 middle A Incorrect. The form defines stock as "merchandise held in storage or for sale, raw materials and in-process or finished goods, including supplies used in their packing or shipping."

The Agreement and Definitions page of the Personal Auto Policy (PAP) includes Choose one answer. A. The name of the insurer issuing the policy. B. A general agreement stating that the insurer is providing the coverage subject to payment of premium and to the terms of the policy. C. The name and mailing address of the insured. D. A general agreement stating the insurer's duty to pay damages and defense costs subject to the terms of the policy.

B. Page: 4.3 D Incorrect. The Agreement and Definitions page of the Personal Auto Policy (PAP) includes a general agreement stating that the insurer is providing the coverage subject to payment of premium and to the terms of the policy.

Some premium payment plans may include additional payments that exceed the amount required if the premium was paid in full at the policy inception. Such additional payments that are a function of the amount of premium payment are treated under U.S. regulatory accounting as Choose one answer. A. Part of the premium. B. Finance charges. C. Service charges. D. Additional premium.

B. See 1.34 the difference between Service Charge and Finance Charge in the box. *Finance charges are percentage and service charges are fixed amount.* C. Incorrect. Such additional payments that are a function of the amount of premium payment are treated under U.S. regulatory accounting as finance charges.

Under an HO-3—Special Form (HO-3), Section I—Exclusions contains an additional three exclusions that apply only to Coverage A—Dwelling and Coverage B—Other Structures. These exclusions include all of the following, EXCEPT: a. Weather b. Fraud c. Acts or decisions d. Damage that results from faulty construction, planning, or materials

B. There is no exclusion of fraud?!

Outdoor Sporting Goods Store has a Commercial General Liability (CGL) Coverage Form. While demonstrating the features of a small boat for a customer, an employee drops the anchor, injuring his foot. Does Outdoor Sporting Goods Store's CGL Coverage Form cover this loss? Choose one answer. A. No, because injuries resulting from the ownership of watercraft are excluded B. No, because injuries to employees are excluded C. Yes, because the store is legally liable for injuries caused by its products D. Yes, because the injury resulted from an "occurrence" not expected or intended

B. WC D Incorrect. The CGL policy excludes injuries to employees of the insured.

26) A-1 Electrical Service is an electrical contractor that employs 14 electricians. A-1 faces many loss exposures. One general liability exposure arises out of faulty work that A-1 electricians may perform for customers at their homes or businesses. This liability exposure is known as A) premises and operations liability. B) products liability. C) completed operations liability. D) contingent liability.

29) Why are some of the "property not covered" exclusions in the Building and Personal Property Coverage Form (BPP) not included in the BOP?

Because some of the "property not covered" exclusions apply to types of businesses that are not eligible for a BOP

69) Which one of the following statements is correct with respect to the liability coverage available under a businessowners policy (BOP)?

Both ISO and AAIS offer BOP endorsements adding employee benefit liability coverage and employment practices liability coverage.

Which one of the following is an option in the business income coverage form that suspends the coinsurance clause as long as the insured carries an amount of business income insurance that is equal to the value agreed on by the policyholder and the insurer?

Business Income Agreed Value coverage option

The Indirect Loss exclusion of the ISO Commercial Crime Coverage Form eliminates coverage for indirect losses, including expenses incurred in establishing either the existence of or the amount of loss, payment of damages for which the insured is legally liable, and

Business income losses.

14) The building and personal property coverage form provides several optional coverages. Under one optional coverage, no deduction is taken for depreciation when settling a covered loss. This optional coverage is called A) extra expense. B) agreed value. C) replacement cost. D) inflation guard.

17) In the context of a surety agreement, the party who agrees to answer for the debt, default, or obligation of another party is called the A) principal. B) obligee. C) surety. D) fidelity.

18) All of the following statements about aviation insurance are true EXCEPT A) Physical damage coverage can be written on an "all-risks" basis. B) Liability coverage also applies to bodily injury arising out of the premises where the aircraft is stored. C) Liability coverage applies to liability assumed by contract. D) Aviation insurance is a highly-specialized market with relatively few insurers.

22) All of the following statements about liability coverage under the Businessowners Policy are true EXCEPT A) Liability arising out of personal injury is covered as part of the insuring agreement. B) Medical payments coverage is provided. C) Employees acting within the scope of their employment are excluded from coverage. D) Coverage is included for the legal costs of defending the insured.

22) One inland marine coverage form is the accounts receivable coverage form. In which of the following cases would the purchaser of this form be indemnified through the coverage? A) If the purchaser cannot pay amounts owed because the purchaser has become insolvent. B) If the purchaser cannot pay amounts owed because the purchaser has suffered an insured physical damage loss. C) If the purchaser cannot collect accounts receivable because of the destruction of records. D) If the purchaser cannot collect accounts receivable because the purchaser extended credit to a poor credit risks.

25) Graham is a cashier at a convenience store. A customer pulled a gun on him, and said that he would shoot Graham unless he gave him all the money in the cash register. This crime, which is covered under the ISO commercial crime coverage form, is called A) extortion. B) murder. C) robbery. D) burglary.

30) Ted Thomas is risk manager of XYZ Company. He is concerned his company might be sued by current or former employees alleging wrongful termination, failure to promote, racial or gender discrimination, or sexual harassment. What type of liability insurance can Ted purchase to cover these types of claims? A) workers compensation insurance B) employer liability insurance C) employment-related practices liability insurance D) directors and officers liability insurance

35) One type of commercial property insurance excludes perils which are covered by the basic coverages. Some businesses buy this coverage to fill coverage gaps, including flood and earthquake, and to cover property in other countries. This type of insurance is called A) protection and indemnity insurance. B) building and personal property coverage form. C) difference in conditions insurance. D) builders risk coverage form.

35) Tina purchased a personal umbrella policy with a $1 million limit. Her insurer required her to carry liability limits of 250/500/50 under her auto insurance policy. The personal umbrella policy was written with a $1,000 self-insured retention. Tina was responsible for an auto accident in which the other driver was severely injured. The other driver's bodily injuries were $400,000 and the property damage was $20,000. How much will the insurer pay under Tina's umbrella policy? A) nothing B) $149,000 C) $150,000 D) $170,000

9) Which of the following statements about the Personal Articles Floater is (are) true? I. It is designed to cover several classes of personal property. II. Coverage is written on an "open perils" (all-risks) basis. A) I only B) II only C) both I and II D) neither I nor II

1) Which of the following statements about Dwelling Property 1 (basic form) is true? A) Coverage on the dwelling is written on a replacement cost basis. B) The full amount of personal property coverage applies to property away from the insured premises. C) Coverage for fair rental value of the dwelling is subject to both an overall maximum and a monthly maximum. D) "All-risk" coverage is automatically provided for both the dwelling and personal property.

1) Which of the following types of families is likely to have the least need for a large amount of life insurance? A) a blended family B) a traditional family C) a single person family D) a sandwiched family

10) Which of the following statements about the causes-of-loss special form of the ISO commercial package policy is (are) true? I. The causes-of-loss special form insures against risk of direct physical loss. II. The causes-of-loss special form excludes loss caused by earthquake. A) I only B) II only C) both I and II D) neither I nor II

10) Which of the following statements about various coverages under a Personal Articles Floater is (are) true? I. Each item of jewelry is described and is insured for a specified amount. II. Stamp and coin collections can be insured on a blanket basis. A) I only B) II only C) both I and II D) neither I nor II

11) A Pony Express Armored Car was transporting bank receipts from six branch banks to the main bank. A group of robbers staged a daring robbery. They forced the armored car off the road, shot two guards, and took over $120,000 in cash. Which insuring agreement in a financial institution bond would cover the stolen money in this case? A) Insuring Agreement A-Fidelity B) Insuring Agreement B-On Premises C) Insuring Agreement C-In Transit D) Insuring Agreement D-Forgery or Alteration

11) Which of the following statements about types of property covered under the Personal Articles Floater is true? A) Golfer's equipment is covered only in the United States. B) Furs are covered on a blanket basis without the necessity to schedule individual items. C) A higher premium must be paid to insure musical instruments if they are played for pay. D) Coverage for silverware and goldware is not available under the Personal Articles Floater.

13) Which of the following statements about the business income coverage form is true? A) Business income is defined as gross earnings before taxes. B) Payroll is excluded unless it is specifically added. C) The form covers loss of business income and extra expenses incurred during restoration. D) The form can be used by a manufacturing operation only.

14) Which of the following statements about life insurance policy loans is true? A) Loans are only permitted for specific reasons listed in the policy. B) They are forgiven if the insured dies before the loans are repaid. C) The policyowner must pay interest on a life insurance policy loan. D) They must be repaid on the basis of a schedule determined at the time of the loan.

15) All of the following statements about the automatic premium loan provision in a life insurance policy are true EXCEPT A) Its purpose is to prevent a policy from lapsing because of nonpayment of premium. B) The premium loan requires interest to be paid at a stated contractual rate. C) If the provision is used, the insured must show evidence of insurability to resume regular premium payments. D) The policy proceeds will be reduced if the premium loans are not repaid by the time of death.

16) What major feature distinguishes a participating policy from a nonparticipating policy? A) the availability of a waiver-of-premium provision B) the existence of settlement options C) the payment of dividends D) the method by which beneficiaries can be named

16) Which of the following statements about the liability coverage of the Business Auto Coverage Form is (are) true? I. The insurer agrees to defend the insured and pay all legal defense costs arising out of an accident involving a covered auto. II. The insured is covered for property damage and bodily injury arising out of the use of a covered auto. A) I only B) II only C) both I and II D) neither I nor II

17) Sources of life insurance dividends include which of the following? I. Excess interest earned on the assets necessary to maintain legal reserves II. Favorable mortality experience A) I only B) II only C) both I and II D) neither I nor II

18) Which of the following statements about surety bonds is (are) true? I. The surety has a legal right to recover a loss payment it made on behalf of a defaulting principal. II. The obligee is the party who benefits from the bond if the principal fails to perform. A) I only B) II only C) both I and II D) neither I nor II

2) The human life value is defined as the A) present value of a deceased breadwinner's future gross income. B) future value of a deceased breadwinner's past earnings. C) present value of the family's share of a deceased breadwinner's future earnings. D) future value of the family's share of a deceased breadwinner's future earnings.

2) Which of the following statements about the entire contract clause is true? A) It allows the insurer to change the policy terms without the insured's consent. B) It specifies that all statements in the application are considered warranties. C) It specifies that the life insurance policy and the attached application constitute the complete agreement between the parties. D) It prevents the insurance company from contesting a policy after it has been in force for two years during the lifetime of the insured.

20) Advantages of selecting the paid-up additions dividend option in a life insurance policy include which of the following? I. Evidence of insurability is not required to purchase additional insurance. II. The additions are purchased at net rates without loading for expenses. A) I only B) II only C) both I and II D) neither I nor II

20) Which of the following statements about the equipment breakdown protection coverage form is (are) true? I. The covered cause of loss is a breakdown of covered equipment, including boilers, machinery, and electrical and mechanical equipment. II. It provides coverage for the reasonable cost of expediting permanent repair or replacement of damaged property. A) I only B) II only C) both I and II D) neither I nor II

20) Which of the following statements about various types of surety bonds is true? A) A judicial bond guarantees that a public official will faithfully perform his or her duties for the protection of the public. B) A payment bond guarantees that the bonded person will appear in court. C) A license and permit bond guarantees that the bonded party will comply with all the laws and regulations governing his or her activities. D) A bid bond guarantees that the principal will complete a construction project on time.

21) Which of the following losses is generally covered under a commercial umbrella policy? A) liability arising out of workers compensation laws B) liability arising out of pollution C) liability arising out of use of a business auto. D) the cost of recalling defective products

23) Which of the following statements about nonforfeiture options found in life insurance policies is true? A) Under the reduced paid-up option, the paid-up policy is term insurance. B) Under the extended term option, the amount of term insurance is less than the face value of the surrendered cash value policy. C) Under the reduced paid-up option, no additional premiums must be paid. D) Unless the policyowner has selected another nonforfeiture option, the cash value option goes into effect automatically.

25) Which of the following statements about errors and omissions insurance is (are) true? I. It is purchased by professionals to protect against claims arising for negligent acts, errors, and omissions. II. It is designed to meet the needs of stock brokers, attorneys, engineers, architects and other professionals who give advice to clients. A) I only B) II only C) both I and II D) neither I nor II

25) Which of the following statements about life insurance settlement options is true? A) Under the fixed period option, the beneficiary normally has the right to make partial withdrawals in case of emergency. B) Under the fixed period option, any remaining proceeds revert to the insurer if the beneficiary dies before the end of the fixed period. C) Under the fixed amount option, the beneficiary can be given the right to increase or decrease the fixed amount. D) Under the fixed amount option, any interest credited in excess of the guaranteed rate increases the amount of each periodic payment.

27) Disadvantages of life insurance settlement options include which of the following? I. Higher yields can often be obtained elsewhere. II. Life income options have limited usefulness at younger ages. A) I only B) II only C) both I and II D) neither I nor II

28) All of the following statements about inland marine forms are true EXCEPT A) A mail coverage form covers securities in transit by first-class mail, registered or certified mail, or express mail. B) A commercial articles coverage form is used to insure photographic equipment and musical instruments. C) A jewelers block coverage form is used by individuals to insure jewelry limited in coverage by the homeowners form. D) The signs coverage form covers neon, mechanical, and electrical signs.

28) Steve and Mary are art collectors. They own lithographs, etchings, and vintage photographs valued at over $100,000. Steve and Mary display their art collection at their home. They can insure this valuable personal property through a A) title insurance policy. B) dwelling property form. C) personal articles floater form. D) personal umbrella policy.

29) The net amount at risk for an ordinary life insurance policy is the difference between the A) present value of future benefits and the present value of future premiums. B) face amount of the policy and the total premiums that have been paid. C) face amount of the policy and the legal reserve. D) annual premium and the annual policyholder dividend.

31) Which of the following statements about the guaranteed purchase option is true? A) It is usually available with term insurance policies. B) The premium when an option is exercised is based on the insured's age at the time the original policy was issued. C) The option permits the insured to purchase specified amounts of life insurance in the future even if the insured has become uninsurable. D) If a guaranteed purchase option expires without being used, it can simply be exercised at a later date.

32) Renee is risk manager of XYZ Company. She purchased a Commercial Package Policy for her company and added one of the optional coverages. This option suspends the coinsurance clause and substitutes a new agreement covering any loss in the same proportion that the limit of insurance purchased bears to a value specified in the declarations. This provision is known as A) waiver of inventory coverage. B) inflation guard coverage. C) agreed value coverage. D) replacement cost coverage.

33) Frank's property insurance requires periodic reporting of inventory values. Frank believes he can save money by under-reporting the inventory. Last period, Frank reported $200,000 when the value was really $400,000. Shortly after filing the report, when the value was $500,000, the inventory was destroyed. How much will Frank's insurer pay, assuming no deductible? A) nothing, as underreporting voids coverage B) $200,000 C) $250,000 D) $400,000

33) Jenkins Company purchased a commercial umbrella policy with a $10 million limit and a $100,000 self-insured retention. The insurer required Jenkins Company to carry a $1 million per-occurrence limit on its general liability policy and a $1 million per-occurrence limit on its business auto policy. Jenkins purchased these required limits. A Jenkins driver was negligent while operating a company vehicle and killed another motorist. The court ruled that Jenkins must pay $5 million. How much of this amount will be paid by the umbrella policy? A) $1.0 million B) $3.9 million C) $4.0 million D) $5.0 million

33) Reasons for NOT purchasing an accidental death benefit rider include which of the following? I. Most people die as a result of a disease rather than from an accident. II. The economic value of a human life is not increased if death occurs because of an accident. A) I only B) II only C) both I and II D) neither I nor II

35) All of the following statements about universal life insurance are true EXCEPT A) Interest is credited to the policy's cash value each month. B) Any withdrawal of a policy's cash value reduces the amount of the death benefit. C) Interest credited to a policy's cash value is taxable for the policyowner in the year credited. D) The policyowner can add to a policy's cash value at any time subject to policy guidelines.

35) Holiday DeCor Company is insured by a commercial general liability policy (CGL). Holiday DeCor rented a storage facility for one month to store some excess inventory. While visiting the storage facility, a Holiday DeCor employee discarded a cigarette. The resulting fire severely damaged the storage facility. Which statement is true regarding coverage of this damage under the CGL? A) There is no coverage as the damage occurred at a rented premises. B) There is no coverage because property damage liability is excluded. C) The damage is covered under the fire legal liability coverage. D) There is no coverage because an employee of Holiday DeCor caused the loss.

36) Tina purchased a personal umbrella policy with a $1 million limit and a $1,000 self-insured retention. Her insurer required her to carry a $300,000 liability limit under her homeowners policy. Tina was held responsible for slandering a public official. The public official won a $100,000 judgment against Tina. The insurer that wrote Tina's homeowners policy denied coverage. How much will the insurer pay under Tina's personal umbrella policy? A) nothing B) $49,000 C) $99,000 D) $100,000

42) Which of the following statements about policies sold to preferred risks is (are) true? I. Preferred risks are people whose mortality experience (deaths per thousand at a given age) is expected to be more favorable than average. II. Insurers require preferred risks to purchase at least a minimum amount of life insurance, such as $250,000. A) I only B) II only C) both I and II D) neither I nor II

45) Jane purchased a life insurance policy on her own life and named her daughter, Cheryl, the beneficiary. Cheryl has a history of not managing money well. Jane wants the death benefit paid to Cheryl in monthly installments over 20 years. Which settlement option should Jane pre-select for Cheryl? A) lump sum B) fixed amount C) fixed period D) interest option

47) Carl would like to purchase life insurance. He would also like to invest in a mutual fund. An agent told Carl about a form of life insurance in which Carl could select where the saving component is invested. This form of life insurance has fixed premiums and the cash value is not guaranteed. This type of life insurance is called A) universal life insurance. B) current assumption whole life. C) variable life insurance. D) indeterminate-premium whole life.

48) Tamara purchased a term insurance policy when she had high life insurance needs and limited income. Now Tamara can afford whole life insurance. What term life insurance provision will permit Tamara to switch her term insurance to whole life insurance without having to show that she is still insurable? A) renewal provision B) tax-free exchange provision C) conversion provision D) free look provision

49) Life insurance policy proceeds can be paid to a trustee upon the death of the insured. All of the following statements about having the proceeds paid to a trustee are true EXCEPT A) Use of a trustee provides flexibility with regard to the timing and amount of the payments. B) Trustees are often used when the beneficiary is a minor child or an adult with diminished mental capacity. C) The trustee is not permitted to accept a fee for rendering services. D) The trustee does not guarantee investment results.

5) A burglar took some blank checks during a break-in at XYZ Company. He was careful to make sure that the theft would be difficult to discover. Three months later, he wrote himself a check for $20,000 and signed the company treasurer's name on the check. After the check was cashed, the loss was discovered. Which commercial crime coverage form would cover this loss? A) Inside the Premises-Theft of Money and Securities B) Money Orders or Counterfeit Currency C) Forgery or Alteration D) Outside the Premises

5) Which of the following exposures is covered under a Commercial General Liability Policy with no endorsements? A) liability arising out of seepage of pollutants B) employment-related practices liability C) personal injury liability D) aircraft liability

50) Ann is considering the purchase of a life insurance policy with these characteristics: flexible premium payments, the insurance and savings components are separate, the interest rate credited to the savings is tied to a market interest rate but a minimum rate is guaranteed, and a monthly administrative fee is charged. Ann is considering buying A) whole life insurance. B) variable life insurance. C) universal life insurance. D) current assumption whole life.

52) Which of the following $100,000 whole life insurance policies, issued by the same company to a man age 32, would require the highest first-year premium? A) continuous premium (ordinary) life B) whole life paid-up at 65 C) 10-payment whole life D) 20-payment whole life

6) All of the following are ISO commercial crime coverage exclusions EXCEPT A) dishonest acts committed by a named insured or partner of the named insured. B) indirect loss resulting from covered losses. C) theft committed by an employee of the named insured. D) losses from unauthorized trading in stocks and bonds.

7) One of the additional coverages under the building and personal property coverage form is "increased cost of construction." The coverage is payable if A) a skilled artisan is needed to duplicate the construction of the damaged property. B) a labor strike or materials shortage increases construction costs. C) an ordinance or building code increases the cost of construction. D) the materials necessary to rebuild the damaged structure are more expensive than ordinary building materials.

7) The purpose of an estate clearance fund is to pay all of the following EXCEPT A) burial expenses. B) estate administration expenses. C) education costs. D) installment debts.

7) Which of the following statements about mobile home insurance is (are) true? I. Coverage for the mobile home may be written on either a replacement cost basis or an actual cash value basis, depending on how much the mobile home has depreciated. II. An additional coverage pays, up to a specified dollar limit, for the cost of transporting the mobile home to a safe place when it is endangered by a covered peril. A) I only B) II only C) both I and II D) neither I nor II

8) All of the following are characteristics of most inland marine floater policies EXCEPT A) The insurance can be tailored to the specific type of personal property insured. B) The insured can select higher limits of coverage than are available under an unendorsed homeowners policy. C) Coverage is normally written on a named-perils basis. D) Covered property is insured anywhere in the world.

8) Which of the following is covered under an unendorsed Commercial General Liability Policy? I. False arrest of a customer wrongly accused of shoplifting. II. Publication of material which violates an individual's right to privacy. A) I only B) II only C) both I and II D) neither I nor II

8) Which of the following statements about beneficiary designations is true? A) A primary beneficiary is entitled to the death proceeds of a life insurance policy only if the contingent beneficiary dies before the insured. B) If a revocable beneficiary designation is used, the insured must obtain the beneficiary's permission to exercise most policy rights. C) The effect of a class beneficiary is to divide death proceeds equally among the members of a particular group. D) Naming the insured's estate as primary beneficiary is the best way to avoid probate expenses, inheritance taxes, and claims of creditors.

8) Which of the following statements is (are) true with respect to financial institution bonds? I. Fidelity Coverage covers losses resulting from the dishonest acts of employees. II. Financial institutions usually insure their crime exposures through financial institutions bonds. A) I only B) II only C) both I and II D) neither I nor II

In which one of the following sections of an insurer's financial statement would forward-looking information be included? a. The cash flow statement b. The income statement c. Notes and disclosures d. The balance sheet

A general exclusion of the ISO Commercial Crime Coverage Form applies to acts of employees. However, an exception is made for

Coverage provided by the Employee Theft insuring agreement.

23) All of the following are covered under the liability coverage of a businessowners policy EXCEPT A) personal injury liability B) bodily injury liability C) advertising liability D) professional liability

surety involves three parties. II. Insurers usually do not have the right to recover a loss payment from an insured, while a surety does have the legal right to recoup a loss payment. A) I only B) II only C) both I and II D) neither I nor II

What is the two-fold purpose of a Terrorism Risk Insurance Act (TRIA) aggregate limit endorsement? Choose one answer. A. To offer broader coverage and provide a means of accounting for TRIA premiums B. To limit the insurer's exposure and to provide a means of accounting for TRIA premiums C. To limit the insurer's exposure and to provide limited coverage for acts of terrorism at a reduced premium D. To offer limited coverage and to provide a means of accounting for TRIA premiums

C BIncorrect. The two-fold purpose of a TRIA aggregate limit endorsement is to limit the insurer's exposure and to provide limited coverage for acts of terrorism at a reduced premium.

One of the purposes of the Terrorism Risk Insurance Act (TRIA) aggregate limit endorsement is to limit the insurer's exposure. What is the other purpose of the TRIA aggregate limit endorsement? Choose one answer. A. To provide a means of accounting for TRIA premiums B. To provide unlimited coverage for acts of terrorism C. To provide limited coverage for acts of terrorism at a reduced premium D. To provide a different means of marketing terrorism coverage

C A Incorrect. The second purpose of the TRIA aggregate limit endorsement is to provide limited coverage for acts of terrorism at a reduced premium.

When uncertainty exists, a conflict can arise between reliability and Choose one answer. A. Completeness. B. Transparency. C. Lack of bias. D. Verifiability.

C A Incorrect. When uncertainty exists, a conflict can arise between reliability and lack of bias.

Marge and her husband Jack have a Personal Auto Policy (PAP) to cover their two automobiles. Marge also has a company car provided by her employer. Which one of the following endorsements would best provide Marge with liability and medical payments coverage for her company car? Choose one answer. A. Named Non-Owner Coverage endorsement B. Miscellaneous Type Vehicle endorsement C. Extended Non-Owned Coverage—Vehicles Furnished or Available for Regular Use endorsement D. Auto Loan/Lease Coverage endorsement

C A. Incorrect. The Extended Non-Owned Coverage—Vehicles Furnished or Available for Regular Use endorsement would provide excess over any other applicable insurance on the company car. The differences between Extended Non-Owned Coverage (Extended) and Named Non-Owner Coverage (Named): 1. Extended is for Regular Used; Named is for occasionally used 2. So Named covers more items, including UM and UIM

The Credit Card, Electronic Fund Transfer Card or Access Device, Forgery and Counterfeit Money Coverage—Increased Limit endorsement may be appropriate for Choose one answer. A. Insureds who pay their bills online. B. Insureds who use automated teller machines. C. Insureds who hold credit cards. D. Insureds who tend to overspend because of credit availability.

C A. Incorrect. This endorsement provides coverage for losses resulting from unauthorized use of an insured's credit card.

Which one of the following elements is necessary to prevail in an assault case? Choose one answer. A. There is a fear that there may be physical contact immediately or sometime in the future. B. A threat is made regardless of whether the individual making the threat can actually act on it. C. A threat is made with the intent of creating fear or apprehension. D. The damages resulting from an assault are significant and measurable in nature

C B Incorrect. A threat is made with the intent of creating fear or apprehension.

Mark, a 50-year-old employee of Ajax Company (Ajax), is fired even though his annual performance reviews have indicated that his work has been outstanding. Mark believes he has been discriminated against because of his age and sues the directors of Ajax. What type of insurance policy does Ajax need to provide coverage for this type of lawsuit? Choose one answer. A. Employee benefits liability B. Employers liability C. Employment practices liability D. Employee indemnification liability

C B Incorrect. Ajax needs employment practices liability insurance.

Even when the duty to select investments for an employee benefits plan has been delegated to others, such as in a mutual fund or brokerage firm, the fiduciaries may be responsible for which one of the following? Choose one answer. A. Compliance with state insurance laws B. Negligence of the organization's directors and officers C. The errors or negligence of the investment managers D. Failure to properly endorse the commercial general liability policy

C B Incorrect. Fiduciaries may be responsible for the errors or negligence of the investment managers.

Which one of the following is an element of fraud that requires proof? Choose one answer. A. Harm B. Material information C. Reasonable reliance D. Recklessly made

C B Incorrect. Reasonable reliance concerns a misrepresentation which must be a reasonable inducement to the other party to act. Reliance must be justified.

Which one of the following accounting standards or rules may apply to self-insured liabilities related to workers compensation claims? Choose one answer. A. Insurance accounting B. Generic accounting C. Employee benefit accounting D. Financial accounting

C. Page 1.52 Related to EE - employee benefit accounting Non-related to EE - Generic accouting B. Incorrect. Employee benefit accounting rules may apply to self-insured liabilities related to workers compensation claims.

A garden shop owner bought a machine to move pallets. The front-end loader had back up lights but both lights were obstructed by a lens guard. Until a customer who was behind the machine was badly injured, the defect had not been discovered. The basis of a lawsuit by the garden shop owner against the machine manufacturer should be Choose one answer. A. Material misrepresentation. B. Breach of warranty. C. Defect in design. D. Defect in assembly.

C D Incorrect. This is not material misrepresentation, breach of warranty, or defect in assembly but it is defect in design.

Which one of the following statements is correct with respect to the Control of Property condition of the Commercial Property Conditions Form? Choose one answer. A. It states that a violation of a policy condition at one location will suspend coverage at all locations. B. It prohibits the insured from abandoning damaged property to the insurer. C. It states that coverage under the policy will not be affected by acts or omissions of persons other than the insured, if the others are not acting under the direction or control of the insured. D. It requires the insured to give the insurer access to the premises in order to make inspections and to review the insured's accounting and other records.

C D Incorrect. This is not part of the Control of Property condition.

An insured plumbing contractor is installing copper water lines in a new building for a general contractor. While soldering a connection, the plumber causes a fire that damages the building, including the copper water lines. The plumber is covered under an unendorsed Commercial General Liability (CGL) Coverage Form. Which one of the following best explains how the plumber's CGL Coverage Form applies to a claim for the building damage, including damage to the copper water lines? Choose one answer. A. Coverage applies because the damaged property was in the plumber's care, custody, and control. B. Coverage does not apply because the general contractor's CGL policy would respond. C. Coverage applies to the building damage but excludes the damage to the copper water lines being installed by the plumber. D. Coverage applies to the building damage including damage to the copper water lines being installed by the plumber.

C 10.19 bottom B Incorrect. Coverage applies to the building damage but not to the damage to the copper water lines being installed by the plumber.

FridgeCo, an appliance retailer, owned a storefront and the sidewalk by the entrance to the facility was always damaged. Very few people other than FridgeCo employees noticed the damage, however. A customer came to the FridgeCo store to buy a mini-fridge, but got into an argument with the owner. The owner asked the customer to leave, and when the customer angrily stormed out, she tripped on the broken sidewalk and injured her ankle. Which one of the following most accurately assesses FridgeCo's duties and liabilities concerning the customer, in most jurisdictions? Choose one answer. A. The customer was a business invitee, so FridgeCo had a duty to exercise reasonable care to keep her safe. B. The customer was a trespasser, but FridgeCo had a duty to warn her of obvious dangers. C. The customer was a business invitee, but FridgeCo was not liable for defects in sidewalks. D. The customer was an implied licensee who became a trespasser, so FridgeCo owed her no duty whatsoever.

C 13.23 A Incorrect. The customer was a business invitee, but FridgeCo was not liable for defects in sidewalks.

A reinstatement clause in a life insurance policy Choose one answer. A. Continues a life insurance policy in force for 30 days after the premium due date, allowing the policyowner the opportunity to pay the overdue premium to reinstate the policy. B. Continues a life insurance policy in force for 60 days after the premium due date, allowing the beneficiaries the opportunity to pay the overdue premium to reinstate the policy. C. Gives the policyowner the right to reinstate a life insurance policy that has lapsed for nonpayment of premium. D. Gives the insurer the option, but not the obligation, to reinstate policies for lapsed policyholders who wish to reactivate coverage.

C Correct. A reinstatement clause in a life insurance policy gives the policyowner the right to reinstate a life insurance policy that has lapsed for nonpayment of premium.

Generally, more than one causes of loss form is used in a commercial property coverage part for which one of the following reasons? Choose one answer. A. Business personal property, which is more subject to loss, is always insured on a more restricted basis than are buildings. B. Most insureds would like to cover their personal effects for loss by theft. C. The underwriter is reluctant to provide the broader coverages for certain types of property. D. Using multiple causes of loss forms in a single policy is standard industry practice.

C Correct. Different causes of loss forms are sometimes used in the same policy because underwriters are sometimes reluctant to provide the broader coverages for certain types of property.

Which one of the following statements is correct with respect to the covered causes of loss under the Causes of Loss—Basic Form? Choose one answer. A. Vandalism includes loss by theft. B. Lightning includes artificially generated electrical current. C. Explosion includes the explosion of gases or fuel in a furnace or flue. D. Smoke covers damage by smoke from industrial operations or agricultural smudging.

C Correct. Explosion includes the explosion of gases or fuel in a furnace of flue. Vandalism includes loss by theft is not covered by basic form.

Under which one of the following provisions of the Building and Personal Property Coverage Form (BPP) must the insurer be notified within 180 days after the occurrence of loss that a claim will be made under the terms of the optional coverage in order for that optional coverage to pay the maximum benefit available? Choose one answer. A. Agreed Value B. Inflation Guard C. Replacement Cost D. Extension of Replacement Cost to Personal Property of Others

C Correct. The insurer must be notified within 180 days after the occurrence of loss that a claim will be made for replacement cost.

Which one of the following statements is correct with respect to the effect optional coverages of the Building and Personal Property Coverage Form (BPP) have on premiums? Choose one answer. A. Replacement cost insurance requires a higher rate than ACV coverage. B. Adding optional coverages increases an insurer's policy processing costs and so an administration fee is charged. C. In some cases, the limit of insurance must be increased to cover the additional property values being insured. D. The charge for a coverage option always involves a separate additional rate applied to the amount of insurance.

C Correct. The limit of insurance must be increased to cover the additional property values being insured. A. Page 9.24. Replacement cost does not involve a higher rate, but AOI needed to meet the coinsurance requirement maybe considerably higher than ACV

Which one of the following might be a reason for a regulatory accounting system to gross up the reported premiums by the amount of credits for large deductible arrangements? Choose one answer. A. To offset the negative impact on reported earned premiums B. To avoid the negative impact of falling insurer loss ratios reported to the state C. To avoid a negative impact on smaller insureds under a premium assessment system D. To discourage the use of large deductible plans by insureds in an effort to avoid state premium taxes

C Correct. To avoid a negative impact on smaller insureds under a premium assessment system a regulatory accounting system might gross up the reported premiums by the amount of credits for large deductible arrangements. Premium assessable can be used to fund the safety program to avoid liability. This premium should include the large deductible premium credit to the large insured, even if they have better safety program to afford the large deductible.

Garth insures his home with an HO-3—Special Form (HO-3). Garth was invited to a party at the apartment of his friend, Julie. Garth was having trouble closing the front door behind him as he entered the apartment. He pulled the door hard, which shook the walls and caused a vase to fall off of a shelf and break into pieces. Julie made a claim against Garth for the replacement cost of the vase, which was $1,108. Garth's insurer did not believe that the accident was Garth's fault in any way. How much did the insurer pay to Julie? Choose one answer. A. $0 B. $554 C. $1,000 D. $1,108

C Correct. Under the Damage to Property of Others additional coverage, the insurer will pay, at replacement cost, up to $1,000 per occurrence for property damage to others caused by an insured, regardless of fault or legal liability. (Note: some exclusions exist.)

Insurers that offer professional liability and management liability policies usually have a claims-made trigger. The reason for this is which one of the following? Choose one answer. A. Claims are settled on an extended coverage basis. B. Claims are not settled until after the statute of limitations date has been reached. C. Claims are sometimes not settled until long after the policy has expired. D. Claims are sometimes not settled under arbitration but require long term litigation.

C Page. 12.11 B Incorrect. Claims are sometimes not settled until long after the insurance policy has expired.

James made settlement on a new house and purchased a homeowners policy to protect it effective June 1st. The new house needed some work, so James did not plan on moving in until July 1st. He maintained his apartment lease and rental insurance for the month. Which one of the following additional sources of recovery did this situation present for James' personal property? Choose one answer. A. Other insurance in dissimilar policies B. Noninsurance agreements C. Other insurance in a similar policy D. Other insurance in the same policy

C correct. Rental and HO are similar policies example A. Incorrect. Other insurance in a similar policy

Which one of the following statements relating to the use of property insurance deductibles is correct? a. Risk transfer mechanisms such as insurance are designed to cope with low-severity property losses. b. For most property insurance policies, the premium reduction is directly proportional to the size of the deductible. c. Property insurance deductibles reduce premium costs by encouraging insureds to prevent or reduce losses. d. Small property insurance deductibles help eliminate dollar trading.

C is correct. I got it right but worth re-visit

Following an auto accident, Jim's vehicle was towed to a body shop, and it remained there for five days for repairs. The damage was covered under the collision coverage of Jim's Personal Auto Policy (PAP). During those five days, Jim used public transportation at a cost of $5.00 per day. What amount will Jim's insurer pay under his PAP for his transportation expenses while his vehicle was being repaired? Choose one answer. A. $0 B. $15 C. $20 D. $25

C. B Incorrect. $20. While a forty-eight-hour waiting period applies to total theft losses under OTC coverage, a twenty-four-hour waiting period applies to loss by other perils under both collision and OTC.

Bert and Maggie insure their house with an unendorsed HO-3—Special Form (HO-3) with a Coverage A—Dwelling limit of $300,000, which is the replacement cost of the house. A fire destroys their detached garage. The cost to replace the garage is $35,000. Ignoring any deductible that may apply, how much will Bert and Maggie's insurer pay to replace the detached garage? Choose one answer. A. $20,000 B. $25,000 C. $30,000 D. $35,000

C. D Incorrect. The insurer will pay $30,000, which is the limit (10% of Coverage A) for Other Structures.

Which one of the following is a policy liability that might exist on an insurer's balance sheet? Choose one answer. A. Liability for policies that have yet to be written B. Liability for possible renewals of property insurance contracts with no guaranteed pricing C. Liability for level premium renewable term life insurance D. Liability for reinsurance recoverables

C. D. Incorrect. Liability for level premium renewable term life insurance is a policy liability that might exist on an insurer's balance sheet. Page 1.18 - This belongs to Policy liabilities

The cost to replace property with new property of like kind and quality less depreciation is referred to as the Choose one answer. A. Replacement cost. B. Selling price. C. Actual cash value. D. Depreciated value.

C. A Incorrect. The cost to replace property with new property of like kind and quality less depreciation is referred to as the actual cash value (ACV).

A state insurance department is concerned about how fast auto liability coverage costs have been rising. The department wishes to limit future increases in rates. The least burdensome form of regulation to achieve this goal is Choose one answer. A. Open competition. B. Use and file. C. Flex rating. D. Prior approval

C. A Incorrect. The least burdensome form of regulation to achieve this goal is flex rating.

Chris and Bill have their family insured under a plan that allows them to select their own healthcare provider without any restrictions. The plan then reimburses them for a percentage of their medical expenses after the satisfaction of a deductible. This is an example of Choose one answer. A. A preferred provider organization plan. B. A health maintenance organization plan. C. An indemnity plan. D. A point-of service plan.

C. A Incorrect. This is an example of an indemnity plan.

Clarence entered into a contract bond that guarantees his insulation work will be free from defects in materials and workmanship for a specified period of five years after completion of the work. The type of bond used by Clarence is a Choose one answer. A. License and permit bond. B. Performance bond. C. Maintenance bond. D. Bid bond.

C. B Incorrect. Clarence used a maintenance bond.

In a lawsuit involving a vehicle accident, a court finds three parties partially at fault. The plaintiff John was 20 percent at fault, Carl, the other driver, was 70 percent at fault, while Bud City (the municipality) was 10 percent at fault. If John proves damages of $100,000 and finds Carl is bankrupt, then under the Uniform Contribution Among Joint Tort Feasors Act (UCAJTFA), Bud City would be liable for Choose one answer. A. None of the damages. B. 10 percent of the damages. C. 80 percent of the damages. D. 100 percent of the damages.

C. B Incorrect. John was only 20 percent at fault and therefore the remaining 80 of fault falls to the municipality since Carl has no resources.

A homeowners policy premium is determined by first developing the base premium. The base premium is influenced by certain factors, including which one of the following? Choose one answer. A. Package policy credits B. Claim history C. Policy form D. Insurance score

C. B. Incorrect. The base premium is influenced by certain factors, including the policy form.

Emilia lived on a farm in rural North Dakota. Her neighbor, Lucas, planted a garden by Emilia's property. Emilia knew that Lucas's garden was at risk of damage from flowing rainwater because of the hills at the edge of her property. Emilia also knew that the trees on her property were old and could fall in strong winds. During the next storm, the garden was destroyed by a combination of rainwater, falling branches, and rocks rolling from Emilia's hills. Which one of the following is correct concerning whether Lucas has a claim against Emilia for any or all of the natural conditions that destroyed his garden? Choose one answer. A. Emilia is liable for the water and tree branches, but not the rocks, because she was not aware of that particular danger. B. Emilia is liable for all the natural conditions on her land that caused injury off her land, except for rainwater. C. Emilia's only duty in this case was to remove the old trees that she knew might fall, and she is not liable for any other natural conditions. D. Emilia is not liable for the damage to the garden, because, in rural areas, landowners have no affirmative duty to inspect trees, rocks, or rainwater runoff.

C. D Incorrect. Emilia's only duty in this case was to remove the old trees that she knew might fall, and she is not liable for any other natural conditions.

An insured is reviewing the Commercial Package Policy (CPP) to determine which conditions apply to all coverage parts in the policy. One of those conditions states that Choose one answer. A. Changes can be made by the insurer or insured by verbally contacting the other. B. Both the insured and insurer can cancel the policy with 30 days notice for certain reasons. C. The insurer has the right to do an on-site inspection of the insured's books and records. D. The insurer will inspect the property to verify the compliance with safety regulations.

C. D Incorrect. The insurer has the right to do an on-site inspection of the insured's books and records. Doesn't guarantee, page9.16

Which one of the following ocean marine insurance policies or clauses covers a shipowner's liability for damage to the cargo on another ship if the insured ship runs into the other ship?

Collision liability clause

Ralph has an unendorsed HO-3—Special Form (HO-3) policy. While coming home from a coin show, Ralph discovers that his automobile was broken into and a package containing $2,000 in coins, some tools, and groceries was stolen. Disregarding any deductible that may apply, will Ralph's HO-3 insurer pay for the loss of the coins? Choose one answer. A. No, theft of money is an excluded peril. B. No, leaving money in an unattended vehicle is negligent behavior, which is excluded. C. Yes, the coins are covered up to a specified limit. D. Yes, the coins are covered up to the limit of Coverage C as long as they are of a collectible nature.

C. D. Incorrect. Yes, the coins are covered up to a specified limit ($200).

Generally, how do courts determine that a defendant is liable under negligence per se? Choose one answer. A. Courts determine that a defendant is negligent per se when the defendant took on the risk of liability under a contract. B. Courts determine that a defendant is negligent per se when the defendant has committed a wanton immoral act. C. Courts determine that a defendant is negligent per se when the defendant has violated a statutory standard. D. Courts determine that a defendant is negligent per se when the defendant is in all likelihood negligent under the given circumstances.

C. 13.12. D Incorrect. Courts determine that a defendant is negligent per se when the defendant has violated a statutory standard.

Lucy owned an apartment complex and rented one of the apartments to Daniel. The wiring in Daniel's apartment was faulty, and certain light switches, if operated with wet hands, could give off nasty electric shocks. Lucy knew about this condition, and knew that Daniel would not be able to detect it, but Lucy did not tell Daniel about the light switches. Daniel did shock himself, and suffered minor burns as a result. Which one of the following correctly identifies whether Lucy is liable for Daniel's injuries, at common law and under today's law? Choose one answer. A. Not liable at common law, not liable under today's law B. Liable at common law, not liable under today's law C. Not liable at common law, liable under today's law D. Liable at common law, liable under today's law

C. 13.24 about today's law = common law today and regulation D Incorrect. Not liable at common law, liable under today's law

Rosa's sedan is covered by a Personal Auto Policy (PAP) with split limits for liability coverage of $100/$300/$50. Rosa's friend, Lamont, owns a sports car that is covered by a PAP with split limits for liability coverage of $25/$50/$10. Rosa borrowed Lamont's sports car and caused an accident with another vehicle driven by James. James and his passenger, Fred, were injured and they filed suit against Rosa. A court awarded $35,000 to James for his bodily injuries and $110,000 to Fred for his bodily injuries. How much will be paid under each policy? Choose one answer. A. $29,000 under Lamont's policy and $116,000 under Rosa's policy B. $35,000 under Lamont's policy and $110,00 under Rosa's policy C. $50,000 under Lamont's policy and $95,000 under Rosa's policy D. $95,000 under Lamont's policy and $50,000 under Rosa's policy

C. Correct. $50,000 under Lamont's policy and $95,000 under Rosa's policy. If other liability coverage is available on a nonowned vehicle, the PAP coverage is excess over any other collectible insurance. To James: $25,000 from Lamont's PAP and $10,000 from Rosa's. To Fred: $25,000 from Lamont's PAP and $85,000 from Rosa's. Be careful, I was thinking about the second 50k not using the 25k limit in my calculation.

Regarding premium recognition, which one of the following treatments might be used for a continuous policy to account for written premium? Choose one answer. A. Pro rata written premium recognition as the premiums become earned B. A written premium definition based only on the first year of the continuous policy C. Annual premium payments viewed as a series of annual policies with only the current year premium treated as "written" D. A written premium definition based on representative years of the continuous policy and using those years as the base for recognition

C. Correct. For a continuous policy, the annual premium payments may be viewed as a series of annual policies with only the current year premium treated as "written". *Continuous policies: Policies of indefinite term, such as reinsurance treaties that are automatically renewed annually unless canceled before a new year begins. *

In which one of the following family structures is the risk of incurring child-care costs over a prolonged period a unique consideration in establishing life insurance needs? Choose one answer. A. Sandwiched family B. Traditional family C. Blended family D. Single-parent family

C. Correct. In a blended family, the risk of incurring child-care costs over a prolonged period is a unique consideration in establishing life insurance needs.

Tim and Kelly have a Personal Auto Policy (PAP) with liability limits of $100/$300/$50. They were at fault in an accident when they lost control of their vehicle and ran into a van, injuring eight passengers in the van. There was a $600,000 judgment against Tim and Kelly, which was the total of $75,000 for each of the eight passengers in the van. Defense costs totaled $25,000. How much will Tim and Kelly's PAP insurer pay for this accident? Choose one answer. A. $100,000 B. $300,000 C. $325,000 D. $625,000

C. Defense cost is in addition to the limit. I was thinking what Tim and Kelly will pay. B Incorrect. Tim and Kelly's PAP insurer will pay $325,000 for this accident. The $300,000 per accident limit applies, plus $25,000 in defense costs.

Louise has a Personal Auto Policy (PAP) with liability limits of $100/$300/$50 insuring her SUV and sedan. Louise's daughter, Tina, who lives in another state, borrowed Louise's sedan while Tina's car was in the shop for maintenance work. Tina has a Personal Auto Policy (PAP) with limits of $250/$500/$50. Tina, talking on her cell phone, was distracted while driving the sedan and rear-ended the car in front of her causing minor damage. The liability loss resulting from this accident will be Choose one answer. A. Not covered by Louise's insurer or Tina's insurer. B. Shared by both Louise's insurer and Tina's insurer. C. Paid by Louise's insurer. D. Paid by Tina's insurer.

C. I am thinking too much. Tina's insurer should be paying on the excess basis. B Incorrect. The liability loss resulting from this accident will be paid by Louise's insurer.

Under the deferral-matching approach to premium accounting Choose one answer. A. The policy premium is recognized as revenue at the time when the insurance contract is signed. B. Revenue is recognized once the insurer gains control of the asset resulting from the revenue. C. Written premiums are generally defined as the amount of premium charged for that policy during the reporting period. D. There is no unearned premium and other liabilities must be established for losses expected during the unexpired policy period.

C. P 1.24. Analog to exam 5. WP is defined as the transactions during the period. Not necessary to include the original charge amount for the original reporting period. D. Incorrect. Written premiums are generally defined as the amount of premium charged for that policy during the reporting period.

An adjustment for risk in the commutation of a reinsurance agreement Choose one answer. A. Decreases the economic value. B. Does not affect the economic value. C. Increases the economic value. D. Equals the economic value.

C. Page 1.55. The risk adjustment is used as a risk load on to the discounted view of future paid losses. (*To account for the interest rate risk and adverse development*) D is incorrect. An adjustment for risk in the commutation of a reinsurance agreement increases the economic value

The named insured under a Commercial General Liability (CGL) Coverage Form dies, and Sarah becomes a temporary custodian of the named insured's property. The coverage for Sarah under the deceased named insured's CGL form applies only to liability arising out of Choose one answer. A. The named insured's premises. B. Losses that occurred within 60 days after the death of the named insured. C. The maintenance or use of the named insured's property. D. Contractual obligations.

C. Page 11.5 about legal representatives A Incorrect. Sarah's coverage is only for liability arising out of the maintenance or use of the named insured's property.

Jack insures his house with an unendorsed HO-3—Special Form (HO-3) with a Coverage A—Dwelling limit of $250,000, which is the replacement cost of the house. A thief breaks into the house while Jack is on vacation and steals his gun collection valued at $7,500. Ignoring any deductible that may apply, how much, if any, will Jack's HO-3 insurer pay for the loss to the guns? Choose one answer. A. $0 B. $1,500 C. $2,500 D. $7,500

C. Page 6.14, recite all!!! B. Incorrect. The insurer will pay $2,500 for the guns.

Which one of the following statements is correct with respect to the Non-Owned Detached Trailers coverage extension of the Building and Personal Property Coverage Form (BPP)? Choose one answer. A. The trailer can be used anywhere in the United States. B. The coverage applies while the trailer is attached to any motor vehicle or motorized conveyance, provided it is not in motion. C. It permits the insured to extend "your business personal property" to include trailers leased to expand office space or to provide additional storage or work areas. D. Coverage is available only if the insured has no contractual responsibility for loss or damage to the trailer.

C. Page 8.16 D Incorrect. Coverage is available only if the insured *HAS* a contractual responsibility for loss or damage to the trailer.

Commercial Articles Coverage Form

Paris Cuisine, a fine-dining restaurant, rents space in a commercial building, which is insured by its owner. Paris Cuisine spends $50,000 on wallpaper, floor coverings, windows, and other improvements that would remain in the building if Paris Cuisine were to move out. Paris Cuisine's interest in these improvements is insured under which one of the following? Choose one answer. A. The building portion of Paris Cuisine's Building and Personal Property Coverage Form (BPP) B. The leasehold improvements section of the building owner's BPP C. The business personal property section of Paris Cuisine's BPP D. The property of others section of the building owner's BPP

C. Paris Cuisine purchases a tanent's commercial property policy. Page 8.9 D is Incorrect. Paris Cuisine's interest in the improvements is insured under the business personal property section of Paris Cuisine's BPP.

Which one of the following is a peril insured against for Coverage C under an HO-3—Special Form (HO-3)? Choose one answer. A. Neglect B. War C. Aircraft D. Intentional loss

C. Peril Insured Against is *covered* D. Incorrect. Aircraft is a peril insured against for Coverage C under a HO-3 policy.

Li has a Personal Auto Policy (PAP) for his car with a $100,000 limit for uninsured motorists (UM) coverage. He was injured in an accident with a legally intoxicated uninsured motorist. Li submitted a UM claim to his insurer. The case went to trial and Li was awarded $50,000 for medical bills, $10,000 for rehabilitation expenses, $5,000 for lost wages, and $10,000 for punitive damages. How much can Li collect under the UM coverage of his PAP? a. $50,000 b. $55,000 c. $65,000 d. $75,000

C. Punitive is not covered

Some states' underinsured motorists (UIM) coverage endorsements contain a "limits trigger." In states that apply the UIM limits trigger, UIM coverage applies when a. The insured has failed to maintain the minimum limits required for bodily injury liability. b. The insured has failed to acquire medical payments coverage for any injuries received while occupying a motor vehicle. c. The negligent driver carries liability limits below the limits provided by the UIM coverage of the injured party. d. The negligent driver carries liability insurance limits that are lower than the injured party's actual damages.

C. This is specific to limits trigger states

covers the stock in trade (inventory) of camera dealers or musical instrument dealers and similar property of others in the insured's care, custody, or control.

Camera and Musical Instrument Dealers Coverage Form

Contractor's equipment floaters are the largest class of inland marine insurance. Contractor's equipment

Can include rental reimbursement coverage.

39) The XYZ Finance Company is insured under an ISO Commercial Crime policy. One month after the policy inception date, XYZ acquired ownership of a smaller finance company including its premises and employees. Which one of the following bedescribes XYZ's responsibility under the Consolidation-Merger or Acquisition condition of the policy?

Coverage applies automatically for 90 days, but XYZ must promptly notify the insurer and pay the appropriate additional premium for coverage to continue beyond that time.

Breakdown coverage

Coverage in an EDP equipment floater for perils such as mechanical failure, electrical disturbance and damage to electronic data when covered equipment breaks down

85) A company that needs coverage for theft of money and securities resulting from computer fraud should choose which one of the following insuring agreements in a cyber risk insurance policy?

Cyber crime

A company that needs coverage for theft of money and securities resulting from computer fraud should choose which one of the following insuring agreements in a cyber risk insurance policy?

Cyber crime

18) All of the following are common dividend options found in participating whole life insurance policies EXCEPT A) reduction of premiums. B) dividend accumulations. C) purchase of paid-up insurance. D) purchase of insurance company stock.

18) Richard is using the capital retention approach to determine how much life insurance to purchase. Richard would like to provide $35,000 per year to his family, forever, if he dies. The assets that he has today will provide $25,000 in annual income without the liquidation of these assets. If life insurance proceeds can be invested to earn a 5 percent annual return, how much life insurance should Richard purchase to fund the additional income needed to meet the $35,000 annual income goal? A) $10,000 B) $100,000 C) $150,000 D) $200,000

22) Which of the following statements about yearly renewable term insurance is (are) true? I. It requires evidence of insurability for renewal. II. It is most appropriate when an insured needs lifetime protection. A) I only B) II only C) both I and II D) neither I nor II

26) Which of the following statements about life income settlement options is (are) true? I. Under a joint-and-survivor life income option, payments cease at the death of the first annuitant. II. Under a life income with period certain, a contingent beneficiary is guaranteed a minimum number of payments regardless of when the primary beneficiary dies. A) I only B) II only C) both I and II D) neither I nor II

27) William would like to insure his home. He does not want theft or personal liability coverage on the dwelling. William should purchase a A) Homeowners 3 Policy. B) Dwelling Property 1 Form. C) Dwelling Property 2 Form. D) Dwelling Property 3 Form.

30) Which of the following statements about the guaranteed purchase option is true? A) An insured usually has 24 months to exercise an option. B) The option cannot be exercised until the insured reaches age 40. C) The amount of life insurance that can be purchased at each option is limited to 10 percent of the face amount of the basic policy. D) The additional coverage can be purchased without demonstrating insurability.

31) All of the following statements about the businessowners policy are true EXCEPT A) Coverage for business personal property includes coverage for leased personal property which the named insured has a contractual responsibility to insure. B) The amount of insurance on the buildings increases by a stated percentage each year. C) Additional coverages include pollutant cleanup and removal. D) The policy must be written with a deductible of at least $2,000 for property losses.

32) Which of the following statements about limited-payment life insurance is true? A) It is a form of term insurance. B) It matures at the end of the premium-payment period. C) The premium decreases each year during the premium-payment period. D) Its use may be appropriate if a person wants paid-up life insurance during retirement.

23) Which of the following statements about a typical personal umbrella policy is (are) true? I. Losses covered under the basic underlying policies are paid on a pro rata basis by the umbrella policy. II. Losses not covered by the basic underlying contracts are subject to a self-insured retention which typically is at least $25,000. A) I only B) II only C) both I and II D) neither I nor II

38) Jennifer was just asked to serve on the Board of an insurance company. Jennifer is concerned that if the company is mismanaged, the policyowners, stockholders, and employees might sue the management team. What type of liability insurance will protect Jennifer from such claims if she accepts a position on the insurance company's Board? A) commercial general liability insurance B) employment-related practices liability insurance C) workers compensation and employer liability insurance D) directors and officers liability insurance

49) Alex, age 26, purchased a 20-payment whole life insurance policy. After Alex has made 20 premium payments, his life insurance policy is considered A) matured. B) reduced. C) expired. D) paid-up.

5) Which of the following statements about the grace period in a life insurance contract is (are) true? I. It is usually between 90 and 180 days in duration. II. If the insured dies during the grace period, the death benefit is reduced by 50 percent. A) I only B) II only C) both I and II D) neither I nor II

10) The period during which a surviving spouse is ineligible for Social Security benefits is referred to as the A) emergency period. B) readjustment period. C) dependency period. D) blackout period.

12) Fifth National Bank decided to loan $200,000 to Fred Franklin. As collateral for the loan, Fred posted stock certificates. When Fred defaulted on the loan, Fifth National tried to sell the stock. They discovered the stock certificates were stolen from someone else. Which insuring agreement in a financial institution bond is designed to cover such losses? A) Insuring Agreement B-On Premises B) Insuring Agreement C-In Transit C) Insuring Agreement D-Forgery or Alteration D) Insuring Agreement E-Securities

13) All of the following are reasons for an employer to purchase employers liability insurance EXCEPT A) to cover the suits of injured employees of small employers in states where workers compensation is not mandatory for small employers. B) to cover suits arising from injuries or diseases which are not covered under workers compensation laws. C) to cover third-party over cases that arise from injuries to an employee. D) to cover suits by employees who seek damages for discriminatory labor practices.

13) Disadvantages of the capital retention approach include which of the following? I. Assets are often liquidated too quickly. II. It underestimates the amount of life insurance needed. A) I only B) II only C) both I and II D) neither I nor II

14) National Bank believed it had been properly authorized to transfer $250,000 to the off-shore account of one of its corporate customers. The authorization was fraudulent, however, and the transferred funds were stolen. Under which commercial crime coverage insuring agreement would such a loss be covered? A) Money Orders and Counterfeit Currency B) Forgery or Alteration C) Outside the Premises D) Funds Transfer Fraud

14) Tom and Nancy Boyle provide financial support for their two children. In addition, they provide financial support for Tom's aged father and Nancy's aged mother. The Boyle family can be described as a A) blended family. B) single-parent family. C) two-income earner family. D) sandwiched family.

15) All of the following are coverage options under the physical damage coverage in the Business Auto Coverage Form EXCEPT A) comprehensive coverage. B) specified causes-of-loss coverage. C) collision coverage. D) property damage liability coverage.

15) All of the following statements about the federal flood insurance program are true EXCEPT A) Under the write-your-own program, each insurer services the policies it writes. B) The regular portion of the program allows the purchase of higher amounts of coverage than are available under the emergency portion of the program. C) The program is designed to be financially self-supporting for the average historical loss year. D) The maximum amount of coverage that can be written on any single dwelling is $25,000.

16) In the context of a surety agreement, the party who agrees to perform certain acts or fulfill certain obligations is called the A) fidelity. B) obligee. C) surety. D) principal.

16) Jessica is an agent for LMN Life Insurance Company. She met with Brad, who was interested in purchasing life insurance. Jessica explained the various uses of life insurance, including income for Brad's wife during the 1- or 2-year period following Brad's death. This period is known as the A) dependency period. B) estate clearance period. C) blackout period. D) readjustment period.

16) Which of the following statements about coverage under the federal flood insurance program is (are) true? I. Subsidized coverage is available for contents, but not for dwellings. II. A $10,000 deductible applies to each loss. A) I only B) II only C) both I and II D) neither I nor II

16) XYZ, Inc. would suffer serious financial consequences if either of its two major customers were shut down and could not purchase XYZ products. Which of the following types of consequential loss protection would provide protection against this exposure? A) leasehold interest B) extra expense C) marine insurance D) business income from dependent properties

17) All of the following are considered floods under the federal flood insurance program EXCEPT A) the overflow of tidal waters. B) the accumulation of surface water after a heavy rain. C) a mudslide caused by an accumulation of water after a heavy rain. D) wind-driven rain which enters a dwelling through storm-damaged doors or windows.

21) Most family heads need substantial amounts of life insurance. However, with limited income, money spent on life insurance reduces the amount of discretionary income available for other high-priority needs. What an insured person gives up when he or she purchases life insurance instead of using the premium dollars for other purposes is called the A) estimated cost of life insurance. B) net cost of life insurance. C) real (inflation-adjusted) cost of life insurance. D) opportunity cost of buying life insurance.

22) Which of the following statements about title insurance is true? A) A premium must be paid annually to keep the policy in force. B) The policy term runs for 20 years or the length of the insured's mortgage loan, whichever is shorter. C) The policy guarantees that the owner will keep possession of the property if a defect in the title is discovered. D) The policy provides protection against title defects occur prior to the effective date of the policy.

24) All of the following statements about term insurance are true EXCEPT A) The insurance provides protection for a specified period of time. B) Most policies can be renewed for additional periods without evidence of insurability. C) Most policies can be converted to a permanent life insurance policy. D) Most policies have a cash value that is refunded when coverage ceases.

24) Which of the following statements about physicians, surgeons, and dentists liability insurance is true? A) Liability coverage is restricted to accidental acts. B) The policy eliminates the need for medical practitioners to purchase general liability insurance. C) The insurer must obtain the consent of medical practitioners before the insurer can settle claims. D) The policy covers the physician for the negligent acts of an employee.

25) All of the following statements about the conversion of a term policy are true EXCEPT A) Under an attained age conversion, the premium is based on the insured's attained age at the time of conversion. B) Under an original age conversion, the policyowner must pay a financial adjustment in addition to the premium for the new policy. C) Most insurers require original age conversion to take place within a specified period (5 years, for example) of the issue of the term policy. D) Evidence of insurability is required before a conversion is permitted.

25) George has a personal auto policy with a per-person liability limit of $300,000. He also has a personal umbrella policy with a limit of $2,000,000 and a self-insured retention of $1,000. How much will be paid by each policy if a person wins a judgment of $500,000 against George as a result of bodily injury arising from the auto accident? A) The auto policy will pay nothing, and the umbrella policy will pay $449,000. B) The auto policy will pay nothing, and the umbrella policy will pay $500,000. C) The auto policy will pay $300,000, and the umbrella policy will pay $199,000. D) The auto policy will pay $300,000, and the umbrella policy will pay $200,000.

26) All of the following are commonly excluded by personal umbrella policies EXCEPT A) acts committed with the intent to cause bodily injury or property damage. B) professional liability. C) aircraft liability. D) libel, slander, and other types of personal injury.

27) XYZ Insurance Company markets a wide range of coverages. One type of coverage provides monetary compensation if a bonded party fails to perform certain acts. This coverage is called A) property insurance. B) liability insurance. C) fidelity bonding. D) surety bonding.

28) A legal reserve in life insurance is a result of A) premium taxes payable by life insurance companies being postponed during the early policy years. B) dividends being paid to policyowners. C) inadequate premiums in the early policy years being subsidized by investment earnings. D) excess premiums in the early policy years being invested at compound interest.

28) Which of the following statements about the waiver-of-premium provision is true? A) Because the probability of becoming disabled exceeds the probability of premature death, the cost to include this provision is usually prohibitive at younger ages. B) Premiums are usually waived if the insured becomes partially disabled. C) Life insurance protection continues in force during a period of disability, but dividends cease and cash values are reduced. D) The disability must occur before a stated age, such as 65, for premiums to be waived.

29) All of the following are requirements that must be satisfied before premiums are waived under a waiver-of-premium provision EXCEPT A) The insured must furnish proof of disability to the insurer. B) The insured must be disabled before some specified age, such as age 60 or 65. C) The insured must satisfy the definition of disability. D) The insured must satisfy a 2-year waiting period.

3) All of the following are covered under the building and personal property coverage form EXCEPT A) the insured's stock and inventory when located inside the insured building. B) equipment used to service the insured building. C) the insured's use interest in improvements and betterments if the insured is a tenant. D) a manufacturing building owned by a key customer or key supplier of the insured.

3) All of the following are reasons an insurer can contest a policy after the contestable period has ended EXCEPT A) The beneficiary purchased the policy with the intent of murdering the insured. B) An insurable interest did not exist at the inception of the policy. C) The applicant had someone else take the medical examination required for policy approval for her. D) The policyowner concealed a material fact at the time of application.

3) In the ISO Commercial Crime Coverage form, safe burglary is defined as the A) unlawful taking of property to the deprivation of the insured. B) unlawful taking of property from the care and custody of a person by someone who has caused or threatens to cause bodily harm or who has committed an unlawful act witnessed by that person. C) unlawful taking of money or securities through the alteration of a negotiable instrument. D) unlawful taking of property from within a locked safe or vault by someone who enters the safe or vault as evidenced by marks of forcible entry upon the exterior.

31) Medical malpractice insurance written on a claims-made basis can leave a surgeon vulnerable to malpractice claims if the surgeon retires, changes insurers, or drops coverage. A provision can be added to the claims-made form that protects the surgeon for future claims arising from incidents that occurred while the claims-made policy was in force. This provision is called a(n) A) cut-through endorsement. B) drop-down endorsement. C) agreed amount endorsement. D) extended reporting period endorsement.

31) State X hired Build-Right Construction to build a bridge. State X required that construction be completed within 2 years after the contract was signed. Les Johnson is the president of Build-Right. State X required that Build-Right's promise to perform be guaranteed by a third party. Build-Right purchased a performance bond from Rock Solid Indemnity. The bond requires Rock Solid to be responsible if Build-Right does not have the project completed on time. In this scenario, which party is the surety? A) State X B) Build-Right Construction C) Les Johnson D) Rock Solid Indemnity

32) Which of the following statements is (are) true about the National Flood Insurance Program? I. You can't purchase flood insurance through this program if your property is located in a high-flood-risk area. II. Coverage is not available for any property which has been flooded previously. A) I only B) II only C) both I and II D) neither I nor II

33) Tenth National Bank extended a $2 million loan to ABC Development Company. Tenth National accepted a mortgage on a building as collateral for the loan. The mortgagee's signature on the loan, however, was a forgery. The resulting loss is covered by which financial institution bond coverage? A) Insuring Agreement A -- Fidelity B) Insuring Agreement D -- Forgery or Alteration C) Insuring Agreement D -- Securities D) Insuring Agreement G -- Fraudulent Mortgages

34) All of the following statements about variable life insurance are true EXCEPT A) The premium is level and guaranteed not to increase. B) The death benefit varies according to investment experience. C) The policyowner has the option of investing the cash value in several investment accounts. D) Cash surrender values are guaranteed.

34) Len is considering the purchase of a home. As a home is a large investment, Len wants to make sure that there are no liens, easements, or other encumbrances preventing him from an unchallenged right to possess and enjoy his property. Len can protect this right through the purchase of A) extended coverage insurance. B) replacement cost insurance. C) personal umbrella insurance. D) title insurance.

34) Rick is risk manager of Herald News, a daily newspaper in a competitive market. Rick wants to make sure that if Herald's printing facility is damaged or destroyed, the paper will continue to be published. What type of insurance can Rick purchase to cover the added cost of continuing to print the paper after a physical damage loss has occurred? A) contingent business income coverage B) product liability insurance C) business income from dependent properties coverage D) extra expense coverage

38) Tom opened a store in a mall. His store is located between a theater and a department store. Tom counts on the theater and department store to generate walk-in business at his store. While his store has been successful, Tom knows that if either or both of the other businesses closed, his store would suffer an economic loss. What type of dependent property situation is illustrated in this scenario? A) contributing location B) recipient location C) manufacturing location D) leader location

4) Section I of the Commercial General Liability (CGL) Policy provides coverage for all of the following exposures EXCEPT A) bodily injury liability. B) advertising injury liability. C) medical payments. D) automobile liability.

4) Which of the following statements about Dwelling Property 3 (special form) is (are) true? I. Personal property is covered on an "open perils" (all risks) basis. II. The dwelling and other structures are covered only for those perils specifically named in the policy. A) I only B) II only C) both I and II D) neither I nor II

40) Which life insurance policy provision specifies that it is the policyowner, and not the insured or beneficiary, who possesses all contractual rights while the policy is in force? A) nonforfeiture options B) entire contract clause C) incontestable clause D) ownership clause

43) Beth purchased a participating life insurance policy 6 years ago. Her life insurance needs have increased, but she has developed a medical condition that makes it impossible for her to purchase more life insurance at affordable premiums. Which dividend option makes sense for Beth to use given her medical condition? A) cash B) apply to premium C) dividend accumulations D) paid-up additions

44) Which of the following statements about savings bank life insurance is true? A) The maximum amount that a depositor can purchase is $50,000. B) The maximum amount of insurance that a depositor can purchase is limited to the amount of money on deposit in his or her savings account with the savings bank. C) The objective of savings bank life insurance is to provide protection to the bank in case a borrower dies before a loan is repaid. D) The objective of savings bank life insurance is to provide low-cost insurance to consumers by holding down expenses.

47) Which of the following statements is (are) true concerning settlement options? I. A straight life annuity provides the lowest periodic income of all the life income options. II. Fixed-period and fixed-amount are life income options. A) I only B) II only C) both I and II D) neither I nor II

5) All of the following are defects which limit the usefulness of the human life value approach in determining the correct amount of life insurance to purchase EXCEPT A) The effects of inflation are ignored. B) Other sources of income for survivors are ignored. C) Earnings are assumed to remain constant. D) Earnings during the individual's productive lifetime are ignored.

5) All of the following are extensions of coverage under the building and personal property coverage form EXCEPT A) newly acquired or constructed property. B) valuable papers and records. C) personal property temporarily off the premises. D) currency and securities.

51) A life insurance policyowner may no longer need life insurance. Such a policyowner may sell the policy to a third party for more than its cash value. The purchaser becomes the new beneficiary and is responsible for subsequent premium payments. Such a financial transaction is called a(n) A) collateral assignment. B) accelerated death benefits rider. C) absolute assignment. D) life settlement.

6) All of the following statements about the requirements to reinstate a lapsed life insurance policy are true EXCEPT A) Evidence of insurability is required. B) The lapse must have resulted from other than the surrender of the policy for its cash value. C) All overdue premiums must be paid along with interest from the premium due dates. D) The policy must be reinstated within 1 year.

6) Bay Gallery has a Commercial General Liability Policy with no endorsements. All of the following claims would be covered under the policy EXCEPT A) An artist sued the gallery for slander after an employee of the gallery said the artist's work looks like it was painted by an intoxicated monkey. B) A customer is injured when a painting falls from the wall and strikes the customer. C) A customer is injured after falling on a slippery floor at the gallery. D) A painting owned by a private collector on loan to the gallery was damaged by a gallery employee.

7) Bernice is an underwriter. She is reviewing a commercial crime coverage application. The coverage will be written using the discovery form. Bernice is concerned that a large undiscovered loss may exist prior to the policy's inception date. Which provision should Bernice add to the policy to protect against liability for such previous losses? A) extended reporting endorsement B) loss sustained during prior insurance provision C) waiver of inventory provision D) retroactive date endorsement

9) All of the following causes of loss are included in the causes-of-loss basic form of the ISO commercial package policy EXCEPT A) fire. B) lightning. C) explosion. D) flood.

In terms of landowners' duties to people on their property, which one of the following is the best definition of a licensee? a. A person who unintentionally enters onto the property without the legal right to do so, and who is owed no duty by the landowner b. A person given permission to be on the land for business reasons only, and who is owed the duty of reasonable care c. A person who enters the property for the landowner's benefit, and who is owed an active duty of great care d. A person with express or implied permission to enter onto the land for his or her own purpose, and who is owed a duty to be warned of hidden defects

Marti fell asleep on a towel while sunbathing on the beach. A driver of a motorized all-terrain vehicle designed for off-road use ran over her, severely injuring her. No liability insurance coverage pertained to the accident. Marti made an uninsured motorist (UM) coverage claim under her Personal Auto Policy (PAP). Marti's claim Choose one answer. A. Should be paid under the Other Insurance clause. B. Should be paid under the public or livery conveyance provision. C. Should be denied because the all-terrain vehicle owner would be considered self-insured. D. Should be denied because it involves no uninsured motor vehicle as defined by the PAP.

D A. Incorrect. Marti's claim should be denied because it involves no uninsured motor vehicle as defined by the PAP.

Joel is a delivery driver for XYZ Auto Supply. He usually drives the company van, but one day, since he only had to deliver a small part, Joel used his own car that is insured with a Personal Auto Policy (PAP). While doing so, Joel was involved in a two-vehicle accident and a liability claim was made against Joel and XYZ Auto Supply. Identify the insured(s) under Joel's PAP in this situation. Choose one answer. A. None B. Joel only C. XYZ Auto Supply only D. Joel and XYZ Auto Supply

D A Incorrect. Joel and XYZ Auto Supply. Part A covers any person or organization legally responsible for the acts of a covered person while using a covered auto. Joel is a covered person while driving his car, and the employer is responsible for his actions as an employee.

Under the Legal Action Against Us condition of the Commercial Property Conditions Form, if the insured wishes to bring legal action against the insurer, he or she must do so within which one of the following timeframes? Choose one answer. A. Sixty days after the insurer denies coverage for a loss B. One year from the date on which the insured notifies the insurer of his or her intention to sue C. Three years after the insurer's action that has given rise to the suit D. Two years after the date on which the direct physical loss occurred

D A Incorrect. The action must be brought within two years after the date on which the direct physical loss occurred.

Which one of the following statements is true regarding insurance coverage for foreign operations? Choose one answer. A. Commercial insurance policies usually provide worldwide coverage. B. Foreign voluntary workers compensation policies exclude coverage for transportation expense to return disabled or deceased employees to the United States. C. Foreign voluntary workers compensation policies do not provide coverage for endemic diseases. D. Small to mid-sized businesses in the United States frequently must concern themselves with foreign exposures.

D B Incorrect. Commercial insurance does not provide worldwide coverage, and foreign workers compensation policies often cover transportation expenses and endemic diseases.

Edna, who participates in a homeowners' reciprocal exchange knows that the members of the exchange insure members' loss exposures. A policy issued by the reciprocal insurer specifies the attorney-in-fact's authority to implement its powers on behalf of Edna and the other members of the exchange. Information regarding the powers of the attorney-in-fact is most likely to be found in Edna's policy's Choose one answer. A. Declarations. B. Insuring agreement. C. Conditions. D. Miscellaneous provisions.

D B Incorrect. Miscellaneous provisions. Miscellaneous provisions Examples on 2.23: 1. A policy issued by a mutual insurer is likely to describe each insured's right to vote in the election of the board of directors 2. A policy issued by a reciprocal insurer is likely to specify the attorney-in-fact's authority to implement its powers on the insured's behalf

Red Contracting (Red) hires a subcontractor, which uses its own bulldozer to move earth at Red's building site. Red secures a certificate of insurance from the subcontractor. While grading the site, the subcontractor damages an adjacent, unoccupied building causing the building to collapse. Does Red's commercial general liability (CGL) policy cover the subcontractor for its actions? Choose one answer. A. Yes, because the subcontractor is under a contract and working at the direction of Red B. Yes, because the subcontractor is a legal representative of Red for this project C. No, because the property damage was caused by the use of mobile equipment, which is excluded under the commercial general liability policy D. No, because the subcontractor is not an insured under Red's CGL policy

D B Incorrect. The subcontractor is not covered because it is not an insured under Red's policy.

Once every two months, the Mayor organized an arts and crafts fair at the city park. The Mayor was responsible for selecting and funding groups from the community to participate. By law, the Mayor was required to organize one arts and crafts event a year, but not necessarily at the park. Students from a local school wanted to take part in the next fair, but the Mayor hated their school so he turned them down. Which one of the following statements correctly assesses whether or not the Mayor's actions are immune from liability in this case? Choose one answer. A. The Mayor is directed by law to organize the fairs, so he is immune from liability for decisions made about the fairs. B. Maintaining a park is a uniquely government function, so the Mayor is not immune from liability over disputes about park events. C. The Mayor has the discretion to choose or not choose community participants, and discretionary acts are immune from liability. D. Official acts by government officials are not immune from suit when they are performed with malice and bad faith.

D C Incorrect. Official acts by government officials are not immune from suit when they are performed with malice and bad faith.

Keith created a tennis ball return machine that tennis pros favor because of the high velocity of the machine. The speeds of return are random and Keith posts the range of speed on the box. A 13-year-old tennis player loses his eye in an accident due to a ball being returned at a very high speed. In this situation, the type of product defect that would most likely lead to a liability suit against Keith is which one of the following? Choose one answer. A. Defect in manufacture B. Defect in assembly C. Defect in design D. Failure to warn

D C Incorrect. There is no indication of defect in manufacturer, assembly or design.

In addition to general duties under a Personal Auto Policy (PAP), a person seeking coverage under Part D—Coverage for Damage to Your Auto must perform additional duties. Which one of the following is one of these additional duties? Choose one answer. A. Promptly notify police if a hit-and-run driver was involved in the accident B. Submit to a physical examination conducted by a doctor chosen by the insurer C. Submit a proof of loss when required by the insurer D. Promptly notify police if a covered auto is stolen

D Struggled with A or D. A is Incorrect. This is an additional duty required for UM coverage. In addition to general duties under a Personal Auto Policy (PAP), a person seeking coverage under Part D—Coverage for Damage to Your Auto must promptly notify police if a covered auto is stolen. This may increase the possibility that the vehicle will be recovered.

Regarding coverage for foreign operations, which one of the following statements is true? Choose one answer. A. Like homeowners policies, commercial insurance policies also provide worldwide coverage. B. Foreign voluntary workers compensation policies seldom include coverage for transportation expenses to return disabled or deceased employees to the United States. C. Standard forms for foreign operations workers compensation exposures are available. D. Each insurer in the foreign voluntary workers compensation insurance market develops its own policy wording.

D 12.31 B Incorrect. Foreign voluntary workers compensation policies often include coverage for transportation expenses to return disabled or deceased employees to the United States.

Which one of the following statements regarding the extent of damages in liability claims is true? Choose one answer. A. The insured/defendant usually has the burden of proof regarding bodily injury and property damage proximately caused by his or her acts. B. A claimant generally may not recover damages to compensate for loss of use of damaged property. C. Unlike property damage claims, evaluation of bodily injury claims considers a narrow range of damage elements for the claimant. D. A claimant in a bodily injury or property damage liability claim has a duty to mitigate loss after an accident.

D Correct. A claimant in a bodily injury or property damage liability claim has a duty to mitigate loss after an accident. A wrong because it is claimant's burden of proof

Except for policies covering airlines, aircraft policies cover which one of the following? Choose one answer. A. All aircraft owned by the named insured B. Aircraft in a fleet, on a blanket basis C. Any aircraft used by the named insured D. Only the plane or planes specifically described in the policy

D Correct. Except for policies covering airlines, aircraft policies cover only the aircraft specifically described in the policy.

Sarah and Ernest Ridley have an unendorsed Personal Auto Policy (PAP) covering Sarah's sedan and Ernest's SUV with the following coverages and limits: Liability $100,000/$300,000/$50,000 Medical Payments $5,000 Uninsured Motorists $100,000/$300,000 Other Than Collision Actual Cash Value Less $250 Collision Actual Cash Value Less $500 Ernest was running errands in the SUV along with Sarah and their granddaughter, Millie. As a deer ran across the road in front of him, Ernest lost control of the vehicle and struck a parked car. The damages and costs from the accident are as follows: Damages to the SUV $15,000 Damages to the parked car $8,500 Ernest's medical injuries $10,000 Sarah's medical injuries $7,000 Millie's medical injuries $4,000 Defense cost $7,500 How much, if any, would Ridley's PAP insurer pay under Part B—Medical Payments Coverage? Choose one answer. A. $ 0 B. $ 4,000 C. $ 5,000 D. $14,000

D Correct. The PAP insurer would pay $5,000 for Ernest's medical injuries, $5,000 for Sarah's medical injuries, and $4,000 for Millie's medical injuries for a total of $14,000 under Part B—Medical Payments.

Which one of the following statements about Blue Cross and Blue Shield plans is true? Choose one answer. A. They are usually considered commercial insurers and regulated by the same laws. B. Their biggest limitation is that they offer only basic medical expense coverage. C. They typically reimburse insureds for medical expenses incurred, and then the insureds pay providers. D. They are often administered by for-profit organizations.

D Correct. They are often administered by for-profit organizations.

The inspections and surveys condition, a common policy condition attached to the ISO Commercial Package Policy, makes it clear that the insurer has the right to inspect the insured premises and Choose one answer. A. Will make regular physical inspections. B. May make safety inspections. C. Will inspect books and records. D. May recommend changes.

D Page 9.16 C. Incorrect. They may recommend changes.

A payment bond is a contract bond guaranteeing which one of the following? Choose one answer. A. A person appointed by a court to administer the property of others will faithfully perform his or her duties. B. The obligee will receive payment for loss or damage resulting from violation of the duties imposed on the licensee. C. The work will be free from defects in materials and workmanship for a specified period after the project is completed. D. The project will be free of liens.

D is correct.

Charlotte rented a house in New York. There was a large sinkhole in Charlotte's property, a short distance from a public road, but Charlotte left the hole unmarked. The hole was practically invisible at night. One evening, a police officer chased a mugger off the road and onto Charlotte's property, and both the officer and the mugger fell into the hole and broke their legs. Which one of the following best answers whether Charlotte is liable for the injuries to the police officer or to the mugger? Choose one answer. A. Charlotte is liable to both the officer and the mugger, because she had a duty to avoid endangering travelers with unguarded ditches. B. Charlotte is not liable to either the officer or the mugger, because they were both trespassers. C. Charlotte is not liable to either the officer or the mugger, because occupiers of land have no duty to correct defects abutting sidewalks or streets. D. Charlotte is liable to the officer for the unguarded ditch, because the officer was a licensee, but she is not liable to the trespassing mugger.

D is correct. C Incorrect. Charlotte is liable to the officer for the unguarded ditch, because the officer was a licensee, but she is not liable to the trespassing mugger.

In the Personal Auto Policy (PAP) definitions, "Your covered auto" includes all of the following classes of vehicles, EXCEPT: Choose one answer. A. A trailer owned by the insured B. A temporary substitute auto or trailer C. A newly acquired auto D. A trailer rented by the insured

D is not covered auto. Covered auto are: A. A trailer owned by the insured B. A temporary substitute auto or trailer (due to breakdown, repair, servicing, loss or destruction) C. A newly acquired auto plus any vehicle shown in the declrations

Group life insurance provides coverage to a number of individuals under one master contract issued to a sponsoring organization. The largest category of group life consumers is Choose one answer. A. Foundation groups. B. Church groups. C. Student groups. D. Employer groups.

D. C Incorrect. Employers represent the largest category covered by group insurance and consist of individual employees or can be multi-employer arrangements.

Jack is a scuba diving instructor, which is a dangerous occupation. Jack applies for a life insurance policy and lists his occupation as "marine administrator," a much safer occupation. Five years after the policy is issued, Jack is accidentally killed in a scuba diving accident. At this time, the insurer learns of Jack's real occupation and denies the claim under Jack's policy due to fraud and material misrepresentation. Jack's insurer would not have issued the policy if it had known Jack's real occupation. The policy had a two-year incontestable clause. Assuming that the policy has no occupational restriction, is the insurer's denial of the claim under Jack's policy proper? Choose one answer. A. Yes—based on Jack's fraud and material misrepresentation B. Yes—based on the suicide clause C. No—based on the misstatement of age and gender clause D. No—based on the incontestable clause

D. A Incorrect. After the period stated in the incontestable clause, in this case two years, the insurer loses the right to challenge the validity of the contract, even for most types of fraud. Some policies deny coverage for specifically stated occupations, but this policy has no occupational restriction.

Which one of the following would be excluded under Coverage B—Personal and Advertising Injury Liability of the Commercial General Liability (CGL) policy? Choose one answer. A. The use of another's advertising idea in the insured's advertisement B. Written publication of material that violates a person's right of privacy C. Malicious prosecution D. An offense committed by an insured whose business is broadcasting

D. A. Incorrect. This is covered under Coverage B of the CGL.

Under the HO-3—Special Form (HO-3) Section I—Conditions, the Loss Payment condition Choose one answer. A. Establishes how the amount to be paid for a property loss will be determined. B. Outlines a method for resolving disagreements between the insured and the insurer. C. Provides that if the insured abandons the property after it is damaged, the insurer need not take over responsibility for it. D. States that the insurer will adjust all losses with the insured or the insured's spouse (unless another person is named in the policy or is legally entitled to receive payment).

D. A. Incorrect. Under the HO-3 policy Section I—Conditions, the Loss Payment condition states that the insurer will adjust all losses with the insured or the insured's spouse(unless another person is named in the policy or is legally entitled to receive payment). Loss Settlement the process to determine the amount to be paid for a property loss

Which one of the following is a defense to libel and slander? Choose one answer. A. Absolute knowledge B. Valid information C. Unconditional privilege D. Retraction

D. B Incorrect. A retraction printed after a defamatory statement has been made is not a complete defense; however, it may minimize the damage to the plaintiff's reputation therefore lowering a compensatory damage award.

Professional liability for professions such as accounting, insurance, law, and engineering is often called which one of the following? Choose one answer. A. Negligence liability B. Malpractice liability C. Fiduciary liability D. Errors and omissions liability

D. B Incorrect. Professional liability for professions such as accounting, insurance, law, and engineering is also known as errors and omissions liability.

Which one of the following has the types of rate regulation listed in order from least stringent oversight to most stringent? Choose one answer. A. Prior approval, use and file, open competition B. Open competition, government-mandated, prior approval C. Open competition, use and file, file and use D. Open competition, use and file, prior approval

D. C Incorrect. Open competition, use and file, prior approval

Which one of the following is true regarding maintaining insurer solvency? Choose one answer. A. All insurers rely on the same reinsurers to provide backing for the risks they cover. B. When one insurer becomes insolvent, they all become insolvent within a short time period. C. Rates are developed based on the experience of all insurers, including those that become insolvent. D. Other insurers may be required to contribute funds to help pay an insolvent insurer's obligations.

D. C Incorrect. Other insurers may be required to contribute funds to help pay an insolvent insurer's obligations.

Which one of the following elements must exist in order to prove fraud? Choose one answer. A. A representation, whether true or untrue, that was made maliciously. B. A representation that was related to a past, existing, or future fact. C. The plaintiff may or may not have acted anyway, but the representation influenced the decision. D. The intent of the representation was to deceive the plaintiff into acting

D. C Incorrect. The intent of the representation was to deceive the plaintiff into acting.

Ian, Isaac, and Ann each own car repair shops. They are defendants in a lawsuit alleging that they were cheating customers and causing vehicle engine problems by utilizing very specific processes in their service shops. The plaintiff Nick is accusing all three defendants since it is unclear which of the defendants actually caused the problems with Nick's vehicle. Ian, Isaac and Ann must each prove that he or she did not cause the harm or that someone else did. This concept is known as Choose one answer. A. Concert of action. B. Industry-wide liability. C. Conspiracy. D. Alternative liability.

D. C Incorrect. This is not concert of action or conspiracy since Ian, Isaac, and Ann did not work together in any way to cause the problems with Nick's vehicle.

An HO-4—Contents Broad Form (HO-4) includes building additions and alterations coverage up to 10 percent of the limit of Coverage C—Personal Property. Which one of the following individuals would typically benefit from this coverage? Choose one answer. A. An owner of an older house with obsolete construction B. An owner of a single family home who has installed wheelchair ramps at the doors of her home to accommodate her wheelchair C. A condominium unit owner who renovates the kitchen and installs more expensive cabinets than were originally in the unit D. An apartment dweller who has installed a power-lift chair at the stairway inside his two-story unit

D. C. Incorrect. The apartment dweller who has installed a power-lift chair would benefit. The HO-4 is typically a renters policy. Even though a tenant may have no insurable interest in the apartment building, there is an insurable interest in installations which, if damaged, would be a loss to the tenant. C owner installed the power-lift chair, which is not an interest of the tenant

Under Coverage C—Personal Property of the homeowners policy, which one of the following statements is true? Choose one answer. A. Loss caused by smoke from agricultural smudging or industrial operations is covered under Coverage C. B. Theft from a building under construction and theft of construction materials are covered under Coverage C. C. Theft is included under Coverage C for watercraft, including its furnishings and equipment, away from the residence premises. D. Windstorm or hail damage to personal property is not covered unless the building is first damaged.

D. C. Incorrect. Windstorm or hail damage to personal property is not covered unless the building is first damaged.

Which one of the following statements is true regarding endorsements and other related documents? Choose one answer. A. Endorsement provisions do not differ from basic policy provisions because of the need for standardized language. B. Because of statutory and regulatory constraints, an insurance policy may not incorporate other documents in addition to policy forms. C. The insurer usually does not need to keep the completed insurance application because similar information may be found in the declarations page. D. In certain circumstances, the insurer's bylaws are incorporated into an insurance policy.

D. Correct. In certain circumstances, the insurer's bylaws are incorporated into an insurance policy. A. Endorsement provisions often differ from basic policy provisions. 2.15

A court would most likely order specific performance for which one of the following purposes? Choose one answer. A. To order a doctor to perform surgery B. To compensate an injured party C. To compel a party to refrain from trespassing D. To require the release of information

D. C Incorrect. A court would most likely order specific performance to require the release of information. Special performance is used to compel a party to act; injunction is used to compel a party not to act

Professional liability insurance is now available for more than just the technical professions. These occupations range from chemists to veterinarians, all of which entail liability for which one of the following? Choose one answer. A. Failure to act in the manner of a "reasonable person" when performing skills related to the chosen profession B. Gross and wanton negligence on the part of the professional C. Advertising injury due to failure to render professional services D. Failure to use the degree of skill expected of a person in a particular field

D. 12.10 A Incorrect. The liability is for failure to use the degree of skill expected of a person in a particular profession.

Which one of the following statements is true regarding the insured's or insurer's right to transfer insurance policies? Choose one answer. A. Insurance policies typically contain conditions allowing insureds to transfer the policy to a third party without the insurer's approval. B. Under state law, insurers may not transfer policies to other insurers. C. Insurance policies typically contain conditions prohibiting an insurer from transferring the policy to a third party. D. An insurer can transfer all of its business if it is acquired by another insurer.

D. 2.10 C Incorrect. An insurer can transfer all of its business if it is acquired by another insurer.

Ella, the owner of a dry cleaning establishment, maintains insurance on customers' clothing and other property. She does so because she is acting as a bailee of cutomers' property while it is in her possession. In the event that a customer's property becomes damaged while in her care, Ella will pay any insurance proceeds to the customer. Which one of the following is the legal basis for insurable interest demonstrated by this example? Choose one answer. A. Factual expectancy B. Ownership interest in property C. Contractual obligation D. Representation of another party

D. 3.6 Representation of Another Party 3 examples: 1. Agents 2. Trustees 3. Bailees C. Incorrect. The legal basis for insurable interest demonstrated by this example is representation of another party.

Corporation X, in an attempt to accrue more profits, used harmful ingredients in a beverage product to enhance taste, boost sales, and save on expenses. As a result many children were sickened and a class action lawsuit resulted in the court awarding punitive damages. To assess punitive damages in this case, the court will usually consider which one of the following factors? Choose one answer. A. Actual proof of malice B. Size of the plaintiff's assets C. Maximum allowable state limit for punitive damage D. Nature of the defendant's actions

D. B should be size of the defendants actions B Incorrect. The court would not be as concerned about actual proof of malice, or the monetary issues as it would be concerned about the nature of the defendant's actions and the resulting harm or injuries.

Which one of the following types of overlaps in coverage is usually the most difficult to resolve? Choose one answer. A. Other insurance in a similar policy B. Noninsurance agreements C. Other insurance in the same policy D. Other insurance in dissimilar policies

D. Correct. Because of the typical lack of provisions governing coordination of coverage for dissimilar policies, these types of overlaps in coverage are often the most difficult to resolve. Page 3.33 What are examples of noninsurance agreements? 1. A lease agreement might make a tenant responsible for damage to leased property that is also covered by insurance 2. Credit card rental car PD protection duplicating APD 3. Credit card protection for purchased property may overlap with HO policy. 4. Extended auto/home warranty overlap with HO policy

Which one of the following is a tort involving use or disclosure of information? Choose one answer. A. Publicly placing plaintiff in a false light B. Public disclosure of facts C. Unauthorized use of information D. Appropriation of plaintiff's name or likeness

D. Only this one full name matches... 13.31 A Incorrect. The tort of appropriation of plaintiff's name or likeness is a tort based on one's rights to one's own name and likeness.

A premium deficiency reserve is established for which one of the following reasons? Choose one answer. A. To avoid performing a liability adequacy test B. To recognize the effect of inflation on reserves C. To offset future earnings from paid losses at the end of a multiyear policy term reported in financial statements D. To prevent a bias in financial statements toward a future earnings loss from the liability runoff

D. Page 1.41 *Most accounting frameworks find the booking of a liability that is expected to be insufficient almost totally unacceptable; however, ...accept the booking ... to be excessive* *aka, if this calculation results in a zero or negative value, no liability is established*

Which one of the following best describes the U.S. GAAP accounting treatment of ceded loss reserves on an insurer's balance sheet? Choose one answer. A. Ceded loss reserves are treated as a liability. B. Ceded loss reserves are treated as an offset to a liability. C. Ceded loss reserves only appear on the income statement. D. Ceded loss reserves are treated as an asset.

D. Page 1.55 Example.

Like auto liability insurance, aircraft liability coverage is usually not subject to which one of the following? Choose one answer. A. A coinsurance clause B. Excess limits or policy sub-limits C. A small deductible D. An aggregate limit

D. Page 12.23 A Incorrect. Aircraft liability coverage is usually not subject to an aggregate limit.

Which one of the following types of insurance policies is least likely to be considered a contract of adhesion? Choose one answer. A. A commercial crime policy B. A personal articles floater C. An automobile policy D. A manuscript policy

D. Page 2.8 B Incorrect. A manuscript policy

Larry drove his car and was involved in a two-car accident caused by the other driver, who was uninsured. The at-fault driver offered Larry a substantial amount of money in satisfaction of his damages. Larry accepted the money in settlement of his losses and released the other driver from further liability. Larry later submitted an uninsured motorists claim under his Personal Auto Policy (PAP). The uninsured motorists claim would be Choose one answer. A. Paid for damages accruing after the settlement with the at-fault driver. B. Paid in addition to the money paid by the at-fault driver. C. Denied because the at-fault driver can be considered self-insured under the circumstances. D. Denied because coverage under these circumstances is excluded.

D. Page 4.44 Prejudice means to injure or damage another party's right A. Incorrect. Denied because coverage under these circumstances is excluded.

The standard limit for Coverage C of the HO-3—Special Form (HO-3) policy is Choose one answer. A. 10 percent of the Coverage A limit. B. 25 percent of the Coverage A limit. C. 30 percent of the Coverage A limit. D. 50 percent of the Coverage A limit.

D. Page 6.13 A Incorrect. The standard limit for Coverage C of the HO-3 policy is 50 percent of the Coverage A limit.

Which one of the following statements is correct with respect to the Building and Personal Property Coverage Form's (BPP) coverage for personal property of others? Choose one answer. A. The BPP specifically excludes coverage for businesses (bailees) that have customers' property in their custody, such as laundries, dry cleaners, appliance repair shops, and furniture upholstery shops. B. Coverage for personal property of others applies only if the insured is legally responsible for the damage. C. The BPP covers personal property of others while it is located anywhere in the world. D. Even if the insured does not buy coverage for personal property of others the BPP still provides a coverage extension for personal property of others, which is limited to $2,500 at each insured location.

D. Page 8.10 B Incorrect. Coverage applies whether the insured is legally responsible or not.

Insurers underwrite Agreed Value optional coverage carefully for which one of the following reasons? Choose one answer. A. The insurer is obliged to pay the ACV of the damaged property, regardless of the limit of insurance purchased. B. Claims settlements under agreed value policies are typically higher than those under policies that include an 80 percent coinsurance clause. C. If the Agreed Value coverage option is not renewed, the coinsurance condition cannot be reinstated. D. Insureds are often tempted to underinsure, knowing they will not suffer a coinsurance penalty when the agreed value option is in effect.

D. Page 9.9. B Incorrect. Because most losses are partial, insureds are often tempted to underinsure, knowing they will not suffer a coinsurance penalty when the agreed value option is in effect. Therefore, insurers underwrite agreed value carefully.

Under U.S. regulatory accounting, the liability for extended reporting endorsements covering a definite period into the future is recorded as Choose one answer. A. Loss reserves. B. Written premium. C. Earned premium. D. Unearned premium reserves.

D. See page 1.36 or notes For definite period - unearned premium reserves For indefinite period - loss reserves A Incorrect. Under U.S. regulatory accounting, the liability for extended reporting endorsements covering a definite period into the future is recorded as unearned premium reserves.

Ren was married to Anna but they have since divorced. Because Ren is aware of Anna's financial status, he wants to take out a life insurance policy on her. In terms of insurable interest, Ren may Choose one answer. A. Purchase a life insurance policy on Anna but it cannot exceed one half of Anna's net worth. B. Purchase a life insurance policy on Anna with any face amount. C. Not purchase a life insurance policy on Anna since he has no right to her assets after the divorce. D. Not purchase a life insurance policy on Anna since he does not have an insurable interest in her life.

D. The question only ask about the insurable interest. B Incorrect. Ren may not purchase a life insurance policy on Anna since he does not have an insurable interest in her life.

Coverage under Coverage B—Other Structures of an HO-3—Special Form (HO-3) policy applies to which one of the following? Choose one answer. A. Personal property that is within the insured dwelling B. A separate structure on the insured premises from which the insured operates a business C. A detached garage that has an apartment that is rented to a local college student D. A detached garage rented to the named insured's neighbor who uses it to store one of his vehicles

D. a structure rented to anyone who is not a resident of the dwelling will not be covered *unless it is rented as a private garage* B Incorrect. Coverage under Coverage B—Other Structures of an HO-3 policy applies to a detached garage rented to the named insured's neighbor who uses it to store one of his vehicles.

Cathy left a bracelet at a jeweler for repair and was given a receipt with the statement, "This establishment is not responsible for loss or damage to any item left in its possession." What does the statement on the receipt represent? a. Assumption of risk b. Hold harmless agreement c. Comparative negligence d. Release of liability

D. is correct What is hold harmless agreement?

For the owners of oceangoing cargo, the possibility of loss to the cargo while it is in the course of transit exists

Either aboard the vessel or on land between the vessel and the cargo's point of origin or destination.

Filed vs/ Non Filed Classes of Business

Filed: are the classes of inland marine business for which the policy forms and/or rates must be filed with the state insurance department. Characterized by large # of potential insureds and reasonably homogeneous loss exposures Nonfiled: are the classes of inland marine business for which neither policy forms nor rates must be filed with the state insurance department. The classes vary by state.

2) Which one of the following statements is correct with respect to ocean marine loss exposures?

For cargo owners, the posibility of loss to the cargo exists either on board a vessel or on land between the vessel and the cargo's point of origin or destination.

Which one of the following statements is correct with respect to ocean marine loss exposures?

For cargo owners, the possibility of loss to the cargo exists either on board a vessel or on land between the vessel and the cargo's point of origin or destination.

11) Which one of the following Commercial Crime Coverage Form insuring agreements provides coverage on a full worldwide basis?

Forgery or alteration

Mail coverage policy

Form that covers a financial institution against loss of securities and other negotiable instruments while in transit through specified types of mail

Rates for the traditionally nonfiled classes of inland marine insurance

Have become standardized to an extent for policies that are widely written.

48) Joe Harris formed a limited liability corporation (LLC) and purchased liability coverage under a Commercial General Liability (CGL) Coverage Form in the name of the LLC. Joe is the sole controlling member. In a casual conversation with a neighbor, Joe made a slanderous remark regarding a storeowner, who upon finding out about the remark, sued Joe for slander. Joe was acting as a private citizen rather than as a member of the LLC. Which one of following statements explains whether the CGL policy would or would not cover Joe for this claim?

He would not be covered by the CGL Coverage form because Joe was not conducting the business of the LLC when the incident occurred.

32) Fiduciary bonds are commonly required of a person who does which one of the following?

Holds property in trust for the benefit of others.

What ocean marine insurance policy or clause covers the damage to an insured's ship if the insured ship collides with an object in the harbor?

Hull Insurance

What ocean marine insurance policy or clause, if any, covers damage to the insured vessel caused by serious misconduct by the members of the crew contrary to the owner's interest?

Hull insurance policy

Which one of the following statements is correct with respect to ocean marine hull insurance?

Hull policies typically include earthquake coverage for the possibility that a vessel might be damaged by earthquake while docked.

84) Red Contracting (Red) hires a subcontractor, which uses its own bulldozer to move earth at Red's building site. Red secures a certificate of insurance from the subcontractor. While grading the site, the subcontractor damages an adjacent, unoccupied building causing the building to collapse. Does Red's commercial general liability (CGL() policy cover the subcontractor for its actions?

No, because the subcontractor is not an insured under Red's CGL policy.

82) ABC, Inc., is a large, national retailer that sells a variety of consumer goods. ABC carries a Commercial Package Policy that includes Insurance Services Office's Commercial Crime Coverage Form (Loss Sustained) with the following insuring agreements: Employee Theft; Forgery or Alteration; Inside the Premises-Theft of Money and Securities; and Inside the Premises-Robbery or Safe Burglary of Other Property. The limit of insurance for each one of these insuring agreements is $100,000 and the deductible per occurrence for each one of these insuring agreements is $1,000. The policy year is 2011. On June 5, 2011, a thief entered ABC through an open window while the store was closed and stole $2,500 worth of electronic merchandise. The thief also broke into a safe causing $1,500 damage to the safe and stole $3,000 in cash from the safe. Under which insuring agreement would the damage to the safe be covered?

Inside the Premises-Theft of Money and Securities

Which one of the following best describes nonfiled inland marine builders risk insurance?

It covers the structure under construction, temporary structures at the building site, and building materials that have not yet become part of the building.

Which one of the following best describes the protection afforded by the Utility Interruption insuring agreement of the ISO Equipment Breakdown Protection Coverage Form?

It extends the business income and extra expense coverage to include loss sustained because of breakdown of equipment owned by a utility or other supplier of electricity, communications, air conditioning, heating, gas, sewer, water, or steam.

24) Which one of the following statements is correct with respect to limits of liability applicable to Part Two-Employers Liability Insurance?

It includes a bodily injury by disease policy limit.

46) Which one of the following statements is correct with respect to the ISO Earthquake and Volcanic Eruption Endorsement?

It includes coverage for the full policy limit and contains a coinsurance clause.

Which one of the following is an advantage of valuation at invoice versus valuation at actual cash value for property in transit between buyers and sellers?

It includes the profit the seller has included on the invoice.

71) Which one of the following statements about the collision liability clause of an ocean marine hull insurance policy is true?

It is a separate amount of insurance ordinarily equal to the amount of insurance on the hull.

Which one of the following best describes the bailees' customers policy?

It is purchased by bailees to cover damage to customers' goods while in the possession of the bailee, regardless of whether the bailee is legally liable for the damage.

Which one of the following best describes the effect of the Voluntary Compensation and Employers Liability Endorsement?

It obligates the insurer to pay an amount equal to the compensation benefits that would be payable if exempt employees were subject to the workers compensation law.

Which one of the following statements is correct with respect to the Preservation of Property additional coverage of the Building and Personal Property Coverage Form (BPP)?

It protects against "any direct physical loss or damage" and is not limited to either the covered causes of loss or locations stipulated in the coverage form.

Which one of the following is a purpose for buying difference in conditions (DIC) insurance?

It provides coverage for flood and earthquake exposures not covered by basic policies

Which one of the following is a purpose for buying difference in conditions (DIC) insurance?

It provides coverage for flood and earthquake exposures not covered by basic policies.

Which one of the following is a characteristic of a site-specific environmental impairment liability policy?

It provides coverage on a claims-made basis.

42) Which one of the following statements is correct with respect to the Causes of Loss-Special Form?

It shifts the burden of proof as to whether a loss is covered from the insured to the insurer.

59) Which one of the following statements is correct with respect to the Control of Property condition of the Commercial Property Conditions Form?

It states that coverage under the policy will not be affected by acts or omissions of persons other than the insured, if the others are not acting under the direction or control of the insured.

ABC Brokerage Company (ABC) is covered by an Insurance Services Office (ISO) Commercial Crime Coverage Form written on a loss sustained basis. The policy was written to replace an identical policy with another insurer that had expired, and there was no lapse in coverage. ABC recently discovered a covered loss that occurred during the prior insurer's policy term. Which one of the following would be true for the current insurer?

It will pay the lesser of what would be covered under the present insurance or the prior insurance if it had remained in effect

It will pay the lesser of what would be covered under the present or the prior insurance.

covers the merchandise of retail jewelers, including similar property of others in the insured's care, custody, or control. It was designed to meet the needs of small retail jewelers. Depending on the nature of the insured's operations, this can either be filed or nonfiled.

Jewelers Block Coverage Form

Which one of the following statements is true regarding the rating of ocean marine insurance?

Judgment rating for ocean marine insurance is influenced by many factors, including the product being shipped and the type of packing.

Which one of the following statements is true regarding the rating of ocean marine insurance?

Judgment rating for ocean marine insurance is influenced by many factors, including the product being shipped and the type of packing.

Which one of the following statements is correct with respect to electronic data processing equipment floaters?

Many cover special perils such as mechanical or electrical breakdown, and they may also insure covered property while it is in transit or at unlisted locations.

Which one of the following statements is correct with respect to electronic data processing equipment floaters?

Many cover special perils such as mechanical or electrical breakdown, and they may also insure covered property while it is in transit or at unlisted locations.

63) The management of Maryland Marine Co. (MMC) must ensure that proper coverage is obtained for work-related injuries. The employee population of MMC is a mixture of full-time and part-time employees as well as some casual employees for one-time tasks. Much of MMC's work is done by independent contractors and temporary employees during peak seasons. Which one of the following statements about these persons is true?

Many states workers compensation statutes exclude casual labor (shor-term employees).

Marine insurers

22) Bob, an employee of Tank's Trucks, is backing one of Tank's trucks toward the loading dock on the insured premises. Bob accidentally strikes Alice, another employee, while she is directing Bob toward the loading dock. Alice sues Bob for her injuries. Is Bob covered under Tank's Trucks' unendorsed Business Auto Coverage Form for liability coverage?

No, because fellow employees' suits are excluded.

18) Betty's Birdhouses constructs and sells birdhouses. Betty discovered a fungus in the wood used to construct the birdhouses that would kill birds. Betty withdrew her entire stock of birdhouses to avoid any claims from environmental organizations for loss to wildlife. Does Betty's Commercial General Liability (CGL) Coverage Form cover the cost to withdraw the birdhouses and feeders?

No, because the cost to withdraw Betty's product is excluded

62) Lucy, the owner of Lucy's Flower Shop, was delivering a vase of flowers to a customer, Mrs. White. When Mrs. White opened her front door, her dog ran outside, knocking the flowers from Lucy's hands, and causing the vase to shatter and injure Mrs. White. Although the customer insisted that she would be fine, Lucy received a medical bill for injuries to Mrs. White two years later. The medical treatment had been received one week before Lucy received the bill. Lucy explains the situation to her insurer and requests coverage under her Commercial General Liaqbility Coverage Form. Will the medical expenses be covered under Coverage C-Medical Payments of the CGL?

No, because the medical expenses must be incurred and reported to the insurer within one year after the date of the accident.

Which one of the following best describes an advantage to insurers of nonfiled compared with filed classes of inland marine insurance?

Nonfiled classes allow for the customization of policy provisions and rates for individual insureds.

During an insurance renewal meeting, the insurance agent mentioned to the insured that they have a nonfiled electronic data processing policy form. Which one of the following describes the difference between a filed and a nonfiled policy form?

Nonfiled policies do not file forms or rates with state insurance departments but for filed polices both are filed.

Entities eligible for financial institution bonds are

Not eligible for the ISO Commercial Crime Forms.

55) Judgment rating is used to rate

One-of-a-kind risks.

One; Under the Commercial Crime Form, one of the ways in which occurrence is defined is as "a series of acts whether or not related, committed by an "employee" acting alone or in collusion during the policy period . . . " Consequently, all the separate acts of employee theft that Beth and Jim committed (both money and merchandise) qualify as only one occurrence when applying the limit of insurance applicable to employee theft loss.

Which one of the following statements is correct with respect to Property Not Covered under the Building and Personal Property Coverage Form (BPP)

Only contraband or property in the course of illegal transportation or trade is totally uninsurable by endorsement or in other policies.

67) Under the Building and Personal Property Coverage Form (BPP), which one of the extensions covers loss only by fire, lightning, explosion, riot or civil commotion, and aircraft?

Outdoor Property

A common carrier delivery service delivered a shipment of furniture to a retailer who sells household furnishings. The furniture was sold to the retailer by a furniture manufacturer on terms of Free On Board (FOB) Destination. When the retailer's receiving department began placing arm chairs into its back room, they discover tears in some of the chair arms that occurred during shipping. These chairs have been shipped in the same way previously without incident. At the time of loss and damage the chairs were

Owned by the furniture manufacturer who can hold the delivery service liable for the cost to repair or replace them.

Exclusions are generally very common in all insurance policies. Which one of the following is a correct statement regarding the exclusions in Part One of the standard Workers Compensation and Employers Liability (WC&EL) Insurance Policy?

Part One contains no out right exclusions.

Particular average

Partial loss that is borne by only one party to a voyage (such as a cargo owner)

General average

Partial loss that must, according to maritime law, be shared by all parties to a voyage (cargo owners and vessel owner)

An ocean freighter with cargo on board has a fire while out at sea. The cargo was partially damaged by the smoke damage and it needs to be repacked. The ship has some superficial damage from the fire. Which one of the following describes this loss to the cargo?

Particular average is used to describe a partial loss other than a general average loss.

covers the professional equipment, materials, supplies, and books of physicians, surgeons, and dentists. It also covers the insured's office equipment and (if the insured is a tenant) improvements and betterment that the insured made to a leased building Coverage that can be added by endorsement: -office equipment while off premises for no more than 30 days -extra expenses following a covered loss -money and stamps on premises -personal effects of the insured or others while on premises -valuable records

Physicians and Surgeons Equipment Coverage Form

Annual transit policy

Policy that covers all shipments made or received by the insured throughout a one year policy period

Warehouse operators legal liability policy

Policy that covers warhouse operators against liability for damage to the property of others beings stored in operators warehouses

43) Morgan Company is involved in a lawsuit that is covered under its unendorsed Commercial General Liability (CGL) Coverage Form. Which one of the following would be covered under the supplementary payments secition of the CGL policy?

Post judgment interest awarded by he judge.

12) Pedestrian Wilma was injured as a result of a contractor's negligence when the contractor failed to adequately warn the public of a hazard when paving a road. Any resulting liability claim by Wilma against the contractor would be considered to have arisen from the contractor's

Premises and operations liability exposure.

33) One Common Policy condition in the Commercial Package Policy (CPP) is the examination of books and records. The intent of this policy condition is to

Prevent the insured from concealing hazardous conditions unacceptable to the insurer.

What ocean marine insurance policy or clause covers an insured shipowner's liability for damage to cargo of others being transported by the insured on the ship?

Protection & Indemnity Insurance

49) Which one of the following ocean marine insurance policies or clauses covers an insured shipowner's liability for injuries to the passengers on board a ship into which the insured ship collided?

Protection and indemnity (P&I) insurance

The basic types of ocean marine insurance include which one of the following?

Protection and indemnity (P&I) insurance

What ocean marine insurance policy or clause covers an insured shipowner's liability for damage to cargo of others being transported by the insured on the ship?

Protection and indemnity (P&I) insurance

What ocean marine insurance policy or clause covers an insured shipowner's liability for damage to cargo of others being transported by the insured on the ship?

Protection and indemnity (P&I) insurance

Which one of the following ocean marine insurance policies or clauses covers an insured shipowner's liability for injuries to the passengers on board a ship into which the insured ship collided?

Protection and indemnity (P&I) insurance

19) Package modification factors for the Commercial Package Policy (CPP) often

Provide a premium discount for the insured.

When freight is guaranteed, the party primarily exposed to the loss of freight is the

Shipper

4) Which one of the following best describes the purpose served by transit insurance?

Shippers use it because their property may be damaged in circumstances under which a carrier has no legal obligation to pay the shipper's loss.

What best describes the purpose served by transit insurance?

Shippers use it because their property may be damaged in circumstances under which a carrier has no legal obligation to pay the shipper's loss.

covers neon, fluorescent, automatic, or mechanical signs. The covered signs must be scheduled with a limit of insurance shown for each item. This form is used by many businesses because commercial property coverage forms severely limit coverage for signs

Signs Coverage Form

66) Which one of the following statements is true regarding insurance coverage for foreign operations?

Small to mid-sized businesses in the United States frequently must concern themselves with foreign exposures.

What can be added to a builders risk policy to cover various incidental expenses that might result from a physical loss to a building project, such as additional interest, advertising expenses, or real estate taxes

Soft costs coverage

Which one of the following can be added to a builders risk policy to cover various incidental expenses that might result from a physical loss to a building project, such as additional interest, advertising expenses, or real estate taxes?

Soft costs coverage

Which one of the following describes property that can be covered under the filed inland marine Theatrical Property Coverage Form?

Stage scenery, costumes, and other similar personal property, including property of others in the insured's care, that insured has used or intends to use in a production stated in the declarations

76) The most widely used financial institution bond is

Standard Form No. 24.

20) Which one of the following statements is correct with respect to eligibility for coverage under a businessowners policy (BOP)?

Some insurers have expanded the eligibility for their BOP programs to include restaurants and contractors.

Which one of the following statements is correct with respect to motor truck cargo liability insurance?

Some policies limit coverage to losses caused by specified perils

Which one of the following statements is correct with respect to motor truck cargo liability insurance?

Some policies limit coverage to losses caused by specified perils.

Which one of the statements is correct with respect to the Building and Personal Property Coverage Form (BPP)?

Some property, such as building foundations below the lowest basement floor, is excluded because it may not be subject to loss by the perils insured against.

The most widely used financial institution bond is

Standard Form No. 24.

Nationwide Marine definition

Statement of the types of property that may be insured on inland marine and ocean marine insurance forms

A clause included in ocean marine cargo insurance that covers the cost of reasonable measures that the insured is required to take to protect property from damage at the time of loss is referred to as the

Sue and labor clause.

79) which one fo the following symbols provides PIP coverage only for those autos that are required by law to have it?

Symbol 5-Owned Autos Subject to No-Fault.

While traveling the Pacific Ocean, an ocean freighter was taken possession of by a gang of pirates. During this take over, cargo and containers were ruined due to the acts of the pirates. Which one of the following principal warranties under an open cargo policy applies?

The free of capture and seizure warranty eliminates coverage for such losses caused by war, piracy, atomic weapons and various types of governmental taking.

73) The Causes of Loss-Basic Form differs from the Causes of Loss-Broad Form in which one of the following ways?

The Broad Form provides coverage for loss caused by collapse of a building or personal property resulting from specified perils.

31) The possibility of the insured incurring an uninsured extra expense loss other than the reduction in business income loss is greatly reduced by

The Business Income (and Extra Expense) Coverage Form.

Upgraded value

The cost to replace covered equipment with the latest comparable state-of-the-art equipment available; can be used as a valuation basis in an EDP floater

Crime loss exposures of financial institutions are covered by financial institution bonds. These policies were developed by

The Surety and Fidelity Association of America (SFAA).

53) The insured has a businessauto policy. Vandals break a window in the insured's pickup truck. While the insured is waiting for the insurance company to appraise the claim, rain enters through the broken window and causes additional damage. What is the insurance company's liability for the loss?

The insurance company is liable for damage by the vandals but not the the damage from the rain.

Which one of the following losses would be covered by the business auto policy?

The insured has agreed to pay for liability losses caused by the insured's negligence that a shipper may incur while the insured is hauling goods for the shipper.

21) Lamda International manufactures fertilizers. The company has a Workers Compensation and Employer's Liability Insurance Policy. The Information Page for the policy includes the following limits: - Bodily Injury by Accident: $100,000 each accident - Bodily Injury by Disease: $500,000 policy limit - Bodily Injury by Disease: $100,000 each employee When an employee at Lambda's plant accidentally backs a forklift into a tank containing a caustic chemical, the tank ruptures and six employees are badly burned. Although all of the workers recover fully, each of the six requires $25,000 in medical treatment. Which one of the following best describes how Lambda's insurer would respond?

The insurer would pay the Bodily Injury by Accident limit of $100,000

Lambda International manufactures fertilizers. The company has a Workers Compensation and Employer's Liability Insurance Policy. The Information Page of the policy includes the following limits for employers liability insurance: Bodily Injury by Accident: $100,000 each accident Bodily Injury by Disease: $500,000 policy limit Bodily Injury by Disease: $100,000 each employee When an employee at Lambda's plant accidentally backs a forklift into a tank containing a caustic chemical, the tank ruptures and six employees are badly burned. Although all of the workers recover fully, each of the six requires $25,000 in medical treatment. Which one of the following best describes how Lambda's insurer would respond?

The insurer would pay the benefits required by the workers compensation law up to the limits found within the law itself.

Which one of the following statements is correct regarding the maintenance of underlying insurance condition of an umbrella liability insurance policy if the underlying insurance is not kept in force?

The umbrella policy would cover claims that exceed the limits of the underlying policies as if they had been kept in force.

A factory fire caused by an employer's negligence results in the death of one employee. The employee was the sole parent and caregiver of a disabled young adult. The young adult sues the employer for loss of services. Which one of the manufacturer's policies would respond to this suit?

The workers compensation and employers liability policy would respond as loss of services is considered under employers liability insurance.

Which one of the following is one of the seven insuring agreements of the Commercial Crime Coverage Form?

Theft committed by any employee

Two tax collectors, who are employees in a local town, embezzled $520,000 from the town's treasury by altering checks and forging signatures. The town has an unendorsed ISO government crime policy with a $100,000 limit for forgery and alteration that was in force prior to the embezzlement. Which one of the following statements describes whether the town has coverage for this loss?

There is no coverage because there is an exclusion for losses caused by any tax collector.

An architectural firm has requested coverage for its vast library of valuable records of blue prints, drawings, and other documents. Their insurance agent has told them that they can provide coverage for the documents with a

They can provide coverage for the documents with a filed inland marine policy that includes some coverage restrictions.

Which one of the following best explains why, in the 1900s, marine insurers were willing to provide broad perils or "all-risks" coverage on the types of property that fire insurers avoided covering?

They were accustomed to covering ocean cargoes of all types against many different causes of loss, including theft, while the property was either at sea or ashore.

44) Green Parks employs three secretaries and accountants, five farm laborers, and one housekeeper. What endorsement would Green Parks likely add to its workers compensation policy to make sure all employees have coverage

Voluntary compensation endorsement.

Which one of the following is a common example of a bailee's coverage form that covers loss to customers' goods only if the insured bailee is legally liable for the loss?

Warehouse operator's legal liability policy

An importer needs protection for its cargo not only while on board an oceangoing vessel, but also while it's being shipped by truck both to the vessel from the point of origin and from the vessel to the final destination. Which one of the following ocean marine clauses accommodates the importer's needs for continuous coverage during the entire course of transit, including the land transportation?

Warehouse to warehouse clause

What is a reason why insureds purchase the filed inland marine accounts receivable coverage form?

an insured can use the inland marine form to obtain a higher coverage limit than the insurer is willing to include in a package policy

The recoveries condition of the ISO commercial crime coverage form specifies how

any subrogation or salvage recoveries will be divided between the insurer and the insured

describe the coverage provided by the inside the premises-theft of money and securities insuring agreement

covers money and securities inside the "premises" or a "banking premises" against theft, disappearance, or destruction

describe the coverage provided by the outside the premises insuring agreement

covers money, securities, and other property while outside the premises and in the care and custody of either a "messenger" or an armored vehicle company

what types of property, other than the insured's professional equipment, materials, supplies, and books, can be insured under the physicians and surgeons equipment coverage form

covers the insured's office equipment and improvements and betterments that the insured has made to a leased building

Mike and Leona own a single-family home insured to value under an HO-3—Special Form (HO-3) with a limit of $350,000 for the Coverage A—Dwelling. While they were out to dinner one evening, an electrical fire started in the kitchen, destroying the kitchen and part of their bedroom on the second floor. The fire destroyed the contents of the bedroom and the clothing in their closets, as well as Leona's jewelry valued at $5,000 and a fur coat valued at $2,000. Ignoring any deductible that may apply, how much coverage is provided for the jewelry and fur coat? a. $1,500 b. $2,000 c. $5,000 d. $7,000

d c is wrong. Only theft has sublimits: jewelry 1500, fur 1500, firearm 2500, silver 2500

What is true regarding the property damage insuring agreement of the ISO equipment breakdown form?

debris removal is covered as part of the property damage limit

describe the types of businesses that the insurance services office, inc commercial crime coverage forms and policy forms are designed to insure

designed for insuring any type of nongovernment commercial or not for profit entity other than a financial institution

policy that covers on an "all-risks" basis to fill gaps in the insured's commercial property coverage, especially gaps in flood and earthquake coverage

difference in conditions (DIC) policy, or DIC insurance

describe how the insurer responds under a commercial crime policy if the amount of loss exceeds the deductible

if the amount of loss exceeds the deductible, the insurer will pay the amount of the loss in excess of the deductible, up to the limit of insurance

Under the valuation-settlement condition of a crime policy, how is the value of a covered loss generally determined for this - money

money is valued at its face value

Under a loss sustained crime form, describe the operations of this to determine when a loss must occur in order to be covered - loss sustained during prior insurance not issued by us or any affiliate

the insurer agrees to pay a loss that meets all of these criteria: 1. the loss is discovered during the policy period shown in the declarations 2. the loss occurred while prior insurance, issued by another unaffiliated insurer, was in effect 3. the current insurance became effective when the prior insurance was canceled or terminated 4. the loss would have been covered by the present insurance if the insurance had been in force at the time of loss

Under a loss sustained crime form, describe the operations of this to determine when a loss must occur in order to be covered - loss sustained during prior insurance issued by us or any affiliate

the insurer agrees to pay a loss that meets these criteria: 1. the loss is discovered during the policy period shown in the declarations 2. the loss occurred while prior insurance, issued by the same insurer or an affiliated insurer, was in effect 3. the current insurance became effective when the prior insurance was canceled 4. the loss would have been covered by the present insurance if the insurance had been in force at the time of loss

Under a loss sustained crime form, describe the operations of this to determine when a loss must occur in order to be covered - extended period to discover loss

the insurer will pay for loss that the named insured sustains through acts committed or events occurring during the policy period and discovered during the policy period or within one year after the policy is canceled. However, the discovery period terminates immediately as of the effective date of any other insurance that the insured obtains that replaces coverage in whole or in part

identify the type of non filed inland marine insurance policy that would provide coverage for each of the following: - a manufacturing company regularly uses its own trucks to deliver finished products to customers

the manufacturing company regularly using its own trucks to deliver finished products to customers would be covered by an annual transit policy

identify the maker in which the commercial crime coverage form determines the most the insurer will pay for all loss resulting directly from an "occurrence"

the most the insurer will pay for all loss resulting directly from an "occurrence" is the applicable limit shown in the declarations

identify the portion of the definition of "occurrence" that applies to every commercial crime coverage

the portion of the definition of "occurrence" that applies to every commercial crime coverage is that" occurrence" includes an individual act, the combined total of all separate acts, or a series of acts

identify and explain the condition in the equipment breakdown form that enables the insurer to act immediately when imminent danger of an accident exists

the suspension condition in the equipment breakdown form allows the insurer to immediately suspend equipment breakdown insurance on an item of equipment that the insurer determines to be in a dangerous condition. The insurer can suspend coverage by delivering or mailing a written notice of coverage suspension to the named insured

explain how each of these clauses affect the coverage provided in a cargo policy - warehouse to warehouse clause

the warehouse to warehouse clause covers the insured cargo during the ordinary course of transit from the time the cargo leaves the point of shipment until it is delivered to its final destination, including inland transit

for what reason do states continue to use the updated nationwide marine definition?

to determine whether a particular coverage is marine insurance under their form and rate filing laws. Typically, commercial inland and ocean marine insurance is subject to less rate and form regulation than other lines of insurance

explain how property is normally valued under a hull policy

under a hull policy, a vessel is normally insured for a value agreed on by the insurer and the insured. For a total loss, the insurer pays the agreed value. For a partial loss, the insurer pays the cost of repairs

when rating hull and protection and indemnity insurance, what factors influence the judgment of underwriters

underwriters consider past loss experience; the size, type, and age of the insured vessel; the area of investigation; the trade in which the vessel is employed; the nation in which the vessel is registered; and the vessel owner's reputation and quality of management

Coverage is provided for which one of the following losses under the inside the premises- theft of money & securities insuring agreement of the ISO commercial Crime coverage form?

unexplained disappearance of securities from the insured's office

Which one of the following is a covered cause of loss under the Causes of Loss—Basic Form?

volcanic action

Voir tous les ensembles d'études

4-5 MASTER

Ensembles d'études connexes

Coursepoint Chapter 12 (Oncology)

Genitourinary Disorders

Who was to blame for the cold war?

Blood Quiz

Capitalization Rules

S+ 601

Chapter 7

PSYCH 2000 - Chapter 3

bio 121 test 3

ORION - Chapter 3

Insurance ch 10 (Tax, retirement)

Chapter 35: Disorders of the Bladder and Lower Urinary Tract

History of Modern China Midterm

Biology Chapter 5

Checkpoint Exams (C)

Chapter 5

Med Surg Final Review

Grief

Nervous System

MUS 110 CH 29 Listening Study Guide: LG 18 Beethoven: Piano Sonata in C sharp minor, Op. 27, No. 2 (Moonlight), I